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NON-REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2426 OF 2015 (Arising Out of SLP (C) No. 34955 of 2013)

  ANDHRA PRADESH INDL. INFRASTRUCTURAL     CORPORATION LTD. & ANR.               ……APPELLANTS

VERSUS

M/S. SHIVANI ENGINEERING INDUSTRIES   ……RESPONDENT

J U D G M E N T

V.GOPALA GOWDA, J. Leave granted.  

2. The  appellant-Andhra  Pradesh  Industrial  

Corporation  Ltd.  (for  short  “the  Corporation”)  is  

aggrieved by the judgment and order dated 20.8.2013 of  

the  High  Court  of  Judicature  of  Andhra  Pradesh  at  

Hyderabad  passed  in  Writ  Appeal  No.  1273  of  2013  

whereby the High Court dismissed the writ appeal and  

affirmed the judgment and order dated 26.4.2013 of the

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learned  single  Judge  passed  in  Writ  Petition  

No.11978  of  2012.  This  appeal  is  filed  by  the  

Corporation  seeking  for  setting  aside  the  impugned  

judgment and orders passed in the writ appeal and writ  

petition by allowing this appeal, urging various facts  

and legal contentions.

3. The brief facts are stated in this judgment for  

the  purpose  of  appreciating  the  rival  legal  

contentions urged on behalf of the parties, with a  

view to find out as to whether the impugned judgments  

and orders passed by both the Division Bench of the  

High Court and the learned single Judge are required  

to be interfered with by this Court.  

The  Corporation  (which  is  one  of  the  State  

Undertaking  Corporations  established  to  promote  the  

industrial  growth  and  development  in  the  State  of  

Andhra  Pradesh)  on  the  application  filed  by  M/s  

Shivani Engineering Industries-the respondent herein  

for allotment of industrial plot measuring 10,000 sq.  

mtrs., allotted plot No.181 of Phase-III, Industrial  

Park at Pashamylaram to an extent of 12000 sq. mtrs.  

at a price of Rs.72,00,000/- in its favour and the

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said amount was to be paid by the respondent within 90  

days  of the receipt of the provisional allotment and  

required to implement the project within 2 years from  

the date of possession of the allotted plot of land,  

failing which the plot was liable to be cancelled by  

the Corporation as per terms and conditions enumerated  

in the provisional allotment letter dated 20.6.2006.  

The relevant clauses from the provisional allotment  

order read thus:-

“2. You should pay the cost of  land  which  works  out  to  Rs.72,00,000/-  within  Ninety  days from the date of receipt of  the allotment order, EMD already  paid.

       XXX  XXX XXX 7. If payment as stipulated in  condition (2)above is not made  within  90  days  of  receipt  of  this  allotment  letter,  this  allotment  letter  shall  stand  cancelled  and  EMD  paid  shall  remain forfeited.       XXX      XXX   XXX 18. You  should  implement  the  project  envisaged  within  two  years  of  taking  possession  of  the  plot.  If  within  two  years  from the date of final allotment  and  taking  possession  of  the  plot  the  project  is  not  implemented, the allotment will

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be cancelled.”

4. It  is  the  case  of  the  Corporation  that  the  

respondent  has  committed  default  in  making  said  

payment to it within stipulated time as payment should  

have been made within 90 days from the date of receipt  

of the allotment letter which was not done by the  

respondent, but on the other hand on 18.9.2006, the  

respondent sought for extension of time for making  

payment of the allotted industrial plot by 30.11.2006.  

5. On 22.9.2006, it was found by the Corporation that  

the  industrial  plot  allotted  in  favour  of  the  

respondent was more than the area mentioned in the  

provisional allotment, the area of the industrial land  

was revised as 14046 sq. mtrs. and the cost payable by  

the respondent was re-fixed at Rs.84,27,600/-. Despite  

having extended the time by the Corporation for making  

payment  of  land  cost  with  interest  @18%  p.a.  till  

30.11.2006,  the  respondent  again  did  not  make  the  

payment for the plot which resulted in cancellation of  

the provisional allotment of industrial plot made in  

favour of the respondent by the Corporation vide its  

letter dated 16.12.2006.

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6. Being  aggrieved  by  the  said  action  of  the  

Corporation,  the  respondent  made  representation  on  

3.2.2007 for restoration of the provisional allotment  

of land in favour of the respondent. The Corporation  

acceded  to  its  request  and  it  has  informed  on  

21.2.2007  to  the  respondent  stating  that  the  

restoration of allotment of plot of land will be done  

subject to payment of total cost of the allotted land  

with interest on belated payment and penalty of 10% of  

the land cost at the prevailing rate and after making  

the payment the suit plot can be registered in favour  

of the respondent.  

7. The respondent made the payment on 2.3.2007 for  

the  industrial  plot  allotted  in  its  favour  and  an  

agreement of sale was executed on 13.3.2007 between  

the Corporation and the respondent and possession of  

the industrial plot was given to the respondent on the  

same  day.  The  relevant  clause  Nos.  ‘3  and  9c’  of  

agreement of sale read thus :-

“3. Only on the Party of the  Second  Part  implementing  the  scheme in the allotted plot,  the sale deed will be executed  and registered.     XXX    XXX    XXX

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9c.The  party  of  the  Second  Part  shall  implement  the  project  within  two  years  of  being put in possession of the  said  plot  as  detailed  at  clause 3 above.”

8. The respondent on 2.9.2008 has sought for change  

of  manufacturing   activity  from  mosquito  coils  to  

heavy engineering project and bus-body manufacturing  

unit. The respondent made an application for loan to  

the State Bank of India for setting up the industry.  

On 23.9.2008, the State Bank of India has asked the  

Corporation for issuing NOC for mortgaging the plot  

allotted to the respondent for sanction of the loan in  

its favour. On 25.9.2008 the Corporation approved the  

change  of  manufacturing  activity  after  receiving  

requisite fees.

9.  On 21.1.2009 the Corporation was intimated by the  

respondent that it has completed the construction of a  

shed, office accommodation and stores and asked for  

registration of the allotted plot in its favour.   

10.  On 12.3.2009, the period of two years stipulated  

for the completion of the project in the agreement was  

expired. Further, Andhra Bank also sent a letter on  

6.11.2009 to the Corporation requesting it for issuing

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NOC for mortgage of the allotted plot of land for  

sanctioning the loan in favour of the respondent for  

setting up the project. According to the respondent,  

in the month of November, 2010, there was installation  

of plant and machinery and commencement of production  

on 1.12.2010.  

11.  On 7.1.2011, a Circular Notice was issued to the  

respondent by the Corporation for charging fee @ 2%  

upto  1  year  and  3%  after  2  years  as  fee  for  

condonation of delay in implementation of the project  

for which purpose the plot was allotted in its favour.  

On  10.8.2011  the  respondent  wrote  a  letter  to  the  

Corporation asking them for registration of the plot  

in its favour. On 8.11.2011, the Corporation asked the  

respondent to pay an amount of Rs.8,42,760/- being 3%  

of the allotted plot cost towards condonation fee for  

delay in implementation of the project.

12.  Being aggrieved on the demand of condonation fee  

by the Corporation, the respondent filed writ petition  

No. 11978 of 2012 before the High Court of Judicature  

of  Andhra  Pradesh  at  Hyderabad,  challenging  the  

validity  of  demand  of  condonation  fee  from  the

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respondent and prayed for issuing a direction to the  

Corporation to execute registered sale deed of the  

allotted plot in its favour. The said writ petition  

was opposed by the Corporation by filing its counter  

affidavit  justifying  the  demand  of  condonation  fee  

from  the  respondent  for  non-implementation  of  the  

project.

13.  The learned single Judge of the High Court has  

recorded  the  finding  holding  that  the  plea  of  the  

respondent  that the project was implemented within a  

period of two years was not accepted, however it has  

allowed  the  writ  petition  on  26.4.2013  with  a  

direction to the Corporation to execute the registered  

sale deed in favour of the respondent  in respect of  

the allotted plot within two months without charging  

any condonation fee of Rs.8,42,760/- as demanded by  

the  Corporation  from  the  respondent  for  the  delay  

caused for implementation of the project.

14.  Aggrieved of the said judgment and order of the  

learned single Judge, Writ Appeal No. 1273 of 2013 was  

filed by the Corporation before the Division Bench of  

the  High  Court  seeking  for  setting  aside  the  said

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judgment and order of the learned single Judge, urging  

various legal contentions.  

15.  The  Division  Bench  of  High  Court  vide  its  

judgment and order dated 20.8.2013 dismissed the writ  

appeal of the Corporation holding that the penalties  

for restoration of allotment as well as the interest  

has already been collected by the Corporation apart  

from the full cost of the land from the respondent.  

The allotment of plot made at      Rs.600/- per sq.  

mtr. was increased substantially on account of the  

additional amount collected from the respondent and  

therefore, it is held that having collected the entire  

cost of land, penalty, interest and further demand of  

fee by describing it as delay condonation fee from the  

respondent is wholly unjustified and the same would  

amount to unjust enrichment by the Corporation. As the  

respondent already implemented the project with the  

approval of the Corporation, it is not open for the  

Corporation to demand any additional amount now, in  

the name of delay condonation fee. It is further held  

by the High Court that clauses of the agreement for  

sale  relied  upon  by  the  learned  senior  counsel  on

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behalf of the Corporation do not support its claim and  

as such the finding was recorded by the learned single  

Judge  by  allowing  the  writ  petition  and  given  

direction to the Corporation as per para 15 of the  

judgment of the learned single Judge. The Division  

Bench of the High Court has dismissed the writ appeal  

by affirming the judgment and order of the learned  

single  Judge.  The  correctness  of  the  judgment  and  

order  of  the  Division  Bench  of  the  High  Court  is  

challenged  in  this  appeal,  urging  various  legal  

contentions and prayed to set aside both the judgments  

and  orders  of  the  learned  single  Judge  and  the  

Division Bench of the High Court.  

16.  Mr.  P.P.  Rao,  the  learned  senior  counsel  

appearing  on  behalf  of  the  Corporation  sought  to  

justify the demand of condonation delay fee of the  

allotted  plot  from  the  respondent  for  non-

implementation of project within two years as agreed  

by it which was impugned in the writ petition before  

the learned single Judge urging untenable grounds.  

17. It  was  further  contended  by  the  learned  senior  

counsel that both the learned single Judge as well as

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the Division Bench of High Court  have set aside the  

demand of condonation of delay fee for delay caused in  

implementation of the project as per the rates at 2%  

and 3%, holding that the same is not permissible in  

law without noticing the clauses in the provisional  

allotment letter dated 20.6.2006. The clause 7 of the  

provisional allotment letter states that if payment of  

Rs.72,00,000/- as stipulated in condition number two  

extracted above is not made within 90 days from the  

date of receipt of allotment letter, the provisional  

allotment of plot shall stand cancelled and EMD paid  

shall remain forfeited by the Corporation.  Clauses  

18, 18A and 18B of the provisional allotment letter  

read thus :-

“18. You  should  implement  the project envisaged within two  years  of  taking  possession  of  the  plot.  If  within  two  years  from the date of final allotment  and  taking  possession  of  the  plot  the  project  is  not  implemented, the allotment will  be cancelled. IMPLEMENTATION MEANS: 18A. You  should  have  implemented the project in full  as envisaged. Where for bonafide  reason, there is some delay in  implementation,  at  least  you  should  have  implemented  the

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project substantially. SUBSTANTIAL  IMPLEMENTATION  MEANS; 18B. You  shall  have  completed  Civil  Works  and  also  completed  erection  of  most  of  the plant and machinery(at least  80% of the Project Cost)…”

Despite  the  aforesaid  clauses,  the  Corporation  was  

liberal  in not  cancelling the  provisional allotment  

of  plot  made  in  favour  of  respondent  for  non-

compliance  of  the  aforesaid  conditions  rather  it  

extended the period upto 30.11.2006 for making cost of  

allotted plot in its favour. For non-payment of the  

revised cost of Rs.84,27,600/- of the allotted plot to  

the  Corporation  and  the  non-compliance  of  the  said  

conditions  by  the  respondent,  the  Corporation  on  

16.12.2006 cancelled the provisional allotment of plot  

made  in  favour  of  the  respondent.  Further,  the  

Corporation was also liberal in giving permission to  

the  respondent to  change the  manufacturing activity  

originally proposed with further terms and conditions  

imposed upon the respondent, the same also have not  

been complied with by the respondent.

18. Further, the learned senior counsel on behalf of  

the Corporation has contended that the learned single

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Judge  has  erroneously  set  aside  the  demand  of  3%  

condonation  fee  for  delay  in  implementation  of  the  

project by the respondent. If the respondent was not  

willing  to  pay  the  condonation  delay  fee  for  

implementing the project, then the High Court should  

have seen that the Corporation had liberty to exercise  

its right and resume the land after cancelling the  

allotment of plot made in favour of respondent as per  

terms  and  conditions  of  the  provisional  allotment  

letter. The learned single Judge without examining the  

above relevant aspects and the terms and conditions  

incorporated in the provisional allotment letter and  

the  agreement  of  sale  between  the  parties,  has  

erroneously held that the Corporation is not empowered  

to collect the condonation of delay fee at 3%  from  

the respondent as it has already collected the penalty  

of 10% with interest on the belated payment made by  

the respondent and further directed the Corporation to  

execute  the  registered  sale  deed  in  favour  of  the  

respondent in respect of the allotted plot. The said  

order  is  affirmed  by  the  Division  Bench  without  

noticing that the respondent is bound by the terms and

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conditions  of  the  provisional  allotment  letter,  

agreement between the parties and earlier cancellation  

order passed by the Corporation for non-compliance of  

the condition i.e. not paying the amount within 90  

days from the date of receipt of the allotment letter.  

Even  after  the  restoration  of  allotment,  further  

period  was  extended  and  even  it  was  permitted  to  

change its project, even though it has not implemented  

the  original  project  within  that  period  and  the  

extended period, therefore, the Corporation keeping in  

view the extension of period granted, condonation of  

delay fee at 3% was demanded  for non-implementation  

of the required project, if that was not acceptable to  

the respondent then the High Court should not have  

interfered with the demand made by the Corporation and  

it should have permitted the Corporation to invoke its  

right under clauses 2, 7 and 18(A) and 18(B) of the  

provisional allotment letter and clauses 3 and 9(c)  

of the Agreement of Sale extracted above and permitted  

the  Corporation  to   resume  the  land  from  the  

respondent.  

19.  On the contrary Mr. Annam D.N. Rao, the learned

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counsel on behalf of the respondent sought to justify  

the finding and reasons recorded by the High Court in  

the judgment and order of the learned single Judge  

holding that there is no justification on the part of  

the Corporation to demand 3% condonation of delay fee  

from  the  respondent  for  non-implementation  of  the  

required project within the stipulated time for the  

reason that the delayed payment with interest and 10%  

penalty has already been collected by the Corporation  

in respect of the allotted plot. The same has been  

rightly set aside by the learned single Judge and the  

same is affirmed by the Division Bench of High Court  

by assigning valid and cogent reasons in the impugned  

judgment and therefore, he submits that the impugned  

judgment does not call for interference by this Court.

20. Further, it is contended by the learned counsel  

for the respondent that the Corporation has extended  

time  for  similarly  placed  150  allottees,  for  non-

implementation  of  project  within  two  years  and  

collected interest and 10% penalty amount from them on  

the  provisional  allotment.  Therefore,  there  is  no  

justification on the part of the Corporation to demand

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penalty  of  3%   from  the  respondent  towards  the  

condonation of delay fee for non-implementation of the  

required project, which is unlawful on the part of the  

Corporation and its action is actually arbitrary and  

unreasonable, and the demand is not traceable to any  

legal provisions and the terms and conditions of the  

provisional allotment letter issued to the respondent  

by further extending the period by the Corporation in  

its  favour  including  the  change  of  manufacturing  

activity by revising its earlier project.

21. We have very carefully examined the rival legal  

contentions urged on behalf of the parties with a view  

to find out as to whether the impugned judgments and  

order warrant interference of this Court. We have to  

consider  the  relevant  clauses  of  the  provisional  

allotment  letter,  which  are  extracted  as  above,  

particularly, the original allotment of plot was made  

in favour of the respondent on 20.6.2006 subject to  

payment of Rs.72,00,000/- within 90 days from the date  

of receipt of the allotment letter. Further, clause 7  

of the said provisional allotment letter provides if  

the above said plot cost is not made within 90 days of

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receipt of the allotment letter the allotment of plot  

shall stand cancelled and the EMD paid shall remain  

forfeited by the Corporation. It is an undisputed fact  

that on 22.9.2006 the allotted plot in favour of the  

respondent  was  found  to  be  more  than  the  area  

mentioned in the provisional allotment letter and the  

area was revised as 14046 sq. mtrs. as also the cost  

payable was revised at Rs.84,27,600/- and despite the  

Corporation extending time for making payment by the  

respondent  till  30.11.2006,  the  same  was  not  paid.  

Therefore, the provisional allotment was cancelled by  

the  Corporation  for  not  making  the  payment  within  

stipulated  time.  The  representation  was  given  on  

3.2.2007  by  the  respondent  for  restoration  of  

allotment of the plot and the same was accepted by the  

Corporation  by  informing  the  respondent  that  the  

restoration of the provisional allotment of plot will  

be done subject to the payment of total cost of plot  

with interest on belated payment and penalty of 10% of  

the land cost at the prevailing rate. The same is the  

concession given by the Corporation to the respondent  

as  it  could  not  have  restored  the  provisional

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allotment  of  the  plot  as  the  said  restoration  of  

allotment  was  totally  impermissible  in  law.  The  

concession was made in favour of the respondent by  

executing  the  agreement  of  sale  of  the  plot  on  

13.3.2007  and  the  possession  of  the  plot  was  also  

given on the same day and within two years from the  

date of possession of the said plot the project should  

have been implemented by the respondent. Despite the  

change of manufacturing activity from mosquito coil to  

heavy engineering project and bus-body manufacturing  

unit,   the  project  was  not  implemented  by  the  

respondent  within  the  said  period.  Therefore,  the  

terms  and  conditions  of  the  provisional  allotment  

letter and the agreement of sale executed on 13.3.2007  

are  violated  by  it,  therefore,  the  Corporation  was  

entitled to cancel the allotment of plot and resume  

the land from the respondent, instead of doing so, the  

Corporation has again made concession by calling upon  

the respondent to pay the condonation fee at 3% which  

is  totally  impermissible  in  law.  The  same  was  

challenged  by the  respondent taking  untenable stand  

that it is not liable to pay the same in view of the

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fact that the plot cost with interest on delayed plot  

cost  and  10%  penalty  has  already  been  paid  to  the  

Corporation and the Corporation is not empowered to  

levy 3% of the land cost as condonation fee for delay  

in  implementation  of  the  revised  project.  If  that  

condition was not acceptable to the respondent, the  

only course left open for Corporation was to cancel  

the allotment and resume the land and allot the same  

in favour of an eligible applicant in accordance with  

the rules prevailing in law in this regard by giving  

advertisement  in  the  newspapers  and  inviting  

applications for allotment of the project in public  

auction, as the property is required to be sold in the  

above manner to get the market value of the industrial  

plot in the absence of allotment Rules is the law laid  

down  by  this  Court  in  catena  of  cases.  Instead  of  

doing so, the Corporation has proceeded with to issue  

the demand notice of 3% of the plot cost towards the  

condonation  fee  for  delay  in  implementation  of  the  

project. The same was not acceptable to the respondent  

and therefore it has approached the High Court seeking  

to quash the same contending that the Corporation has

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no right to demand such fee and therefore, it is not  

liable to pay condonation fee to the Corporation. The  

High  Court  should  not  have  passed  the  impugned  

judgment  and  order  quashing  the  demand  notice  and  

giving direction to the Corporation to register the  

sale deed in respect of the plot in favour of the  

respondent,  undisputedly  the  respondent  has  not  

implemented the revised project within 2 years from  

the date of agreement though it was put in possession  

of  the  plot  and  granting  permission  to  change  the  

manufacturing activity and extended the period. Hence,  

the impugned judgment and order of the single Judge  

which was affirmed by the Division Bench of the High  

Court is liable to be set aside. Liberty is also given  

to the Corporation to take necessary action to invoke  

the relevant clauses of agreement of sale to cancel  

the allotment of allotted plot and resume the same by  

issuing notice to the respondent. It is also brought  

to our notice by the learned counsel Mr. Annam D.N.  

Rao on behalf of the respondent that the Corporation  

has extended time in favour of nearly more than 150  

similarly placed plot allottees for not implementing

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the projects within 2 years and extending period by  

collecting  interest  and  10%  penalty  amount  on  the  

allotment cost on provisional allotment of land but no  

condonation of delay fee for non-implementation of the  

project  was  levied  and  collected  from  them  and  

therefore, the action of the Corporation is arbitrary  

and discriminatory.  

22. In view of above submissions, we are of the view  

that the Corporation is not diligent  in disposing of  

the industrial plots acquired by it in accordance with  

law  in favour of the eligible applicants keeping in  

view after acquiring the land of the owners for the  

purpose of the development of industrial estate and  

allot the same in favour of eligible persons to start  

industries  on  the  allotted  plots  to  generate  

employment  to  provide  employment  to  the  unemployed  

youth in the State.  Having regard to the facts and  

circumstances  of  the  case,  the  Corporation  and  its  

officers are very generous in extending time in favour  

of the allottees for implementing the projects on the  

allotted  plots  and  not  invoking  its  right  for  

cancellation and resuming the plot for non-compliance

Page 22

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with the terms and conditions of allotment letter and  

agreement and    re-allot the same in public auction  

in favour of eligible persons. Therefore, it is a fit  

case for this Court to give direction to the CoD of  

the  Telangana  State  to  conduct  a  detailed  

investigation in the matter against all the officers  

who are involved in the cases of allotment of plots  

and extending the period in favour of the allottees  

for implementation of the projects for which purpose  

the  plots  are  allotted  and  not  cancelling  the  

allotments  made  by  the  Corporation  and  resumed  the  

plots and dispose of the same in accordance with law  

by taking steps. The CoD, Police must investigate the  

cases in the Corporation and take suitable action in  

this regard against officers involved in such cases.

Page 23

C.A. @ SLP (C) No.34955 of 2013                                      23

23.  With the aforesaid observation and direction to  the State Government and CoD, Police, the appeal is  

allowed, the impugned judgments and orders of both  

the learned single Judge and the Division Bench of  

the  High  Court  are  set  aside.  The  Corporation  is  

directed  to  withdraw  the  demand  of  condonation  of  

delay fee issued to the respondent and take further  

action for resumption of the plot allotted to the  

respondent. The CoD/CID of the State Government of  

Telangana  represented  by  its  Inspector  General  of  

Police or Director General or whomsoever concerned,  

is directed to conduct investigation and conclude the  

same and submit the report before the jurisdictional  

court within four months from the date of receipt of  

the copy of this judgment. The Registry is directed  

to send the copies to them and submit its compliance  

report for perusal of this Court.

                           ……………………………………………………………J.    [V. GOPALA GOWDA]

                             …………………………………………………………J.   

 [R. BANUMATHI] New Delhi, February 25, 2015