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Non-Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 361  OF 2016 (Arising out of  SLP (C) No. 10951 of 2014)

M/s Metal Seam Co. of  India (P) Ltd. …Appellant

Vs.

M/s Avadh Delicacies & Others          …Respondents

J U D G M E N T

Uday U. Lalit, J.

1. Leave granted.

2. This  appeal  challenges  the  judgment  and  order  dated

28.03.2014 passed by the High Court of Judicature at Allahabad,

Lucknow  Bench,  Lucknow  in  Writ  Petition  No.1840  of  1998

whereby  the  High  Court  was  pleased  to  set-aside  the  orders

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dated  09.06.1998  and  15.06.1998  passed  by  the  General

Manager, District Industries Centre, Lucknow.

3. The facts in the present matter are as under:- a) In 1956, Shed No.B-5 inclusive of appurtenant open space

situated  in  Talkatora  Industrial  Estate,  Lucknow  (hereinafter

referred to as the “concerned shed”) was allotted to M/s Surya

Chemicals for establishment of a factory. Under the Hire Purchase

agreement entered into between M/s Surya Chemicals and the

Director of Industries on behalf of the Government of U.P., it was

expressly stipulated in Condition No.4 as under:-

“Not  to  sell,  mortgage,  assign  or  otherwise transfer  the  factory  building  except  with  the previous permission in writing of the Director of Industries,  U.P.  till  the price has been fully paid and  the  transfer  as  aforesaid  shall  be  as  such conditions as the Director of Industries, U.P., may lay down while granting such permission.”

b) The  present  Appellant  was  allotted  the  adjoining  shed

namely B-6 in the year 1968 and in due course of time it started

manufacturing  containers  and  drums.  As  the  business  of  the

Appellant expanded, it required additional premises. Around this

time M/s Surya Chemicals was in arrears in making payment of

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instalments in respect of the concerned shed. At one stage the

allotment in its favour was cancelled but on an assurance that it

would start production, it was given time and the allotment was

restored.  The  Appellant  approached  the  Joint  Director  of

Industries for  allotment of  the concerned shed on payment of

entire cost. c) Since M/s Surya Chemicals was in default, the Joint Director

of  Industries  recommended  cancellation  of  allotment  of  the

concerned shed and wrote to the General Manager to take the

appropriate steps after  taking legal  opinion in the matter.  The

General  Manager  however  by  his  order  dated  01.12.1983

recommended transfer of the concerned shed in favour of Avadh

Delicacies, Respondent No.1 herein. Respondent No.1 was a new

firm provisionally registered as a Small Scale Industries unit with

the General Manager.  The order was passed on an application

moved  by  M/s  Surya  Chemicals  for  transfer  of  the  concerned

shed to Respondent No.1. d) On 25.02.1984 the Joint Director of Industries accepted the

transfer  application moved by M/s Surya Chemicals  permitting

the transfer of the concerned shed in favour of Respondent No.1.

This  led  to  the filing  of  Writ  Petition  No.1166 of  1984 by  the

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Appellant  in  the  High  Court.   It  was  submitted  that  the

application for transfer ought to have been considered along with

other  pending  applications  and  when  the  application  of  the

Appellant was pending there was no question of accepting the

transfer as proposed by M/s Surya Chemicals.

e) That  writ  petition  was  allowed  by  the  High  Court  by  its

judgment  and  order  dated  04.03.1987.   It  was  observed  as

under:-

“In the instant case, from the above facts, it is obvious that the allotment which has been permitted without considering  other  applications,  is   unreasonable  and lacks good faith and could not be said to be in public interest.  The order  passed by the State Government effecting  the  order  of  transfer  in  favour  of  opposite party  No.6  is  unreasonable  and  invalid.  In  these circumstances, the allotment order passed in favour of opposite party No.6 cannot be allowed to stand.

The writ  petition is  accordingly allowed and a writ  of certiorari  is  issued  quashing  the  order  dated 25.02.1984, passed by the Joint  Director of Industries (Annexure-14) and the order dated 23.02.1984, passed by the State Government contained in Annexure-13 to the  writ  petition.   However,  it  will  be  open  to  the opposite parties to consider the merits of the case of the petitioner and that of opposite party No.6 and in case the opposite party No.6 in  fact  has started any production regarding which there is dispute and doubt, his claim would be given due consideration and in any view the opposite parties will, so far as possible, allot any other shed to opposite party No.6 if circumstances

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warrant  that  he  should  not  get  and keep possession over shed No.5-B.”

f) Thus the order of transfer in favour of opposite party No.6

i.e. Respondent No.1 was quashed.  The authorities were directed

to  consider  the  merits  of  the  case  of  the  Appellant  and

Respondent No.1 and in case the claim of Respondent No.1 was

to be accepted,  its claim could inter-alia be considered in respect

of any other shed.   

g)  The aforementioned judgment and order dated 04.03.1987

was challenged by Respondent No.1 in this Court by filing Civil

Appeal No. 3062 of 1987 and during its pendency nothing could

be done.  It appears that on 25.09.1997 Shed No.C-1 in the very

same Industrial Estate came to be allotted to the Appellant.  On

29.09.1997  the  aforesaid  civil  appeal  was  dismissed  for

non-prosecution by this Court and such dismissal  has attained

finality.

h)  Soon thereafter the matter was taken up for consideration.

On 20.03.1998 a notice was issued to the Respondent No.1 to

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present  its  case  along  with  necessary  record  relating  to  the

concerned shed.  A further notice in that behalf was again issued

to Respondent No.1 on 27.03.1998.  Similar  notices were also

issued to the Appellant and M/s Surya Chemicals.  

i) In the meeting of Zila Udyog Bandhu held on 20.05.1998,

the  matter  concerning  allotment  of  concerned  shed  was

considered.  It was observed that in the year 1997 Shed No.C-1

was already allotted in favour of the Appellant.  The committee

however concluded as under:- “Having considered the entire facts of the above case and after  due deliberations,  the Chairman has taken the  decision  that  Shed  No.  B-5  was  allotted  to  M/s Surya Chemicals in the year 1965 and the possession of the shed was handed over on 01.01.1966 but they have  not  commenced  any  work  at  their  own  and transferred Shed No. B-5 to M/s Avadh Delicacies.  M/s Surya Chemicals is not interested in setting up of unit and started production, therefore, the committee has taken the decision to cancel the allotment of Shed No. B-5 to M/s Surya Chemicals and make its allotment in favour of M/s Metal Seam Company of India under the provisions  of  Government  Order  No. 1888/18-2-92-25(3)/92 dated 30.4.1992 as per rules.”

j) On 09.06.1998 General Manager, District Industries Centre,

Lucknow  issued  a  letter  cancelling  the  allotment  of  the

concerned  shed  which  was  made  in  favour  of  M/s  Surya

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Chemicals and re-claimed the possession of the concerned shed.

Further, by order dated 15.06.1998 the General Manager, District

Industries Centre, Lucknow allotted the concerned shed to the

Appellant.  M/s Surya Chemicals did not challenge the order of

cancellation  dated  09.06.1998.   However,  Respondent  No.1

challenged the said order by filing Writ Petition No.1840 of 1998

in the High Court.  During the pendency of the writ petition, there

was an order of status quo which continued till the disposal of

the writ petition.  It appears that on 10.03.2006 another shed in

the same Industrial Estate being Shed No.C-2 was allotted to the

Appellant  herein.   The  Appellant  since  then  has  been  having

allotment of three sheds, namely, B-6, C-1 and C-2 in its favour.   

k) In the aforesaid writ petition a supplementary affidavit was

filed by General Manager, District Industries Centre in January,

2000 stating as under:

“That this Hon’ble Court on 13.09.1999 (when the instant  case  was  listed)  was  pleased  to  enquire whether the petitioner’s case was considered or not for allotment of industrial plot in question in view of the judgment  of  this  Hon’ble  Court  dated  04.03.1987 passed in Writ Petition No. 1166 of 1984 (MB) (Metal Seams Co. of India v. State of UP & Ors.) in this regard it  is  submitted  that  in  paragraph  23  of  the  counter

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affidavit  filed  in  the  instant  writ  petition  i.e.  Writ Petition No. 1840 of 1998(MB) dated 19.03.1999 it has been specifically asserted that  after  the dismissal  of the  SLP  against  the  judgment  and  order  dated 04.03.1987 the steps were taken by the Department for  the  assessment  of  the  comparative  need  of  the conflicting parties in respect of shed in question.  In the said paragraph it  was further stated that all  the parties namely (1) M/s Surya Chemicals, (2) M/s Metal Seams Co. and (3) M/s Avadh Delicacies were called vide letters dated 20.03.1998 and 27.03.1998 by the committee consisting of (1) General Manager, District Industries  Centre,  Lucknow,  (2)  Director,  Central Design Centre, Lucknow and (3) Project Manager in the office of Joint Director Industries, Lucknow.  The said letters were annexed as annexure Nos. (A-3 and A-4) to the said counter affidavit.   

l) The record placed before us indicates that Respondent No.1

had initially got registration to manufacture ayurvedic medicines

in the year 1987.  However, in the year 1992 it had obtained

licence to run a Flour Mill and to deal in and store food grains.

On 25.06.1997 Respondent  No.1 had written to  the Trade Tax

Officer, Lucknow as under:

“1. The firm of the applicant is registered with your office under State Trade Tax Act vide Registration No. LKO-0366347 dated 17.05.1992.

2. That  the  trader  has  closed  down  his  business because of the loss in it.

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3. That Form No.15 and 19 are already submitted in the office.

Hence,  the  applicant  urges  that  the  notice  of closure  may  be  admitted  and  the  firm  may  be permanently closed.”                                  

(m)    The aforementioned Writ Petition No.1840 of 1998 came to

be allowed by the High Court by its judgment and order dated

28.03.2014.  The  High  Court  observed  that  Annexure  No.R-16

placed on its record by way of rejoinder affidavit, disclosed that

Respondent No.1 was running an industry for manufacturing PVC

pipes and accessories and its production had also started. It was

further observed that the order of allotment dated 15.06.1998 in

favour  of  the  Appellant  was  passed  without  giving  any

opportunity  of  hearing  or  issuing  any  show  cause  notice  to

Respondent No.1 and without complying with the directions in

the  order  dated  04.03.1987.  The  High  Court  also  stated  that

order dated 15.06.1998 was not sustainable in as much as it was

issued without any public auction or inviting tenders.

4.   This appeal by special leave challenges the judgment and

order  passed  by  the  High  Court  setting  aside  the  order  of

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allotment dated 15.06.1998.   In support of the appeal, Mr. H.P.

Raval, learned Senior Advocate submitted that the notices dated

20.03.1998  and  27.03.1998  clearly  indicate  that  requisite

opportunity  was  afforded  to  Respondent  No.1,  that  record

indicated that the cases of all three claimants including that of

Respondent No.1 were considered before letter  of  cancellation

dated  09.06.1998  was  issued,  that  cancellation  was  never

challenged by M/s Surya Chemicals  and that Respondent No.1

had  no  stateable  claim  in  respect  of  the  concerned  shed.

Appearing for Respondent No.1, Mr. Guru Krishna Kumar, learned

Senior  Advocate  submitted  that  in  keeping  with  the  direction

issued in the judgment and order dated 04.03.1987 the claim of

Respondent  No.1  was  required  to  be  considered,  which  is  a

matter  of  fact,  was  not  considered  at  all  and  that  the

requirement  of  the  Appellant  stood  completely  satisfied  by

allotment of two sheds namely C-1 and C-2 during the pendency

of the proceedings.

5. We have considered the submissions and gone through the

record.  The Appellant  is  right  in  its  submissions that  requisite

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notices were issued to Respondent No.1 and that it was afforded

adequate opportunity. The observations of the High Court in that

behalf are not quite correct. The supplementary affidavit filed in

January  2000 made the  position  quite  clear.  The petition  was

therefore wrongly allowed on the ground that no opportunity was

given to Respondent No.1. We have also seen the record and are

satisfied that Respondent No.1 had closed its operation in the

year 1997.  According to annexure No. R-16 placed along with

the  rejoinder  affidavit,  an  inspection  report  was  apparently

prepared.   That  report  is  a  solitary  piece  in  support  of  its

submissions  of  having  started  manufacturing  activity.  Nothing

has been placed on record,  no licence is  adverted to nor is it

shown  how  and  in  what  manner  Respondent  No.1  started  its

activity of manufacturing PVC pipes.  Nothing was filed or placed

on record pursuant to notices dated 20.03.1998 and 27.03.1998.

We do not  find any merit  in  the submissions that Respondent

No.1 has been conducting any activity of manufacturing of PVC

pipes. The claim of Respondent No.1 must therefore be rejected.

At  the  same  time  it  is  absolutely  clear  on  record  that  the

Appellant has been having allotment of three sheds namely B-6,

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C-1 and C-2 in its favour in the same Industrial Estate. No special

equities are in its favour and no case is therefore made out for

allotment of concerned shed to the Appellant.   The observation

of the High Court that the order dated 15.06.1998 was issued

without any public auction or inviting tenders and as such was

completely unsustainable, in our view is absolutely correct.

6.  In  the  circumstances  we  allow  the  present  appeal  with

following directions:-

(a)    The claim of Respondent No.1 was rightly rejected while

cancelling allotment made in favour of M/s Surya Chemicals vide

letter of cancellation dated 09.06.1998. The order of cancellation

dated  09.06.1998  is  sustained  and  shall  be  fully  operative.

Respondent No.1 who has been in  wrongful  occupation of  the

concerned shed must surrender the possession immediately. The

authorities are directed to recover the possession forthwith and

report compliance to this Court.

(b)  In view of the change in circumstances namely allotment of

sheds C-1 and C-2 in its favour, the Appellant is not entitled to

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claim any special equity. The order of allotment dated 15.6.1998

passed in its favour therefore stands set aside.

(c)   The authorities  are  directed  to  conduct  public  auction  or

invite tenders for allotment of the concerned shed at the present

market value.  Needless to mention that the present Appellant

and Respondent No.1 or any other person is free to participate in

such public auction or tender.

7.     This appeal thus stands allowed and the judgment of the

High Court under appeal stands modified to the aforesaid extent.

No order as to costs.

……………………………J. (V. Gopala Gowda)

……..………………..……J. (Uday Umesh Lalit)

New Delhi, January 19, 2016

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ITEM NO.1E-For Judgment       COURT NO.10             SECTION XI                S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS C.A.  No.361/2016  @  Petition(s)  for  Special  Leave  to  Appeal  (C) No(s).  10951/2014 M/S.METAL SEAM CO.OF INDIA (P)LTD.                 Petitioner(s)                                 VERSUS M/S.AVADH DELICACIES & ORS.                        Respondent(s) Date : 19/01/2016 This appeal was called on for pronouncement of JUDGEMENT today. For Petitioner(s)                      Mr. Anil Kumar Mishra,Adv.                      For Respondent(s)                      Mr. Gaurav Dhingra,Adv.

Mr. Akshit Gadhok, Adv.                      Mr. Munawwar Naseem,Adv.                      

Hon'ble  Mr.  Justice  Uday  Umesh  Lalit  pronounced the  judgment  of  the  Bench  comprising  Hon'ble  Mr. Justice V. Gopala Gowda and His Lordship.

Leave granted. The  appeal  is  allowed  in  terms  of  the  signed

non-reportable judgment.   

(VINOD KUMAR) COURT MASTER

(MALA KUMARI SHARMA) COURT MASTER

          (Signed Non-Reportable Judgment is placed on the file)