* SMT JUSTICE T. RAJANI

+ WRIT PETITION No.6440 of 2018

% 15.11.2019

Automotive Manufacturers Pvt. Ltd., Rep. by its authorized signatory, Mr.T.R.Ganesh Iyer.

… Petitioner

Vs.

$ The Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC), rep. by its Managing Director and others …. Respondents

! Counsel for the petitioners: Sri Dammalapati Srinivasa Rao

Counsel for the Respondents: Sri Ugra Narasimham, Standing Counsel for respondents 1 and 2 Government Pleader for Industries & Commerce for respondent No.3.

<Gist :

Head Note:

? Cases referred:

1. 1999(2) SCC 37

2. (2018) 6 SCC 410

3. Judicial Review of Administrative Action (1995), para 13.085, pp.601-605.

HIGH COURT OF ANDHRA PRADESH

+ WRIT PETITION No.6440 of 2018

Between:

Automotive Manufacturers Pvt. Ltd., Rep. by its authorized signatory, Mr.T.R.Ganesh Iyer.

… Petitioner

Vs.

$ The Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC), rep. by its Managing Director and others

…. Respondents

Date of order Pronounced: 15.11.2019

Submitted for Approval:

SMT JUSTICE T. RAJANI

1.	Whether Reporters of Local newspapers<br>may be allowed to see the judgments ?	Yes/No
2.	Whether the copies of judgment may be<br>marked to Law Reporters/Journals	Yes/No
3.	Whether Their Ladyship/Lordship wish to<br>see the fair copy of the Judgment ?	Yes/No

_____________ T. RAJANI, J

SMT JUSTICE T.RAJANI

WRIT PETITION No. 6440 of 2018

ORDER:

The petitioner moved this court by way of this writ petition seeking to declare the cancellation order bearing Lr.No.IP/MNGLR/ Automotive/2006/1197, dated 29.08.2016, and the Cancellation cum Resumption Notice bearing Lr.No.ZO/GNT/IP-MNGLR/Automotve/2006/357, dated 06.02.2018, issued by the 2 nd respondent, as illegal and arbitrary.

2. The brief facts, which lead to the filing of this writ petition, are as follows:

The petitioner company is one of India's largest automobile dealers. As a part of the petitioner's company expansion programme, to set up state of the art facilities including showrooms and workshops for the petitioner's customers across the State of Andhra Pradesh, representations were made to the 1st respondent in the year 2006-07 for allotment of lands. In the same year, several parcels of lands were allotted to the petitioner company by the 1st respondent across various regions in the erstwhile united Andhra Pradesh. In Mangalagiri, Guntur District, an undeveloped parcel of land, admeasuring an extent of Ac.3-00 at Survey No.39(part) & 49(part) situated at Industrial Park, Mangalagiri, was allotted to the petitioner. The Provisional allotment was made by the 2nd respondent, dated 06.12.2006, stating that the land should be utilized for the purpose of setting up of a unit for the servicing and stocking of the automobile vehicles. At the time of

allotment, the plot did not have road activity, no sewerages, no electricity and water connection. Six months later, an agreement of sale for the said land was executed on 21.05.2007. As a condition precedent to the petitioner being placed in the possession of the land, the petitioner paid Rs.1,45,69,200/-. It was further stated that the allotted land would be utilized exclusively for setting up of an automobile service centre and that the said project shall be implemented within two years of the petitioner being put in possession of the said plot. A possession certificate dated 21.05.2007 was also issued to the petitioner. The petitioner company was allotted around 11 plots of lands across the erstwhile state of united Andhra Pradesh for the construction of similar such automobile workshops and showrooms. By the year 2009, three of the projects were already implemented and were functional. However, given the global economic meltdown the automobile sector across the globe was hit and there was a slowdown in the sale and purchase of automobiles. Hence, the project was delayed at Mangalagiri. Petitioner approached the office of VC & MD of the 1st respondent by a letter dated 12.02.2009 explaining the reasons for the delay and requesting for rescheduling the uncompleted projects. Regarding the plot at Mangalagiri, an extension of time till 2012 was sought to implement the project. It was also requested that as the petitioner would be raising loans for the execution of the projects, it was pertinent that the sale deeds for the same be executed, in order to gain financial assistance. Vide a reply, dated 16.03.2009, the 1st respondent considered the request of the petitioner and agreed to

execute the sale deeds. As such, the sale deed was executed on 26.03.2009 for the plot at Mangalagiri. But for the reasons best known to the 2nd respondent, original sale deed was kept with it. The petitioner initiated preliminary activity on the plot subsequent to the sale deed. In the year 2011, the petitioner approached the Zonal Office of the 1 st respondent vide letter, dated 28.10.2011, for their approvals for setting up the automobile service centre. On 20.03.2012, i.e., six months later the petitioner received a reply from the Divisional Zonal Manager, Autonagar, Guntur, stating that with regard to the petitioner's plot of land, the layout boundaries were revised and hence he asked the petitioner to submit revised building plans along with a rectification deed for the said plot of land. No copy of the revised plans was provided nor was there any information as to whom the petitioner approached for the revised lay out plans. Subsequent to the reply dated 20.03.2012, the representatives of the petitioner were constantly following up with the 2nd respondent for procuring the revised lay out plans. But there was no response from the 2nd respondent office and as a result, the extended time period till 2012 has also lapsed. The petitioner plans of procuring financial assistance were also stalled as the 2nd respondent retained the original sale deed and refused to provide the same to the petitioner's banker. Vide letter, dated 08.07.2013, the petitioner's banker requested the respondent to furnish the sale deeds, but there was no response to the said letter. On 09.01.2015, the petitioner received a consent from the AP Pollution Control Board. On 29.05.2015, the final building plan approvals were issued by the

Commissioner. The petitioner company initiated construction activity. As things stood thus, and as construction activity was underway, the officials of the 1st respondent in the month of August visited the plot and stalled the construction activity. When the petitioner's representatives visited the 2nd respondent, they were informed that their allotment was being cancelled and hence, they should not undertake any construction activity. The final show cause notice was issued on 13.04.2016 by the 2nd respondent referring earlier show cause notice, dated 14.09.2015, which was not received by the petitioner. Vide letter, dated 05.05.2016, the petitioner sought for extension of time but to the petitioner's dismay, instead of affording the petitioner an opportunity to explain the situation, the respondent issued cancellation orders on 29.08.2016. The petitioner was also directed to pay the damages. In response to the cancellation notice, the petitioner issued a reply, dated 06.09.2016, explaining the difficulties. The representatives of the petitioner were called to the office of the 2nd respondent and were informed to submit a separate representation for the issuance of specific orders for extension of time. As such, a representation, dated 19.09.2016, was submitted to the 1st and 2nd respondents. But in the month of November, 2016, some unknown persons entered the premises and started taking measurements. On enquiry, it was informed that to enter and take measurements, the 2nd respondent had granted permission. This issue was immediately addressed to the 2nd respondent, but there was no response from the 2nd respondent. Another application, dated 30.11.2016, was made

for extension of time, but there was no response. While so, on 06.02.2018, the petitioner received the impugned cancellation cum resumption notice, which is totally illegal. Even after the execution of the sale deed, the sale deed was retained by the 2nd respondent, due to which financial assistance could not be secured by the petitioner and as a result there was a delay in the construction activity. Hence, this petition seeking to declare the cancellation orders as illegal.

3. The respondents filed counter contending that the respondents has considered the request of the petitioner for execution of the sale deed, which is subject to complying the conditions of implementation. The conditions of the sale agreement, in which the Project was agreed to be completed within two years was made part of the sale deed and is valid under Section 31 of the Transfer of Property Act, 1882 (for short, "the Act"). The petitioner requested for releasing the original sale deed to ICICI Bank for taking financial assistance for further expansion of their unit and also requested the ICICI Bank to send the original sale deed for process of their request for extending financial assistance for further expansion of their projects. The letter of the bank does not say that the loan is sanctioned for implementation of the unit in this plot. The cancellation cum resumption notice was issued on 06.02.2018 and the plot was resumed on 28.02.2018 due to non implementation of the unit even after nine years from the date of taking possession. Hence, the writ petition is liable to be dismissed.

4. Heard the arguments of Sri Dammalapati Srinivasa Rao, learned senior counsel appearing for the petitioner; Sri Ugra Narasiham, learned standing counsel appearing for respondent Nos.1 and 2; and the learned Government Pleader for Industries and Commerce appearing for respondent No.3.

5. There is no dispute that following the allotment letter, there was a sale agreement between the parties and consequent to the sale agreement, a sale deed was executed. Now the respondents issued the cancellation-cum-resumption order allegedly consequent to the failure of the petitioner to fulfill the condition incorporated in the agreement, which is that the project has to be completed within a period of two years of being put in possession of the land.

6. The contention of the petitioner's counsel is that unless the clause mentioned in the sale agreement is super added in the sale deed, the respondents would not have any right to cancel the sale deed unilaterally, which has the effect of absolute transfer of interest in the property comprised by the sale deed. On the other hand, the respondents' counsel submits that the agreement containing the said clause of two years completion is made part of the sale deed and hence, the cancellation of the sale deed and resumption of the land is proper.

7. Before interpreting the sale deed, the judgments relied upon by the counsel can be looked into.

8. The standing counsel for the respondents 1 and 2 relies on the judgment of the Supreme Court in INDU KAKKAR VS. HARYANA STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD., AND ANOTHER¹. The facts of the case dealt with in the above said judgment are that the agreement was entered into between Industrial Corporation and the allottee for setting up of an Industry. But later on, as the allottee was evacuated from the scene after inducting someone else into the plot without the consent of the corporation, it is not legally permissible for the inductee to compel the corporation to recognise him as an allottee. In that background of facts, the court held that the subsequent party, who was inducted into the plot, does not have locus standi and hence, he cannot question the cancellation of the allotment. Dealing with Section 32 of the Act, the court held that the condition that the Industrial Unit shall be established within a specified period, failing which the interest shall cease, is a valid condition as per Section 32 of the Act.

$\overline{9}$ The Judgment relied upon by the counsel for the petitioner is rendered in the case of ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED AND OTHERS VS. S.N.RAJ KUMAR AND ANOTHER². In the said judgment, the petitioner therein was issued an allotment letter with a stipulated condition. But in the sale deed, no such condition was imposed. The court relied on INDU KAKKAR'S case and discussed the finding given on Section 32 with regard to the condition that is incorporated in

$1999(2)$ SCC 37

$^{2}$ (2018) 6 SCC 410

the agreement. Distinguishing the case with which the Supreme Court was dealing with, from INDU KAKKAR'S case, the Supreme Court observed that there was no such stipulation in the agreement of sale or the sale deed and it was only in the allotment letter. Hence, as the two cases differ on facts, the court held that the agreement of sale and the sale deed did not contain the condition super added. The court also observed that the respondents have directed the petitioners therein to pay 50% of the prevailing market value for condoning the delay in construction. The said demand was also found to have no legal basis when it is tested on the doctrine of proportionality. While dealing with the doctrine of proportionality, the Supreme Court held that in the realm of Administrative Law, "proportionality" is a principle where the court is concerned with the process, method or manner in which the decision maker has ordered his priorities and reached a conclusion or arrived at a decision. It also held that the very essence of decision making consists in the attribution of relative importance of the factors and considerations in the case; the Doctrine of proportionality thus steps in focus true nature of exercise - the elaboration of a rule of permissible priorities. De Smith ³also states that "proportionality" involves "balancing test" and "necessity test"; the balancing test permits scrutiny of excessive onerous penalties or infringement of rights or interests and a manifest imbalance of relevant considerations.

$10.$ In the above background, if the facts of this case are examined, it can be seen that the agreement was entered into on $21.05.2007$ ,

^&lt;sup>3</sup> Judicial Review of Administrative Action (1995), para 13.085, pp.601-605.

while the sale deed was executed after almost two years of the sale agreement i.e., 26.03.2009. The sale deed was executed, admittedly, in pursuance of the request made by the petitioner to raise financial assistance from the Banks. The contention of the respondents' counsel that the agreement is made part of the sale deed does not have valid ground, as the condition in the agreement of sale is to complete the project within two years from the date on which the party is put in possession of the said plot. There is no dispute with regard to possession being delivered on the date of agreement itself. Hence, by the date of sale deed, the said two years period has almost elapsed. Simply by mentioning the agreement in the sale deed, it cannot be said that there was an intention on the part of the seller to incorporate all the terms of the sale agreement in the sale deed. It does not, in clear terms, specify that the terms of the sale agreement are made part of the sale deed. It only mentions that under the agreement, the party shall use the land for the purpose of putting up a factory or factories duly permitted by the respondents and other than factory building or buildings, no other structure shall be put on the land. It does not specify that it has to be completed within two years. The fact that the petitioner could complete some of the projects allotted to it is not disputed. It is also not disputed that the petitioner has requested the respondents along with ICICI Bank vide letter dated 08.07.2013 to forward the original sale deed. But except stating that the petitioner has not taken any steps for implementation, the counter does not answer the contention that the sale deed was not delivered to the petitioner in spite of repeated

requests. The learned counsel for the respondents is not in a position to state whether there was any response given to the petitioner in respect of the letter received from the ICICI Bank.

11. With regard to the waiver of the respondents in sticking to the time of completion of the project, the counsel relies on a judgment of the High Court of Andhra Pradesh reported in M/S.A.B.C.INDIA LIMITED $\mathbf{AND}$ OTHERS $VS.$ THE A.P.INDUSTRIAL INFRATRUCTURE CORPORATION LIMITED AND OTHERS⁴, wherein at paragraph 31 it was noted that after APIIC issued notices in 2006, petitioners obtained building permission from IALA and commenced construction. The said allegation is not traversed in the counter affidavits. When the petitioners did not commence the civil construction allegedly as stipulated in the allotment letter and sale agreement, nothing prevented APIIC to cancel the allotment. They did not do so. Indeed they executed sale deed in favour of the petitioners. Therefore, they waived the right if any as a contracting party. Therefore, the cancellation is arbitrary and cannot stand to court's scrutiny. The reliance placed by the APIIC on INDU KAKKAR'S case was not accepted by the court saying that the same has no application.

12. The facts of this case are similar to the facts dealt with in the above said ruling. As already observed, execution of sale deed, almost at the end of expiry of two years period specified in the sale agreement, would amount to nothing but waiver on the part of the APIIC as regards the time schedule for completion of the project. Hence, in view

^&lt;sup>4</sup> 2010 SCC Online AP 1198

of the above, this court deems it fit to declare the impugned cancellation order as well as the cancellation cum resumption notice issued by the 2nd respondent, as arbitrary and illegal.

13. The counsel for the petitioner submits across the bar that if the respondents 1 and 2 hand over the sale deeds, the petitioner would be able to complete the project within a period of six months. Considering the said submission, there shall be a direction to the respondents 1 and 2 to handover the original sale deeds to the petitioner within a period of 15 days from the date of receipt of this order.

14. With the above directions, the Writ Petition is allowed setting the aside the cancellation order bearing Lr.No.IP/MNGLR/ Automotive/2006/1197, dated 29.08.2016, and the Cancellation cum Resumption Notice bearing Lr.No.ZO/GNT/IP-MNGLR/Automotve/2006/357, dated 06.02.2018, issued by the 2 nd respondent. The respondents 1 and 2 are directed to handover the original sale deeds to the petitioner within a period of 15 days form the date of receipt of a copy of this order.

As a sequel, the miscellaneous applications pending, if any, shall stand closed.

______________ T. RAJANI, J

November 15, 2019 LMV

JUSTICE T.RAJANI

WRIT PETITION No. 6440 of 2018

November 15 , 2019

LMV