Karnataka High Court
The Karnataka Industrial Areas … vs K V Forgings Pvt Ltd on 16 December, 2024
Author: M.G.S. Kamal
Bench: M.G.S. Kamal
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF DECEMBER, 2024
BEFORE
THE HON'BLE Mr. JUSTICE M.G.S. KAMAL
RSA No.1884 OF 2021 (GM-RES)
BETWEEN:
1. THE KARNATAKA INDUSTRIAL
AREAS DEVELOPMENT BOARD
PRESENTLY AT NO.49,
4TH AND 5TH FLOOR,
KHANIJA BHAVAN,
RACE COURSE ROAD,
BENGALURU-560 001
REPRESENTED BY ITS CHIEF
EXECUTIVE OFFICER AND EXECUTIVE MEMBER,
(FORMERLY AT NO.14/3,
2ND FLOOR, RASHTROTHANA PARISHAT
BUILDING, NRUPATHUNGA ROAD
BENGALURU-560 002
REPRESENTED BY ITS EXECUTIVE MEMBER.
2. CHIEF EXECUTIVE OFFICER AND
THE EXECUTIVE MEMBER
KARNATAKA INDUSTRIAL AREAS
DEVELOPMENT BOARD NO.49,
4TH AND 5TH FLOOR, KHANIJA BHAVAN,
RACE COURSE ROAD, BENGALURU-560 001.
(FORMERLY THE EXECUTIVE MEMBER,
THE KARNATAKA INDUSTRIAL
AREA DEVELOPMENT BOARD,
NO.14/3, 2ND FLOOR, RASHTROTHANA
PARISHAT BUILDING, NRUPATHUNGA ROAD,
BENGALURU-560 002.
...APPELLANTS
(BY SRI. S.S. NAGANAND SENIOR COUNSEL FOR
SRI. B.B. PATIL, ADVOCATES)
2
AND:
K V FORGINGS PVT LTD.,
A COMPANY REGISTERED
UNDER THE COMPANIES ACT 1956,
HAVING ITS REGISTERED OFFICE
AT NO.198/1, LINK ROAD,
SHESHADRIPURAM, BENGALURU-560 020
REPRESENTED BY ITS MANAGING DIRECTOR,
SRI K. VITTAL RAO, S/O KRISHNAJI RAO,
AGED ABOUT 89 YEARS.
...RESPONDENT
(BY SRI. JEEVAN KUMAR B.S. ADVOCATE FOR C/R)
THIS RSA IS FILED UNDER SECTION 100 OF CPC, AGAINST
THE JUDGMENT AND ORDER DATED 13.01.2021 PASSED IN
RA.NO.31/2009 ON THE FILE OF THE IX ADDITIONAL DISTRICT AND
SESSIONS JUDGE, BENGALURU RURAL DISTRICT, BENGALURU,
ALLOWING THE APPEAL AND SETTING ASIDE THE JUDGMENT AND
DECREE DATED 20.12.2008 PASSED IN O.S.NO.154/2006 (OLD CASE
NO.223/1997) ON THE FILE OF THE CIVIL JUDGE (SR.DN) AND JMFC,
ANEKAL.
THIS APPEAL HAVING BEEN RESERVED FOR JUDGMENT,
COMING ON FOR PRONOUNCEMENT THIS DAY, DELIVERED THE
FOLLOWING:
CORAM: HON'BLE MR JUSTICE M.G.S. KAMAL
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CAV JUDGMENT
This appeal by the defendant Nos.1 and 2 aggrieved
by Judgment and order dated 13.01.2021 passed in
R.A.No.31/2009 by the learned IX Additional District and
Sessions Judge, Bengaluru Rural District, Bengaluru (First
Appellate Court) by which the first appellate Court while
allowing the appeal filed by the plaintiff, set aside the
Judgment and decree dated 20.12.2008 dismissing the suit
in O.S.No.154/2006(Old No.223/1997) passed by the
learned Senior Civil Judge, Anekal (Trial Court) and
consequently decreed the suit declaring that the order
dated 13.03.1997 issued by defendant-KIADB determining
the lease agreement and resuming the suit property as null
and void and further directed defendant-KIADB to execute
and register sale deed in respect of the suit property in
favour of the plaintiff with further consequential directions.
2. Subject matter of the suit is all that piece and
parcel of the plot Nos.10 and 11 in Sy.No.44, 51, 50, 45,
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49, 64, 63 and 38 situated in Attibele Industrial Area, I
phase within the village limits of Balegaranahalli, Attibele
Hobli, Anekal Taluk, Bangalore District measuring 48,360
sq. mtrs., with the following boundaries:
East by : Plot No.2 and 3
West by : Road
North by : Civic Amenity
South by : Plot No.9, 9A, 9B and 9Ctogether with two huge industrial sheds, guard rooms,
water banks, fuel oil tank and septic tanks.
3. The above suit is filed by the plaintiff
contending that;
a) the suit property was originally allotted by the
defendant-KIADB in favour of one M/s.K.V.Forgings in the
year 1982 and the possession was delivered on
15.07.1982. Subsequently plaintiff company was
incorporated accordingly an endorsement was made on the
reverse of the possession certificate on 4/10.10.1983 to
the effect that the possession was handed over to the
plaintiff company. A lease cum sale agreement was
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executed and registered on 12.10.1983 in favour of the
plaintiff company, for a period of eleven years commencing
from 12.07.1982 and expiring on 12.07.1993. That as per
clause 7(a) of the said agreement at the end of eleven
years total amount of rent paid by the plaintiff was to be
adjusted towards balance of the value of the suit property
that was to be fixed by the defendant No.1-KIADB. Clause
7(b) stipulated that as soon as convenient defendant No.1-
KIADB would fix the price of the suit property at which it
was to be sold and plaintiff was required to pay any
balance amount after adjustment of the lease amount.
b) That the plaintiff as on the date of the lease had
paid advance/premium of Rs.1,21,440/-. Plaintiff
thereafter has been paying annual rent fixed and if there
was any delay defendant No.1-KIADB was levying interest
which was also duly and promptly paid by the plaintiff.
That as per the statement of account certified by the
accounts officer/controller of finance of defendant No.1-
KIADB for the period between 12.07.1983 to 12.07.1992
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the cost of the schedule property had been fixed at
Rs.6,04,669/-. That after the adjustment of the annual
lease amount paid by the plaintiff, plaintiff was due and
liable to pay only Rs.92/- to the defendant together with
interest.
c) The defendant No.1-KIADB by its letter dated
20.07.1993 had demanded from the plaintiff sum of
Rs.579/- comprising of land cost of Rs.92/- interest at
Rs.445/- penal interest at Rs.42/- which was paid by the
plaintiff by way of demand draft on 09.07.1994. Defendant
No.1-KIADB had issued a receipt dated 16.09.1994. Thus
the plaintiff had paid a total sum of Rs.8,31,517/- as
against the cost of Rs.6,04,669/-.
d) That the plaintiff after obtaining the lease-cum-
sale agreement proceeded to put up construction as per
the approved plan and has put up construction of huge
industrial sheds on the suit schedule property. The said
constructions were completed during October 1985 in
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compliance with all the provisions of law dealing with
prevention/control of noise pollution and environmental
protection with high technical specification.
e) As no power and water supply was made
available the manufacturing activity commenced only in
December 1987. Since the production activities were
delayed due to defendant-KIADB not providing water
supply and KEB not providing required power supply, the
investment of the plaintiff in the project was lying locked
without returns.
f) Plaintiff had raised loans from Karnataka State
Financial Corporation (KSFC) and had deposited the
original lease deed and possession certificate with other
documents as collateral security. As the plaintiff was
unable to repay the loan, KSFC seized the schedule
property under Section 29 of the State Financial
Corporation Act. However, plaintiff repaid the entire dues
to the KSFC and obtained release of schedule property
during February 1996. All this was within the knowledge
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of the defendants. This financial constraint was on account
of defendant No.1 not providing required and continuous
power and water supply.
g) Defendants despite being aware of the above
aspects started making unilateral and arbitrary demands
calling upon plaintiff to pay certain amounts due towards
arrears of rent which was denied by the plaintiff which
invited the attention of the defendants to the letter dated
20.07.1993 issued by their Controller of Finance and
consequential payment of Rs.650/-. Later, defendants
alleged violation of terms and conditions of lease
agreement for the first time in their letter dated
2/5.08.1994 stating plaintiff had constructed only the
factory sheds and there was no production and plaintiff
was called upon to furnish the certificate of investment
issued by the Chartered Accountant which they had no
authority.
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h) Plaintiff by letter dated 16.08.1994 issued a reply
refuting the allegations of violation of terms and conditions
and stated that it was not possible to furnish any
certificate or statement from the Chartered Accountant.
Further plaintiff by letter dated 31.08.1994 explained in
detail its difficulty and called upon the defendants to
execute deed of sale in favour of the plaintiff.
j) Since the plaintiff had already paid cost of the land
fixed at Rs.6,04,669/- defendants were only required to
execute and register the deed of sale collecting balance
amount if any. Plaintiff has always been ready and willing
to perform its part of the obligation under the lease
agreement and had indeed performed all the legal
obligation. Plaintiff was ready and willing to pay stamp
duty charges. By letter dated 14.09.1995 plaintiff called
upon the defendant to execute the sale deed as it required
to raise further funds for rehabilitation and running the
unit which was followed by letters dated 22.12.1995,
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26.03.1996 and 06.09.1996 to which there was no
response from the defendant.
k) When things stood thus, plaintiff received a
notice dated 6/8.1.1997 wherein referring to clause
2(p)(1)(i) to (iii) of the lease agreement it was alleged that
there has been no utilization of certain extent of area in
the suit schedule property which amounted to violation of
the terms and conditions of the lease-cum-sale agreement
and called upon the plaintiff to show cause as to why after
the expiry of 90 days from the date of receipt of notice,
defendant should not determine the lease in accordance
with clause 4 of the agreement. That the said notice was
received by the plaintiff only on 14.01.1997 and even
before the plaintiff could reply the said notice it received
another letter dated 16.01.1997 calling upon the plaintiff
to meet defendant No.2 on 23.01.1997. Plaintiff replied to
the same by letter dated 16.01.1997 stating that they had
already met defendant No.2 on several occasions and
there was no further requirement to meet. The plaintiff
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sent a reply dated 29.01.1997 to show cause notice dated
6/8.1.1997 explaining its difficulties and also regarding all
the amounts having been paid and defendant not
executing the deed of sale despite several repeated
requests by the plaintiff which was acknowledged by the
defendant on 03.02.1997.
l) Thereafter on 15.03.1997, plaintiff received an
order bearing No.KIADB/3564/19223/1996-97 dated
13.03.1997 wherein defendants without considering the
cause shown by the plaintiff had passed the order stating
that the lease deed was determined and they were going
to resume the land on 01.04.1997 and that if the plaintiff
was not present at the schedule property the resumption
would be done in their absence.
m) That the said order was illegal, arbitrary and
unjust. In any case the defendants were required to take
action only after expiry of 90 days from the date of receipt
of the said notice which would expire only after
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14.04.1997. As such the order was illegal and
unsustainable.
4. Contending as above, plaintiff sought for the
following reliefs:
“(a) declaring that the order bearing
No.KIADB/3464/19223/96-97 dated 13.03.1997 issued by
the defendants is illegal, without any jurisdiction or
authority and is null and void;
(b) direct the defendants by way of specific performance to
execute and register the absolute sale deed in respect of
the schedule property in favour of the plaintiff at the cost
of the plaintiff and upon failure of the defendants to do so,
this Hon’ble court be pleased to execute and register the
said sale deed in respect of the schedule property in favour
of the plaintiff;
(c) consequently to issue an order of permanent
injunction, restraining the defendants, their agents, staff,
officers or any person claiming through or under them from
entering upon the schedule property or otherwise interfering
with the plaintiff’s peaceful possession and enjoyment of the
schedule property;
(d) to award costs and grant such other relief(s) as this
Hon’ble court may deems fit and expedient in the
circumstances of the case, in the interest of justice and
equity.”
5. Defendants filed the written statement denying
the plaint averments, allegations and contended that;
(a) They have not agreed to sell the suit schedule
property at the price of Rs.6,04,669/- and that the
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agreement dated 12.10.1983 does not state the price at
which it was to be sold. That clause 7(b) of the agreement
provides the price at which the suit schedule property to
be sold would be determined by the defendants. As such,
the valuation of the suit under the Karnataka Court Fee
and Suit Valuation Act was incorrect. That the actual
extent of the land in possession of the plaintiff was not
48360.00 sq. mts., but 52093.00 sq. mtrs.
(b) That mere expiry of period of 11 years would not
confer any right on the plaintiff to demand execution of
sale deed. That the amount paid by the plaintiff was only
tentative cost of the land and not the final price which is
evident from clause 7(b) read with letter of allotment
dated 13.07.1982.
(c) That during the year 1993 the accounts were
thoroughly scrutinized and since the plaintiff had not
utilized the extent of 47600 sq. mtrs., of land for the
project as per the terms, and had utilized only 17992.86
14
sq. mtrs., as late as on 27.08.1994 contrary to clause 2(p)
(2)(i) & (iii) of the agreement, the show cause notice was
issued. That though plaintiff had issued a reply dated
14.09.1995 it had pleaded its ignorance of its obligation
regarding utilization of the land.
(d) That action was not taken against the plaintiff
as the property was taken over by the KSFC as the
defendants had permitted the plaintiff to mortgage its
right, title and interest therein. Mere expiry of lease period
would not entitle the plaintiff for the sale deed.
(e) Unless the plaintiff utilizes the plot as per the
representation made, the demands of the plaintiff of
execution of the deed of sale cannot be considered. The
final price as required under clause 7(b) has never been
communicated to the plaintiff. That plaintiff utilized only
3.41% of the total land allotted that too after lapse of 14
years from the date of execution of lease agreement. As
such the request of the plaintiff cannot be examined at all.
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(f) The issuance of notice dated 06/08.1.1997 of
clause 4 became necessary as the plaintiff had not utilized
the vast extent of valuable industrial land and had kept it
idle for more than 14 years. What was sought to be
resumed was not the entire plot but only the unutilized
portion. As against 52093 sq. mtrs., the area in occupation
of the plaintiff only 37120 sq. mtrs., of land was sought to
be resumed.
(g) That reply issued by the plaintiff did not give any
justification for non-utilization. As such, the order of
resumption was passed. The action taken before the expiry
of 90 days would not prejudice the case of the plaintiff as
it was not humanly possible for the plaintiff to remedy the
breach and further from the reply of the plaintiff it was
clear that it was not in a position to remedy the breach.
(h) Lands were acquired from the poor farmers and
given to the plaintiff at subsidized rates and if they are
kept unutilized the same would tantamount to placing
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premium on default and there are many entrepreneurs
waiting for allotment of land, which cannot be permitted.
(j) That the defendants have necessary power to
supervise, monitor and promote the growth of industries in
the State of Karnataka under the Act and the said power
includes resumption of land on failure of compliance of the
terms of the said allotment. Hence, sought for dismissal of
the suit.
6. Based on the pleadings the trial Court framed
the following issues;
“1] Whether the plaintiff proves that the
defendants have executed lease-cum-sale
agreement dated 12-10-1983 and received the
sale price from the plaintiff and delivered
possession of the schedule property as alleged?
2] Whether plaintiff further proves that the
defendants have illegally and without jurisdiction
or authority passed an order dated 13-03-1997
and the same is null and void and not binding on
the plaintiff as alleged?
3] Whether the defendants prove that plaintiff has
violated the terms and conditions of the lease
agreement and liable to be evicted from portion of
the schedule property by virtue of the expiry of
lease property as alleged?
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4] Whether the suit is not properly valued and the
court fee paid is insufficient as alleged by the
defendants in para-2 of the written statement?
5] Whether the plaintiff is entitled for the relief of
declaration and for permanent injunction against
the defendants?
6] Whether the plaintiff is entitled for the relief of
specific performance of contract against the
defendants as prayed?
7] To what relief if any, the parties are entitled?”
7. The Managing Director of the plaintiff-company
has been examined as PW.1 and exhibited 42 documents
marked as Ex.P1 to Ex.P42. Two witnesses have been
examined on behalf of defendants as DW1 and DW2 and
have exhibited 6 documents marked as Ex.D1 to D6(d).
The trial Court on appreciation of evidence answered issue
No.1, 2, 4 to 6 in the negative and issue No.3 in the
affirmative and consequently dismissed the suit.
8. Being aggrieved by the same, plaintiff preferred
a regular appeal in R.A.No.31/2009 before the First
Appellate Court. The First Appellate Court framed the
following points for its consideration;
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“1. Whether the plaintiff proves that the
defendants have executed lease-cum-sale
agreement dated 12.10.1983 and delivered
possession of the suit schedule property and as
per the terms of lease, it has paid entire sale
consideration amount to the defendants as
contended?
2. Whether the plaintiff further proves that the
defendants have illegally and without jurisdiction
or authority have passed an order dated
13.03.1997 and the same is null and void and not
binding on it as contended?
3. Whether the defendants proves that plaintiff
has violated the terms and conditions of lease
agreement and as such is liable to be evicted from
the schedule property by virtue of the expiry of
lease period as contended?
4. Whether the suit is not properly valued and the
Court fee paid is insufficient as alleged by the
defendants in para-2 of their written statement?
5. Whether the plaintiff is entitled for the relief of
specific performance of contract against the
defendants and permanent injunction as prayed?
6. Whether the plaintiff has made out a case for
appointment of Commissioner?
7. Whether the judgment and decree is suffers
from any error or illegality warranting interference
of this Court?
8. What Order?”
and on re-appreciation of the evidence answered
point Nos.1, 2, 5 and 7 in the affirmative and point Nos.3,
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4 and 6 in the negative and consequently allowed the
appeal and set aside the judgment and decree passed by
the trial Court. Being aggrieved by the same defendants
are before this Court.
9. This Court by order dated 15.12.2024 admitted
this appeal to consider the following substantial questions
of law.
“1. Whether the first appellate Court is justified in
reversing the Judgment and decree passed by the
trial Court and decreeing the suit without adverting to
clauses 2(p)(2), 4, 8 and 9 of Ex.P-1 which imposes
conditions on the plaintiff to perform his part of the
contract enabling him to seek for conveyance of the
property?
2. Whether the first appellate Court is justified in
construing lease having expired on 12.07.1993
without adverting to provisions of Section 111 of the
Transfer of Property Act?
10. Sri. S.S.Naganand, learned Senior counsel
appearing for the appellants/defendants submitted that;
(a) Referring to clause 2(b)(p)(1)(i)to(iv) and
2(b)(p)(2)(i)to(iii) and 2(q), 5, 8, 9 of the lease agreement
produced at Ex.P1 elaborately submitted that the said
20
clauses of the agreement specifically set out the terms and
conditions which are required to be strictly adhered to by
the plaintiff which is completely absent in the instant case.
(b) He refers to sketch at Ex.D6 to point out that as
against the plot area of 48360.00 sq. mtrs., only 1792.86
sq. mtrs., of plinth area has been utilized by the plaintiff
and the rest of the land remained vacant and unutilized.
(c) That the KSFC had taken over the land for default
of repayment of loan by the plaintiff and the said land was
with KSFC between 15.02.1994 to February, 1996 during
which period the land was not utilized. That the KIADB by
letter dated 02.08.1994 had called upon the plaintiff to
furnish the certificate of investment and had also pointed
out that there was violation of terms and conditions of the
lease to which plaintiff had issued a reply dated
16.08.1994 seeking time to furnish the documents as
sought for and by further reply dated 31.08.1994 had
made false allegation. Again by letter dated 14.09.1994
21
had requested for execution of deed of sale. Thus pointing
out these documents he submitted that the plaintiff had
not denied the violation of the terms of the agreement
mentioned which amounts to admission on its part.
(d) All these resulted in defendant-KIADB issuing
show cause notice on 06.01.1997. In reply to the said
show cause notice issued by the plaintiff on 28.1.1997 as
per Ex.P14 plaintiff itself had admitted its inability to
expand the industry contrary to its plans. Thus, he submits
there was a clear admission on the part of the plaintiff not
utilizing the land.
(e) He referred to second schedule to the agreement
at Ex.P1 and pointed out that the clause (1) of the said
schedule prescribes only the maximum area to be utilized
which shall not be more than half of the total area and it
does not mention about the minimum area.
(f) Referring to the application filed by the plaintiff
for allotment of land as per Ex.D1 dated 15.02.1982 he
submitted that even according to the plaintiff it had
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mentioned the requirement of 2160.00 sq.mts., of land
for the purpose of factory building and the area required
for putting of office was shown at 880 sq. mtrs., and the
area that was required for open space etc., is shown as
281.55 sq.mtrs. He also pointed out the same having been
reiterated in the blue print purportedly submitted by the
plaintiff.
(g) Referring to project report at Ex.D2 and
allotment letter dated 13.07.1982 at Ex.D3 submitted that
the allotment letter was issued with a specific time
schedule to be adhered to by the plaintiff which was in
furtherance to project report submitted by the plaintiff
itself.
(h) He pointed out to clause 14 and 15 of the
allotment letter and submitted that it was specifically
mentioned therein that in the event of land not being put
to use for the purpose it was asked for, the Board would
re-enter and take possession of whole or that part of the
land which was not put to proper use.
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(j) He submitted that letter dated 03.02.1996 at
Ex.D4 was issued only in response to the letter dated
14.9.1995 that have been issued by the plaintiff and the
same would not amount to waiver of the breaches
committed by the plaintiff.
(k) That the DW1 is the Assistant Secretary of the
defendant-KIADB. DW2 is the person who had prepared
the sketch. Said persons were authorized and their
deposition had remained unchallenged.
(l) That the First Appellate Court while reversing
the judgment and decree passed by the Trial Court has not
adverted to the aforesaid terms and conditions as provided
under the agreement of lease and the contents of the
aforesaid correspondence and the consequent actions
contemplated thereof.
(m) He submits that the First Appellate Court has
not appreciated that the plaintiff has not obtained approval
of the blue prints within six months from the date of letter
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of allotment or within two months from the date of lease
agreement and has neither commenced nor completed the
construction within 24 months from the date of letter of
allotment as contemplated under the agreement.
(n) That the First Appellate Court has also not
appreciated that the plaintiff had not even commenced the
production within 24 months as agreed.
(o)Thus, the defendants under the circumstances had
right to resume any portion of the plot which had not been
utilized.
(p) That the first notice notifying the violation of the
terms of the lease was issued on 15.08.1994 which
remained uncomplied. The second show cause notice dated
06.01.1997 also remained uncomplied. That the First
Appellate Court without adverting to this aspect of the
matter has erroneously held that the letter dated
03.02.1996 produced at Ex.D4 has constituted waiver of
25
all the violation which is contrary to the material placed on
record.
(q) The First Appellate Court has wrongly read the
contents of the said letter at Ex.D4 which had only
specified the question of sale deed would be considered
after fixation of price and would not lead to waiver of any
violation which had already been pointed out in the first
notice dated 15.08.1994.
(r) That the First Appellate Court failed to notice
the sketch at Ex.D1 was prepared by the Assistant
Engineer who was examined as DW2 and there is no
challenge to the same, yet the First Appellate Court
erroneously concluded that the said sketch was disputed.
(s) That the First Appellate Court even in the absence
of any plea has taken upon itself the question of
authorization by the Board to the executive Officer to issue
Ex.P12 and Ex.P17 and the reference to Section 32(b) of
26
the KIAD Act was inappropriate to the facts of the present
case as the said section was introduced on 25.01.2020.
(t) That the First Appellate Court without appreciating
the material evidence on record has reached the erroneous
conclusion of plaintiff complying the terms of the lease and
being entitled for specific performance.
(u) That the contention regarding issuance of
termination letter at Ex.P17 before expiry of period of 90
days was not tenable in view of provision of section 111(g)
of the Transfer of Property Act which provides for forfeiture
of lease on account of breach.
(v) He relied upon the following judgments in support
of his submissions;
1. SMT. NALINI SUNDER VS. G.V.SUNDER reported in ILR
2002 KAR 4734.
2. KAUSHIK NARSINHBHAI PATEL AND OTHERS VS.
S.J.R. PRIME CORPORATION PRIVATE LIMITED AND
OTHERS reported in 2024 SCC Online SC 1762.
3. RAMA K.T. BARMAN (DIED) THROUGH LRS VS. M.D.
MAHIM ALI AND OTHERS in Civil Appeal No.3500/2024.
4. MANISHA MAHENDRA GALA AND OTHERS VS.
SHALINI BHAGWAN AVATRAMANI AND OTHERS reported
in (2024) 6 SCC 130.
27
5. HERO VINOTH (MINOR) V/S. SESHAMMAL
reported in (2006) 5 SCC 545.
6. SRI. JALEEL V/S MR. SURENDRA NAYAK reported
in 2016 SCC Online KAR 1002.
7. MEHBOOB-UR-REHMAN (DEAD) THROUGH LEGAL
REPRESENTATIVES V/S. AHSANUL GHAVI reported in
(2019) 19 SCC 415.
8. DESH RAJ AND OTHERS V/S. ROHTASH SINGH
reported in (2023) 3 SCC 714.
9. SHAH NEWAZ KHAN AND OTHERS V/S. STATE OF
NAGALAND AND OTHERS reported in (2023) 11 SCC
376.
10. U.N.KRISHNAMURTHY (since DECEASED)
THROUGH LEGAL REPRESENTATIVES V/S. A.M
KRISHNAMURTHY reported in (2023) 11 SCC 775.
11. RADHA PRASADH SINGH V/S. GAJADHAR SINGH
& ORS 1959 reported in 1959 SCC Online SC 168.
12. T. D. GOPALAN V/S. THE COMMISSIONER OF
HINDU RELIGIOUS & CHARITABLE ENDOWMENTS,
MADRAS reported in (1972) 2 SCC 329.
13. MADHUSUDAN DAS V/S. SMT. NARAYANI BAI
(DECEASED) BY LRS AND OTHERS reported in
(1983) 1 SCC 35.
14. DILIP V/S. MOHD. AZIZUL HAQ & ANOTHER
reported in (2000) 3 SCC 607.
15. JAGADISH PRASAD PATEL (DEAD) THROUGH
LEGAL REPRESENTATIVES & ANOTHER V/S.
SHIVNATH AND OTHERS reported in (2019) 6 SCC
82″.
11. Sri. Jeevan Kumar B.S, learned counsel
appearing for the plaintiff/respondent justifying the
28
impugned Judgment and order of the First Appellate Court
submitted that;
(a) at the outset referring to the letter of termination
dated 13.03.1997 at Ex.P17 and show cause notice dated
6.1.1997 at Ex.P12 submitted that the said letters have
been issued by a person without authority and the same
have been signed for Executive Member and not by
Executive Member himself.
(b) He referred to letter at Ex.P13 dated 16.1.1997
and submitted that the said document is also signed by
Assistant Secretary to KIADB.
(c) Referring to the signatures found on the above
said documents he submitted that these communications
have been issued by the Assistant Secretary who is not
authorized under the Act.
(d) He referred to Section 34(b) of the KIAD Act and
submitted that any action has to be taken by the “Board”
or any person or officer authorized in this behalf. He
referred to Section 6 of the Act regarding constitution of
29
the Board and submitted that there is no evidence of
delegation of power in favour of the Assistant Secretary.
Thus he submitted that the entire basis of issuance of
show cause notice and issuance of order of termination
and resumption of land is without authority of law.
(e) He referred to section 14(f) (ii) of the KIAD Act,
1966 and submitted that power to modify or rescind the
allotment is to be exercised by the Board and not by the
Secretary as done in the instant case.
(f) Referring to Section 6 of the Act, submitted that
DW1 and DW2 are not the authorized persons and no
resolution delegating the power in their favour is produced.
He submitted that the First Appellate Court at paragraph
27 of its judgment has elaborately considered these
aspects of the matter which cannot be interfered with.
(g) Referring to the show cause notice dated
16.1.1997 and order dated 13.03.1997 he submitted that
period of 90 days prescribed under show cause notice
30
would expire on 6.4.1997 and the action thus taken prior
to the expiry of said period of 90 days is illegal.
(h) He referred to clause 2(i) to (iii) and (q) of the
agreement and submitted that the plaintiff had indeed
taken all measures to comply with the terms of the
agreement, as such it had borrowed the loan from the
KSFC as seen at Ex.P29 and had even paid the commercial
tax and had even started production which was evidenced
by Ex.P40 which are the orders issued by the Commercial
Tax Department regarding the tax paid on the transaction.
(j) He relied upon the following judgments/citations
in support of his submissions;
“1. Prakash Chandra Vs. Angadlal and others reported in
(1979) 4 SCC 393.
2. Mansaram Vs. S.P.Pathak and others reported in (1984)
1 SCC 125.
3. M/s. Prakash Dal Mill and others Vs. The Government of
Karnataka, by its Secretary, Department of Commerce
and Industries and others reported in ILR 2003 KAR.1622.
4. State of Karnataka Vs. B.R.Muralidhar in Civil Appeal
No.1966/2013 decided on 28.07.2022.
5. M/s. Distillers Company (P) Ltd., Vs. Karnataka
Industrial Area Development Board and others in
W.P.No.35948/2010 decided on 09.10.2018.
31
6. M/s.Shrisma Fine Chemicals and Pharmaceuticals Ltd.,
Vs. State of Karnataka and others in W.P.No.14961/2021
decided on 17.03.2023.”
Hence, sought for allowing of the appeal.
12. In reply, learned Senior counsel
Sri. S.S.Naganand, submitted that there has been no
specific plea in the plaint with regard to authorization to
issue notice and pass orders and there is also no plea
regarding there being no resolution as now contended
during the arguments.
13. Referring to para 19 of the plaint he submitted
that the pleading therein are insufficient. He referred to
issue No.2 framed by the trial Court and submitted that
the trial Court has answered the said issue in the negative
taking into consideration the evidence led in by the
plaintiff. He submitted that the findings given by the First
Appellate Court at pages 46 and 47 of its judgment are
contrary to the deposition at page 165. He further referred
to the deposition of PW.1 at paragraph 18 and submitted
that there is no details regarding the same. Referring to
32
the deposition of DW2 recorded on 28.09.2005 he
submitted that there has been no suggestion made to the
witness regarding the authorization. He submitted that any
amount of evidence without plea is of no avail. He
submitted that determination of lease is under Section
111(g) of the Transfer of Property Act, as such the
allegation of premature termination is untenable. He
referred to judgment of this court in the case of
SMT.NALINI SUNDER VS. G.V.SUNDER reported in ILR
2002 Kar. 4734 and submitted that termination prior to
the expiry of 90 days is of no consequence.
14. In rejoinder, learned counsel for the respondent
submitted that the determination of the lease in the instant
case is under Section 106 of the Transfer of Property Act
and not under Section 111(g) of the Transfer of Property
Act. He referred to the earlier order passed by this Court in
RSA No.1789/2009 and pointed out at paragraph 17 of the
said order, wherein the submission regarding the order
dated 06.01.1997 not having been passed by the executive
33
members have been taken note of. Thus he submitted that
despite the said finding by this Court on the earlier
occasion no document is produced to show delegation of
authority. Hence, sought for dismissal of the appeal.
15. Heard and perused the records.
REG: SUBSTANTIAL QUESTION OF LAW NO.1:
16. There is no dispute with regard to defendant-
KIADB allotting the suit schedule property in favour of the
plaintiff-company. Ex.P1 is the lease-cum-sale agreement
that has been entered into between defendant-KIADB and
plaintiff-company on 12.07.1982. The period of lease is 11
years commencing from the date of the agreement and
expiring on 12.07.1993. Since the entire dispute between
the parties revolves around the performance of terms of
the agreement at Ex.P1, appropriate at this juncture to
extract relevant clauses of the said agreement which are
as under:
2. The lessee with the intent to bind all persons into
whatsoever hands the demised premises may come doth
hereby covenant with the lessor as follows:
34
(p)(1)(i) To submit the blue prints of the plan of the civil
construction to the Lessor for prior approval within six
months from the date of receipt of letter of allotment or
within two months from the date of the agreement
whichever is earlier.
(ii)To commence the civil construction works within three
months from the date of approval of the blue prints, after
obtaining licence from the Chief Inspector of Factories
and Boilers of Karnataka State.
(iii) To complete civil construction works and erection of
factory within twenty months from the date of letter of
allotment that is the 13th day of July one thousand nine
hundred and eighty two.
(iv) To commence production within twenty four months
from the date of letter of allotment that is the 13th day of
July one thousand nine hundred and
Eighty twoFor good and sufficient, reasons, the Lessor may
extend the time in writing in any of the cases mentioned
in sub clauses (i) to (iv) above, by such period as the
Lessor in his discretion deem fit and the Lessee Shall
complete the item of works for which extension of the
time given within such extended time.
Failure to fulfill any of the conditions (i) to (iv)
mentioned above shall result in allotment being cancelled
and agreement being terminated under clause 4 and a
sum not exceeding 5% of the cost of land as indicated in
clause 1 of the lease agreement subject to a maximum of
Rs.10.000/- and minimum of Rs.1,000/- and interest due
and payable as per clause 1 from the date of taking
possession to the date of resumption of the land by the
Board shall be forfeited to the lessor.
(2) The Lessor always reserves the right to resume after
giving Lessee and the financial institution/banks referred
to in clause 2 (q) to whom the lessee has mortgaged his
right title and interest not less than 90 (ninety) days
notice.
35
(i) the entire plot when the implementation of the project
for which the plot is allotted to the Lessee is considered
by the Lessor either not satisfactory or not according to
the time schedule hereinbefore specified and the decision
of the Lessor in this behalf shall be final and binding on
the Lessee.
(ii) Such portion of the plot as has not been sufficiently
utilised by the Lessee in accordance with the proposals
given in application and project report submitted by the
Lessee to the Lessor for allotment of plot and the decision
of the Lessor in this behalf shall be final and binding on
the Lessee.
(iii) Such portion of land which has been allotted to the
Lessee for his future expansion but has not been actually
utilised by him for that purpose within five years from the
date of commencement of production, and the decision of
the Lessor in this behalf shall be final and binding on the
Lessee.
q) The Lessee shall not alienate the demised premises or
any part thereof or the buildings that may be constructed
thereon during the period of lease. The Lessor, may,
however, permit the mortgage of the right, title and
interest of the Lessee in favour of the Government of
Karnataka or the Central Government or Corporate Bodies
like Life Insurance Corporation of India, Karnataka State
Industrial Investment and Development Corporation,
Karnataka State Financial Corporation, Industrial Finance
Corporation of India, Industrial Development Bank of
India, Industrial Credit and Investment Corporation of
India, Unit Trust of India, Trustees of Debenture stock or
Banks to secure moneys advanced by such Governments
or bodies for the erection of building, plant and
machinery.
3. If and whenever any part of the rent hereby reserved
shall be in arrears the same may be recovered from the
Lessee as an arrears of land revenue under the provisions
of the Karnataka land Revenue Act (No. 12 of 1964).
4. If the said rent hereby reserved shall be in arrears for
the space of thirty days whether the same shall have
36
been legally demanded or not if and whenever there shall
be breach of any of the covenants by the Lessee herein
before/after contained the Lessor may reenter upon any
part of the demised premises in the name of the whole
and thereupon the term hereby granted and right to any
renewal there of shall absolutely cease and determine and
in that case a sum not exceeding 5% cost of the land as
indicated in clause 1 of this agreement subject to a
maximum of Rs. 10,000/- and minimum of Rs. 1,000/-
and interest due and payable as per clause 1 from the
date of taking possession to the date of resumption of the
land by the Board shall be forfeited to the Lessor and in
addition no compensation shall be payable to the Lessee
on account of the building or improvements built or
carried out on demised premises, or claimed by the
Lessee on account of the building or improvements built
or made, provided always that except for nonpayment of
rent as aforesaid the power of re-entry hereinbefore
contained shall not be exercised unless and until the
Lessor or the Executive Member on behalf of the Lessor
shall have given to the Lessee or left on some part of the
demised premises a notice in writing of his intention to
enter and of the specific breach or breaches of covenants
in respect of which the re-entry is intended to be made
and default shall have been made by the Lessee in
remedying such breach or breaches within three months
after the giving or leaving of such notice.
Provided that whenever the Lessor intends to
exercise his right of re-entry under this Clause, he shall
give 90 (ninety) days prior notice to the financial
institutions/banks in whose favour the Lessee has
mortgaged his right, title interest under Clause 2 (q) of
this agreement.
Notwithstanding any such default as aforesaid, the
Lessor may at its discretion extend the period of lease at
the cost and expense in every respect of the lessee on
payment of the rent mentioned hereinbefore and subject
to the same covenants, provisos and stipulations herein
contained.
7. (a) At the end of 11 years referred to in Clause I or the
extended period, if any, the total amount of rent paid by
the Lessee for the period of the Lease shall be adjusted
37
towards the balance of the value of the property (as fixed
in the manner herein after appearing).
7. (b) As soon as it may be convenient the Lessor will fix
the price of the demised premises at which it will be sold
to the Lessee and communicate it to the Lessee and the
decision of the Lessor in this regard will be final and
binding on the Lessee. The Lessee shall pay the balance
of the value of the property, if any after adjusting the
premium and the total amount of rent paid by the Lessee,
within one month from the date of receipt of
communication signed by the Executive Member of the
Board. On the other hand, if any sum is determined as
payable by the Lessor to the Lessee after the adjustment
as aforesaid, such sum shall be refunded to the Lessee
before the date of execution of the sale deed.
8. If the Lessee has performed all the conditions
mentioned herein and committed no breach there of the
Lessor shall at the end of 11 years referred to in Clause 1
of the extended period, if any, sell the demised premises
to the Lessee and all attendant expenses in connection
with such sale such as stamp duty, registration Charges,
etc., shall be borne by the Lessee.
9. On complying with the terms and conditions of this
agreement in the manner stated above but not otherwise,
the Lessor shall be obliged to execute the sale deed in
Form 5 appended to the Regulations governing the
disposal of lands by the Karnataka Industrial Areas
Development Board, 1969 in favour of the Lessee.
17. Perusal of the aforesaid clauses more particularly
clause 2(p)(2)(i)(ii)(iii) indicate that;
(a) defendant-KIADB being the lessor had reserved the
right to resume the land after giving 90 days notice if in
the event of plaintiff-company;
(b) failing to either implement the project on the entire
plot for the purpose to which it was allotted or if the
implementation of the project was not satisfactory or not
38
in accordance to the time schedule specified under clause
p(1)(i)(ii)(iii)(iv).
(c) or such portion of the plot has not been sufficiently
utilized by the plaintiff company in accordance with the
proposal given in the application and project report
submitted by the plaintiff company to the defendant-
KIADB for allotment of plot.
(d) that such portion of the land which has been
allotted to the plaintiff company for its future expansion
but has been not actually utilized by it for that purpose
within five years from the date of commencement of
production.
18. Further Clause 8 of the agreement as noted
above would require the defendant-KIADB to convey
the property in favour of the plaintiff company if the
plaintiff company had performed all the conditions
mentioned and had committed no breach.
19. Clause 9 further reiterates that it is only on
complying with the terms and conditions of the agreement
in the manner stated thereunder and not otherwise, the
defendant-KIADB shall be obliged to execute the sale deed
in the prescribed format appended to the regulation
governing disposal of the lands by defendant-KIADB.
20. In the application dated 15.02.1982 filed by the
plaintiff company seeking allotment of land produced at
39
Ex.D1 marked through PW1 following particulars are given
at page No.4:
5(a) Extent of land required in 47600 sq. metres
terms of square yards or metres(Plot number if any, in the I plot No.26
Industrial Area which the II or Plot No.25
applicant wishes to be allotted III or Plot No.12
may be given here. Three
numbers may be indicated in the
order of preference)
(A) (B) (C)
(b) Break-up details of the
proposed use (in sq. metre/sq For For future Total
immediate expansion
yards) requirements
(i) Area that will be taken up by 2160 sq. m 1260 sq. m 3420 sq.m
the Factory building
(ii) Area that will be actually
occupied by the machinery/plant
proper
(iii) Area required for putting up of
office and other ancillary 880 sq. m 1320 sq. m 2200 sq.m
buildings, if any
(iv) Area that will be taken up by
open space, garden, lawn or roads 28155 sq. m 4775 sq. m 32930 sq.m
(v) Area for storage of materials
6800 sq. m 6800 sq. m
or for godowns if required –
(vi) Area for disposal of effluent, if
500 sq. m - 500 sq. m
any
(vii) Area for experimental
- 300 sq. m 300 sq. m
research, if any
(viii) Area required, if necessary
for
(a) putting up labour colony - - -
(b) for any civic amenity inside
the colony with the details - 500 sq. m 500 sq. m
(ix) Any other purpose - 950 sq. m 950 sq. m
47,600 sq.m
40
21. Thus, from the above, it is clear that plaintiff
company had represented its immediate requirement of
land for the purpose of factory at 2160 sq. mtrs., and for
future expansion at 1260 sq. mtrs., totally 3420 sq. mtrs.
That apart for immediate purpose of putting up of office
and other ancillary buildings it had stated that it required
880 sq. mtrs., and for future expansion 1320 sq. mtrs.,
total 2200 sq. mtrs., and for open space, garden, lawn or
roads at 28155 sq. mtrs., as immediate requirement and
future expansion at 4775 sq. mtrs., totally 32930 sq.
mtrs., and for storage of materials or for godowns 6800
sq. mtrs., and for disposal of effluent 500 sq. mtrs., and
future expansion for experimental research 300 sq. mtrs.,
for civic amenities inside the colony with the details 500
sq. mtrs., and for other purposes 950 sq. mtrs. Thus total
extent 47600 sq. mtrs., was sought for.
22. Further the letter of allotment dated 13.07.1982
produced at Ex.D3 marked through PW1 at clause 7
provides the time schedule for utilization and
41
implementation of the project and clause 14 provides for
right of defendant-KIADB to re-enter the land in the event
of plaintiff company not putting the land into use
satisfactorily. The clauses 7 and 14 reads as under:
7. The time schedule given shall be adhered to:-
1. For execution of lease One month from the date of
agreement and taking receipt of confirmatory letter of
possession of the land: allotment.
2. For getting the approval of Six months from the date of
the Board for blue prints: receipt of this letter.
3. For commencement of civil Three months from the date of
Engineering works: approval of the blue prints.
4. For completion of works and Twenty months from the date of
erection of the factory: this letter.
5. For commencement of Twenty four months from the
production: date of this letter.
14. On being satisfied that the land is not put to the
use for the purpose for which it was asked for, the Board
will be free re-enter upon and take possession of the
whole or that part of the land which has not been put to
proper use.
23. In the light of the above, terms and conditions
enumerated in the lease-cum-sale agreement at Ex.P1,
requirement of extent of the plot and undertaking given by
the plaintiff company for implementation of the project at
Ex.D1 and the terms and conditions imposed in the letter
42
of allotment at Ex.D3 it is to be seen whether the plaintiff
company has committed any violation of the said terms.
24. For the first time defendant-KIADB vide letter
dated 02.08.1994 as seen at Ex.P5 called upon the plaintiff
company to furnish a certificate of investment issued by
the financial institution/chartered accountant as on
30.07.1984, 85, 86, 87, 88, 89, 90, 91, 92, 93 and
30.07.1994 on the premise that as per the terms and
conditions of the allotment the plaintiff company was
expected to implement the project on or before
30.07.1984 and that it was noticed that plaintiff had
constructed only a small shed and there was no
production.
25. In response thereof, plaintiff had issued a reply
dated 16.08.1994 as per Ex.P6 denying the allegation of
violation of the terms of letter of allotment. However, it
sought time to furnish the certificate of investment from
the financial institution (Chartered Accountant) as
43
requisitioned by the defendant-KIADB. Thereafter vide
letter dated 31.08.1994 as per Ex.P7 plaintiff contended
that after obtaining the plot of land from KIADB, it had
availed term loan of Rs.26.84 lakhs from KSFC and
implemented the project within the stipulated terms. That
the unit went into production during 1987 immediately on
receiving the power supply and water. As regards
construction of the structures, it is contended that in order
to meet the provisions of Environmental and Pollution Act,
and explosives and hazardous situation it constructed two
sheds measuring 45 meters by 18.5 meters apart from
other ancillaries. It had also contended that plant was
carrying on production all these years until KSFC seized it
a few months ago. It also contended that the plaintiff has
been assessed by Income Tax Department, Central Tax
(CTO), Central Excise Department and also contended that
as per the Income Tax provisions they were preparing the
statement of accounts and balance sheet as on 31st March
every year and called upon defendant-KIADB to furnish
44
them the logic of it calling upon them to give the
information as on 31st July and accordingly sought for
withdrawal of the letter.
26. Thereafter by another letter dated 14.09.1995 at
Ex.P8 the plaintiff called upon the defendant-KIADB to
execute deed of sale by intimating outstanding dues if any.
It is further pointed out in the said letter that defendant-
KIADB had alleged violation of the terms and conditions of
the lease agreement which was repudiated by plaintiff vide
letter dated 31.08.1994 and since over one year had
elapsed it was presumed that the said allegations were
withdrawn. Accordingly, plaintiff company called upon the
defendant-KIADB to execute the deed of sale by
completing all formalities within 15 days.
27. Said letter is followed by subsequent letters
dated 22.12.1995, 26.03.1996, 06.09.1996 as per Exs.P9,
P10 and P11 requesting for execution of deed of sale.
Defendant-KIADB vide its letter dated 06.01.1997 produced
45
at Ex.P12 contended that as per clause 2(p)(1)(i)(ii)(iii),
plaintiff company should utilize the land as per the proposal
given in the application for allotment and the project report
submitted including future expansion within five years from
the date of commencement of the project. That the unit
set up by the plaintiff company had been closed and it was
not carrying on any production activity and since the lease
period expired and the plaintiff failed to utilize the land,
there was violation of the terms and conditions of lease-
cum-sale agreement. Accordingly, called upon the plaintiff
company to show cause why the Board should not enter
upon the unutilized portion of the lease premises after
expiry of 90 days from the date of receipt of the notice and
determining the lease in accordance with clause 4 of the
agreement. By a reply dated 29.01.1997 as per Ex.P15
plaintiff submitted the details regarding delay in setting up
the industry. Necessary to note the following contents of
the said reply:
a. That after allotment of land and entering into
agreement on 12.10.1983, plaintiff availed loan of
46Rs.26.84 lakhs from KSFC and immediately went into
production on receipt of power supply and water
connection.
b. That during 1994 running unit was seized by KSFC
on account of non payment of their dues and after
clearance, unit was handed back to the plaintiff.
c. That after the expiry of the lease period plaintiff
requested execution of deed of sale and reminded
periodically by several letters and there was no
response from the KIADB.
d. That after three year, show cause notice was
issued repeating the allegations that were made three
years ago.
e. That with great difficulty plaintiff set up the
industry starting of which was delayed for nearly
three years for want of electricity and water
connection, subsequent thereto, industry itself could
not run due to irregular supply of electricity and
frequent cuts. As such, plaintiff could not expand it
industry contrary to its plans.
f. Now it has every intention to expand the industry
subject to KIADB executing sale deed enabling them
to borrow loan from financial institutions.
g. That after expiry of 11 years of lease period
plaintiff has become absolute owner and power to
issue notice as per clause 4 of agreement of lease-
cum-sale was available only till the operation of the
lease period upto 12.07.1993 and not thereafter.
28. Defendant-KIADB by order dated 13.03.1997 at
Ex.P17 declining to accept the reasons assigned by plaintiff
and also stating that only 3.41% of the allotted area was
47
utilized while the large extent of land had remained
unutilized and that the Deputy Development Officer had
recommended for resumption of an extent of 37120 sq.
mtrs., of land as indicated in the sketch, determined the
lease agreement dated 12.10.1983 and called upon the
plaintiff to be present at the spot on 01.04.1997 to witness
resumption of land.
29. The defendant-KIADB had got the subject
property inspected through its Assistant Engineer who had
submitted the report with regard to implementation of the
project as per Ex.D5. In that it is pointed out that;
1. The extent of land occupied by the allottee is
52093.00 sq. mtrs. as against 48360.00 sq. mtrs.
2. Extent of land covered
by the buildings;
(1) factory building- 1673.52 sq. mtrs.
(2) office building – 83.19 sq. mtrs.
(dilapidated)
(3) Watchman shed - 19.43 sq. mtrs.
(4) Oil tank - 10.60 sq. mtrs.
(5) Pump House - 6.12 sq. mtrs.
3. That the factory is sick no activity is going on in the
premises.
4. The factory shed are as per bye laws except the
watchman shed and office block which are in
dilapidated condition.
5. The factory has name board of K.V.Forgings Pvt. Ltd.,
48
6. There is no borewell at present.
Since the allottee has not utilized very large extent of
land same is proposed for resumption as shown in the
sketch enclosed with the said report.
30. Sketch enclosed to the said report is produced at
Ex.D6 wherein the details of the areas have been given as
under:
Area
Sital area allotted – 48360.00 sq. mtrs.
Plot area as per actual – 52093.00 sq. mtrs.
Plinth area – 1792.86 sq. mtrs.
31. DW-1 who produced Exs.D5 and D6 report has
been cross examined on behalf of the plaintiff on
02.09.2005 and at paragraph 26 suggestions have been
made with regard to signatures found on Ex.D5 and the
person who prepared Ex.D-6 and in whose presence the
said documents were prepared. Witness has pleaded
ignorance about the same. He has denied the suggestion
of the said documents being created. However, there is no
suggestion to the said witness DW1 with regard to the
49contents of the said documents. In other words there is no
denial with regard to the details mentioned in the said
documents regarding allotment of the plot, actual extent of
the plot in occupation of the plaintiff and the actual extent
utilized by the plaintiff.
32. DW2 who prepared Ex.D5 and D6 has been
examined on 22.09.2005. In his cross examination
conducted on 28.09.2005 except suggesting that Ex.D5
and D6 were prepared for the purpose of the case, which is
denied by the witness, nothing has been elicited.
33. Infact as already noted above even according to
the plaintiff company in its reply dated 29.01.1997 at
Ex.P15 which was given in response to the notice dated
06.01.1997 Ex.P12 issued by defendant-KIADB, wherein
defendant-KIADB had specifically mentioned the extent of
built up area being 1792.86 sq. mtrs., including oil tank
and pump house as against an extent of 48360 sq. mtrs.,
allotted, plaintiff has neither denied nor given any other
50information regarding the extent of land utilized other than
what is mentioned in Ex.D5 and D6. Infact in its earlier
reply dated 31.08.1994 produced at Ex.P7 at paragraph 3
plaintiff itself has given the measurement of two industrial
sheds constructed by it measuring 45 mtrs., by 18.5 mtrs.,
along with other ancillary construction. The measurement
of the sheds as given by the plaintiff in Ex.P7 is exactly the
same as what is mentioned in the sketch Ex.D6 enclosed
to Ex.D5.
34. Thus, there is no denial or rebuttal of the extent
of land utilized by the plaintiff company as mentioned in
Exs.D5 and D6 vis-à-vis the extent of land the plaintiff
company intended to utilize immediately and in its
proposed expansion as mentioned in its application at
Ex.D1 which is 47600 sq. mtrs., including areas to be
utilized for open space, garden, lawns and roads etc.
There is no any material produced by the plaintiff company
for having formed open space, garden, lawns and roads.
There is also no material produced by the plaintiff with
51
regard to construction of the buildings, structures for its
immediate use and for future expansion as represented by
it in Ex.D1. Indeed admittedly plaintiff company has
closed down its business operation.
35. Necessary also to note that when the defendant-
KIADB had called upon the plaintiff to produce the
certificate of investment from the Financial Institutions/
Chartered Accountant as per Ex.P5, the plaintiff company
by its reply dated 16.08.1994 produced at Ex.P6 had
expressed its inability to produce such certificate and by
subsequent correspondence questioned the logic of
defendant-KIADB, seeking production of such document.
The plaintiff company has however produced assessment
orders passed by Assistant Commissioner of Commercial
Taxes for the years 1989-1990 and 1990-1991 as per
Ex.P40 to P42. Except these two returns nothing has been
furnished by the plaintiff with regard to its so called
production for all these years till filing of the suit.
52
36. The terms and conditions of the lease-cum-sale
agreement at Ex.P1 found at Clause 2(p)(1)(i)(ii)(iii)(iv)
and 2(2)(i)(ii)(iii) read in the light of the aforesaid
undisputed facts of the matter would manifestly make it
clear that there has been violation/non-compliance of the
said terms by the plaintiff company.
37. Clause 8 and 9 of Ex.P1 would give right to the
plaintiff company to seek execution of the deed of sale
only if it has complied with the terms and conditions of the
agreement mentioned therein and not otherwise.
38. The trial Court having adverted to these aspects
of the matter has come to the conclusion that there was
non compliance of the terms and conditions of Ex.P1 by
plaintiff company and accordingly dismissed the suit. The
First Appellate Court however found that the plaintiff
company had given explanation in its responses to the
notices/correspondences issued by defendant-KIADB and
has further proceeded to hold that since the defendant-
53
KIADB had in its letter at Ex.D4 had indicated that it was
in the process of ascertaining the cost of the land, the
same amounted to waiver of violation of the terms by the
plaintiff company if any. Further the First Appellate Court
has found that since the KIADB had not raised any
objection of violation of terms and conditions of the lease
upto the completion of lease period, and had issued
document at Ex.D4 dated 03.02.1996 clearly proving that
there was no violation of terms and condition atleast upto
the said date and any violation would be only after
03.02.1996. It has further opined if at all there was any
violation of terms and conditions there was no question of
giving intimation to the plaintiff company about process of
fixation of final price and execution of sale deed after
fixation of final price as per Ex.D4. This in the considered
opinion of this Court is incorrect and cannot be sustained.
39. The further conclusion arrived at by the First
Appellate Court at paragraph 75 of its Judgment that “the
plaintiff has fulfilled almost all the conditions except the
54
condition in respect of utilization of some portion of the
land. The plaintiff has given acceptable reason for non-
utilization of some portion of land and same has been
accepted by defendant-KIADB, as such defendant-KIADB
has intimated the plaintiff regarding execution of the sale
deed and that the defendants have failed to prove violation
of terms and conditions of lease and as such the order of
resumption is not in accordance with law” in the
considered view of this Court is contrary to the contents of
the documents produced by plaintiff company itself as well
as by the defendant-KIADB. Thus, suffering from
perversity.
40. Further observation made by the First Appellate
Court at paragraph 76 that the documents Ex.D8 to D11
would disclose that after expiry of lease period the plaintiff
had expressed its intention to perform its contract and that
the plaintiff company by investing huge money had
constructed two buildings and had paid upto date lease
amount, as such, it was not correct to say that the plaintiff
55
shall vacate the schedule premises and that equity was in
favour of the plaintiff for grant of relief of specific
performance, is also without reference to clause 8 and 9
of the lease-cum-sale agreement produced at Ex.P1.
41. Necessary to note that there has been not even
a single correspondence, letter or representation from the
plaintiff company to the defendant-KIADB between the
date of execution of lease-cum-sale agreement which is
12.10.1983 and 16.08.1994 either intimating/informing
the defendant-KIADB with regard to its
performance/compliance with the terms of the lease-cum-
sale agreement or compliance with the conditions of letter
of allotment noted hereinabove. There is also no evidence
with regard to plaintiff having implemented the project as
represented by it in its application seeking allotment of
plot till date. As such the finding arrived at by the First
Appellate Court that the plaintiff was always ready and
willing to perform its part of the contract and was thus
56
entitled for relief of specific performance cannot be
sustained.
42. Apex Court in the case of Hero Vinoth (Minor) Vs
Seshammal (supra) at paragraph 13 has held that “
“13. Though as rightly contended by learned counsel
for the appellant the scope for interference with
concurrent findings of fact while exercising jurisdiction
under Section 100 Code of Civil Procedure is very
limited, and reappreciation of evidence is not
permissible (sic except) where the trial court and/or the
first appellate court misdirected themselves in
appreciating the question of law or placed the onus on
the wrong party certainly there is a scope for
interference under Section 100 Code of Civil Procedure
after formulating a substantial question of law.
14. As was noted in Yadarao Dajiba Shrawane (dead) by
Lrs. v. Nanilal Harakchand Shah (dead) and Ors. if the
judgments of the trial Court and the first Appellate Court
are based on misinterpretation of the documentary
evidence or consideration of inadmissible evidence or
ignoring material evidence or on a finding of fact has
ignored admissions or concession made by witnesses or
parties, the High Court can interfere in appeal.
15. In Neelakantan and Ors. v. Mallika Begum it was held
that findings of fact recorded must be set aside where the
finding has no basis in any legal evidence on record or is
based on a misreading of evidence or suffers from any
legal infirmity which materially prejudices the case of one
of the parties. (See: Krishna Mohan Kul alias Nani Charan
Kul and Another v. Pratima Maity and others.”
57
43. Thus the re-appreciation of the evidence in the
instant case is necessitated in view of reasoning and
conclusion arrived at by the First Appellate Court which are
contrary to the admissions and the contents of the
documents.
44. Whether the First Appellate Court was justified in
holding that since the defendant-KIADB had issued letter
dated 03.02.1996 at Ex.D4 indicating that it was in the
process of ascertaining cost of the land would amount to
waiver of violation/breach of terms of agreement?
45. The Co-ordinate Bench of this Court in the case of
Jaleel Sab Vs Surendra Nayak dealing with the question of
waiver, at paragraphs 8 and 9 has held as under:
“8. In HANEEF SAIT v. SYED ASIF, reported in (2011)1
Kar.L.J. 258, an identical contention was considered by
raising the following point for determination:
“8(ii) Whether, the plaintiff waived his right by
accepting the amount paid by the defendant
along with the reply notice-Ex.P3 and also the
amount paid monthly, in the Courts, during the
pendency of the matter?”
9. The said point was answered as follows:
58
“11. Waiver is not a pure question of law. Waiver is a
question of fact and must be properly pleaded and
proved. No plea of waiver can be allowed to be raised
unless it is pleaded and factual foundation for it is laid in
the pleadings. In the absence of appropriate pleading,
there can be no distinct issue. Hence, there can be no
adjudication of such issue. Adjudication of a dispute by a
Civil Court in a civil suit between the parties are governed
by the rules of pleadings. Indisputedly the plea of waiver
was not taken by the defendant in his written statement
or the additional written statement. There is also no
ground regarding waiver, raised in the appeal
memorandum. Sri.G.R.Mohan, raised the ground only
during the arguments. Thus, Sri.K.Krishna, is justified in
objecting for the ground of waiver being raised for
determination. Though I find merit in the objection raised
by Sri.K.Krishna, still, I would prefer to examine the merit
of the contention.
12. In the case of CHOTU MIA, it was held that,
acceptance of rent which has accrued due subsequent to
the forfeiture and prior to the institution of a suit in
ejectment operates as a waiver of the forfeiture.”
46. There is no pleading by the plaintiff with regard
to waiver or acquiescence by the defendant-KIADB. No
issue in this regard is framed either by the trial Court or by
the First Appellate Court. The burden of proving waiver
and acquiescence is on the person who is intending to
avoid the contract imposing terms of performance.
47. In the absence of any pleading or evidence on
the issue of waiver, which is mixed question of law and
59
fact, the First Appellate Court has however exonerated the
plaintiff company of its short comings on the ground of
waiver. Therefore the First Appellate Court was not
justified in holding that the issuance of letter by the
defendant-KIADB as per Ex.D4 amounted to waiver. In
any case a perusal of the said Ex.D4 would not indicate
that the defendant-KIADB had even remotely agreed or
assured the plaintiff company to execute the deed of sale
as contemplated under clause 8 and 9 of the lease-cum-
sale agreement. In the absence of any pleading regarding
waiver the reasoning assigned by the First Appellate Court
is unsustainable.
48. Necessary to note though the plaintiff company
has sought relief of declaration declaring the order dated
13.01.1997 to be illegal and unauthorized, essentially the
suit is one for specific performance of the agreement of
lease at Ex.P1 through which the plaintiff is seeking
execution of deed of sale. Clause 8 and 9 of the lease
agreement extracted hereinabove specifically provide that
60
the plaintiff company would be entitled for seeking
execution of deed of sale at the end of lease period
provided it has performed all terms of the agreement
particularly clauses 2(p)(1), 2(p)(2) and has committed no
breach thereof. Imperative therefore for the plaintiff to
have made averments and proved the same that it has
performed its part of the terms and conditions of the
agreement enumerated hereinabove and it was always
ready and willing to perform the same. Perusal of the
plaint averments do not indicate compliance of this
requirement imposed under Section 16(c) of the Specific
Relief Act. Paragraphs 15 and 21 of the plaint though refer
to plaintiff claiming that it has always been ready and
willing to perform its obligation under the lease-cum-sale
agreement and that it has performed all its obligation,
there is no further pleading with regard to plaintiff
performing the terms of the lease agreement which are
extracted hereinabove. On the contrary reply and
explanation given by the plaintiff which is also extracted
61
hereinabove would indicate that the plaintiff has neither
performed nor willing to perform the terms of the
agreement. The Apex Court in the case of Mehaboob Ur
Rehman(dead through Lrs) (supra) dealing with
Section 16(c) of the Specific Relief Act at paragraph 15 has
stated as under:
15. Though, with the amendment of the Specific Relief
Act, 1963 by Act No. 18 of 2018, the expression “who
fails to aver and prove” is substituted by the expression
“who fails to prove” and the expression ” must aver”
stands substituted by the expression “must prove” but
then, the position on all the material aspects remains the
same that, specific performance of a contract cannot be
enforced in favour to the person who fails to prove that
he has already performed or has always been ready and
willing to perform the essential terms of the contract
which are to be performed by him, other than the terms
of which, the performance has been prevented or waived
by the other party. As per the law applicable at the
relevant time, it was incumbent for the plaintiff to take
the specific averment to that effect in the plaint. Of
course, it was made clear by this Court in several
decisions, that such requirement of taking the necessary
averment was not a matter of form and no specific
phraseology or language was required to take such a
plea. However, and even when mechanical reproduction
of the words of statue was not insisted upon, the
requirement of such pleading being available in the plaint
was neither waived nor even whittled down. In the case
of A. Kanthamani v. Nasreen Ahmed, even while
approving the decree for specific performance of the
agreement on facts, this Court pointed out that the
requirement analogous to that contained in Section
16(c) of the Specific Relief Act, 1963 was read in its
forerunner i.e., the Specific Relief Act, 1877 even without
specific provision to that effect. Having examined the
62scheme of the Act and the requirements of CPC, this
Court said: (SCC p.660, para 22)“22. Therefore, the plaint which seeks the relief of
specific performance of the agreement/contract must
contain all requirements of Section 16 (c) read with
requirements contained in Forms 47 and 48 of Appendix
‘A’ CPC.”
49. Similarly in the case of U.N.Krishnamurthy(since
deceased) through Lrs Vs A.M.Krishnamurthy at paragraph
45 has held as under:
“45. It is settled law that for relief of specific
performance, the plaintiff has to prove that all along and
till the final decision of the suit, he was ready and willing
to perform his part of the contract. It is the bounden
duty of the plaintiff to prove his readiness and willingness
by adducing evidence. This crucial facet has to be
determined by considering all circumstances including
availability of funds and mere statement or averment in
plaint of readiness and willingness, would not suffice.”
50. The First Appellate Court has not adverted to
the aforesaid legal and factual requirement of the matter
while reversing the Judgment and decree passed by the
trial Court and decreeing the suit as sought for. Judgment
and order of the First Appellate Court is unsustainable
even on this count.
63
RE: SUBSTANTIAL QUESTION OF LAW No.2:
51. One of the contentions urged by the plaintiff is
that the impugned order at Ex.P17 passed by defendant-
KIADB is unsustainable as the same was issued even prior
to expiry of period of 90 days provided in the notice and
that since the termination of lease was under Section 106
of the Transfer of Property Act, the termination of lease
would not be valid before the expiry of period mentioned in
the notice. As such the notice of termination at Ex.P17 is
invalid.
52. Answer to the said contention by the defendant-
KIADB is that under the terms of the lease agreement
defendant-KIADB reserved its right to re-enter the lease
premises in the event of breach of terms of conditions
provided under the lease agreement and that
determination of lease was in furtherance to the said terms
of the lease agreement and is in accordance with Section
111(g) of the Transfer of Property Act.
64
53. Section 111(g) of the Transfer of Property Act
reads as under:
“Section 111 – Determination of lease:- A lease
of immovable property determines –
(g) by forfeiture; that is to say (1) in case the lessee
breaks an express condition which provides that; on
breach thereof the lessor may re-enter.”
54. Clause 4 of the lease agreement provides right of
re-entry in the event of breach or breaches of covenants of
the lease agreement. Relevant portion of the said clause is
as under:
“4. …..
“Provided always that except for non-payment of rent as
aforesaid the power of reentry hereinbefore contained
shall not be exercised unless and until the lessor or the
executive member on behalf of the lessor shall have given
to the lessee or left on some part of the demised
premises a notice in writing of his intention to enter and
of the specific breach or breaches of covenants in respect
of which the reentry is intended to be made and default
shall have been made by the lessee in remedying such
breach and breaches within three months after giving or
leaving such notice.”
55. The notice determining the lease is found at
Ex.P12 dated 06.01.1997. In the said notice defendant-
KIADB has specifically referred to clause 2(p)(1)(i)(ii)(iii)
65
of the lease-cum-sale agreement and has further pointed
out that the plaintiff company had closed its unit and was
not carrying out any production activity and that it had
utilized only 1792.86 sq. mtrs., including oil tank and
pump house as against an extent of 48360 sq. mtrs., of
land and that the lease period stipulated had also expired
without plaintiff utilizing the land as per the proposal given
by it in its project report and the application. As such,
there was total violation of terms and conditions. The
notice further called upon the plaintiff to show cause as to
why the board shall not enter upon unutilized portion of
leased premises after expiry of 90 days from the date of
receipt of the notice in accordance with clause 4 of the
agreement.
56. In response to the said notice plaintiff company
issued a reply dated 29.01.1987 as per Ex.P15 contents of
which is already extracted hereinabove in which the
plaintiff has admitted to have not utilized the allotted land
and expanded its industry as per its application, project
66
report, terms of allotment letter and the lease agreement.
There is no indication of plaintiff intending to make good
the breach or the violation of terms of the lease-cum-sale
agreement.
57. Learned counsel for the defendant-KIADB
submitted that requirement of waiting for the expiry of
period of 90 days before passing of the order of
resumption in exercise of clause 4 and 11 of the lease
agreement would be meaningless in view of reply which is
issued by the plaintiff as per Ex.P15. He submitted that
waiting for the expiry of period of 90 days would be an
exercise in futility as there was not even remote intent or
possibility of plaintiff complying with the terms of the lease
agreement as it had already closed its unit long ago.
58. There is considerable force in the submissions
made on behalf of the defendant-KIADB. The notice at
Ex.P12 specifically pointed out the violation and breaches
committed by the plaintiff company. It had also pointed
67
out Clause 4 of the lease agreement under which
defendant-KIADB intended to re-enter and resume the
unutilized plot. Plaintiff by its explanation given in the
reply as per Ex.P15 has made it more than clear that it was
not possible for it to perform its part of agreement unless a
deed of sale is executed by defendant-KIADB.
59. The aforesaid events indicate that the
determination of lease was under Section 111(g) of the
Transfer of Property Act and not under Section 106 as
contended by the plaintiff.
60. For the aforesaid reasons and analysis, the
reasoning and conclusion arrived at by the First Appellate
Court that since the lease expired, there was no question
of termination of lease is unjustified and unsustainable.
The substantial questions of law are answered
accordingly.
61. The other aspect of the matter is with regard to
contention of learned counsel for the plaintiff regarding
68
notice of termination and impugned order at Ex.P12 and
Ex.P17 having been issued/signed by the person without
authority. Extensive arguments are addressed by learned
counsel for the plaintiff company in this regard. Referring
to paragraphs 27 and 28 of the order of the First Appellate
Court, learned counsel for the plaintiff company submitted
that the First Appellate Court has found that the rescission
of agreement and resumption of the land was
unauthorized. Necessary to note that the First Appellate
Court has extensively extracted the pleadings and the
submissions made by learned counsel for the parties upto
paragraph 41 of its Judgment. The discussions and analysis
has started only after paragraph 42 of its Judgment.
Therefore, reference made to paragraphs 27 and 28 to
contend that the same have been dealt with is incorrect.
In any case the trial Court while answering issue No.2 has
negated the contention of the plaintiff of the orders passed
being unauthorized.
69
62. Learned Senior counsel for the defendant-KIADB
drawing attention of this Court to Section 34B of the
Karnataka Industrial Areas Development Act submitted
that by virtue of amendment to the Act, the Board has
been vested with the power to resume the possession of
the premises in the event of violation of any terms and
conditions of the allotment and if the allottee fails to
remedying the breach within the time so stipulated. He
submitted that exercise of power by the defendant-KIADB
is in consonance with the said provisions of law. He further
submitted that the said provisions of law have to be read
having retrospective effect inasmuch as the said provision
partakes the character of “engrafting an enactment upon
the existing contract”. In this regard he refers to the
Judgment of the Division Bench of this Court in the case of
Commissioner of Income Tax Vs Gogte Minerals
reported in 1995 SCC online Kar 584. At paragraph 6 of
the said Judgment the Division Bench of this Court dealing
with the operative nature of Rule 34 of Mineral
70
Conservation and Development Rules, 1988 on to the
earlier agreements entered into between the Mining
operators and the State Government has held as under:
“6. The lease………………..However, we may advert to the
law in the matter. In a somewhat identical situation in
the case of Indramani Vs W.R.Nathu (supra), the law on
the matter is stated thus by the Supreme Court while
referring to a decision of the Queen’s Bench Division
wherein Cockburn, C.J. said in Duke of Devonshire Vs
Barrow, Haematite Steel Co. Ltd., (1877) 2 QBD 286 that
where two persons enter into a contract, and afterwards a
statute is passed, it `engrafts an enactment upon existing
contracts’ and thus operates so as to produce a result
which is something quite different from the original
intention of the contracting parties, such a statue has, in
effect a retrospective operation. Elaborating, the
Supreme Court observed that it is clear law that a statute
which could validly enact a law with a power to make a
rule or frame a bye-law having retrospective operation
and that position cannot be disputed. If this were so, the
same result.”
63. Learned Senior counsel for the defendant-KIADB,
referring to paragraph 19 of the plaint further submitted
that the plaintiffs have not specifically pleaded that the
issuance of notice and the order is bad for want of
authority of a person who has issued but it is of a very
generic statement of the order being without authority. He
also referred to issue No.2 framed by the trial Court and
the answer which is given by the trial Court referring to
71
Section 31 of the KIAD Act, 1966 in this regard. He also
relied upon the Judgment of the Division Bench of this
Court in the case of Nalini Sunder Vs G.V.Sunder reported
in ILR 2002 Kar 4734 wherein at page 4741 the Division
Bench has held as under:
A party cannot make out a case on the basis of evidence
for which he /she has laid no foundation in the pleadings.
It is fairly well settled that no amount of evidence can
prove a case for a party who has not set up the same in
his/her pleadings.
64. He also referred to Judgment of the Apex Court in
the case of MANISHA MAHENDRA GALA AND OTHERS
VS. SHALINI BHAGWAN AVATRAMANI AND OTHERS
reported in (2024) 6 SCC 130 wherein at paragraph 23
the Apex Court has held as under:
“23. In this connection Shri Ahmadi, learned counsel for
the appellants, relying upon “Ram Sarup Gupta (Dead)
By Lrs. vs. Bishun Narain Inter College & Ors” submitted
that the pleadings must be construed liberally and it is
not necessary that the precise language or expression
used in the statute should be used. The aforesaid
decision lays down that pleadings should be liberally
construed and need not contain the exact language
used in the statutory provision but it does not mean
that the pleadings even if fails to plead the essential
legal requirement for establishing a right, the same be
so construed so as to impliedly include what actually
has not been pleaded more particularly when it happens
to be an essential ingredient for establishing a right.
72
Thus, the aforesaid pleadings cannot be treated to be of
sufficient compliance of the statutory requirement. It is
settled in law that a fact which is not specifically
pleaded cannot be proved by evidence as evidence
cannot travel beyond the pleadings.”
65. In the light of the aforesaid factual and legal
aspect of the matter and in the absence of any specific
pleading in this regard, the contention of the plaintiff
company that the notices and impugned order were issued
by the persons without authority cannot be countenanced.
66. Before parting necessary also to note that by
order dated 13.03.1997 at Ex.P17 defendant-KIADB has
sought to resume 37120 sq. mtrs., of land as per the
sketch enclosed as against total extent of 52093 sq. mtrs.,
of plot in its occupation. In other words the area which is
in occupation of the plaintiff that is 14973 sq. mtrs.
(52093-37120 sq. mtrs.) would be left with the possession
of the plaintiff. Plaintiff would therefore be entitled to seek
necessary conveyance to the extent of the land which is
admittedly utilized and in its possession. Resultantly the
following:
73
ORDER
Appeal is allowed. Judgment and order dated
13.01.2021 passed in R.A.No.31/2009 by the First
Appellate Court is set aside and Judgment and decree
dated 20.12.2008 passed in O.S.No.154/2006 on the file of
the trial Court is confirmed.
Sd/-
(M.G.S. KAMAL)
JUDGE
RU/SBN