Judgment:
IN THE HIGH COURT OF JHARKHAND AT RANCHI L. P. A. No. 344 of 2014 with L. P. A. No. 345 of 2014 --- L. P. A. No. 344 of 2014 M/s. P.P.G Steel Pvt. Limited … … Appellant Versus The State of Jharkhand and Others … … Respondents L. P. A. No. 345 of 2014 Adityapur Industrial Area Development Authority … Appellant Versus M/s. Gyan Press Metal Pvt. Ltd. and Others … … Respondents --- CORAM:HON'BLE MR.JUSTICE VIRENDER SINGH, CHIEF JUSTICE :HON'BLE MR. JUSTICE RONGON MUKHOPADHYAY --- For the Appellant :Mr. Sumeet Gadodia, Advocate (In LPA No.344/2014) For the Respondent-AIADA :Mr. V. P. Singh, Senior Advocate For the Respondent No.1 :Mr. Indrajit Sinha, Advocate (In LPA No.345/2014) For Proforma Respondent No.4 : Mr. Sumeet Gadodia, Advocate (In LPA No.345/2014) For the Intervenor : Mr. Rupesh Singh, Advocate --- C.A.V. on 30.11.2015 Pronounced On – 1.02.2016 --- I. A. No. 1118 of 2015: This interlocutory application has been preferred by M/s. Alliance Industries seeking permission to intervene in L.P.A. No. 344 of 2014. Heard Mr. Rupesh Singh, learned counsel for the proposed intervenor and Mr. Sumeet Gadodia, learned counsel for the appellant – M/s. P. P. G. Steel Pvt. Ltd. Mr. Rupesh Singh, learned counsel for the proposed intervenor has submitted that the auction sale of the mortgaged/hypotheticated assets of M/s. Fancam Engineers was carried out by Bihar State -2- Financial Corporation in favour of M/s. Gyan Press Metal Pvt. Ltd. Learned counsel submits that at the request of the Director of M/s. Gyan Press Metal Pvt. Ltd., the proposed intervenor had accepted the proposal of re-payment to B.S.F.C. on behalf of M/s. Gyan Press Metal Pvt. Ltd. with a condition to transfer the said land in favour of Alliance Industries. Learned counsel further submits that the Director of M/s. Gyan Press Metal Pvt. Ltd. - Mr. Yashpal Singh had defrauded M/s. Alliance Industries and got the land of M/s. Fancam Engineers re- allotted in his name. Learned counsel further submits that behind the back of the proposed intervenor, Mr. Yashpal Singh had entered into a similar transaction with M/s. P. P. G. Steel Pvt. Ltd. assuring him transfer of the assets of M/s. Fancam Engineers. It has further been submitted that the entire act of M/s. Gyan Press Metal Pvt. Ltd. in connivance of M/s. P. P. G. Steel Pvt. Ltd. was in order to keep the proposed intervenor in the dark and it was deliberately not made a party in the writ application. Since the proposed intervenor is going to be affected by any order passed by this Court with respect to the present appeal, it being a necessary party deserves to be impleaded as a party-respondent. At this, Mr. Sumeet Gadodia, learned counsel for the appellant – M/s. P. P. G. Steel Pvt. Ltd. submits that the proposed intervenor is never an interested party and the entire transaction with respect to the transfer of land by M/s. Gyan Press Metal Pvt. Ltd. to M/s. P. P. G. Steel Pvt. Ltd. does not concern the proposed intervenor as he also does not have any legal right to claim handing over/surrender/re- allotment of the land in its favour. In the writ application preferred by M/s. P. P. G. Steel Pvt. Ltd., the proposed intervenor was never made a party. The entire episode with respect to re-allotment of the land is between the private players M/s. Gyan Press Metal Pvt. Ltd. and M/s. P. P. G. Steel Pvt. Ltd. Although the lease deed of the proforma respondent was cancelled vide order dated 07.09.2013 by the Managing Director, AIADA, the Alliance Industries Ltd. neither filed any intervention application nor has been able to show as to how the proposed intervenor is an interested party. Merely because contention has been raised with respect to auction sale of M/s. Fancam Engineers Ltd. by M/s. Gyan Press Metal -3- Pvt. Ltd., the proposed intervenor at this stage cannot claim itself of being a necessary party to the present proceedings. Accordingly, this application being devoid of any merit is hereby dismissed. L. P. A. Nos. 344 & 345 of 2014: Both these appeals arise out of a common order dated 06.08.2014 passed in W.P.(C) No. 1181 of 2014 with W.P.(C) No. 1273 of 2014 and therefore, the appeals are being disposed of by this common order.
2. The facts appearing in both the cases are intertwined and which are referred to in the following paragraphs:
3. M/s. Fancam Engineers, Hindustan Building, Jamshedpur was alloted plot no. M-8, 6th Phase, Adityapur Industrial Area, Gamharia having an area of 1.5 acres by Adityapur Industrial Area Development Authority (hereinafter referred to as the 'AIADA' for the sake of brevity) vide letter no. 2577 dated 30.08.1996 and accordingly possession of the said plot was delivered to M/s. Fancam Engineers on 09.11.1996. M/s. Gyan Press Metal Private Ltd. (Petitioner in W.P.(C) No. 1273 of 2014) purchased the mortgaged/hypotheticated assets of M/s. Fancam Engineers from Bihar State Financial Corporation, Patna vide letter dated 03.05.2000 on failure of M/s. Fancam Engineers to repay the loan of financial corporation. Pursuant to the purchase of the mortgaged/hyotheticated assets by M/s. Gyan Press Metal Private Ltd., the allotment of plot no. M-8, 6th phase, Adityapur Industrial Area was considered by AIADA in terms of the approval of the Project Clearance Committee/Land Allotment Committee in its meeting held on 04.03.2005. Vide letter no. 1693/ADA dated 01.08.2005 issued by AIADA, the possession of the land was given to M/s. Gyan Press Metal Pvt. Ltd. on 04.12.2008 and a lease deed dated 22.03.2010 was also executed by AIADA in favour of M/s. Gyan Press Metal Pvt. Ltd. Since M/s. Gyan Press Metal Pvt. Ltd. could not run its industrial unit and no longer required the land for the purpose of which it was leased out, in exercise of its power under Clause 6(v) of the lease deed executed a deed of surrender dated 07.09.2010 for re-allotment of the land in favour of M/s. P. P. G. Steel Pvt. Ltd. (writ petitioner in W.P.(C) No. 1181 of 2014). An approval was also sought for by M/s. Gyan -4- Press Metal Pvt. Ltd. from the Managing Director, AIADA intimating him about the deed of surrender with a request to re-allot the plot in question to M/s. P. P. G. Steel Pvt. Ltd. M/s. P. P. G. Steel Pvt. Ltd. had also requested AIADA vide letter dated 08.09.2010 to process its application for re-allotment of the land in its favour. In the 100 th meeting of the Board of Directors of AIADA held on 23.02.2011, a decision was taken not to allot land on the basis of deed of surrender and accordingly, further process for re-allotment of the land in favour of M/s. P. P. G. Steel Pvt. Ltd. was suspended. However, in its 101 st meeting held on 30.09.2011, the Board of Directors had reconsidered the case of 17 industrial units for transfer of lease/re-allotment pursuant to the deed of surrender including that of M/s. Gyan Press Metal Pvt. Ptd. and a decision was taken at the said meeting to consider and re-allot the lands in question in favour of 17 industrial units including M/s. P. P. G. Steel Pvt. Ltd. and the said decision was taken in terms of Clause 6(v) of the lease deed. AIADA in its letter dated 08.02.2012 issued a show-cause notice to M/s. Gyan Press Metal Pvt. Ltd. to reply as to why the allotment in its favour should not be cancelled as the production of the industrial unit had not commenced. Reply was duly given bringing to the notice of AIADA, the fact that a deed of surrender in favour of M/s. P. P. G. Steel Pvt. Ltd. was already executed. The Managing Director of AIADA vide his order dated 07.09.2013 cancelled the lease deed of M/s. Gyan Press Metal Pvt. Ltd. on the ground that it has violated the terms and conditions of the land allotment order and the lease deed including violation of the terms and conditions of the industrial policy. M/s. P. P. G. Steel Pvt. Ltd. being aggrieved by the order of the Managing Director of AIADA dated 07.09.2013 preferred an appeal being Appeal No. 17 of 2013 before the Secretary, Department of Industries which however was dismissed on 28.01.2014 treating the appeal as not maintainable at the instance of M/s. P. P. G. Steel Pvt. Ltd. as it was never the allottee of the land in question.
4. Being aggrieved by the order dated 07.09.2013 passed by the Managing Director, AIADA, M/s. Gyan Press Metal Pvt. Ltd. preferred a writ application being W.P.(C) No. 1273 of 2014. Similarly M/s. P. P. G. Steel Pvt. Ltd. being also aggrieved by the order dated 07.09.2013 passed by the Managing Director, AIADA as well as the subsequent -5- dismissal of the appeal by the Secretary, Department of Industries preferred a separate writ application being W.P.(C) No. 1181 of 2014. Both the writ applications were heard and disposed of vide order dated 06.08.2014 in which the order dated 07.09.2013 was quashed and whereas W.P.(C) No. 1273 of 2014 was allowed, W.P.(C) No. 1181 of 2014 was disposed of in view of the judgment of this Court in M/s. Acropoly Metals Industries Pvt. Ltd. Vs. State of Jharkhand and others (L.P.A. No. 204 of 2011) with a further direction that AIADA shall deal with the lands of AIADA strictly in accordance with the guidelines of the State Government and without such guidelines and regulations AIADA shall not alienate or transfer any of its lands.
5. Aggrieved by the order dated 06.08.2014 passed in W.P.(C) No. 1181 of 2014, M/s. P. P. G. Steel Pvt. Ltd. has preferred L.P.A. No. 344 of 2014, whereas AIADA also being aggrieved by the order dated 06.08.2014 has also preferred a separate appeal being L.P.A. No. 345 of 2014.
6. Mr. Sumit Gadodia, learned counsel appearing for the appellant in L.P.A. No. 344 of 2014 has submitted that the learned Single Judge had erred in relying upon the case of “M/s. Acropoly Metals Industries Pvt. Ltd.” (supra) in view of the observations made with respect to the transfer. It has been submitted that the Jharkhand Industrial Policy of 2012 has come into existence on 16.06.2012 w.e.f. April 2011 and in terms of the said Industrial Policy which recognises transfer simplicitor or transfer by surrender simplicitor has not been considered by the learned Single Judge while making such observations. It has been submitted that in the order which was impugned in the writ application passed by the Managing Director, AIADA dated 07.09.2013 also reflects that the Managing Director did notice the subsequent policy of the State Government. Mr. Gadodia, furthering his argument has submitted that the judgment in the case of “Acropoly Metals Industries Pvt. Ltd.” (supra) will have no bearing in the case of the appellant in view of the subsequent introduction of the industrial policy and therefore, the order passed by the learned Single Judge with respect to the appellant is liable to be set aside. In this context, learned counsel for the appellant has also relied upon the various provisions of the Jharkhand Industrial Policy more notably Clause 12.11.1 (d), Clause 12.9, Clause 12.12.1 and Clause 12.15. It has also been submitted -6- that Clause 6(v) of the lease deed categorically mentions that the lessee may transfer the leasehold right to any other party for industrial purpose for the remaining period of the lease. Summing up his argument, learned counsel for the appellant has submitted that in terms of Clause 6(v) of the lease deed and the industrial policy formulated by the State of Jharkhand, there cannot but be one conclusion that the land in question should have been re-alloted in favour of the appellant.
7. Mr. Indrajit Sinha, learned counsel appearing for the proforma respondent no. 4 (M/s. Gyan Press Metal Pvt. Ltd.) has supported the contentions made by the learned counsel for the appellant by submitting that only the allotment order can be cancelled, but the lease can never be cancelled. Reference has been made to Clause 6(v) of the lease deed by submitting that when before the expiry of 6 months Clause 6(v) is invoked, there is no question of resorting to Clause 6(xiv) of the lease deed. Mr. Indrajit Sinha, learned counsel for the proforma respondent further submits that the judgment in the case of “M/s. Acropoly Metals Industries Pvt. Ltd”. (supra) will not be applicable in view of the coming into existence of the industrial policy and therefore, the learned Single Judge had erred in not considering the prayer of the appellant by resorting to the judgment passed in the case of “M/s. Acropoly Metals Industries Pvt. Ltd” (supra).
8. Mr. V. P. Singh, learned senior counsel appearing for the AIADA has defended the order dated 16.07.2014 passed in W.P.(C) No. 1181 of 2014 by submitting that the learned Single Judge had properly appreciated the judgment in the case of “M/s. Acropoly Metals Industries Pvt. Ltd” (supra) and since there has been a directive that without any regulations or guidelines, AIADA cannot alienate or transfer any of its lands; there is no error with respect to the impugned order. Submissions have been advanced that since the lease deed of M/s. Gyan Press Metal Pvt. Ltd. was itself cancelled for violation of the terms and conditions of the land allotment order as well as the lease deed, the subsequent re-allotment of the land to M/s. P. P. G. Steel Pvt. Ltd. does not arise. While defending the order passed in W.P.(C) No. 1181 of 2014, learned senior counsel has also put forward his argument on behalf of AIADA as challenge has also been made to the order dated 06.08.2014 passed in W.P.(C) No. 1273 of 2014. Mr. -7- V. P. Singh, learned senior counsel has submitted that pursuant to the purchase of the hypotheticated/mortgaged assets by M/s. Gyan Press Metal Pvt. Ltd. from M/s. Fancam Engineers, a lease deed was executed for allotment of the said land on 22.03.2010 by and between AIADA and M/s. Gyan Press Metal Pvt. Ltd. It has been submitted that there is a specific clause mentioned in the lease deed itself being Clause 6(xiv) which stipulates that the lessee would utilise the land for the specific purpose it was allotted for within a period of 6 months from the date of lease, failing which, the lease was liable to be terminated and lessee would be evicted from the land without notice. It has been submitted that since M/s. Gyan Press Metal Pvt. Ltd. did not comply with the said conditions for which the lease was liable to be terminated, it had been show-caused on 08.02.2012 as to why the allotment shall not be cancelled. Moreover, the transfer of the lease deed has to be effected in terms of Clause 6(v) of the same, but with the prior approval of AIADA which was never taken by M/s. Gyan Press Metal Pvt. Ltd. Considering the said circumstance, the Managing Director of AIADA had rightly cancelled the lease deed vide order dated 07.09.2013. Learned senior counsel submits that the learned Single Judge had relied on the meeting of the Board of Directors while quashing the order dated 07.09.2013 passed by the Managing Director, AIADA, but when there is specific provision inserted in the lease deed itself, the question of re-allotment of the said land in favour of the M/s. P. P. G. Steel Pvt. Ltd. at the discretion of M/s. Gyan Press Metal Pvt. Ltd. could not arise and therefore, the order passed in W.P.(C) No. 1273 of 2014 deserves to be set aside.
9. Mr. Indrajit Sinha, learned counsel appearing for the respondent no. 1 in L.P.A. No. 345 of 2014 answering to the submissions of learned senior counsel for the appellant has submitted that the Board of Directors in its 101st meeting held on 30.09.2011 had considered the re-allotment of the land in favour of M/s. P. P. G. Steel Pvt. Ltd. and in the midst of such decision, the order dated 07.09.2013 was passed by the Managing Director, AIADA. It has been submitted that M/s. Gyan Press Metal Pvt. Ltd. had exercised its option in terms of Clause 6(v) of the lease deed by surrendering the land in favour of AIADA for its re- allotment to M/s. P. P. G. Steel Pvt. Ltd. Submission has been advanced that the learned Single Judge had appreciated the fact that -8- when the option of re-allotment had already been processed by AIADA, there was no occasion for passing the order dated 07.09.2013 by the Managing Director, AIADA and therefore, having quashed the order dated 07.09.2013, the learned Single Judge has not committed any illegality.
10. In order to appreciate the contentions made by the learned counsel in both the appeals, it would be practicable to deal with L.P.A. No. 345 of 2014 at the first instance.
11. The impugned order in the writ application dated 07.09.2013 passed by the Managing Director, AIADA reveals that the lease deed had been cancelled in view of the terms and conditions of the lease. Clause 6(v) of the lease deed stipulates that if at any time, the said land or any part thereof shall no longer be required by the lessee for the purpose for which it is leased out to him, the lessee shall surrender it to AIADA or with the prior approval of the AIADA, the lessee may transfer the leasehold right to any other party only for industrial purpose for the remaining period of the lease. Clause 6(xiv) of the lease deed reveals that the lessee shall use the land for the specific period within a period of 6 months from the date of the lease, failing which the lease may be terminated and the lessee shall be evicted from the land without notice. The learned Single Judge had considered the fact that the deed of lease was executed by M/s. Gyan Press Metal Pvt. Ltd. on 06.03.2010 and thereafter executed a deed of surrender in favour of AIADA on 07.09.2010 for re-allotment of the land to M/s. P. P. G. Steel Pvt. Ltd. One of the clauses in the deed of surrender reflects that the surrender of the premises in question was made in favour of the second party – AIADA to re-allot the said plot to M/s. P. P. G. Steel Pvt. Ltd. The earlier decision of the Board of Directors taken in its 100th meeting was reviewed in its 101st meeting held on 30.09.2011 wherein it was decided to re-allot the land in case, where the lessee has failed to start its project for which the land was allotted. Despite such decision which was taken in terms of Clause 6(v) of the lease deed, show-cause notice was issued upon M/s. Gyan Press Metal Pvt. Ltd. and thereafter the impugned order to the writ application was passed on 07.09.2013 cancelling the lease deed. Learned Single Judge had rightly held that M/s. Gyan Press Metal Pvt. Ltd. had exercised its option for surrendering the land in terms of -9- Clause 6(v) of the lease deed and since the option of re-allotment had been processed, Managing Director, AIADA could not have passed the order dated 07.09.2013 by illegally resorting to the provisions of Clause 6(xiv) of the lease deed. As such, the learned Single Judge had rightly held that the order dated 07.09.2013 passed by the Managing Director, AIADA was illegal and therefore, the same was quashed. We do not find any merit in the case of the appellant – AIADA and therefore, L.P.A. No. 345 of 2014 is hereby dismissed.
12. So far as L.P.A. No. 344 of 2014 is concerned, M/s. P. P. G. Steel Pvt. Ltd. is aggrieved by the impugned order dated 06.08.2014 passed in W.P.(C) No. 1181 of 2014 by which the writ application was disposed of and M/s. P. P. G. Steel Pvt. Ltd. was as has been held not entitled to any relief. In order to appreciate the rival contentions which seems to have been focused mainly on the judgment of this Court in the case of “M/s. Acropoly Metals Industries Pvt. Ltd.” (supra) which the learned counsel for the appellant claims gets diluted in view of the coming into force of the Jharkhand Industrial Policy. The Industrial Policy has been noted by the Managing Director, AIADA in his order dated 07.09.2013 and he had taken resort to Clause 12.9 while cancelling the lease deed. Clause 12.11.1 of the Jharkhand Industrial Policy, 2012 reads as under: “12.11.1(i) The lessor may consider the request of the lessee for the transfer of leasehold rights of the schedule property in favour of a new entrepreneur as identified by the lessee during the currency of lease imposing following conditions. (a) The lessee has met all the stipulated requirements of the lease and not violated any of the conditions contained in the lease. (b) the lessee has utilised the leasehold area as per approved project report by IADA. (c) The lessee is not holding any statutory, legal or financial liability of government or financial institutions. (d) The new entrepreneur to whom the lessee wants to transfer the leasehold right must have a viable/feasible/implementable project to be executed on the available plot of land. …...........................”
13. Clause 12.11.1(i) of the Jharkhand Industrial Policy includes the request of the lessee by the lessor for the transfer of the leasehold -10- rights in favour of a new entrepreneur as identified by the lessee. This clause therefore, recognises a surrrender by a lessee in favour of another unit/entrepreneur just as in the present case where the deed of surrender was entered into by M/s. Gyan Press Metal Pvt. Ltd. for re- allotment of the land to M/s. P. P. G. Steel Pvt. Ltd. The recognition of surrender of the leasehold rights is further fortified by virtue of Clause 12.12.1 which reads as under: “12.12.1 The lessor may accept the voluntary surrender of schedule property by the lessee on the following conditions. (a) The lessee has met all the stipulated requirements of the lease and not violated any of the conditions contained in the lease. (b) the lessee has utilised the leasehold area as per approved project report by IADA. (c) The lessee is not holding any statutory, legal or financial liability of government or financial institutions against the plot. (d) The plot of land should be free from all encumbrances.”
14. Therefore, a conjoint reading of Clause 12.11.1 and Clause 12.12.1 can lead to a conclusion that the deed of surrender entered into by M/s. Gyan Press Metal Pvt. Ltd. was well within its rights in conformity with the lease deed as well as in terms of the provisions enumerated above and incorporated in the Jharkhand Industrial Policy 2012.
15. What would thus suffice is that there is already a regulation/policy in place with respect to allotment/re-allotment of the land and this aspect of the matter has not properly been considered by AIADA. The learned Single Judge has also not taken into consideration the subsequent guidelines/policy framed by the State Government and in such circumstance, the order passed in W.P.(C) No. 1181 of 2014 requires to be interfered with.
16. Accordingly, the order dated 06.08.2014 passed in W.P.(C) No. 1181 of 2014 is set aside and the matter is remitted back to the Managing Director, AIADA to pass a fresh order in accordance with law on the question of re-allotment of the land surrendered by M/s. Gyan Press Metal Pvt. Ltd. in favour of M/s. P. P. G. Steel Pvt. Ltd. within a period of six weeks from the date of receipt/production of a copy of this order. -11- 17. As a cumulative result of the discussions made above, L.P.A. No. 344 of 2014 is allowed while L.P.A. No. 345 of 2014 is dismissed. (Virender Singh, C.J.) (Rongon Mukhopadhyay, J) R. Shekhar Cp 2