Facts of the Case

GRV Packages Private Limited, a private limited company incorporated in the year 2021, was promoted by its shareholders for establishing a small-scale industry for manufacturing corrugated boxes used for packing and packaging a wide range of goods by consumer industries. The proposed industrial activity was also intended to generate employment opportunities for local persons in and around Tirunelveli and Kanyakumari Districts.

For establishing the proposed industry, the Petitioner was searching for a suitable location in and around Tirunelveli District. The Petitioner came to know that developed plots were available for allotment with the Respondents at SIPCOT Industrial Park, Gangaikondan, Tirunelveli District, with subsidy provided by the Government.

Accordingly, on 19.05.2022, the Petitioner applied through the online portal for allotment of two developed plots, namely Plot Nos. C-71 and C-75. The Petitioner furnished the requisite particulars and paid Rs.1,44,800 towards the initial deposit, processing fees, GST and other required amounts.

Upon considering the application, the First Respondent allotted Plot No. C-71, measuring 1.33 acres, to the Petitioner through an allotment order dated 12.07.2022.

The plot cost was fixed at Rs.13,30,000 after extending the subsidy provided by the Government. After adjustment of the initial deposit of Rs.1,33,000 paid at the time of application, the balance amount payable was indicated as Rs.11,97,000. In addition, Rs.66,500 was payable towards caution deposit and Rs.100 towards advance lease rent. Thus, the total amount payable was Rs.12,63,600.

Under the allotment conditions, the Petitioner was required to submit an acceptance letter within seven days and pay the entire amount within thirty days from the date of allotment. The due date was 10.08.2022. Failure to comply with the payment requirement would result in automatic cancellation of the allotment.

Although the Petitioner considered the thirty-day period limited, it expected to raise the necessary funds from pending payments. The Petitioner therefore proceeded with the allotment and made the following payments:

  • Rs.66,500 towards caution deposit on 03.08.2022;
  • Rs.50,000 towards land cost on 03.08.2022;
  • Rs.2,00,000 towards land cost on 04.08.2022; and
  • Rs.100 towards advance lease rental.

According to the Petitioner, an amount of Rs.4,49,600 had been paid to the Respondents out of the total amount of Rs.12,63,600, and the balance amount payable was Rs.9,47,000.

As the processing of a bank loan was taking time, the Petitioner submitted a representation dated 10.08.2022, setting out the particulars of payments already made and requesting an extension of two months for payment of the balance amount. The Petitioner also met the officials of the Respondents, explained its position and requested additional time.

Meanwhile, the Petitioner approached the Tamil Nadu Industrial Investment Corporation (TIIC) for a loan under the General Scheme for purchasing the allotted land. At the request of TIIC dated 20.09.2022, the Petitioner submitted a detailed project plan, which was under scrutiny.

According to the Petitioner, TIIC officials informed it that the loan application would be considered favourably but that a minimum period of two months would be required for processing the application in accordance with applicable norms and regulations.

The Petitioner thereafter sent another representation dated 19.09.2022 to the First Respondent, informing it about the loan application submitted to TIIC and requesting an extension of two months for payment of the balance land cost.

However, by order dated 26.09.2022 communicated through e-mail, the Respondents cancelled the allotment of Plot No. C-71 on the ground that the Petitioner had failed to remit the plot cost within the stipulated period.

The Petitioner contended that the cancellation order was issued without considering or passing orders upon its representations seeking extension of time. After the Respondents declined to reconsider the cancellation, the Petitioner approached the Madras High Court by filing the writ petition.

Issues Involved

The principal issues before the Court were:

  1. Whether the cancellation order dated 26.09.2022 concerning the allotment of SIPCOT Plot No. C-71 was liable to be interfered with under Article 226 of the Constitution of India.
  2. Whether the Petitioner could be granted additional time to pay the balance plot cost when the delay was attributed to the time required by TIIC for processing and sanctioning the proposed loan.
  3. Whether the Petitioner’s part payments, representations seeking extension and steps taken for obtaining institutional finance demonstrated sufficient bona fides to justify conditional relief.
  4. Whether the impugned cancellation order should be set aside subject to strict payment conditions and automatic revival of cancellation upon default.

Petitioner’s Arguments

The Petitioner submitted that it had approached the Tamil Nadu Industrial Investment Corporation (TIIC) for financial assistance to ensure payment of the outstanding balance amount towards the allotted industrial plot.

It was argued that the delay in remitting the entire balance amount was connected with the time required for processing and sanctioning the loan.

The Petitioner relied upon the steps already taken towards compliance, including part payments made against the allotment and the representations submitted to the Respondents seeking extension of time.

The Petitioner submitted before the Court that, if an extension of eight weeks were granted, it would be able either to secure the loan or independently mobilise the necessary funds and pay the outstanding balance amount of Rs.9,47,000.

The Petitioner therefore sought setting aside of the cancellation order dated 26.09.2022 and grant of reasonable additional time for payment of the balance plot cost.

Respondents’ Position / Arguments

The Respondents were represented before the Court by learned Standing Counsel.

The impugned cancellation proceeded on the basis that the Petitioner had not remitted the plot cost within the time stipulated under the allotment order dated 12.07.2022.

The allotment terms required payment within thirty days, with the due date falling on 10.08.2022, and provided that failure to make payment within the stipulated period would result in automatic cancellation of the allotment.

Accordingly, the Respondents issued the cancellation order dated 26.09.2022 on the ground of failure to remit the plot cost within the stipulated period.

Important Note: The judgment does not record any further elaborate or separately detailed counter-arguments on behalf of the Respondents beyond the position emerging from the cancellation action and the Respondents’ representation through Standing Counsel. Therefore, no additional argument has been attributed to the Respondents.

Court Order / Findings

The Madras High Court found that the delay in making payment arose because the Tamil Nadu Industrial Investment Corporation (TIIC) was taking time in processing and sanctioning the loan.

The Court granted relief subject to conditions intended to demonstrate the bona fides of the Petitioner.

The Court directed as follows:

  1. The Petitioner shall deposit Rs.1,00,000 within a period of two weeks from the date of the Court’s order.
  2. Subject to compliance with the above condition, the Petitioner shall be permitted to pay the remaining amount of Rs.8,47,000 within a period of eight weeks from the date of the order.
  3. The impugned cancellation order dated 26.09.2022 was set aside.
  4. If the Petitioner failed to comply with the conditions imposed by the Court, the cancellation of the allotment order would stand revived.
  5. With the above observations, the writ petition was disposed of.
  6. No order as to costs was made.
  7. Consequently, the connected miscellaneous petitions were closed.

Important Clarification

The relief granted by the High Court was conditional and not an unconditional restoration of the industrial plot allotment.

The Court specifically linked continuation of the relief to compliance with the payment schedule prescribed in the judicial order. The Petitioner was first required to deposit Rs.1,00,000 within two weeks. Subject to such compliance, the remaining Rs.8,47,000 was permitted to be paid within eight weeks from the date of the order.

The Court expressly clarified the consequence of non-compliance: if the Petitioner failed to comply with the order, the cancellation of the allotment would stand revived.

Thus, the operative effect of the judgment was that the cancellation order dated 26.09.2022 was set aside subject to strict compliance with the Court-directed payment conditions.

Sections / Constitutional Provisions Involved

Article 226 of the Constitution of India — The writ petition was instituted under Article 226 seeking issuance of a Writ of Certiorarified Mandamus.

Relief sought under writ jurisdiction — The Petitioner sought:

  • quashing of the cancellation order dated 26.09.2022; and
  • a consequential direction to grant extension of time for payment of the balance plot cost under the allotment order dated 12.07.2022.

No separate statutory section is specifically recorded in the judgment as the substantive basis of the dispute. The principal provision expressly involved is Article 226 of the Constitution of India.

Link to download the order -https://mytaxexpert.co.in/uploads/1783408718_1354compressed.pdf

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