IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14TH DAY OF NOVEMBER, 2019 BEFORE THE HON’BLE MR. JUSTICE SURAJ GOVINDARAJ WRIT PETITION No.24452 OF 2016 (GM-KSSIDC) BETWEEN:
M/S VBL INNOVATIONS PVT LTD HAVING IT’S REGISTERED OFFICE AND WORKS, AT NO.81-82, 7TH MAIN, PHASE-III, PEENYA INDUSTRIAL AREA, BENGALURU-560 058, REPRESENTED BY ITS MANAGING DIRECTOR, SRI HARISH VARDHAN BHUWALKA. ...PETITIONER (BY SRI K B S MANIAN, ADVOCATE) AND:
M/S K S S I D C LIMITED, REGD. OFFICE A.O.BUILDING, INDUSTRIAL ESTATE, RAJAJINAGAR, BANGALORE-560 010 REPRESENTED BY ITS MANAGING DIRECTOR. …RESPONDENT (BY SRI PUTHIGE R RAMESH, ADVOCATE) THE WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THAT THE PART OF THE COMMUNICATION DATED: 23.12.2015 ISSUED BY RESPONDENT (ANNEX-S) BY WHICH THE RESPONDENT HAS REJECTED THE CLAIM FOR PAYMENT OF INTEREST ON THE AMOUNT DEPOSITED TOWARDS THE PLOT COST AND ALSO FOR REFUND OF DELAY PERIOD OF INTEREST PAID BY THE PETITIONER AND ETC., THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R 1. Though this petition is listed for preliminary hearing, with the consent of the counsels for both parties, the same is taken up for final disposal.
2. The petitioner claiming to be in the business of manufacture of leather watch Straps, in response to the notifications issued by the respondent Corporation inviting applications for allotment of Industrial plots in Nelamangala Industrial Area, submitted two applications dated 29.06.2012 and 21.01.2013 for allotment of plots in each of those applications. Said applications were considered by the respondent and ‘A’ type plots at Nelamangala Industrial Estate approximately 2000 Sq.mtrs. each bearing Nos.A-11, A-12 and A-13 were allotted to the petitioner vide allotment letter dated 26.02.2014. In terms of the said allotment, cost of each of the plots was indicated at Rs.1,00,00,680/- and having regard to the payments already made, the balance was requested to be paid within 45 days of receipt of the letter.
3. It is stated that the petitioner was unable to make payment of the said amounts within said 45 days and hence by issuance of a letter dated 07.04.2014 requested for extension of time to enable such payment. Said request was considered by the respondent favourably and the respondent by way of letter dated 12.06.2014 permitted the petitioner to make payment of the balance amount within 30 days of 12.06.2014 albeit with additional interest of 12.5% per annum on the said amount for the delayed period.
4. The petitioner made payment of balance amount on 11.07.2014 i.e., within the extended period of 30 days fixed by the respondent alongwith interest at the rate of 12.5% as demanded by the respondent.
5. It is contended by the petitioner that surprisingly, on 1.08.2015, the respondent informed the petitioner that certain conditions have to be fulfilled and only thereafter allotment would be considered and said allotment now would be on a 99 years lease basis as per the New Industrial Policy announced by Government of Karnataka. The petitioner for the first time came to know about the New Industrial Policy and its applicability to the allotment made to the Petitioner. The petitioner was under the bonafide impression and belief that the allotment of plots were made as per the Rules applicable at the time of allotment as contained in terms and conditions of the notifications dated 19.06.2013 and 02.01.2013 and the same would continue to be applicable to the Petitioner. The petitioner expected that a sale deed would be executed in favour of the petitioner as per the policy applicable at the time of allotment and was not prepared for taking lease of the plots though for a period of 99 years. Hence, the petitioner got issued a legal notice to the respondent contending that the New Industrial Policy was not applicable and since the respondent was insisting on the application of the New Industrial policy to the allotment made to the petitioner, the petitioner would not go ahead with the project as originally envisaged and therefore, requested for refund of the entire money paid by the petitioner along with interest at the rate of 12.75% p.a. calculated from the date on which the amounts were paid by the petitioner to the respondent.
6. It is thereafter that the respondent on 16.09.2015 confirming that the allotment has been made on 26.02.2014 informed the petitioner that there are various amounts to be paid including development charges etc., and that plots are allotted on ‘ As is where is’ basis on 99 years’ lease basis(clause 5). It is for the first time on 16.09.2015 that those terms and conditions were informed to the petitioner. Hence, the petitioner contends that those conditions are not binding on the petitioner.
7. There were various notices/correspondences exchanged between the parties. Petitioner contending that it is the old policy which is applicable to the petitioner and the respondent contending that they are bound by the New Industrial Policy and therefore the demand of the petitioner cannot be accepted, the petitioner finally issued a legal notice to the respondent seeking to be restituted in calling upon the respondent to make payment of the amounts deposited by the petitioner along with interest thereon. In response thereto, respondent on 23.12.2015 refunded certain amount of monies, however deducted 12.5% interest which has been paid by the petitioner on account of delayed payment on 11.07.2014. Respondent also refused to make payment of any interest on the amount paid contending that the New Industrial Policy is applicable thereto.
8. It is aggrieved by the above facts that the petitioner has filed the present writ petition seeking a writ of certiorari for quashing the communication dated 23.12.2015 issued by the respondent, whereunder the respondent rejected the claim for payment of interest on the amount deposited by the petitioner on the ground that the New industrial policy is applicable. Petitioner has also sought for various other reliefs and has furnished calculation of the amounts due from the respondent.
9. On the respondent entering appearance, respondent filed its objections stating that the mistake is on the part of the petitioner, the Petitioner did not make payment of the entire amount before the New Industrial Policy came into force and since no sale deed had been executed before the New Industrial Policy came into force, bt the petitioner and the respondent were bound to follow the New Industrial Policy. Respondent states that the petitioner having defaulted in payment of the monies, resulted in the delay and in the mean-while, New Industrial Policy came into being, therefore, in accordance with the New Industrial Policy, the respondent cannot execute a sale deed, but can only execute a 99 years lease. There is no default on the part of the respondent, respondent has refunded the principal amount received, apart therefrom no amounts have to be repaid by the respondent to the petitioner as interest or otherwise. It is also contended that though the petition is styled and worded to seek for a writ of certiorari, in essence, the petition is one for recovery of money which is a civil dispute and cannot be adjudicated under Article 226 of the Constitution.
10. Respondent further contends that the delay is solely attributable to the petitioner and the petitioner having not paid money on time cannot now contend that the old policy is applicable when infact New Industrial Policy has come into force. The respondent was willing to continue with the allotment albeit as per the New Industrial Policy which terms have been informed to the petitioner, The petitioner having chosen not to go ahead with the allotment the respondent is not liable to make payment of any monies.Respondent on the above grounds seeks for dismissal of the writ petition.
11. I have heard learned Counsel Sri. K.B.S. Manian for the petitioner and Sri. Puthige Ramesh, learned counsel for the respondent-Corporation.
12. During the course of arguments, the contentions placed in the pleadings are reiterated. Apart therefrom, Sri. Manian during the course of arguments has produced the Karnataka New Industrial Policy 2014-2019 and by referring to it submits that the old policy was in force upto 30.09.2014 and it is only after 01.10.2014 that the new policy came into operation. These dates according to him are crucial and relevant for the facts in issue, since processing of the application of the petitioner and the allotment took place prior to 01.10.2014. He contends that the allotment having occurred on 26.02.2014 has been admitted by the respondent in its communication dated 16.09.2015 where a reference has been made to allotment letter dated 26.02.2014, hence, he submits that the allotment is complete as on that date, it is only the formalities thereafter which were required to be completed. He submits that both the parties are ad-idem as regards the date of allotment, the payments being delayed, has no consequence, since any proceedings as regards such delay would have to be in accordance with old policy and not as per the new policy.
13. Sri. Manian has relied on the decision of the Hon’ble Apex Court in the case of INDUSTRIAL ASSISTANCE GROUP, GOVT. OF HARYANA AND ANOTHER vs. ASHUTOSH AHLUWALIA AND ANOTHER, reported in (2001) 4 SCC 359, more particularly para 8 thereof which is reproduced hereunder for easy reference:-
8. “In our view, the impugned order suffers from no infirmity. The appellants could not have, on the basis of the changed policy of 15-7-1996, refused to complete the formalities so far as the 1st respondent is concerned. In the case of 1st respondent there had already been an allotment. Thus the process of allotment had been completed. In this view of the matter the Commission was right in issuing the directions that it did. As the allotment was completed the 1st respondent could not be asked to pay any rate higher than the one on which he had been allotted the plot. We see no reason to interfere.”
14. Relying on the above Shri Manian contends that change in the policy cannot be a ground for the statutory authorities like respondent to apply changed policy to settle an allotment made under the earlier policy.
15. Sri. Puthige Ramesh, on the other hand while reiterating the submission made in the objection statement as detailed above, contends that the petitioner cannot take advantage of his own wrongs and that the delay having been caused by the petitioner and the new Industrial policy coming into being in that interregnum, both petitioner and the respondent are bound by the New Industrial policy. He further contends that the respondent Corporation has refunded the entire amount and therefore it can be mulched with interest on account of the petitioner’s default.
16. In view of the above submissions, the points that arise for determination of this Court are:-
1. Whether the respondent could apply New Industrial Policy 2014-2019 to the case of the petitioner?
2. Whether refusal by the respondent to restitute the petitioner and refund the amount alongwith interest thereon is contrary to the earlier Industrial Policy which was in force till 30th September 2014?.
3. What order?
Point No.1 17. The notifications dated 19.06.2013 and 02.01.2013 whereunder the entrepreneurs were invited to apply for allotment of plots details out in as many as 19 conditions and provides breakup of the amounts to be paid. In terms of the said conditions, initially, the plot would be leased for a period of six years and on compliance of the obligation on the part of the petitioner, a sale deed would be executed. It is on the basis of the said representation that the petitioner applied for allotment of three plots to set up its industrial unit. The applications filed by the petitioner were considered and on 26.02.2014, allotment letters were issued by the respondent in terms of policy then in existence. Unfortunately, the petitioner was unable to make payment of monies, hence, requested for extension of time, which was so granted by the respondent and the petitioner made payment of due amounts within the extended period of time i.e., on 11.07.2014. Respondent having extended time cannot now contend that the petitioner has violated or breached the terms and conditions or that the petitioner has committed default in payment. Respondent has accepted the delay, levied interest thereon and thereafter accepted the balance amount alongwith interest. Therefore, even if there is default which has been committed by the petitioner, the same has been accepted and any rights that respondent had under the allotment against the petitioner has been waived by the respondent.
18. Having received said payments, it is only on 1.08.2015 i.e., nearly 13 months of receipt of the payment, that the respondent has informed the petitioner that some other conditions have to be fulfilled and thereafter the allotment would be considered i.e., only on 99 years lease basis under the New Industrial Policy. Until 01.08.2015, there was no information made available to the petitioner as regards the applicability of the New Industrial Policy.
19. Admittedly, New Industrial policy came into force on 01.10.2014 by which date, the petitioner had made payment of the balance amount on 11.07.2014. Thus it is clear on facts that the New Industrial policy which has come into force from 1.10.2014 would not be applicable to the allotment made to the petitioner.
Point No.2:
20. The demand of the respondent that the allotment would be only on 99 years lease was rejected by the petitioner by its subsequent legal notice and the petitioner has sought for refund of the entire monies with interest at the rate of 12.75% p.a. which was the same rate of interest that the respondent had levied on the petitioner on account of delay in payment by the petitioner.
21. The petitioner having requested for refund of the monies, establishes that the petitioner has given up the allotment. The respondent however persisted by way of its letter dated 16.09.2014 by contending as if a fresh allotment has been made by the respondent to the petitioner on that date and called upon the petitioner to make payment of various amounts as also to comply with various conditions stated therein. It is not understood as to how the respondent could have insisted on the petitioner to continue with the allotment, to make payment of monies and this time, for a lease of 99 years, rather than in accordance with the earlier allotment made. In my view, the petitioner rightly replied to the respondent stating that change in terms on account of change in the policy is not acceptable to the petitioner and therefore called upon the respondent to refund the entire amounts with interest thereon.
22. There were several correspondences between the parties. However, it is not in dispute that the respondent on 23.12.2015 refunded the principal amount paid by the petitioner to the respondent, retaining with it the interest amount paid by the petitioner for the delay in payment by the petitioner and thereafter refused to make payment of any interest on the said amounts to the petitioner. The two payments which are in dispute are as regard interest charged by the respondent which according to the petitioner has to be refunded and further that in view of the allotment having been cancelled by the petitioner on account of the respondent insisting on making New Industrial Policy applicable, the petitioner contends that respondent is liable to make payment of interest on the said amounts from the date of payment by the petitioner.
23. Having come to the conclusion that the New Industrial Policy is not applicable to the petitioner, insistence by the respondent to apply New Industrial Policy to the petitioner was totally uncalled for. Respondent ought to have proceeded with the allotment made under Old Industrial Policy and could not have changed the rules of the game during the process of the game. It is only on account of insistence on the part of the respondent, the petitioner sought for cancellation and refund. There are no other reasons forthcoming from the objections filed by the respondent and other documents which could lay blame on the petitioner for such cancellation and seeking for refund.
24. The transaction between the petitioner and respondent is a commercial transaction, inasmuch as, the petitioner had not only invested money from its funds but also borrowed money from Industrial Development Bank of India(IDBI) to make payment towards allotment. Respondent was well aware of the said borrowing, and the respondent was well aware of the fact that the amounts were paid by the petitioner to establish industrial units. Therefore, it was required of the respondent to pay commercial interest this being a commercial transaction. Infact, in the decision relied on by Sri. Manian, learned counsel for the petitioner, interest at the rate of 18% had been awarded. In the present case, the petitioner has sought for interest at the rate of 12.75% interest per annum. This Court finds that said request for interest on the payment made by the petitioner is just and suitable and said interest has to be awarded.
25. Respondent is not eligible to retain the interest collected from the petitioner. Respondent would have been so eligible, if the allotment had gone through and the petitioner had implemented the project. Insistence by the respondent in applying New Industrial Policy when it was not so applicable to the petitioner in implementing the project has resulted in the present situation, hence, respondent cannot retain the interest amount collected.
26. In the result, the petition is allowed. The refusal by the respondent to restitute the petitioner contained in the letter dated 23.12.2015 is quashed.
27. Consequently, Respondent is directed to make payment of interest at the rate of 12.75% calculated from the date of payment made by the petitioner to the respondent until receipt thereof by the petitioner. Respondent is also directed to refund the interest amount collected by the respondent on account of delay in payment by the petitioner. The above payments to be made within 6 weeks of the receipt of the certified copy of this order. Petitioner at liberty to furnish the same to the respondent once obtained.
Petition is allowed accordingly.
Sd/- JUDGE *mn/-