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TMI Blog2008 (1) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited (APCL) is a small scale industry. APIIC allotted scheduled land to APCL on 22-4-1989. As per said allotment order, the land was meant for construction of godown and storage tanks. The allottee paid an amount of Rs. 52,324.80 towards full provisional cost. APIIC and APCL entered into an agreement on 16-7-1990 and possession was handed over to APCL on 20-7-1990. The agreement inter alia provided that allottee company shall commence construction of godown and storage tanks within three months and complete within eighteen months, in default of which vendor was given right to resume possession treating occupation as trespass/encroachment. Agreeing with all conditions, APCL gave Bank guarantee on 22-8-1988 for Rs. 14.50 lakhs to meet the enhanced cost of acquisition of scheduled land. There was, however, no enhancement of compensation and thus the allottee is deemed to have paid entire sale consideration of Rs. 52,324.80. 3. APCL was directed to be wound up by order of this Court dated 10-4-1998 in RCC No. 4 of 1997 and OL attached to this Court was appointed as liquidator of the company. The liquidator however did not take any steps till APIIC moved present application. A repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her APIIC as vendor of immovable property is in law entitled to determine the contract of sale and resume possession of the land. As mentioned earlier, the fact of the matter is not in dispute. The company in liquidation admits that APIIC acquired the land admeasuring Acs. 1.09 gts and became owner. On an application made by APCL, scheduled land was allotted and agreement was entered into. The allotment was subject to certain conditions. Relevant conditions are clauses 14(a), 14( b), 18 and 19. They read as below : "14. Provided always that it is agreed expressly by the party of the second part to hold the scheduled land as follows :- (a )The scheduled land shall always be utilized for the bona fide specified industrial purpose herein before written and shall not be put to any other use without obtaining prior written sanction of the Party of the first part. (b)The Party of the second part shall within three months of being put in possession of the scheduled land commence construction of godown, buildings and storage tanks and complete them within 18 months duly obtaining necessary approvals for plans from the competent authorities like Inspector of Factories, local body, Public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mortgagee." [Emphasis supplied] 5.1 Analysing above three clauses, the following consensus ad idem between parties can be culled out : (i) Scheduled land shall have to be utilized by the allottee for bona fide specified industrial purpose and not for any other purpose; (ii) Scheduled land should be utilized for storage of Orthoxylene in not later than two years being put in possession of scheduled land and commence constructions of godown and storage tanks and complete within 18 months. This should be done after obtaining necessary approvals within three months; (iii) If the land is kept unutilized for a continuous period of six months and it is, in the opinion of APIIC, in excess of requirement of allottee or remains unutilized, APIIC has right to resume unutilized portion of the land; and (iv) If the allottee commits breach of any of the covenants, the allotment stands cancelled, agreement shall stand determined without any notice and the allottee shall be treated as encroacher or trespasser giving right to resume the land. 5.2 The clauses extracted herein above do not depend on the fact whether the allottee paid the entire sale consideration or part of sale consideration. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it relates to one which could legally constitute the condition of the creation of an interest'. If the condition is invalid, it cannot be set up as a condition precedent for crystallization of the interest created. The condition that the industrial unit shall be established within a specified period failing which the interest shall cease, is a valid condition. Clause 7 of the Agreement between the parties, is, therefore, valid and is binding on the parties thereto. ** ** ** 20. Here the agreement was entered into between the Corporation and the allottee as a sequel to the request made by the allottee to give him an industrial plot for the purpose of setting up an industry. Corporation reciprocated to the request on being satisfied that the allottee was able to carry out the obligations so as to accomplish the purpose of allotment. The assurance given by of the allottee that he shall start construction of the building for setting up the industry within a period of six months and complete the construction thereof within two years from the date of issue of allotment letter was verified and found acceptable to the Corporation and then only the Corporation has chosen to enter i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m towards cost of IDA land in Patancheru. This was accepted and an amount of about Rs. 75 lakhs was adjusted towards Patancheru land after forfeiting certain amounts like EMD. The balance amount of about Rs. 35 lakhs was not paid and therefore, by proceedings, dated 31-1-2006, APIIC cancelled allotment of land at Patancheru. In the meanwhile, they were informed by Official Liquidator that the company was ordered to be wound up. Official Liquidator also filed CA No. 266 of 2006 for quashing the cancellation of allotment as the same was done without notice and without permission of this Court. Reliance was placed on Indu Kakkar's case (supra) in justification of cancellation. This Court distinguished the said Judgment. While placing reliance Teri Oat Estates (P.) Ltd.'s case (supra), Ananda Reddy, J., came to the conclusion that extreme action of cancellation of allotment and resumption of land should be resorted to as a last resort. In the facts and circumstances of the said case, this Court thought it fit that it is not a case for cancellation of allotment. 9. In Teri Oat Estates (P.) Ltd.'s case (supra), Union Territory of Chandigarh allotted lands on leasehold basis. Such allotm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be used or not will depend on factual matrix obtaining each case which has to be viewed separately, no hard and fast rule can be laid. Earlier decision of Supreme Court in Indu Kakkar's case (supra) was not brought to the notice of Bench which decided Teri Oat Estates (P.) Ltd.'s case (supra). Secondly, the same cannot be taken as an authority laying down that cancellation of allotment of an industrial part should not be resorted even when the allottee failed to pay the agreed amount of consideration and/or failed to comply with binding covenants of agreement/sale deed in completing construction of industrial shed, establish plant and machinery and commencing production. Teri Oat Estates (P.) Ltd.'s case (supra) was a case where the allottee failed to pay the amount and it is not a case of not utilizing the land. Therefore, Supreme Court came to the conclusion that extreme step of cancellation of allotment is not warranted. In Indu Kakkar's case (supra), industry was not established within the stipulated time as per the binding covenant. For these reasons, this Court is not inclined to treat Teamasia Lakhi Semiconductors Ltd.'s case (supra) is binding decision. The same was deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... response thereto, company informed that they are not in a position to make any construction work on the land allotted to them as revival package is not finalized. At that stage, BIFR sent their opinion to wind up APCL under section 20 of SICA Act. This Court passed orders on 10-4-1998 in R.C.C. No. 4 of 1997 for winding up of the company. Having completed pre-cancellation/resumption procedure like issuing show-cause notice and giving sufficient time to APCL, APIIC moved present application seeking permission for cancellation because when Court liquidation proceedings are pending, APIIC could not have cancelled the allotment without leave of this Court. 13. That the agreement dated 16-7-1990 is binding on APCL, is not denied. Learned Counsel for OL however submits that when there is interpolation in clause 14(b) of the agreement, the same cannot be enforced in a Court of law. According to him, words and sentence written in handwriting in clause 14(b), [shown in underlined italics in extract (supra)], amount to material alteration and based on such unilateral changes in agreement, APIIC cannot enforce such clause. This submission cannot be accepted for reasons more than one. 14. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to an extent of Rs. 36,54,821.25. The appeal was filed before Supreme Court. Inter alia it was contended that when the policy was amended to include entire factory premises, it was improper to assess damage only with reference to property inside the factory shed. The Supreme Court having noticed the correspondence between the parties observed that, "when the terms of the contract have been reduced to writing, it cannot be changed without mutual agreement of both the parties" and that, "though the insured suggested amendments, the insurer did not accept for the amendment except to change the name of Bank and accordingly the amendment is not binding on the insured." The following principle was laid down with regard to interpretation of a contract between the parties: "In this connection, it may also be relevant to mention here that when this proposal was approved the same was sent to the complainant and the complainant wanted some amendments in both policies i.e., coverage of goods lying outside plant including the expression factory-cum-godown as there was no godown in existence but those amendments were not agreed to by the insurance company, they only agreed to make amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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