TMI Blog2016 (12) TMI 1907X X X X Extracts X X X X X X X X Extracts X X X X ..... w of para 5(iv)(j) of the Agreement dated 11.10.2006 whereunder its project has been exempted from PAPRA, 1995? - HELD THAT:- The petitioner s contention that there is no statutory backup to levy the cost of infrastructure development, for there is no such provision in the PAPRA, 1995, is wholly misconceived. Once the petitioner s project is exempted from PAPRA, 1995, the affairs of the parties shall be governed by the terms and conditions of the Agreement dated 11.10.2006. Further, since the External Development Works stand included in the infrastructure development works, there can be no escape but to hold that the petitioner is liable to pay such charges as per the binding contract read with Section 5 of the PAPRA, 1995. It is clarified that since the exemption from PAPRA, 1995 granted to the petitioner was subject to its liability to pay proportionate cost towards infrastructure development works, hence, there was no exemption to it in legal parlance from the levy of external development charges as defined in Section 2(p) read with Section 5 of PAPRA, 1995. What is the effect of para-6 of the Agreement dated 11.10.2006 on the petitioner s claim for exemption from payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of other statutory charges on the petitioner, it cannot be said that the respondents have acted contrary to their promise. Similarly, the petitioner cannot be heard to say that it legitimately expected not to pay the proportionate cost of infrastructure development works even after it agreed to share such liability while entering into agreement. We thus do not find any merit in this contention as well. Whether the action of the respondents in levying EDC/CLU/licence fee etc. is discriminatory, based upon arbitrary and irrational considerations? - HELD THAT:- The petitioner is liable to pay proportionate cost towards infrastructure development works and all the External Development Works as defined in PAPRA, 1995 are by implication included in the infrastructure development works. The inescapable consequence would be that the impugned recovery notices served on the petitioner are fully justified. The respondents may be right to an extent in contending that the petitioner lacks the financial capability to fulfill the promise for which it entered into the Agreement or that it has consistently failed to honour the commitment towards payment of due charges. At the same time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Land Use (CLU) despite exemption of Change of Land Use charges as well as other levies under the Industrial Policy, 2003. The petitioner has also assailed the letter dated 22.11.2012 (P13), asking it to obtain NDC from GMADA as a pre-condition for allowing concessions under the Punjab Apartment and Property Regulation Act, 1995 (in short, the PAPRA, 1995 ). Similar challenge is laid to yet another letter dated 28.08.2012 (P18) requiring the petitioner to obtain NDC from GMADA as a pre-condition for approval of Layout and Zoning Plans submitted by it. A further direction to grant extension of time towards completion of the project on account of delays having been caused by the respondents, has also been prayed for. Facts of the case: (3) The petitioner is a Private Limited Company duly incorporated on 25.11.2005 under the Companies Act, 1956. The main objectives of the petitioner-Company as enumerated in its Memorandum of Association are to carry on the business of real estate and properties including purchase of real estate and development of land/premises/building, creation of plots for the purpose of sale, lease to carry on the business of colonisers developers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the areas other than specified above, intimation by the Industries Department about the location of the proposed unit shall be sent to Chief Town Planner, Punjab, Department of Housing Urban Development, so as to keep the data bank regarding land use updated. 10.4.3 Sale / Transfer of developed infrastructure There shall be no stamp duty on first sale/transfer of developed infrastructure by the developer in industrial parks / complexes as approved by the Department of Industries during the setting up of such areas and subsequently for a period of three years. Thereafter, the normal stamp duty would be chargeable on such transactions. (6) The petitioner-Company on 18.01.2006 applied under the Industrial Policy, 2003 to grant it a special package of incentives for setting up of Information Technology/Industrial Park in an area measuring 125 acres of land with an investment of ₹ 952 crore at SAS Nagar Mohali. The Secretary, Industries and Commerce, Govt. of Punjab vide memo dated 05.05.2006 (P3) informed the petitioner that the Empowered Committee under the Chairmanship of Chief Minister, Punjab had considered the petitioner s proposal in its meeting hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es issued by the Department of Industries Commerce for Industrial Parks shall also be applicable. ix) The State Government will try to ensure that connectivity to power, roads, accessibility, communication, civic and other infrastructure upto project is provided within 240 days from the date the same is applied for to the concerned department/agency/authority/local body on fulfillment of various terms and conditions required in this regard at such rates/fee etc. which shall not be less favourable to them compared to similarly placed projects/customers. x) The project of industrial park shall be exempted from PAPR Act. xi) 50% exemption from electricity duty at current rate for 5 years shall be allowed from the date of release of connection by PSEB. This concession shall, however, be admissible only to such Industrial units which are set up within the area earmarked for industry and start production within 5 years from the date of approval of Industrial Park i.e. 12.1.2006. xii) State Government shall alow the company to connect the project area to the State Transport Network. The State Government shall also allow them to operate their own public transport syst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2006. The said project shall have to be fully implemented and brought into commercial production within the said stipulated period. (ii) xxxx xxxx (iii) The project of Information Technology Park shall be further subject to the provision of the guidelines notified by Department of Industries Commerce. Some of the relevant provision shall be:- a. A minimum of 60% of area will have to be developed as an industrial Pocket, a maximum of 30% of area may be developed as residential pocket and 10% of area can be developed as commercial pocket Government in the Department of Industries may however, reduce the permissible limits for non-industrial use in particular cases. b. xxxx xxxx c. xxxx xxxx d. xxxx xxxx e. Infrastructure development would include roads (including approach roads) water supply and sewerage facilities, common effluent treatment facilities, telecom networks, generation and distribution of power, parking facilities, parks, street lights and such other facilities as are of the common use for industrial activities which are identifiable and are to be commonly used. f. xxxx xxxx g. xxxx xxxx h. xxxx x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be exempted from PAPR Act. k) xxxx xxxx l) xxxx xxxx m) xxxx xxxx n) xxxx xxxx o) xxxx xxxx p) xxxx xxxx q) Proportionate cost of infrastructure development which will be carried out by the State Government in the area where project is located shall be borne by all the developers of Information Technology Park/Industrial Park proportionately. (emphasis applied) (8) Para-6 of the Agreement further says that :- In case the above company fails to comply with provisions of para-5(i), 5(ii) 5(iii) above, within the stipulated period mentioned therein, the concession enumerated in para-5(iv) above shall stand automatically withdrawn and the company shall have no claim or liability whatsoever on the State Government in this regard. The Government of Punjab shall be entitled to recover the cost of the aforesaid relief/concession availed by the Company (as dues recoverable by the Government as arrears of land revenue) under Para 5(iv) above in the event of failure on the part of the Company to fulfill its obligations under Para 5(i), 5(ii) 5(iii) above. (9) The Agreement dated 11.10.2006 culminated into the notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the show-cause notice pointing out that as per the amicable settlement between the parties, a sum of ₹ 200 lacs was paid by it so that GMADA could clear the pending revised Layout Plan/Zoning Plans/Building Plans. The GMADA, however, did not accede to the petitioner s request and served it with the impugned memo dated 10.03.2015 (P17) informing that as per the Punjab Government policy, it was decided to recover the due amount along with interest etc. as per the revised schedule of payment mentioned therein, asking the petitioner to clear the outstanding dues in instalments by 09.10.2016. (14) While assailing the afore-mentioned demand orders, the petitioner s precise case is that the payments made by it have been wrongly appropriated by the respondents towards EDC as no such charges are leviable since the same were actually exempt under the Industrial Policy, 2003. The petitioner is said to have been caught unaware by levying EDC and licence fee contrary to the terms and conditions of the agreement dated 11.10.2006 (P4) executed between the petitioner and the State. The petitioner thus seeks refund of the payments made by it which are said to have been illegally approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Business Rules on 16.03.2012, the cases/files of all such Projects approved by the Empowered Committee stood transferred to the Department of Information Technology vide letter dated 04.04.2013 and as such the detailed reply, if any, is to be filed by the Department of Information and Technology. (18) The Director-cum-Secretary, Department of Information Technology (respondent No.4) has filed a separate reply dated 08.04.2015, which again does not deal with any factual issue except pointing out that GMADA has raised a demand towards EDC and licence fee and the petitioner in its reply dated 10.11.2014 sent to the Department of Information Technology has not taken the stand that EDC or other fees having been exempted, are not payable by the petitioner. The only other reference made is to a letter dated 27.05.2014 asking the petitioner to explain its position for non-payment of outstanding dues. (19) Respondent No.3 GMADA in its written statement has averred that the special package of incentives granted on 05.05.2006 for setting up Information Technology/Industrial Park in an area of 125 acres of land and with an investment of ₹ 952 crores, was valid only for a peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be deposited till 09.04.2015. The petitioner, instead of depositing the said amount, challenged the said demand notice, may be to thwart the payment of outstanding dues. It is also alleged that various complaints, oral and written, have been received against the petitionercompany from the general public/allottees for not honoring the commitments made to such allottees while selling the plots. (23) It has been reiterated that instead of investing ₹ 952 crores within a period of three years or within the extended period till September, 2012, the petitioner has admittedly invested only ₹ 154 crores till 31.03.2014 and is thus guilty of violating the Agreement as well as the basic objective of the Industrial Policy, 2003 which was aimed at providing cascading benefit to the people of the State and not to an individual company who has taken the State for a ride. By way of an additional affidavit, GMADA has also placed on record copies of the Agreements entered into by the State of Punjab with (a) M/s Janta Land Promoters (R6); (b) M/s Chandigarh Overseas Pvt.Ltd. (R7); and (c) M/s Hansa Tubes Pvt. Ltd. (R8) for a comparative analysis of the terms and conditions whereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner allegedly altered its position on account of the assurances given by the respondents and has already made a huge investment of ₹ 150 crores, therefore, the respondents cannot arbitrarily revoke or rescind the incentives and concessions in derogation of the promise given or to the disadvantage of the petitioner. Reliance was placed on two decisions of the Supreme Court in (i) Kasinka Trading Anr. vs. Union of India Anr. (1995) 1 SCC 274; (ii) State of Bihar vs. Kalyanpur Cement Ltd. case (supra); (ii) the only motivation for the petitioner-Company for entering into agreement with the respondents was the incentives to be given under the Industrial Policy, 2003 which expressly include exemption of payment of EDC, licence fee and CLU charges etc. The petitioner went ahead with the Project without making arrangements for any payment towards these multiple charges, was caught unaware and the demands were raised at a stage when the petitioner had already made investments and reached at point of no return; (iii) petitioner-Company has complied with the requisite conditions enumerated in Clause-5 of the Agreement dated 11.10.2006 but the respondents at their end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er:- (a) the area where infrastructure has been developed is defined in metes and bounds; (b) the nature of infrastructure developed in such area is explained; (c) the cost incurred on each component of the infrastructure is quantified; (d) a fair and transparent criteria is evolved for proportionate distribution of such costs on all the beneficiaries, be that they be Industrial Parks Developers, commercial sites or allottees of residential plots within that defined area; No such exercise has been undertaken as may be seen from the impugned notices and the petitioner has not been apprised at all as to what is the criteria of proportionality; (viii) the respondents, especially GMADA have misdirected themselves by treating Infrastructure Development Costs and External Development Charges as one and the same thing. The components of infrastructure development are given in Clause-5(iv)(e) of the Agreement dated 11.10.2006, which are not similar to what is included in External Development Works under Section 2(p) of PAPRA, 1995; (ix) other project developers like Janta Land Promoters Ltd. who are also located in Sector 61 along with the petitioner, stand exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered into with the State Government through the Secretary, Department of Industries and Commerce, Punjab. The State Government has not rescinded the Agreement. GMADA which is a subservient statutory authority of the State, to whom the development works might have been entrusted, has no authority in law to proceed against the petitioner on the premise that the Agreement stands abrogated. GMADA being a developer like the petitioner, is indeed a competitor and cannot be allowed to sit over the Government decisions and to unilaterally determine the petitioner s liability. (28) Shri R.S. Khosla, learned senior counsel for GMADA and Shri Rajesh Bhardwaj, learned Addl. AG Punjab strenuously opposed the petitioner s claim, as according to them, the writ petitions are liable to be dismissed for the reasons that:- (i) Time is the Essence of the Contract and Clause-5(i) of the Agreement provides in specific that the Company shall make an investment of Rs.952 crore including fixed capital investment of at least Rs.1 crore at one location, by setting up of Information Technology Parks Projects in 125 acres of land at Mohali with an investment of Rs.952 crores within a period of three ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition was expressly agreed to by the developer in the case of Hansa Tubes Pvt.Ltd. (supra) as also by the petitioner vide Agreement dated 11.10.2006. In fact, such a condition was conveyed to the petitioner, in no uncertain terms, vide LOI dated 05.05.2006 also [Clause (xvii) of P3]; (v) the exemption from PAPRA, 1995 was conditional and as the petitioner failed to perform the obligations agreed to by it, the exemption got automatically withdrawn; (vi) the petitioner was exempted from payment of licence fee in respect of the area of the project to be developed for industrial purposes and that exemption had never been withdrawn. There was no exemption from payment of licence fee qua the commercial or residential components and the demand raised against the petitioner pertains to the residential and commercial projects only; (vii) the petitioner itself is responsible for the delay in the commencement of its project. Soon after the Agreement between the parties executed on 11.10.2006, the State Pollution Control Board granted no objection on 20.08.2007 (P5 colly) and CLU in respect of 104.08 acres was also granted on 26.09.2007. The Pollution Control Board vide letter dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a legislation. (30) Section 2 of the Act contains the definition clause, the relevant parts whereof have already been reproduced. Section 5 mandates that any promoter, who desires to develop a land into a colony, shall have to apply in the prescribed format with a prescribed fee to the competent authority for grant of permission. Its sub-sections (1), (5), (6) (7) are reproduced below:- (1) Any promoter, who desires to develop a land into a colony, shall make an application in the prescribed form alongwith the prescribed information and with the prescribed fee to the competent authority for grant of permission for the same and separate permission will be necessary for each colony. (2) xxxx xxxx (3) xxxx xxxx (4) xxxx xxxx (5) The promoter shall enter into agreement undertaking to pay proportionate development charges for External Development Works to be carried out by the Government or a local authority. (6) The competent authority shall determine the proportion in which, and the time within which, the estimated development charges referred to in sub-section (5) shall be paid to the State Government, or the local authority, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, 1995? iii) What is the effect of para-6 of the Agreement dated 11.10.2006 on the petitioner s claim for exemption from payment of EDC and other charges? iv) Whether the time prescribed for completion of the project is the essence of contract, and if so, whether it would have any adverse effect on the petitioner s claims after the expiry of the extended period? v) Whether the respondents are bound by the principles of legitimate expectation and promissory estoppel and consequently are debarred from levying EDC on the petitioner? vi) Whether the action of the respondents in levying EDC/CLU/licence fee etc. is discriminatory, based upon arbitrary and irrational considerations? Point Nos.(i) (ii) (34) For the correct appreciation of these issues, it is necessary to make reference firstly to Clause 10.4.1 of the Industrial Policy, 2003 which in so many words declared that in order to facilitate and encourage private participation in Industrial Parks/Estates/Information Technology Parks etc., the private or joint sectors shall be exempted from PAPRA, 1995. It was in conformity with the said policy that the petitioner s project to set up information technol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facilities, telecom networks, generation and distribution of power, parking facilities, parks, street lights and such other facilities as are of common use for industrial activities which are identifiable and are to be commonly used . (37) From the comparative analysis of the above reproduced two expressions, there should remain no doubt that the Infrastructure Development is a very expansive phrase which includes the External Development Works as well. Infrastructure Development Works are of wider configuration to include certain works which do not find mention amongst the External Development Works . The State Government who alone is the competent authority to grant exemption from the provisions of PAPRA, 1995, while granting special package of incentives including exemption from PAPRA, 1995, has by way of a special clause fastened the liability of paying proportionate cost of infrastructure development on the petitioner. Such a special clause obligating the petitioner to pay proportionate cost of infrastructure development has been expressly inserted in the Agreement also. Not only this, the infrastructure development works have been illustratively defined in the Agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner on 11.10.2006. The State Government thereafter at its own has extended the time limit repeatedly and its latest policy dated 06.02.2015 (R3) conclusively establishes its inclination towards the completion of projects by granting concession/relief in the agreed time schedules, for which an offer has been made even to the petitioner also. Since the respondents themselves are not keen to adhere to the time schedule, we hold that GMADA has no authority to assume the role of State Government or to invoke Para 6 of the Agreement to say that the petitioner has lost its right to claim concessions due to the expiry of time period, within which the project was required to be completed. Point No.(v) (41) The petitioner s claim that the respondents are estopped by their act and conduct from levying EDC or that after exemption from PAPRA, 1995, it legitimately expected not to be burdened with EDC has to be held to be misconceived and misdirected in view of the findings returned on point Nos.(i) (ii) above. The State Government while granting special package of incentives on 05.05.2006, expressly informed the petitioner of its liability towards proportionate cost o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . who challenged the levy of EDC and claimed parity with M/s Janta Land Promoters and Chandigarh Overseas. A Division Bench of this Court to which one of us (Surya Kant, J) was a member, turned down the plea of discrimination vide order dated 29.09.2014 passed in CWP No.23053 of 2010 (Hansa Tubes Pvt. Ltd. Vs. State of Punjab Ors.) and held that :- Thus, whereas in the agreement in Janta Lands' case, there was no specific qualification to the condition of ensuring connectivity to power, roads etc., in the present case, it is clearly stipulated that the proportionate costs of any infrastructure upgradation would be borne by the Company. Hence, as regards external development charges, both the cases run on their own facts, as per the agreements entered into by Government, with different companies. Therefore, as already held by us, external development charges are very much payable by the petitioner in the present case, even though they were not payable by M/s Janta Land Promoters Ltd. (43) For the reasons assigned in M/s Hansa Tubes Pvt. Ltd., the petitioner cannot claim parity with M/s Janta Land Promoters case. Needless to say that the terms and conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Section 32 of PAPRA, 1995 by way of Notification dated 29.10.2009. Secondly, the said notification is not under challenge in petitioner s both the writ petitions. Thirdly, there is even otherwise no prayer made by petitioner to exempt it from such statutory charge. Fourthly, the demand has an express statutory back-up. Save where the Court finds wrong with a provision of the Statute, it ought to be given full effect. (48) As a result of the above discussion and findings, it is reiterated that the petitioner is liable to pay proportionate cost towards infrastructure development works and all the External Development Works as defined in PAPRA, 1995 are by implication included in the infrastructure development works. The inescapable consequence would be that the impugned recovery notices served on the petitioner are fully justified. (49) Having held so, we cannot be oblivious of the fact that the time schedule extended by the State Government under its new policy dated 06.02.2015 (R3), for giving one more opportunity to the project promoters to clear the outstanding amount of EDC/licence fee etc. has since expired. The respondents may be right to an extent in contending t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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