Southern Ferro Limited Ferro Limited vs. The Chief Executive Officer

Held

The Court held that the order of resumption passed by the KIADB authority was vitiated for being a non-speaking order and demonstrating non-application of mind. It was found that the authority did not address any of the causes set out by the appellant in its reply to the show cause notice, contrary to the requirements of Section 34-B(3) of the KIADB Act, 1966. The Court also held that the learned Single Judge erred in rejecting the writ petition solely on the inability of the appellant's counsel to satisfy the Court regarding compliance with lease conditions. The Court reasoned that the primary issue was the authority's failure to consider the appellant's submissions. Consequently, the writ appeal was allowed, the order of the learned Single Judge was set aside, and the order of resumption dated 17.10.2017 was also set aside. The authority was directed to conduct a fresh inquiry and pass a considered order after adverting to the grounds set out by the appellant.

Facts

Southern Ferro Limited (the appellant/petitioner) was allotted an industrial site of 15999 sq.mtrs. by the Karnataka Industrial Areas Development Board (KIADB) on 22.02.2010, with possession handed over on 19.04.2012. The appellant faced delays in project implementation due to economic recession and industry-specific issues. KIADB invoked Section 34(B) of the KIADB Act, 1966, issuing a show cause notice for lease termination. The appellant provided reasons for delay, which were acknowledged, and an extension of 120 days was granted. As the project was not completed within the extended period, KIADB issued a notice of hearing. The appellant submitted a reply detailing reasons for delay, including market conditions post-GST, investments made, construction progress, and site-specific challenges. The KIADB passed an order of resumption on 17.10.2017, which the appellant challenged.

Key Issues

1. Whether the order of resumption passed by the KIADB authority is vitiated due to non-application of mind and being a non-speaking order, thereby rendering it arbitrary and unsustainable, as argued by the appellant? 2. Whether the learned Single Judge erred in rejecting the writ petition solely on the ground of the appellant's counsel being unable to satisfy the Court regarding compliance with lease conditions, as contended by the appellant? The appellant argued that the KIADB authority failed to address the specific causes for delay detailed in its reply to the show cause notice, making the resumption order arbitrary and unsustainable. They relied on Section 34-B(3) of the KIADB Act, 1966, which mandates considering the cause shown by the allottee after an opportunity of being heard. The appellant contended that the order did not advert to any of the grounds presented. The respondents (KIADB) did not record any specific arguments in the judgment.