Lakshmi Metallurgy Limited vs. Govt Of Andhra Pradesh

Held

The Court held that the decision-making process of the administrative authority (respondents) suffered from non-consideration of relevant facts and non-application of mind, exhibiting illegality, irrationality, and procedural impropriety. The Court directed the Petitioner to pay a penalty of 3% on the prevailing cost of the allotted land to the respondent within one month. Upon payment of this penalty, the 4th respondent was directed to issue the NOC and execute the Sale Deed in favor of the Petitioner, in compliance with proceedings No 20559/DW/D10/IP/GMD/07 dated 17.05.2016, within fifteen days. The Court also stipulated that reasonable time for project completion would be afforded from the date of issuance of the NOC or execution of the Sale Deed. The ratio decidendi is that administrative authorities must act reasonably and consider all relevant facts before making decisions, and that delays beyond an allottee's control, when diligently addressed, should not lead to arbitrary cancellation or denial of essential clearances.

Facts

Lakshmi Metallurgy Limited (Petitioner) sought a Writ of Mandamus against the Government of Andhra Pradesh and other respondents, directing them to issue a No Objection Certificate (NOC) and execute a Sale Deed for Plot Nos. 67, 69, 70, 71, 72, and 73 in Industrial Park, Gajulamandyam, Chittoor District. The Petitioner had been allotted these plots for a Ferro Alloys Industry project. Despite completing approximately 70% of construction work and facing significant delays in obtaining statutory approvals and financial assistance from ICICI Bank (which required an NOC), the Petitioner encountered repeated issues with the respondents. The respondents initially levied penalties for delays, then waived them, but later rejected the Petitioner's requests for NOC and extension of time, ultimately cancelling the allotment and seeking forfeiture of the Earnest Money Deposit (EMD). The Petitioner had previously filed WP 8322/2016, which was under interim suspension. The Petitioner fulfilled various conditions, including paying penalties and service tax, and agreed to withdraw the earlier writ petition upon receiving the NOC and a 12-month extension. However, the respondents continued to demand further amounts and documentation, leading to the present writ petition.

Key Issues

1. Whether the inaction of Respondents 2-4 in issuing NOC/executing Sale Deed for the allotted plots, despite the Petitioner's compliance with proceedings No 20559/DW/D10/IP/GMD/07 dated 17.05.2016, is arbitrary, illegal, and a misuse of power violating Articles 14 and 19 of the Constitution of India? 2. Whether the Respondents should be directed to issue NOC/execute Sale Deed without imposing penal conditions for the execution of the sale deed in favor of the Petitioner? Petitioner's arguments: The Petitioner contended that the respondents' continued silence and inaction on their numerous representations were arbitrary, illegal, and procedurally improper, amounting to a non-consideration of relevant facts and non-application of mind. They argued that they had diligently pursued project development and faced delays due to factors beyond their control, including obtaining statutory approvals and securing financial assistance. The Petitioner also claimed that similar allotments to other parties with less progress had not been cancelled. They sought directions to issue the NOC and execute the Sale Deed without penal conditions, and to grant reasonable time for project completion. Respondents' arguments: The respondents contended that the Petitioner had acted with mala fide intention and failed to fulfill the conditions for the extension of time granted. They argued that the Petitioner intentionally delayed the project by submitting demand drafts for partial payments of the EOT penalty, which were returned, and by not taking steps to fulfill the conditions stipulated in the APIIC letter dated 17.05.2016.