M/S Continental Chemical Company vs. The State Of Bihar

It is the case of the petitioner that he has been allotted the subject property by the authority on 08.08.2005. 3/13 That thereafter, the same was cancelled by the respondent- BIADA on 17.08.2022 and though the petitioner has preferred a statutory appeal, the same was also dismissed on 21.11.2022. Thereafter, the petitioner has preferred writ petition in this Hon’ble Court vide CWJC No. 16772 of 2022 and this Court vide order dated 22.12.2022 has set aside both the orders of cancellation dated 17.08.2022 in Memo No. 143 and 21.11.2022 passed in Appeal Case No. 218 of 2022. That consequent to the order passed by this Hon’ble High Court in CWJC No. 16722 of 2022, the possession was restored to the petitioner on 01.01.2023. That after the restoration of the physical possession of the plot to the petitioner, the commercial production of the unit has started and continues to do so. However, the respondent-BIADA without putting the petitioner on any show cause notice or giving the petitioner an opportunity of producing any documents to substantiate that the unit is functioning and is in commercial production has taken physical possession of the subject property.

Learned counsel appearing on behalf of the petitioner has submitted that the act of the respondent authority in forcibly taking over the physical possession of the unit without cancelling the allotment made to the petitioner is 4/13 contrary to the provisions of the BIADA Act and also the judgment of this Hon’ble Court passed in CWJC No. 16772 of 2022 dated 22.12.2022. Learned counsel has submitted that the authority without cancelling the allotment has forcibly taken the possession of the subject property solely on the ground that this Court in the earlier round of litigation has granted permission to the respondent-BIADA to take over the possession of the subject property in case the commercial production has not started. Learned counsel has submitted that even for the sake of argument if there was any violation of the terms and conditions of the undertaking given by the petitioner before this Hon’ble Court in the earlier round of litigation, the respondent-BIADA was expected to approach this Hon’ble Court and apprise this Court by way of filing the petition or filing a contempt. However, they could not have taken forcible physical possession of the subject property without approaching this Court or passing an order of cancellation after putting the petitioner notice. Learned counsel has submitted that earlier order of cancellation passed by the Deputy General Manager and also the order passed by the Principal Secretary in the Appeal Case No. 218 of 2022 were both quashed and set aside by this Hon’ble Court. Therefore, there was no occasion for the 5/13 respondent-BIADA to take physical possession of the subject property without any show cause notice. Learned counsel has submitted that had the petitioner been put on prior notice and given an opportunity of filing his explanation, he could have produced documentary evidence to prove that the unit was functioning and in commercial production of allopathic drugs. Further, learned counsel has submitted that the reliance placed by the respondent authority on the two inspection reports are both made to suit their needs, as no prior notice was given to the petitioner prior to the date of inspection. That one of the dates of inspection on i.e., 20.10.2023 was a holiday and the unit was closed on that particular date. Learned counsel has submitted that without cancelling the allotment made to the petitioner, the authority ought not to have taken physical possession of the subject property forcibly and allotted the same to the respondent No. 7 herein. Further, handing over of the possession of the subject property to the respondent No. 7 who is running an IT Industry is contrary to the BIADA own industrial policy and therefore, the same is liable to be set aside. Learned counsel has stated that the petitioner has invested crores of rupees and made the unit functional one and, therefore, the abrupt taking of the physical possession by the respondent-BIADA is contrary to the 6/13 principles of natural justice and equity and also the provisions of the BIADA Act. Learned counsel has therefore, prayed this Hon’ble Court to allow the present writ petition and restore the possession back to the respondent-BIADA.

Per contra, the learned counsel appearing on behalf of the respondent-BIADA has vehemently opposed the very maintainability of the present writ petition. Learned counsel has submitted that the petitioner has not approached this Hon’ble Court with clean hands and further, the prayer sought for in the present writ petition has become infructuous as the respodent-BIADA has taken physical possession of the subject property and allotted it to a third party i.e., respondent No. 7 herein. Learned counsel has submitted that the petitioner in spite of being given ample opportunity, has failed to start commercial production and no effort was made by the petitioner to start production within a time granted by this Hon’ble Court in the earlier round of litigation. Learned counsel has submitted that the petitioner himself has voluntarily given an undertaking before this Court that he will start the commercial production and keep the unit running, but, he has failed to do so. Learned counsel has submitted that the petitioner was put on notice in the Month of April 2023 (Annexure-R/7) and further, the 7/13 inspections have taken place in the Months of October, November and December, 2023 and on physical inspection, it was found that the petitioner has violated undertaking given to this Hon’ble Court. Further, it is stated that the petitioner had to make the unit fully functional for sanctioned products i.e., allopathic drugs but the petitioner has not filed any scrap of paper to substantiate that he is in commercial production of the sanctioned products. That the documents filed by the petitioner reveal that the petitioner is not manufacturing any allopathic drugs but he is only trading in some chemicals which are mainly used for veterinary purposes. Learned counsel submits that in the earlier round of litigation, the respondent-BIADA was authorized to take over the physical possession of the subject property in case the petitioner failed to commence the commercial production as per his own undertaking and the petitioner having failed to hand over the physical possession of the subject property, the respondent authority had to necessarily take the physical possession of the unit. Further, learned counsel has submitted that the documents filed by the petitioner namely the tax receipts, invoices and also the electricity bills reveal that the petitioner’s unit is not in commercial production but the petitioner is only indulging in trading. That the GST returns 8/13 filed by the petitioner clearly establish the fact that there is no commercial activity present and so also the electricity bills filed by the petitioner reveal that there is no manufacturing process that is being conducted by the petitioner as the monthly bills bare minimum. The negligible consumption of electricity of the unit clearly points out to the fact that there is no manufacturing process that is being undertaken by the petitioner. Learned counsel has submitted that the petitioner is habitual offender and in fact, in the earlier round of litigation also, this Hon’ble Court on the basis of undertaking given by the petitioner had given an opportunity to the petitioner to commence commercial production but he has failed to do so. That the principles of natural justice and equity have been complied with, by the authority before taking possession. That the petitioner was put on notice on 03.11.2023 and he has submitted his reply on 06.11.2023 and, thereafter, on finding that the documents and the reply filed by the petitioner to the show cause notice was not substantiated by any proof of any production, a speaking order dated 14.11.2023 was passed. Further, the contention of the petitioner that the IT Parks are not permitted under the BIADA policy is totally misconceived as the Government of Bihar under the new Industrial Incentive Promotion Policy is now permitting 9/13 allotment of land to the service sector specifically IT Parks etc. Learned counsel has submitted that a third party has already been allotted the subject property and therefore, the equities as claimed by the petitioner are not available to him and prayed for dismissing the present writ petition.

Learned counsel appearing on behalf of the respondent No. 7 i.e., third party in whose favor the subject land has been allotted while adopting the arguments made by the learned counsel for the respondent-BIADA has also opposed the very maintainability of the present writ petition. Learned counsel has stated that the respondent No. 7 has been allotted subject property on 21.12.2023 and thereafter, the respondent No. 7 has undertaken the necessary steps for setting up the IT Park. Learned counsel has submitted that the balance of convenience and equities are in favor of the respondent No. 7 and it would not be prudent for this Court to set aside the impugned order and restore the possession back to the petitioner who admittedly is a habitual offender. Learned counsel has submitted that though the petitioner was initially allotted the land way back in the year 2005, the petitioner till date has not done much manufacturing and the same is evidenced by the monthly electricity bills of the unit. Further, the inspection 10/13 reports dated 20.10.2023 & 03.11.2023 reveal that the unit of the petitioner was not functional and the minimum electricity consumption of the unit clearly points out to the fact that there is no manufacturing process being undertaken as claimed by the petitioner. Learned counsel has therefore, prayed this Hon’ble Court to dismiss the present writ petition.

The only issue before this Court is as to whether the respondent-BIADA in cases were the unit in the earlier round of litigation has given an undertaking that they will start commercial production within the time fixed by the Court is has to pass a fresh order of cancellation or not no longer res integra.

A division Bench of this Court in CWJC No. 919 of 2024 along with its analogous cases dated 29.04.2025 has clarified as under; “12. An issue was raised before the learned Single Judge, where such matters are now being adjudicated, that before taking any precipitate action, the BIADA, under the orders passed by the Division Bench, referred to above, was under an obligation to approach the Court first; seek liberty and only then pass any order.

On such a plea by the petitioner, the learned Single Judge referred the matter to the Division Bench for interpreting the order dated 22.11.2022, referred to above, as it was passed by a Division Bench.

A plain reading of the order makes is very obvious that the undertaking was of the writ petitioner.

The aforenoted undertaking was accepted by the Bench and it was directed that in case of any default by the petitioner, he shall hand over the vacant and peaceful possession of the allotted property to BIADA.

This fact had to be communicated to the Court by the BIADA so that necessary action could be taken against the writ petitioner for breach of the undertaking given by him before this Court.

Merely because a part of the order has been couched in such a way so as to suggest that before taking any precipitate action, permission of the Court was necessary, it would not become imperative for the BIADA to first approach this Court and only after seeking liberty, take any action.

This would not be a correct reading of the order of the Division Bench.

The Bench vide order dated 22.11.2022, had only clarified the undertaking given by the writ petitioner and in case of any default, meaning thereby that if the unit would not be started within 60 days or would not be made fully functional or operational within six months, the vacant and peaceful possession would be handed over to BIADA. If that is not done, the matter had to be reported to the Court by BIADA.

The Court by introducing such term in the order only ensured that the writ petitioner did not run away from his responsibility and not face the Court for its contempt.

The order dated 22.11.2022 cannot be read as putting any restraint on the BIADA for seeking permission of the Court before cancelling the allotment.”

Therefore, the contention of the petitioner that the respondent-BIADA ought to have passed fresh orders of cancellation before taking possession is without any legal basis. Though the counsel for the petitioner has argued at length on the merits of the case, a perusal of the document filed by the petitioner does not show that any manufacturing of any allopathic drugs is being undertaken in the unit. The perusal of the invoices reveal that the petitioner is dealing mostly in canto calcium 5kg chemical which is mainly used for veterinary 12/13 purposes. Further, the perusal of the monthly electricity consumption bills also reveal that the consumption of electricity is very minimal and does not in any manner establish that the unit of the petitioner is functioning. Had the unit been functioning the monthly consumption of electricity could have been very high. However, in this case they are very minimal. That insofar as the contention of the petitioner that the principles of natural justice and equity have not been followed is concerned, the inspection reports dated 20.10.2023 & 03.11.2023 clearly points out to the fact that the unit of the petitioner was not functional. Though the counsel for the petitioner has stated that the inspection dated 20.10.2023 was a holiday and even if that report is ignored, the second inspection report also points out to the fact that the unit is not functioning as rightly pointed out by the counsel for the respondent-BIADA, the petitioner appears to be simply trading in animal feed/ canto calcium 5kg and not really manufacturing any allopathic drugs. The GST returns also do not substantiate the contention of the petitioner that the unit is functional. Further, it is to be noted that that the possession of the subject unit was on 23.11.2023 and allotted to the respondent No. 7 on 21.12.2023 and it could not be prudent on part of this Court to restore the possession of the 13/13 subject property at this point of time, when it is clearly established that the petitioner has reasonably failed to start commercial production as per the undertaking given to this Hon’ble Court in the earlier round of litigation.

Having regard to the above discussion, this Court does not find any merit in the present writ petition which warrants any interference by this Hon’ble Court under Article 226 of the Constitution of India. Accordingly, the present writ petition stands dismissed, however, without any costs.

The respondent BIADA is directed to return all the articles, machinery, furniture etc. that was in the unit at the time of taking possession from the petitioner and as per the inventory preponed.

All pending I.As., if any, are deemed to have been disposed of.