A. Kanmani vs. The Tamilnadu Small Industries Development

Held

The Court held that the impugned order dated 13.08.2024, cancelling the allotment of Plot No. 8, was unsustainable and liable to be quashed. The Court found that the petitioner had paid the entire cost of the plot, including penal interest, by 12.12.2018. As per the allotment order, if the MOU was not executed within one month of full payment, the plot would be deemed handed over. However, SIDCO failed to execute the MOU within 30 days of the final payment. Consequently, the condition regarding commencement and completion of construction did not arise, as possession of the plot was never handed over to the petitioner. Furthermore, the Court found that the cancellation order was passed without any prior notice or enquiry, violating the principles of natural justice. The Court directed SIDCO to execute the MOU with the petitioner and hand over possession of Plot No. 8 within two weeks. The petitioner was then directed to commence construction within six months and complete it within 18 months from taking possession.

Facts

The petitioner, A. Kanmani, proprietor of M/s. Risha Industries, was allotted Plot No. 8 (0.250 acres) in the Batalgundu Industrial Estate by the Tamil Nadu Small Industries Development Corporation Limited (SIDCO) on 05.01.2018, for an outright sale. The tentative cost was Rs. 9,34,600/-. The petitioner paid 25% initially and subsequently made further payments, including a delayed payment with penal interest of Rs. 5,38,643/- on 12.12.2018, settling the entire plot cost. Despite full payment, SIDCO failed to execute a Memorandum of Understanding (MOU) as per the allotment order. The petitioner made several representations, but no sale deed was executed. Subsequently, on 13.08.2024, SIDCO issued an order cancelling the allotment. The petitioner filed a writ petition challenging this cancellation order.

Key Issues

1. Whether the cancellation of the plot allotment order dated 05.01.2018 by the first respondent (SIDCO) on 13.08.2024 is valid, considering the petitioner had paid the entire plot cost and SIDCO failed to execute the Memorandum of Understanding (MOU)? (Question of law and fact, concerning principles of natural justice and contractual obligations). 2. Whether the cancellation order was passed in violation of the principles of natural justice, as the petitioner was allegedly not issued a prior show cause notice or given an opportunity of hearing? (Question of law, concerning Article 226 of the Constitution of India). Petitioner's Arguments: The petitioner argued that no show cause notice was issued and no opportunity of hearing was provided before the cancellation. The petitioner also contended that the allotment order was not communicated. The petitioner emphasized that full payment was made, and SIDCO's failure to execute the MOU within the stipulated period, as per the allotment order, should not lead to cancellation of the allotment. Respondents' Arguments: The respondents (SIDCO) argued that the petitioner failed to make payments in time, and show cause notices were issued. They further contended that the petitioner failed to come forward for the execution of the MOU and also failed to fulfill other conditions, such as commencing construction within six months and completing it within 18 months from taking possession. Therefore, the allotment was deemed cancelled.