Grv Packages PVT LTD vs. State Industires Promotion Corporatoin Of Tamil Nadu LTD (Sipcot)

Facts

GRV Packages Private Limited (Petitioner) applied for allotment of two industrial plots from the State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) (Respondent). SIPCOT allotted Plot No. C-71 for Rs. 13,30,000/-. The Petitioner was required to pay the balance amount of Rs. 11,97,000/- along with caution deposit and lease rent, totalling Rs. 12,63,600/-, within 30 days of the allotment order dated 12.07.2022, with a due date of 10.08.2022. The Petitioner made partial payments totalling Rs. 4,49,600/-, leaving a balance of Rs. 9,47,000/-. The Petitioner sought an extension of time due to delays in processing a loan from Tamil Nadu Industrial Investment Corporation (TIIC). Despite representations, SIPCOT issued an order dated 26.09.2022 cancelling the allotment. The Petitioner filed a writ petition challenging this cancellation order and seeking an extension of three months for payment.

Held

The Court held that the delay in payment was primarily due to the time taken by the Tamil Nadu Industrial Investment Corporation (TIIC) in processing the Petitioner's loan application. The Court found that the Petitioner had demonstrated bonafide by making partial payments and actively pursuing loan sanctions. Consequently, the Court set aside the impugned cancellation order dated 26.09.2022. The Petitioner was directed to deposit Rs. 1,00,000/- within two weeks from the date of the order. The remaining balance of Rs. 8,47,000/- was to be paid within eight weeks from the date of the order. The Court stipulated that if the Petitioner failed to comply with these conditions, the cancellation of the allotment order would stand revived. The ratio decidendi is that where a party demonstrates bonafide efforts to secure funds and faces unavoidable delays in loan processing, a cancellation order may be set aside with conditions for payment, upholding principles of fairness.

Key Issues

1. Whether the cancellation of the allotment order dated 26.09.2022 by the Respondent is justified, considering the Petitioner's representations and the circumstances leading to the delay in payment, particularly in light of the Petitioner's reliance on a loan from TIIC? (Question of mixed law and fact, turning on principles of natural justice and contractual obligations). Petitioner's arguments: The Petitioner argued that the delay in payment was due to the time taken by TIIC to process their loan application, which was essential for making the balance payment. They had made substantial partial payments and had submitted representations seeking an extension. They contended that the cancellation order was issued without considering these representations and that an extension of eight weeks would allow them to secure funds. They relied on their bonafide intention to establish the industry. Respondent's arguments: The Respondent did not explicitly record arguments in the judgment. However, their action of cancelling the allotment implies they relied on the terms of the allotment order, specifically the clause stating that the allotment would stand automatically cancelled if the payment was not made within the stipulated time.