M/S Y.M.P. Electro Power Engineer (P) LTD vs. The State Of Madhya Pradesh

Held

The Court held that the impugned orders dated 23.04.2010 and 21.04.2012 are quashed. The Court noted from the rejoinder and the petitioner's submissions that the unit has been operational since 2012 and has deposited GST and lease rent, facts not controverted by the respondents. The sole ground for cancellation was the non-commencement of work within one year of the lease execution (24.07.2007). However, given that production started subsequently and the unit has been functioning for approximately 14 years, the Court deemed it in the interest of justice to give the industry an opportunity to submit its defense before the appropriate forum. The matter is remanded back to the appellate authority to consider the entire petition and documents submitted before the High Court and pass a fresh reasoned order within one month.

Facts

The petitioner, M/s Y.M.P. Electro Power Engineer (P) Ltd., filed a writ petition challenging the termination of its industrial plot lease by respondent No. 5 (order dated 23.04.2010) and the appellate authority's confirmation of this termination by respondent No. 4 (order dated 21.04.2012). The petitioner was allotted Plot No. 37 in Mandideep, District Raisen, and a lease deed was executed on 25.07.2007. The petitioner claimed to have commenced development but faced delays due to external factors like waterlogging. The respondents contended that the petitioner breached Clause 7(a) of the lease deed by failing to commence commercial production within one year of taking possession (by 25.07.2008). A show cause notice was issued on 22.04.2009, and the lease was ultimately cancelled. The appellate authority vacated an interim order and upheld the cancellation due to alleged non-compliance by the petitioner.

Key Issues

1. Whether the impugned orders dated 23.04.2010 and 21.04.2012, cancelling the lease deed, are arbitrary, mala fide, and unsustainable in law, as argued by the petitioner? The petitioner contended that the cancellation was arbitrary and unsustainable, citing substantial expenditure, delays attributable to authorities, and issues with plot encumbrances. They also highlighted that their unit has been operational since 2012, paying GST and lease rent. The petitioner relied on their operational status and investments as evidence of compliance. 2. Whether the respondents have legally grounds to cancel the lease deed based on the petitioner's alleged non-commencement of commercial production within the stipulated period, as argued by the respondents? The respondents argued that Clause 7(a) of the lease deed, requiring commencement of commercial production within one year of possession (by 25.07.2008), was breached. They stated that despite a show cause notice and an opportunity to reply, the petitioner failed to commence production, justifying the cancellation. The respondents relied on the lease deed terms and the petitioner's admission of non-commencement.