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2007 DIGILAW 659 (PAT)

Badri Mehrotra v. State Of Bihar

2007-04-02

MRIDULA MISHRA

body2007
Judgment 1. Heard the counsel for the parties. 2. Petitioner has filed this application (i) for a direction to the respondent, Bihar Industrial Area Development Authority, for settlement of up-to-date account of the petitioner as per Bihar industrial Policy issued by the Government of Bihar so that he can be free from the liabilities of the loan (ii) for a direction to the respondent authority to take back 0.185 acres lands, i.e., part of the vacant land leased to the petitioner vide lease deed, dated 15.12.1988, by the North Bihar Industrial Development Area Authority, Muzaffarpur, and (iii) for quashing memo no. 1086/D, dated 18.11.2003 issued by Bihar Industrial Area Development Authority (hereinafter referred to as, the BIADA) imposing additional burden of 15 per cent land value for giving change in the unit or sale of the unit. 3. The short facts of the case are that Shree Ganesh Engineering Company was formed by the petitioner which was registered as small scale unit bearing registration no. 03-08-03727-PMT-SSI. The firm is situated at Industrial Estate, Muzaffarpur. Petitioner was allotted 0.45 acres of land by the North Bihar Industiial Area Development Authority vide letter no. 2143, dated 7.9.1988, for establishing a factory for the production of fabricated steel materials, G.I. earthing pipe etc. The registered deed of lease was executed on 9.3.1989 for 99 years by the officer of the North Bihar Industrial Area Development Authority in favour of the petitioner. The physical possession of the land was delivered to the petitioner on 15.12.1988. The terms incorporated in the allotment letter and the lease deed indicated that the total cost of the land including proportionate development cost will have to be paid by the lessee in instalments with 12% interest thereon per annum as per the schedule described in part II of the agreement. Petitioners case is that the lease deed and agreement was signed by him but later on when he minutely went through the lease deed, he came to know that some conditions in the lease deed are contrary to the provisions of the Bihar Industrial Policy. 4. Bihar Industrial Policy came into existence on 1st September, 1986, and main object of this policy was to give incentive to the industries in Bihar and to accelerate the progress of all industries, namely, large, medium, small and tiny. 4. Bihar Industrial Policy came into existence on 1st September, 1986, and main object of this policy was to give incentive to the industries in Bihar and to accelerate the progress of all industries, namely, large, medium, small and tiny. Clause 2 of the policy relates to concession and incentives and Clause 3 to infra-structural assistance. Clause 3(1)(b) of the Industrial Policy provide "Sheds would be available for outright purchase or on hire purchase basis on payment of cost in equal instalments. The rate of interest will be 5 per cent with 2 per cent rebate for timely payment". Clause (c) provided-"The developed land in Industrial Area/Estates would be given on lease for 99 (ninety nine) years and the cost and interest will be realised in instalments in the same manner as mentioned in (b)". Petitioners case is that in violation of Bihar Industrial Policy, Clause 3(b) and (c) in the lease deed 12 per cent compound interest was made chargeable when it should have been 5 per cent simple interest. Realising this, petitioner represented his case to, the Executive Director, BIADA Muzaffarpur, stating that the agreement was executed in good faith and belief that the provisions made in the Industrial Policy must have been followed properly. The facility of 5 per cent interest has been extended to other similarly situated units but from the petitioner, 12 per cent interest is being charged, as such, the disparity should be removed. Nothing was done by the respondents even after receiving repeated representations of the petitioner. After some time the industrial unit of the petitioner started running in loss, as such, petitioner applied for permission to sell the unit and also for issuance of no dues certificate with regard to allotted land as the cost of land has already been paid. Neither no dues certificate was issued nor the permission for selling the land was granted to the petitioner. The petitioner, thereafter, made several requests and finally he received a letter issued from Bihar Industrial Area Development Authority, Regional Office, Muzaffarpur, informing that there is no provision for taking back the land of the unit but in case petitioner wants to sell the unit to some other person he can transfer it after depositing proper fee and after clearance of the dues of the unit. Petitioner in response to this letter again fifed his representation stating that one of his senior members of the unit is ready to take over the management of the firm and to clear the legitimate dues as per rules but without making payment of additional 15% charge. 5. In support of charging excess interest in violation of Industrial Policy, the petitioner filed supplementary affidavit annexing some of the lease deeds in favour of some other small scale units from whom interest has been charged at the rate of 5 per cent, according to the industrial "policy of the Government. These lease deeds have been annexed as Annexure 11 series. 6. The counter affidavit filed on behalf -of BIADA and its official disclose that the lease deed was executed in favour of the petitioner incorporating certain terms and conditions to which the petitioner agreed. For some time he also made payment to the authorities of the BIADA in terms and conditions of the agreement. He subsequently raised objections. which is not permissible in a contractual relationship. 7. Considering the pleadings of the parties and on perusal of sub clause (c) of Clause 3 of the Bihar Industrial Policy, 1986, I find that it is categorically envisaged that developed land in industrial area estate would be given on lease for 99 years. The cost and interest will be realised in instalments in the same manner as mentioned in sub clause (b) of Clause 3. Clause 3(1)(b) of the Bihar Industrial Policy states that sheds would be made available for outright purchase or on a hire purchase basis on payment of cost in instalments and rate of interest will be 5 per cent per annum with 2 per cent rebate for timely payment. The Industrial Policy do not disclose that any other rate of interest is provided in case of allotment of land in industrial area/estate for 99 years lease. However, the counsel for the respondent BIADA, submits that sub clause (b)(c) of Rule 3.1 has no application in the case of the petitioner. Sub clause (h) of Clause 3 has application in the present case which provides that wherein estate/ area has been developed by taking loan from financial institution/bank on a high rate of interest, rate of interest not exceeding 12 per cent will be charged in respect of such shed/land. Sub clause (h) of Clause 3 has application in the present case which provides that wherein estate/ area has been developed by taking loan from financial institution/bank on a high rate of interest, rate of interest not exceeding 12 per cent will be charged in respect of such shed/land. The rate of interest if charged from the petitioner at 12 per cent, it is not violative of any of the Clauses of Industrial Policy 8. The counsel for the petitioner, in reply to this submission, has stated that sub clause (h) of Clause 3 is applicable only in such cases where developed land has been made available to the entrepreneurs after taking loans from financial institution/bank on higher rate of interest for procurement of land. In the present case the land allotted to the petitioner was not a developed land. It was a Government land which can be leased out to the entrepreneurs on terms and conditions as decided by the Government keeping in view the area, location of the land and the prevailing market rate as well as the type of industry for which land is needed. No loans was taken from any bank or financial institution for procurement of this land. In this way sub clause (h) of Clause 3 of the Industrial Policy has also been violated by the respondent, as such, the excess interest amount which has been received by the BIADA from the petitioner should be calculated and an up-to-date account be prepared. 9. I find that the counsel for the petitioner has correctly indicated that an excess interest amount has been realised from the petitioner. The Industrial Policy has came in 1986, agreement was executed in favour of the petitioner in the year 1989 ignoring the Industrial Policy although in case of similarly situated persons it was taken into consideration. There is no pleading of the respondent that land allotted to the petitioner was procured after taking loan from bank or financial institution on high interest rate. The land provided to the petitioner do not come in the category for which 12% interest could have been realized as provided under sub clause (h) of Industrial Policy. There is no pleading of the respondent that land allotted to the petitioner was procured after taking loan from bank or financial institution on high interest rate. The land provided to the petitioner do not come in the category for which 12% interest could have been realized as provided under sub clause (h) of Industrial Policy. The respondent, BIADA, is directed to calculate the excess amount realised from the petitioner as interest at the rate of 12%, prepare an account calculating interest at 5% per annum on such calculation the amount refundable to the petitioner be refunded/ adjusted against dues, if any. This exercise must be completed without any delay. . 10. Petitioner has also challenged the memo no. 1086/D, dated 18.11.2003, issued by the Bihar Industrial Area Development Authority imposing additional burden of 15 per cent land value for giving permission for any change in the unit or sale of the unit. 11. Counsel for the petitioner has submitted that the decision of additional burden fixed by BIADA is illegal and not in conformity with the resolution of the Industry Department, Government of Bihar. The Industry Department vide letter no. 1748, dated 7.7.1992, has given a guideline to the Patna Industrial Area Development Authority which has now merged in the Bihar Industrial Development Authority for transfer/sale of the unit wherein mere an undertaking to clear old dues have been made. There is no whisper in this letter regarding any additional charge on the transfer or sale or reconstitution of the unit. The BIADA has taken such decision without any consultation with the State Government though they can not take any such decision which is against the industrial development policy of the State. The decision taken by the development authority, as such, is fit to be quashed. 12. In the counter affidavit filed by the respondent it has been stated that 5% additional charge on the present value of the land is chargeable from the entrepreneurs for coping with the existing requirement of BIADA and to meet situation from time to time. Nothing has been stated about the letter of Industry Department referred by the petitioner or about any consultation with the State Government before taking decision by the BIADA for imposing 15 per cent charge in case of transfer/sale of any unit. 13. During the pendency of this application, the petitioner filed a supplementary affidavit stating that one Mr. Nothing has been stated about the letter of Industry Department referred by the petitioner or about any consultation with the State Government before taking decision by the BIADA for imposing 15 per cent charge in case of transfer/sale of any unit. 13. During the pendency of this application, the petitioner filed a supplementary affidavit stating that one Mr. Vijay Banka, a senior partner of Shree Ganesh Engineering Company will look after the management and he had agreed to clear all legitimate dues of BIADA as per rules. It has also been stated that so far 15 per cent additional charge is concerned, it is illegal and it will be not be paid by Mr. Banka. 14. Considering the letter, dated 7.7.1992, of the Industry Department, Government of Bihar, addressed to the Managing Director of the Development Authority, I find that in case of reconstitution of management or transfer of unit there is specific direction that only the dues can be demanded by the authorities. So far additional 15 per cent charge is concerned, there is no such provision. 15. Accordingly, memo no. 1086/D, dated 16.11.2003, issued by the respondent authority imposing additional burden of 15 per cent land value is quashed. The respondents are directed to allow the senior member of the firm to make payment of all legal dues of the respondents excluding 15% additional charge so that the petitioner can be relieved from his liability. 16. This application is allowed.