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2022 DIGILAW 1377 (JHR)

B. M. W. Industries Ltd. v. State of Jharkhand

2022-12-08

RAJESH SHANKAR

body2022
ORDER : 1. The present writ petition has been preferred for quashing the order as contained in letter No. 706 dated 26.10.2019 issued by The Secretary-cum-Regional Deputy Director, Jharkhand Industrial Area Development Authority (JIADA), Bokaro Region (respondent no.5), whereby allotment made in favour of the petitioner vide Allotment Order No.940 dated 04.02.2004, amended vide letter no. 164 dated 04.02.2005 appertaining to Plot No IV/B-1 to 3 & B-7 to 9, area 40 Acres and letter no. 502 dated 04.03.2014 appertaining to Plot No. IV/B-1(P)-1, Area 4.81 acres, has been cancelled. Further prayer has been made for quashing the order dated 17.03.2021/15.07.2021 passed in Appeal No. 02/2019 by the Secretary, Department of Industries, Government of Jharkhand, Ranchi (Respondent No.2) and communicated to the petitioner as well as the respondent nos. 4 and 5 vide Memo No. 79/S.C./Ranchi dated 16.07.2021 whereby the appeal of the petitioner filed against the order as contained in letter no.706 dated 26.10.2019 has been rejected. 2. Learned senior counsel for the petitioner submits that the petitioner was allotted the said plots for establishing a Sponge Iron (Steel Plant) Unit. However the allotment was cancelled by the respondent no.5 vide impugned order as contained in letter no. 706 dated 26.10.2019 exercising power under Clause-25 of the Jharkhand Industrial Area Development Authority Regulations, 2016 (in short, “JIADA Regulations, 2016”). Thereafter, the petitioner preferred Appeal No. 02/2019 before the respondent No.2 who with a view to promote the Industry within the State provided last opportunity to the petitioner to start the work and passed order dated 10.01.2020 as contained in Memo No. 06/S.C dated 17.01.2020, with the following three conditions: i. Unit must start the work production within six months and concerned progress report must be provided by the unit; ii. Up-to-date dues must be paid within three months; iii. The status report regarding functioning of the Unit will be provided through JIADA, Bokaro 3. The respondent no.2 further ordered that if the aforesaid three conditions were fulfilled and a report regarding the same was submitted by the respondent no. 3 to the respondent no. 2, then the order of cancellation issued vide letter no. 706 dated 26.10.2019 might be recalled after analysis of the said report. 4. The respondent no.2 further ordered that if the aforesaid three conditions were fulfilled and a report regarding the same was submitted by the respondent no. 3 to the respondent no. 2, then the order of cancellation issued vide letter no. 706 dated 26.10.2019 might be recalled after analysis of the said report. 4. It is further submitted that in terms with the order dated 10.01.2020, the petitioner deposited the dues of Rs.14,27,886/- in the office of Respondent No.3 for which Invoice No. 742 dated 04.02.2020 was issued to it. In the meantime, nation-wide lockdown was declared on 25.03.2020 owing to COVID-19 Pandemic and all business operations and activities came to a standstill. Accordingly, the petitioner preferred an application on 23.06.2020 before the respondent no.2 to extend the period for further six months for starting the project owing to unprecedented nation-wide lockdown and unavailability of manpower. It is also submitted that in spite of difficulty in continuing with the work due to unavailability of manpower, transportation restriction, material shortage and lock down, the petitioner somehow managed to continue with the work for completion of the unit and started construction work of foundation of machine as well as shed for commissioning of the unit. It immediately prepared status report in relation to establishment of the unit and sent it to the respondent no.4 for forwarding the same to the respondent no.2. Thereafter, the respondent no. 4 submitted status report and site inspection report in compliance of the order dated 10.01.2020 to the respondent No.2 vide letter No.713 dated 17.12.2020 mentioning that the payment of up-to-date dues was made by the petitioner and it started construction work of establishment of the unit where the work of machine foundation and shed foundation was going on at that time. It is also submitted that Jharkhand State Pollution Control Board also granted combined Consent (Consent to Establish and Consent to Operate) under Section 25 of the Water (Prevention and Control of Pollution) Act, 1974 and under Section 21 of the Air (Prevention and Control of Pollution) Act, 1981, vide letter dated 20.10.2020. Moreover, Jharkhand Bijli Vitran Nigam Limited also granted electric connection to the petitioner-Unit. The petitioner also submitted project progress report to the Assistant Development Officer, JIADA, Bokaro Region vide letter dated 01.06.2021 and the copies of the same were also communicated to the respondent nos. Moreover, Jharkhand Bijli Vitran Nigam Limited also granted electric connection to the petitioner-Unit. The petitioner also submitted project progress report to the Assistant Development Officer, JIADA, Bokaro Region vide letter dated 01.06.2021 and the copies of the same were also communicated to the respondent nos. 2 and 4 which have were duly received on 01.06.2021. 5. It is further submitted that in spite of the fact that the petitioner had fulfilled the conditions imposed on it vide order dated 10.01.2020, the respondent no.2 subsequently dismissed the petitioner’s appeal of vide order dated 17.03.2021/15.07.2021 as contained in vide Memo No. 79/S.C. dated 16.07.2021. 6. Learned senior counsel for the petitioner also submits that the said order is completely perverse and contrary to the materials available on record as the respondent no.2 has observed that no work has been started over the allotted land even after expiry of 17 years which is contrary to the progress report dated 17.12.2020 submitted by the respondent no. 4 to the respondent no. 2 wherein it was clearly mentioned that work of establishment of the unit had been started. It has also been mentioned in the impugned order that the petitioner has not deposited the dues of Rs.14,27,886/- which is completely false and contrary to the report dated 17.12.2020 in which the respondent no. 4 had clearly mentioned that said amount was deposited by the petitioner. The respondent no.2 while passing the impugned order has completely ignored the status report as well as project progress report. The said factual aspect could have easily been explained by the petitioner’s representative, which was otherwise available on record, but prior to passing of the said order no opportunity of hearing was given to the petitioner as would be evident from the order itself. The last hearing of the said appeal was done on 11.02.2021 and thereafter neither hearing was completed nor the order was reserved by respondent no.2, however, the said order in the appeal has been passed by the respondent no.2 on the basis of hearing conducted on 11.02.2021 without appreciating the evidence available on record. It is further submitted that the Hon'ble Supreme Court took suo motu cognizance of the situation prevailing during COVID-19 pandemic period and passed specific order that no limitation would be applicable in relation to any proceeding. It is further submitted that the Hon'ble Supreme Court took suo motu cognizance of the situation prevailing during COVID-19 pandemic period and passed specific order that no limitation would be applicable in relation to any proceeding. However, the respondent no.2 has passed the impugned order without any application of mind ignoring that aspect as well. The petitioner-Company has invested about Rs.100 crores in the construction work of the Unit including cost of land and due to passing of the impugned order, it has to face huge financial loss as well as unemployment of its employees. As such, the impugned order passed by respondent no. 2 is also against the public interest. 7. The learned counsel for the respondent nos.3 to 5 submits that the petitioner was allotted 40 acres of land and was directed to deposit Rs. 2,92,33,440/- @ 7,30,836/- per acre and/or pay Rs. 2,43,62,400/- @ Rs. 6,09,060/-per acre if paid in one installment. The petitioner, after making some payment, executed a bond stating that it would pay the balance amount in 9 installments in 9 years along with compound interest @ 14.5% chargeable on the balance amount. As per Para-XXI of the Bond, the petitioner/allottee undertook that in case of keeping civil construction suspended for more than 10 months from the date of allotment, the allotment of land so made would be cancelled and the installments of price of the land deposited with the Bokaro Industrial Area Development Authority (now JIADA, Bokaro region) would be forfeited. Completing the civil construction and starting the production of the goods, for which it was registered, was to start within 9 months from the date of allotment in case of Small Scale Industries, within 2 years from the date of allotment in case of Medium Scale Industries and within 3 years from the date of allotment in case of large Scale Industries. In case of failure of the petitioner company to do so, the BIADA was entitled to forfeit the deposited price of land and the entire cost of civil construction or part thereof as considered reasonable. It is further submitted that the petitioner was delivered possession of 40 acres of land on 14.03.2005 vide letter no. 313/BIADA, however there was no progress at the site and thus a show cause notice was issued to it vide letter no. 1799 dated 30.11.2006. It is further submitted that the petitioner was delivered possession of 40 acres of land on 14.03.2005 vide letter no. 313/BIADA, however there was no progress at the site and thus a show cause notice was issued to it vide letter no. 1799 dated 30.11.2006. It is further submitted that 50 acres more land was allotted to the petitioner on 16.12.2010 and delivery of possession of the same was made vide letter no. 83/BIADA dated 03.02.2011. 8. It is also submitted that since there was no progress at the site and dues of Rs.3,36,08,113/- was not paid to BIADA, the petitioner was issued show cause notices vide letter no. 188/BIADA dated 07.03.2012, letter no. 568 dated 10/11.07.2012 and letter No. 314 dated 25.04.2013. On 31.05.2013, physical progress at the site was inspected by the authorities of BIADA and it was found that there was construction of one guard room over 40 acres of land and one store room without roof, window and door over 50 acres of land. The petitioner was again issued show cause notice vide letter no. 634 dated 31.07.2013 as there was no progress at the site and the aforesaid dues of Rs.3,36,08,113/- (as on 31.03.2013) was not paid. The petitioner vide letter dated 20.02.2014, requested for extension of time and change of location of 50 acres of land on the ground that there was a school and Anganbari at site. Thereafter, BIADA withdrew the allotment of 50 acres of land and plot no. IV/B-1(P)-1 having area of 4.81 acres was allotted to petitioner which was handed over to it on 27.06.2017 and its remaining deposited amount of Rs.71,71,280/- was adjusted in lieu of the aforesaid land of 4.81 acres on the condition that it would come in production within two years. A show cause notice was issued to the petitioner-company vide letter no.27 dated 13.01.2018 as there was no progress at the site. The petitioner-company submitted reply to the said show cause notice vide letter dated 29.01.2018 stating that due to improvement in economic scenario there was a need to take fresh initiative for investment and as such the company had ordered M/s Dastur Company to study and prepare the techno economic viability report. The last show cause notice was issued to the petitioner on 18.09.2019 vide BIADA letter no. The last show cause notice was issued to the petitioner on 18.09.2019 vide BIADA letter no. 647 dated 18.09.2017 which was replied vide letter dated 27.09.2019 stating that the petitioner-company had applied before the Secretary, Department of Industries, Government of Jharkhand for steel procurement from Steel Authority of India Limited, Bokaro and had demanded incentive from Government of Jharkhand. The said reply was found unsatisfactory and unconvincing and as such the order of cancellation of allotment pertaining to the land measuring area of 40 acres and 4.81 acres was passed on 26.10.2019. 9. It is further submitted that an order dated 10.01.2020 as contained in memo no. 06/SC dated 17.01.2020 was passed by the respondent no.2 in Appeal No. 02/2019 filed by the petitioner and thereafter the petitioner deposited Rs.14,27,886/- vide RTGS dated 05.02.2020. A site inspection was conducted by BIADA on 04.06.2020 to ascertain as to whether there was any physical progress towards ensuring industrial production by the petitioner company, however, no progress was found at the site. Nothing was done by the petitioner-company to bring the unit under production as stipulated in the order as contained in memo no.06/SC dated 17.01.2020. Thereafter, the respondent no.4 wrote letter to the petitioner that on verification, no industrial activity was found even after lapse of 5 months from the date of the order passed by the respondent no. 2. Another site inspection was done by the Assistant Development Officer, In-charge Assistant and Amin, JIADA, Bokaro Region again on 14.12.2020, wherein it was found that only foundation work of machine and shed was going on. Thereafter, the respondent no.4 sent letter no.713 dated 17.12.2020 to the respondent no. 2 with respect to the status report regarding site inspection report and compliance report of the order dated 10.01.2020. 10. It is also submitted that due to persistent inaction on the part of the petitioner-company from 04.02.2004 to 15.07.2021, the respondent no.2 passed the impugned order dated 15.07.2021 in Appeal No.02/2019. In fact, even after about 17 years, the petitioner-company failed to bring its unit in production. No tangible and concrete step was taken by the petitioner-company to create infrastructure i.e. factory site of the Sponge Iron unit which was clear violation of the basic terms and conditions of allotment of the land in question to the petitioner- company. In fact, even after about 17 years, the petitioner-company failed to bring its unit in production. No tangible and concrete step was taken by the petitioner-company to create infrastructure i.e. factory site of the Sponge Iron unit which was clear violation of the basic terms and conditions of allotment of the land in question to the petitioner- company. Under the said circumstance, the land is required to be allotted to other entrepreneurs who are keen to set up industrial units on the same. 11. Heard learned counsel for the parties and perused the materials available on record. The petitioner is primarily aggrieved with the order of cancellation of allotment of plots for establishing Sponge Iron Unit. 12. Thrust of the argument of the learned counsel for the petitioner is that though the petitioner had substantially complied the direction of the respondent no.2 issued on 10.01.2020 in Appeal No.02/2019, the same was completely ignored by the said respondent subsequently and the appeal preferred by the petitioner was dismissed mechanically vide order dated 17.03.2021/15.07.2021. 13. On the other hand, the respondents have contended that in spite of repeated show cause notices issued to the petitioner, it failed to start production of its unit within the time frame as fixed in the Jharkhand Industrial Area Development Authority Regulations 2016, resultantly the order of cancellation of plots in question was passed by the respondent no. 5 in exercise of power conferred under Clause 25 of Regulations, 2016. Further contention is that the petitioner even failed to comply the interlocutory order dated 10.01.2020 passed by the respondent no.2 and, therefore, the appeal preferred by it has been dismissed by the respondent no.2. Both the orders being legal and justified need no interference of this court. 14. Learned counsel for the respondent invited attention of this court to Clause 19 and 25 of Jharkhand Industrial Area Development Authority Regulations 2016 which read as under:- “19. TIMELINES FOR CONSTRUCTION OF FACTORY/SHED i. The allottee shall start construction as per the approved plan within 6 (six) months, extendable to a maximum period of another six months, under extraordinary circumstances, with prior approval of the Chief Executive Officer of the region from the date of taking physical possession of the allotted plot. In the event of failure on the part of allottee to do so, late action charges shall be recovered @ 1.00 per sq. ft. In the event of failure on the part of allottee to do so, late action charges shall be recovered @ 1.00 per sq. ft. per month from the last date of extended period. ii. Jharkhand Industrial Area Development Authority shall organize annual inspection of all allotted plots to ensure its utilization. Detailed information compiled by the inspection team will be placed on the Website. The case of enterprises not utilizing the plot or inadequately utilizing the plot for the purpose, for which the allotment was made, Chief Executive Officer of the region shall take action for cancellation of allotment order of land or penalty equal to land premium or forfeiture of amount deposited by the entrepreneur towards land premium and other charges. After allotment and taking over possession thereof if a fully functional industry is not set up by the allottee within the stipulated period (two years for micro and small enterprises and five years for other enterprises) the allotment of land shall be cancelled and possession taken by Jharkhand Industrial Area Development Authority. 25. CANCELLATION OF ATIOTTED PLOT (i) Any violation of the conditions of land allotment order, lease deed, indemnity Bond, or the provisions of industrial Policy as applicable on the relevant date and/or the provisions of Bihar Industrial Area Development Authority Act, 1974 (Bihar Act 16 of 1974 and Bihar Act 27 of 1992) as adopted by the Government of Jharkhand vide Notification No. 339 dated 02.03.2001 issued by the Secretary Department of Science Technology, information Technology and Industries as Jharkhand Industrial Area Development Authority Act, 2001 shall entitle the Chief Executive Officer to cancel the allotment order, terminate the lease deed and forfeit the lease premium and take possession by observing the principles of natural justice and pass orders to the effect.” 15. Thus, the allottee has to start construction of the unit within six months from the date of taking physical possession of the allotted plot which is extendable to a maximum period of another six months under extraordinary circumstances, with prior approval of the Chief Executive Officer of the region. If the construction is not started within the stipulated time, then the late action charges are recoverable. As per Clause 25, if any violation of the conditions of land allotment order is made, it shall entitle the CEO to cancel the allotment order. If the construction is not started within the stipulated time, then the late action charges are recoverable. As per Clause 25, if any violation of the conditions of land allotment order is made, it shall entitle the CEO to cancel the allotment order. The words “shall entitle” mentioned in clause 25 of Regulations, 2016 suggest that passing an order of cancellation of allotment on violation of conditions of allotment order is not mandatory. 16. It appears from the record that the respondent no.5 cancelled the plots allotted to the petitioner vide order as contained in letter no. 706 dated 26.10.2019 on the ground that in spite of repeated show cause notices, it failed to establish the factory unit in a fully functional state within the timeframe mentioned in the allotment order, which was violation of Clause 25 of the Regulations, 2016. The petitioner preferred appeal against the said order of cancellation before the respondent no.2 by preferring Appeal No.2 of 2019. It was contended inter alia that the factory could not be established due to recession in steel industries as well as the petitioner did not get required cooperation from the Bokaro Steel Limited. In course of hearing of the said appeal, the petitioner assured the respondent no.2 that if six months’ time is allowed to it, then the factory unit will come in production state. Learned counsel for JIADA, Bokaro Rigion appeared before the respondent no.2 and submitted that it would be better to grant further time to the petitioner for the said purpose on some conditions. Accordingly, the respondent no.2 granted one more opportunity to the petitioner to start operation of its factory on three conditions i.e. (i) it would start its production within six months; (ii) the balance dues would be paid within three months (iii) status report regarding the petitioner having started its production would be made available through JIADA, Bokaro Region. The respondent no.2 further observed that the order of cancellation of allotment as contained in the letter dated 26.10.2020 might be recalled by the authority after receiving compliance report of all the aforesaid three conditions. 17. Though the petitioner failed to start production within the time stipulated in the allotment letter, the respondent no.2 being the appellate court had given one more opportunity to the petitioner to start its production on three conditions as stipulated in the order dated 10.01.2020. 17. Though the petitioner failed to start production within the time stipulated in the allotment letter, the respondent no.2 being the appellate court had given one more opportunity to the petitioner to start its production on three conditions as stipulated in the order dated 10.01.2020. Thus, I am of the view that the contention of the respondents with respect to violation of the time frame stipulated in the allotment letter, is not of much relevance now, as the said aspect was already considered by the respondent no.2 at the initial stage of hearing of the appeal and the delay was waived on fulfilment of three conditions by the petitioner as mentioned in the said order. That apart, as observed earlier, passing of an order of cancellation of allotment was not mandatory on violation of the conditions of allotment letters. 18. Learned senior counsel for the petitioner has emphatically argued that the conditions mentioned in the order dated 10.01.2020 was substantially fulfilled by the petitioner. It is submitted that though the dues amount was already deposited in terms with the conditions, yet while passing the impugned order dated 17.03.2021/15.07.2021, the respondent no.2 wrongly recorded that the dues amount of Rs.14,27,886/- was not deposited by the petitioner. Further, the respondent no.2 also wrongly recorded that during the inspection conducted by JIADA, Bokaro Region, it was found that the petitioner had only cleared thickets, rather in the site inspection report dated 14.12.2020, it was clearly mentioned that the petitioner-company had started the work to establish the factory after clearing thickets and in that process, the work relating to foundations of machine as well as shed was being completed. The petitioner in support of the said fact has brought on record few photographs of the factory premises which corroborate such claim of the petitioner. So far the payment of dues amount is concerned, the same has been admitted by the respondent no.4 in his letter dated 17.12.2020 sent to the respondent no.2 and thus it appears to this court that the respondent no.2 has wrongly recorded the said factual position while affirming the order of cancellation of the allotment of the plots. Otherwise also, the respondent no.2 overlooked the fact that the delay was already waived while granting one more opportunity to the petitioner for starting production from its unit while passing the interlocutory order dated 10.01.2020. Otherwise also, the respondent no.2 overlooked the fact that the delay was already waived while granting one more opportunity to the petitioner for starting production from its unit while passing the interlocutory order dated 10.01.2020. This Court is of the view that the petitioner had shown its sincerity to fulfil the conditions mentioned in the order as contained in the said order passed by the respondent no.2, as would be evident from the site inspection report submitted by the respondent no.4. The claim of the petitioner that due to Covid-19 pandemic, it could not start production in its unit within six months as was directed vide order dated 10.01.2020 also appears to be sufficiently explained. 19. In view of the aforesaid facts and circumstances of the case, the order as contained in letter No.706 dated 26.10.2019 issued by the respondent no.5 and order dated 17.03.2021/15.07.2021 passed by the respondent no. 2 in Appeal No.02/2019 as contained in memo no. 79/S.C./Ranchi dated 16.07.2021 are hereby quashed. It is evident from the record that after passing of the impugned order, the petitioner has been dispossessed from the plots in question and the premises has been sealed. Thus, the respondent no.4 is directed to unseal the premises and hand over the possession of the same to the petitioner within three weeks of passing of the present order. The petitioner will commence the production of its unit within six months from the date of handing over the possession of the plots to it and in the meantime it will submit monthly progress report to the respondent no.4 so as to satisfy the said authority regarding its sincere effort to commence production of the unit within aforesaid timeline. 20. The writ petition is, accordingly, allowed with the aforesaid observations and directions.