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Sunday, February 7, 2016

“In the instant case, from the above facts, it is obvious that the allotment which has been permitted without considering other applications, is unreasonable and lacks good faith and could not be said to be in public interest. The order passed by the State Government effecting the order of transfer in favour of opposite party No.6 is unreasonable and invalid. In these circumstances, the allotment order passed in favour of opposite party No.6 cannot be allowed to stand.= requisite notices were issued to Respondent No.1 and that it was afforded adequate opportunity. The observations of the High Court in that behalf are not quite correct. The supplementary affidavit filed in January 2000 made the position quite clear. The petition was therefore wrongly allowed on the ground that no opportunity was given to Respondent No.1. We have also seen the record and are satisfied that Respondent No.1 had closed its operation in the year 1997. According to annexure No. R-16 placed along with the rejoinder affidavit, an inspection report was apparently prepared. That report is a solitary piece in support of its submissions of having started manufacturing activity. Nothing has been placed on record, no licence is adverted to nor is it shown how and in what manner Respondent No.1 started its activity of manufacturing PVC pipes. Nothing was filed or placed on record pursuant to notices dated 20.03.1998 and 27.03.1998. We do not find any merit in the submissions that Respondent No.1 has been conducting any activity of manufacturing of PVC pipes. The claim of Respondent No.1 must therefore be rejected. At the same time it is absolutely clear on record that the Appellant has been having allotment of three sheds namely B-6, C-1 and C-2 in its favour in the same Industrial Estate. No special equities are in its favour and no case is therefore made out for allotment of concerned shed to the Appellant. The observation of the High Court that the order dated 15.06.1998 was issued without any public auction or inviting tenders and as such was completely unsustainable, in our view is absolutely correct. In the circumstances we allow the present appeal with following directions:- (a) The claim of Respondent No.1 was rightly rejected while cancelling allotment made in favour of M/s Surya Chemicals vide letter of cancellation dated 09.06.1998. The order of cancellation dated 09.06.1998 is sustained and shall be fully operative. Respondent No.1 who has been in wrongful occupation of the concerned shed must surrender the possession immediately. The authorities are directed to recover the possession forthwith and report compliance to this Court. (b) In view of the change in circumstances namely allotment of sheds C-1 and C-2 in its favour, the Appellant is not entitled to claim any special equity. The order of allotment dated 15.6.1998 passed in its favour therefore stands set aside. (c) The authorities are directed to conduct public auction or invite tenders for allotment of the concerned shed at the present market value. Needless to mention that the present Appellant and Respondent No.1 or any other person is free to participate in such public auction or tender.


                                                              Non-Reportable


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 361  OF 2016
                 (Arising out of  SLP (C) No. 10951 of 2014)


M/s Metal Seam Co. of  India (P) Ltd.             …Appellant


                                  Vs.


M/s Avadh Delicacies & Others                    …Respondents




                            J U D G M E N T



Uday U. Lalit, J.



Leave granted.





This appeal challenges the judgment and order  dated  28.03.2014  passed  by
the High Court of Judicature at Allahabad, Lucknow Bench,  Lucknow  in  Writ
Petition No.1840 of 1998 whereby the High Court  was  pleased  to  set-aside
the orders dated 09.06.1998 and 15.06.1998 passed by  the  General  Manager,
District Industries Centre, Lucknow.





The facts in the present matter are as under:-


In 1956, Shed  No.B-5  inclusive  of  appurtenant  open  space  situated  in
Talkatora  Industrial  Estate,  Lucknow  (hereinafter  referred  to  as  the
“concerned shed”) was allotted to M/s Surya Chemicals for  establishment  of
a factory. Under the Hire Purchase agreement entered into between M/s  Surya
Chemicals and the Director of Industries on  behalf  of  the  Government  of
U.P., it was expressly stipulated in Condition No.4 as under:-

“Not to sell, mortgage, assign or otherwise transfer  the  factory  building
except  with  the  previous  permission  in  writing  of  the  Director   of
Industries, U.P. till the price has been fully  paid  and  the  transfer  as
aforesaid shall be as such conditions as the Director of  Industries,  U.P.,
may lay down while granting such permission.”




The present Appellant was allotted the adjoining  shed  namely  B-6  in  the
year 1968 and in due course of time it started manufacturing containers  and
drums. As the business of the Appellant  expanded,  it  required  additional
premises. Around this time M/s Surya Chemicals  was  in  arrears  in  making
payment of instalments in respect of the concerned shed. At  one  stage  the
allotment in its favour was cancelled but on  an  assurance  that  it  would
start production, it was given time and  the  allotment  was  restored.  The
Appellant approached the Joint Director of Industries for allotment  of  the
concerned shed on payment of entire cost.


Since M/s Surya Chemicals was in default, the Joint Director  of  Industries
recommended cancellation of allotment of the concerned  shed  and  wrote  to
the General Manager  to  take  the  appropriate  steps  after  taking  legal
opinion in the matter. The  General  Manager  however  by  his  order  dated
01.12.1983 recommended transfer of the concerned shed  in  favour  of  Avadh
Delicacies,  Respondent  No.1  herein.  Respondent  No.1  was  a  new   firm
provisionally registered as a Small Scale Industries unit with  the  General
Manager. The  order  was  passed  on  an  application  moved  by  M/s  Surya
Chemicals for transfer of the concerned shed to Respondent No.1.


d)    On 25.02.1984 the Joint Director of Industries accepted  the  transfer
application moved by M/s Surya Chemicals  permitting  the  transfer  of  the
concerned shed in favour of Respondent No.1. This led to the filing of  Writ
Petition No.1166 of 1984 by  the  Appellant  in  the  High  Court.   It  was
submitted that the application for transfer ought to  have  been  considered
along with other pending  applications  and  when  the  application  of  the
Appellant was pending there was no question of  accepting  the  transfer  as
proposed by M/s Surya Chemicals.

e)    That writ petition was allowed by the High Court by its  judgment  and
order dated 04.03.1987.  It was observed as under:-
“In the instant  case,  from  the  above  facts,  it  is  obvious  that  the
allotment which has been permitted without considering  other  applications,
is  unreasonable and lacks good faith and could not be said to be in  public
interest. The order passed by the State Government effecting  the  order  of
transfer in favour of opposite party No.6 is unreasonable  and  invalid.  In
these circumstances, the allotment order passed in favour of opposite  party
No.6 cannot be allowed to stand.

The writ petition is accordingly allowed and a writ of certiorari is  issued
quashing the order dated  25.02.1984,  passed  by  the  Joint   Director  of
Industries (Annexure-14) and the  order  dated  23.02.1984,  passed  by  the
State Government contained in Annexure-13 to the  writ  petition.   However,
it will be open to the opposite parties to consider the merits of  the  case
of the petitioner and that of opposite party No.6 and in case  the  opposite
party No.6 in fact has started  any  production  regarding  which  there  is
dispute and doubt, his claim would be given due  consideration  and  in  any
view the opposite parties will, so far as possible, allot any other shed  to
opposite party No.6 if circumstances warrant that  he  should  not  get  and
keep possession over shed No.5-B.”




f)    Thus the order of transfer in  favour  of  opposite  party  No.6  i.e.
Respondent No.1 was quashed.  The authorities were directed to consider  the
merits of the case of the Appellant and Respondent  No.1  and  in  case  the
claim of Respondent No.1 was to be accepted,  its claim could inter-alia  be
considered in respect of any other shed.


g)  The aforementioned judgment and order dated  04.03.1987  was  challenged
by Respondent No.1 in this Court by filing Civil Appeal  No.  3062  of  1987
and during  its  pendency  nothing  could  be  done.   It  appears  that  on
25.09.1997 Shed No.C-1 in  the  very  same  Industrial  Estate  came  to  be
allotted to the Appellant.  On 29.09.1997 the  aforesaid  civil  appeal  was
dismissed for non-prosecution by this Court and such dismissal has  attained
finality.


h)    Soon thereafter  the  matter  was  taken  up  for  consideration.   On
20.03.1998 a notice was issued to the Respondent No.1 to  present  its  case
along with necessary record relating  to  the  concerned  shed.   A  further
notice in that behalf was again issued to  Respondent  No.1  on  27.03.1998.
Similar notices were also issued to the Appellant and M/s Surya Chemicals.


i)    In the meeting of Zila Udyog Bandhu held  on  20.05.1998,  the  matter
concerning allotment of concerned shed  was  considered.   It  was  observed
that in the year 1997 Shed No.C-1 was already  allotted  in  favour  of  the
Appellant.  The committee however concluded as under:-


“Having considered the  entire  facts  of  the  above  case  and  after  due
deliberations, the Chairman has taken the decision that  Shed  No.  B-5  was
allotted to M/s Surya Chemicals in the year 1965 and the possession  of  the
shed was handed over on 01.01.1966 but they have not commenced any  work  at
their own and transferred Shed No. B-5 to M/s Avadh Delicacies.   M/s  Surya
Chemicals is not interested in setting up of unit  and  started  production,
therefore, the committee has taken the decision to cancel the  allotment  of
Shed No. B-5 to M/s Surya Chemicals and make its allotment in favour of  M/s
Metal Seam Company of India under the provisions  of  Government  Order  No.
1888/18-2-92-25(3)/92 dated 30.4.1992 as per rules.”




j)    On 09.06.1998 General Manager,  District  Industries  Centre,  Lucknow
issued a letter cancelling the allotment of the  concerned  shed  which  was
made in favour of M/s Surya Chemicals and re-claimed the possession  of  the
concerned shed.  Further, by order dated  15.06.1998  the  General  Manager,
District Industries Centre, Lucknow  allotted  the  concerned  shed  to  the
Appellant.  M/s Surya Chemicals did not challenge the order of  cancellation
dated 09.06.1998.  However, Respondent No.1 challenged  the  said  order  by
filing Writ Petition  No.1840  of  1998  in  the  High  Court.   During  the
pendency of the writ petition, there  was  an  order  of  status  quo  which
continued till the disposal of  the  writ  petition.   It  appears  that  on
10.03.2006 another shed in the same Industrial Estate being Shed No.C-2  was
allotted to the Appellant herein.  The Appellant since then has been  having
allotment of three sheds, namely, B-6, C-1 and C-2 in its favour.

k)    In the aforesaid writ petition a supplementary affidavit was filed  by
General Manager, District Industries Centre  in  January,  2000  stating  as
under:

      “That this Hon’ble Court on 13.09.1999  (when  the  instant  case  was
listed) was pleased to enquire whether the petitioner’s case was  considered
or not for allotment of industrial plot in question in view of the  judgment
of this Hon’ble Court dated 04.03.1987 passed in Writ Petition No.  1166  of
1984 (MB) (Metal Seams Co. of India v. State of UP & Ors.)  in  this  regard
it is submitted that in paragraph 23 of the counter affidavit filed  in  the
instant writ  petition  i.e.  Writ  Petition  No.  1840  of  1998(MB)  dated
19.03.1999 it has been specifically asserted that  after  the  dismissal  of
the SLP against the judgment and  order  dated  04.03.1987  the  steps  were
taken by the Department for the assessment of the comparative  need  of  the
conflicting parties in respect of shed in question.  In the  said  paragraph
it was further stated that all the parties namely (1) M/s  Surya  Chemicals,
(2) M/s Metal Seams Co. and  (3)  M/s  Avadh  Delicacies  were  called  vide
letters dated 20.03.1998 and 27.03.1998 by the committee consisting  of  (1)
General Manager, District Industries Centre, Lucknow, (2) Director,  Central
Design Centre, Lucknow and (3)  Project  Manager  in  the  office  of  Joint
Director Industries, Lucknow.  The said letters  were  annexed  as  annexure
Nos. (A-3 and A-4) to the said counter affidavit.





l)    The record  placed  before  us  indicates  that  Respondent  No.1  had
initially got registration to manufacture ayurvedic medicines  in  the  year
1987.  However, in the year 1992 it had obtained  licence  to  run  a  Flour
Mill and to deal in and store food grains.  On  25.06.1997  Respondent  No.1
had written to the Trade Tax Officer, Lucknow as under:

“1.   The firm of the applicant is registered with your office  under  State
Trade Tax Act vide Registration No. LKO-0366347 dated 17.05.1992.

2.    That the trader has closed down his business because of  the  loss  in
it.

3.    That Form No.15 and 19 are already submitted in the office.

Hence, the applicant urges that the notice of closure may  be  admitted  and
the firm may be permanently closed.”


(m)    The aforementioned Writ Petition No.1840 of 1998 came to  be  allowed
by the High Court by its judgment  and  order  dated  28.03.2014.  The  High
Court observed that  Annexure  No.R-16  placed  on  its  record  by  way  of
rejoinder affidavit, disclosed that Respondent No.1 was running an  industry
for manufacturing PVC pipes and accessories  and  its  production  had  also
started.  It  was  further  observed  that  the  order  of  allotment  dated
15.06.1998 in  favour  of  the  Appellant  was  passed  without  giving  any
opportunity of hearing or issuing any show cause notice to  Respondent  No.1
and without complying with the directions in  the  order  dated  04.03.1987.
The High Court also stated that order dated 15.06.1998 was  not  sustainable
in as much as it was issued without any public auction or inviting tenders.


4.    This appeal by special leave challenges the judgment and order  passed
by the High Court setting aside the order  of  allotment  dated  15.06.1998.
In support of the appeal, Mr. H.P. Raval, learned Senior Advocate  submitted
that the notices dated  20.03.1998  and  27.03.1998  clearly  indicate  that
requisite  opportunity  was  afforded  to  Respondent  No.1,   that   record
indicated  that  the  cases  of  all  three  claimants  including  that   of
Respondent  No.1  were  considered  before  letter  of  cancellation   dated
09.06.1998 was issued, that cancellation was never challenged by  M/s  Surya
Chemicals and that Respondent No.1 had no stateable claim in respect of  the
concerned shed.  Appearing for Respondent  No.1,  Mr.  Guru  Krishna  Kumar,
learned Senior Advocate submitted that in keeping with the direction  issued
in the judgment and order dated 04.03.1987 the claim of Respondent No.1  was
required to be considered, which is a matter of fact, was not considered  at
all and that the requirement of the Appellant stood completely satisfied  by
allotment of two sheds namely  C-1  and  C-2  during  the  pendency  of  the
proceedings.


5.    We have considered the submissions and gone through  the  record.  The
Appellant is right in its submissions that requisite notices were issued  to
Respondent  No.1  and  that  it  was  afforded  adequate  opportunity.   The
observations of the High Court in that behalf are  not  quite  correct.  The
supplementary affidavit filed  in  January  2000  made  the  position  quite
clear. The petition was therefore wrongly allowed  on  the  ground  that  no
opportunity was given to Respondent No.1. We have also seen the  record  and
are satisfied that Respondent No.1 had closed  its  operation  in  the  year
1997.  According to annexure  No.  R-16  placed  along  with  the  rejoinder
affidavit, an inspection report was apparently prepared.  That report  is  a
solitary  piece  in  support  of   its   submissions   of   having   started
manufacturing activity. Nothing has been placed on  record,  no  licence  is
adverted to nor is it shown how and in what manner Respondent  No.1  started
its activity of manufacturing PVC pipes.  Nothing was  filed  or  placed  on
record pursuant to notices dated 20.03.1998 and 27.03.1998.  We do not  find
any merit in the submissions that Respondent No.1 has  been  conducting  any
activity of manufacturing of PVC pipes. The claim of  Respondent  No.1  must
therefore be rejected.  At the same time it is absolutely  clear  on  record
that the Appellant has been having allotment of three sheds namely B-6,  C-1
and C-2 in its favour in the same Industrial  Estate.  No  special  equities
are in its favour and no  case  is  therefore  made  out  for  allotment  of
concerned shed to the Appellant.   The observation of the  High  Court  that
the order  dated  15.06.1998  was  issued  without  any  public  auction  or
inviting tenders and as such was completely unsustainable, in  our  view  is
absolutely correct.


6.    In the circumstances  we  allow  the  present  appeal  with  following
directions:-


(a)    The claim of Respondent No.1 was rightly  rejected  while  cancelling
allotment made in favour of M/s Surya Chemicals vide letter of  cancellation
dated 09.06.1998. The order of cancellation dated  09.06.1998  is  sustained
and shall be fully operative. Respondent  No.1  who  has  been  in  wrongful
occupation of the concerned shed must surrender the possession  immediately.
The authorities are directed to recover the possession forthwith and  report
compliance to this Court.


(b)  In view of the change in circumstances namely allotment  of  sheds  C-1
and C-2 in its favour, the Appellant is not entitled to  claim  any  special
equity. The  order  of  allotment  dated  15.6.1998  passed  in  its  favour
therefore stands set aside.


(c)  The authorities are  directed  to  conduct  public  auction  or  invite
tenders for allotment of the concerned shed at  the  present  market  value.
Needless to mention that the present Appellant and Respondent  No.1  or  any
other person is free to participate in such public auction or tender.





7.     This appeal thus stands allowed and the judgment of  the  High  Court
under appeal stands modified to  the  aforesaid  extent.   No  order  as  to
costs.



                                                               ……………………………J.
                              (V. Gopala Gowda)


                                                            ……..………………..……J.
                             (Uday Umesh Lalit)
New Delhi,
January 19, 2016



ITEM NO.1E-For Judgment       COURT NO.10             SECTION XI

               S U P R E M E  C O U R T  O F  I N D I A
                       RECORD OF PROCEEDINGS

C.A. No.361/2016 @ Petition(s) for  Special  Leave  to  Appeal  (C)   No(s).
10951/2014

M/S.METAL SEAM CO.OF INDIA (P)LTD.                 Petitioner(s)

                                VERSUS

M/S.AVADH DELICACIES & ORS.                        Respondent(s)

Date : 19/01/2016 This appeal was called on for pronouncement  of  JUDGEMENT
today.

For Petitioner(s)
                     Mr. Anil Kumar Mishra,Adv.

For Respondent(s)
                     Mr. Gaurav Dhingra,Adv.

                        Mr. Akshit Gadhok, Adv.
                     Mr. Munawwar Naseem,Adv.


      Hon'ble Mr. Justice Uday Umesh Lalit pronounced the  judgment  of  the
Bench comprising Hon'ble Mr. Justice V. Gopala Gowda and His Lordship.
      Leave granted.
      The appeal is allowed in terms of the signed non-reportable judgment.

|(VINOD KUMAR)                          | |(MALA KUMARI SHARMA)                  |
|COURT MASTER                           | |COURT MASTER                          |


           (Signed Non-Reportable Judgment is placed on the file)

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