Industrial land granted to factory in 1978 goes back to KIADB

S Shyam Prasad

Bengaluru: The High Court has dismissed an appeal by the Official Liquidator of Ms Electromobiles who had sought the rights to land allotted to the company in 1978.

The lease of land to the company was terminated by the Karnataka Industrial Area Development Board (KIADB) as a proposed factory never came up.

“The Official Liquidator of the Company cannot have rights in the property when the Company itself (is dysfunctional). It is pertinent to note that the order of cancellation of the allotment was not challenged by the Official Liquidator. Therefore, the land in question did not become the property of the Company,” the Division Bench of Justice Alok Aradhe and Justice Ramanath Hegde said in their judgement dismissing the Original Side Appeal.

The Company had filed an application before the KIADB in November 1976 for allotment of land for construction of a factory for manufacturing two-wheelers. The Board (KIADB) allotted 69.25 acres of land in Rayapura in Hubballi-Dharwad Industrial Area.

Since the said land was in litigation, a fresh allotment of 35 acres and 29 guntas of land was made in Yelawala hobli, Mysuru, and the land delivered in February 1979. The Company was given time till October 1982 to implement the project.

The Company failed to implement the project and therefore the Board in January 1987 took a decision to cancel the allotment of land. The company was asked to hand over the possession of the land. The same year, an order to wind up the company was passed.

The Official Liquidator challenged the order of cancellation that was allowed by the Company Judge, which set aside the Board’s decision. This was challenged by the Board in the High Court. A Division Bench of the HC in an order in April 2001 held that the Board had powers to terminate the lease.

The Board made another order in December 2001 terminating the lease granted to the Company. The Company approached the Company Judge court again to give effect to the Board’s order.

The Company judge in 2012 upheld the validity of the termination of lease and ordered the Official Liquidator to hand over the land within three months. The appeal in the HC was filed by the Official Liquidator against the order passed by the Company Judge on November 28, 2012.

The appeal filed in 2013 was disposed of by the HC recently. The HC in its judgment noted that “From the perusal of the order of the Division Bench of this Court, it is evident that the Division Bench of this Court has held that the remedy of the Board was to terminate the lease and thereafter apply to the Company Court for appropriate relief in regard to the land in question. It was further held that if and when such an application is filed by the Board seeking permission to initiate legal action for taking possession or seeking delivery of the land from the Court, the Company Court will consider the validity of the action of the Board.”

Since the Board had taken the decision to terminate the lease-cum-sale deed and thereafter the Company Court has given effect to that order to seek possession of the land, “The aforesaid action of the Board is in consonance with the order passed by the Division Bench of this Court and therefore, the same does not suffer from any infirmity.” OSA 5/2013