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Civil Appeal Nos. 7252-7253 and 8222-8223 of 2003. Case: The Rajasthan State Industrial Development and Investment Corporation and Anr. Vs Diamond and Gem Development Corporation Ltd. and Anr.. Supreme Court (India)

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Case NumberCivil Appeal Nos. 7252-7253 and 8222-8223 of 2003
CounselFor Appellant: Dhurv Mehta, Sr. Adv., Manish Singhvi, AAG, Milind Kumar, Amit Lubhaya and Pragati Neekhra, Advs. and For Respondents: P.S. Patwalia, Rakesh Dwivedi and M.N. Krishnamani, Sr. Advs., Ajay Singh, Ashok K. Mahajan, Shibashish Mishra, Sanskriti Pathak, P.V. Yogeswaran, R. Gopalakrishnan, Sanjay Parikh, Mamta Saxena, Bushra Parveen, A...
JudgesB.S. Chauhan and V. Gopala Gowda, JJ.
IssueRajasthan Land Acquisition Act, 1953 - Sections 4(1), 6; Nationalisation Act - Section 3; Mines Act - Section 2(1); Principal Act; Rajasthan Land Revenue (Industrial area Allotment) Rules, 1959 - Rule 11A; Rajasthan State Industrial and Investment Corporation Limited (Disposal of Land) Rules, 1979 - Rule 24; Constitution of India - Article 226
Citation2013 (III) AD 73 (SC), AIR 2013 SC 1241, JT 2013 (3) SC 409, JT 2013 (3) SC 417, 2013 (2) MLJ 756 (SC), 2013 (120) RD 144, 2013 (2) SCALE 452, 2013 (5) SCC 470
Judgement DateFebruary 12, 2013
CourtSupreme Court (India)

Judgment:

B.S. Chauhan, J.

  1. These appeals have been preferred against the impugned judgment and order dated 30.7.2002 passed by the High Court of Rajasthan (Jaipur Bench) in Civil Writ Petition Nos. 5481/1994 and 105/1997, by which the High Court has allowed the writ petitions filed by the Respondent-Diamond and Gem Development Corporation Ltd. (hereinafter referred to as the 'Company'), for quashing the order of cancellation of allotment of land and directing the Appellants for providing the approach/access road.

  2. As these appeals have been preferred against the common impugned judgment, for the sake of convenience, Civil Appeal Nos. 7252-53/2003 are to be taken to be the leading case. The facts and circumstances giving rise to these appeals are:

    1. That a huge area of land admeasuring 607 Bighas and 5 Biswas situate in the revenue estate of villages Durgapura, Jhalan Chod, Sanganer and Dhol-ka-Bad in District Jaipur, stood notified under Section 4(1) of the Rajasthan Land Acquisition Act, 1953 (hereinafter referred to as the 'Act') on 18.7.1979, for a public purpose i.e. industrial development, to be executed by the Appellant Rajasthan State Industrial Development and Investment Corporation (in short 'RIICO').

    2. Declaration under Section 6 of the Act was made on 22.6.1982 for the land admeasuring 591 Bighas and 17 Biswas. After meeting all requisite statutory requirements contained in the Act, possession of the land, was taken over by the Government and was subsequently handed over to Appellant-RIICO, on 18.10.1982 and 17.11.1983. The Land Acquisition Collector assessed the market value of the land and made an award on 14.5.1984. RIICO made allotment of land admeasuring 105 acres vide allotment letter dated 10.3.1988 to the Respondent No. 1 company, to facilitate the establishment of a Gem Industrial Estate for the manufacturing of Gem stones.

    3. In pursuance of the aforesaid allotment letter, a lease deed was executed between the Appellant and Respondent-company on 22.5.1989, with a clear stipulation that the land was allotted on an "as is-where-is", and that the Respondent-company must complete the said project within a period of 5 years, and further that, in the event that the terms and conditions of the lease agreement were not complied with, the Appellant would be entitled to recover its possession in addition to which, various other conditions were also incorporated therein.

    4. After possession was taken by the Respondent-company, construction could be carried only on a portion of the land allotted to it. As the development work was being carried out at an extremely slow pace, the Appellant issued various notices from time to time, reminding the Respondent-company that it was under an obligation to complete the project within a specified period, owing to which, it must accelerate work. Additionally, there also arose some difficulty with respect to the Respondent-company's attempts to sub-lease the said premises, or parts thereof, and in view of this, an amendment dated 4.11.1991 was inserted in Rule 11-A of the Rajasthan Land Revenue (Industrial area Allotment) Rules, 1959 (hereinafter referred to as the 'Rules 1959'), enabling the company to sub-lease the said land.

    5. The Appellant vide notice dated 4.7.1992, informed the Respondent-company, that as per Clause 2(n) of the lease deed, all construction had to be completed within a stipulated time period of 5 years. The Respondent-company began asking the Appellant to provide it accessibility via road, from the Jaipur Tonk main road and, as the same was not provided, the Respondent-company filed Writ Petition No. 5481 of 1994 before the High Court, seeking the issuance of a direction to the Appellant to provide to it, the aforesaid road.

    6. During the pendency of the aforesaid writ petition, the Appellant expressing its dis-satisfaction with regard to the progress of the development of the said land by the Respondent-company, filed a reply to the said writ petition before the High Court stating that it was not under any obligation to provide to the Respondent-company the aforementioned approach road, as the lease deed had been executed between them, on the basis of an "as-is-where is" agreement. Further, the Appellant issued a show cause notice dated 29.8.1996, to determine the lease in light of the lease agreement, in lieu of the fact that the Respondent-company had not made any progress regarding the completion of the project, and even after the expiry of a period of 5 years, only 10% of the total construction stood completed. In pursuance thereof, the lease deed was cancelled vide order dated 1.10.1996, and possession of the land in dispute was taken back by the Appellant on 3.10.1996.

    7. The Respondent-company filed another Writ Petition No. 105 of 1997, challenging the cancellation order dated 1.10.1996 and the taking over of possession by the Appellant on 3.10.1996. The Appellant contested the said writ petition on the grounds that it was entitled to restoration of possession, as the Respondent-company had failed to ensure compliance with the terms and conditions incorporated in the lease deed, according to which, the company was required to complete the said project within a period of 5 years. However, presently, the extent of development completed by it stood at 10%. Therefore, in light of the aforementioned circumstances, the Appellant had no choice but to cancel the lease deed and take back possession.

    8. The High Court vide its impugned judgment and order, allowed both the writ petitions quashing the order of cancellation, and directed the restoration of possession of the aforesaid land to the Respondent-company, and further, also directed the Appellant to provide to the Respondent-company, the approach/access road demanded by it.

    Hence, these appeals.

  3. Shri Dhruv Mehta, learned senior counsel appearing on behalf of the Appellant-RIICO, and Shri Manish Singhvi, learned Additional Advocate General for the State of Rajasthan have submitted that, as the allotment of the land had been made to the Respondent-company on an 'as-is-where-is" basis, there was no obligation on the part of RIICO to provide to it, the said access road. The terms of the contract must be interpreted by court, taking into consideration the intention of the parties and not on the basis of equitable grounds. Moreover, the cancellation of the deed was in accordance with the terms and conditions incorporated in the lease deed, and therefore, in light of the facts and circumstance of the case, the High Court has committed an error, by quashing the order of cancellation and, in issuing a direction for the restoration of possession and for the provision of the access road.

    The High Court has mis-interpreted the amendment to Rule 11-A of the Rules 1959, and has thus held that the Appellant had no jurisdiction to cancel the said lease, as the Respondent-company by virtue of the operation of the amended provision, had become a direct lessee of the State. In such a fact-situation, there was no obligation on the part of the Appellant to provide the approach road as it was not the lessor of the Respondent-company. In case by virtue of the amendment in Rule 11-A of the Rules 1959, the State Government became the lessor, the Appellant-RIICO lost the title/interest over the property which had been acquired by it on making payment of the huge money and that too, without getting any refund. Such an interpretation leads to absurdity. Thus, the appeals deserve to be allowed.

  4. Per contra, Shri P.S. Patwalia, learned senior counsel appearing for the Respondent-company, has submitted that the judgment and order of the High Court does not require any interference whatsoever, for the reason that the Respondent-company had been invited to establish and develop the Gem Stone industrial park at Jaipur. In view of the fact, that the amendment to Rule 11-A of the Rules 1959 was made exclusively to facilitate the Respondent-company to sub-lease a part of the developed premises, the High Court has rightly held that the State Government became the lessor and that, RIICO had no concern whatsoever in relation to the said matter, owing to which, it had no competence to cancel the lease. In the light of the fact that RIICO was in possession of other lands surrounding the land in question, the High Court has directed it to provide to the Respondent-company, an access road on equitable grounds, taking into consideration the fact...

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