# M/S Vaid Organics & Chemical Industries Ltd v. State of U.P. & Ors

- **Citation:** (2023) 3 ILRA 265
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-02-22
- **Case number:** Writ C No. 2835 of 2008
- **Bench:** Mrs. Sangeeta Chandra, Manish Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-vaid-organics-chemical-industries-ltd-v-state-of-u-p-ors-49954
- **Pages:** 7

## Headnote

C.S.C.,
A.K
Chaturvedi,
Alka
Verma,
Kartikey Dubey, Manoj Sahu

Civil Law - Lease - Cancellation - U.P.
State Industrial Development Authority -
land in question was allotted to the
petitioner
on
lease
by
statutory
Corporation Uttar Pradesh State Industrial
Development Corporation Ltd. under the
fixed terms of the lease agreement,
having been signed in 1992 - Petitioner
had to make construction and start
manufacturing within a period of two
years from the date of lease agreement -
two years' period expired on 30.4.1994 -
on the request of the petitioner, twice the
time was extended but the petitioner
neither made any construction nor started
manufacturing in violation of Clause 4(e)
and Clause 5 of the lease agreement - By
the
impugned
order
the
Corporation
cancelled the lease agreement in the year
2008 - Held - The Corporation has been
created for encouraging industrialisation
coupled
with
the
aim
to
generate
employment and for betterment of the
economy - Due to the non-adherence to
the conditions in the lease deed by the
petitioner, the industrial development for
which the land was allotted to the
petitioner has been affected - No infirmity
in impugned order.
Dismissed. (E-5)

List of Cases cited:
266 INDIAN LAW REPORTS ALLAHABAD SERIES

## Text

3 All. M/S Vaid Organics & Chemical Industries Ltd. Vs. State of U.P. & Ors.
265
date of notice would expire only on
11.05.2021 and fifteen days beyond the
said date would expire on 26.05.2021 and
even according to the statutory provisions
cancellation of the lease of the petitioner
could not have been ordered prior to expiry
of the said period i.e. 26.05.2021 while in
the present case the order of cancellation
has been passed on 26.4.2021 before the
expiry of statutory period, as such, it is
clearly noticed that Rule 58 of the Rules of
1963 has been flagrantly violated by the
respondents in cancellation of their lease in
pursuance of the show cause notice dated
12.4.2021. Therefore, on this ground also
the cancellation order is illegal, arbitrary
and violative of Rule 58 of the Rules of
1963.

31. In view of the aforesaid facts and
circumstances,
this
Court
is
of
the
considered view that the impugned order
dated 16.3.2022 passed by the State
Government
in
Revision
No.104
(R)/SM/2021 as well as order 26.4.2021
passed by opposite party No.3 i.e. District
Magistrate, Banda are illegal and arbitrary,
hence, set aside.

32. Considering the seriousness of the
allegations and the amount of recovery the
respondents are given liberty to proceed
against the petitioner in accordance with
law, if they so choose.

33. In view of the above, the writ
petition stands allowed.
----------
(2023) 3 ILRA 265
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 22.02.2023

BEFORE

THE HON'BLE MRS. SANGEETA CHANDRA, J.
THE HON'BLE MANISH KUMAR, J.

Writ C No. 2835 of 2008

M/S Vaid Organics & Chemical Industries
Ltd. ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Akhilesh Kalra, Akhilesh Kumar Kalra,
Jyotiresh
Pandey,
Narendra
Shanker
Shukla, Narendra Shukla, Pooja Singh

Counsel for the Respondents:
C.S.C.,
A.K
Chaturvedi,
Alka
Verma,
Kartikey Dubey, Manoj Sahu

Civil Law - Lease - Cancellation - U.P.
State Industrial Development Authority -
land in question was allotted to the
petitioner
on
lease
by
statutory
Corporation Uttar Pradesh State Industrial
Development Corporation Ltd. under the
fixed terms of the lease agreement,
having been signed in 1992 - Petitioner
had to make construction and start
manufacturing within a period of two
years from the date of lease agreement -
two years' period expired on 30.4.1994 -
on the request of the petitioner, twice the
time was extended but the petitioner
neither made any construction nor started
manufacturing in violation of Clause 4(e)
and Clause 5 of the lease agreement - By
the
impugned
order
the
Corporation
cancelled the lease agreement in the year
2008 - Held - The Corporation has been
created for encouraging industrialisation
coupled
with
the
aim
to
generate
employment and for betterment of the
economy - Due to the non-adherence to
the conditions in the lease deed by the
petitioner, the industrial development for
which the land was allotted to the
petitioner has been affected - No infirmity
in impugned order.
Dismissed. (E-5)

List of Cases cited:
266 INDIAN LAW REPORTS ALLAHABAD SERIES
1. St. Of U.P. & ors. vs Maharaja Dharmander
Prasad Singh [1989 SCC (2) 505]

2. ITC Limited Vs St. of U.P. [2011 (7) SCC 493]

3. Rakesh Kumar Garg Vs St. of U.P. & ors., Writ
- C No. 68500 of 2015, dt 7.1.2016

(Delivered by Hon'ble Mrs. Sangeeta
Chandra, J.
&
Hon'ble Manish Kumar, J.)

1. Heard Shri Akhilesh Kumar Kalra,
learned counsel for the petitioner and Shri
Kartikey Dubey, learned counsel for the
respondents and perused the record.

2. This petition has been filed by the
petitioner for quashing of the order dated
10.3.2008, as contained in Annexure-1 to
the petition and for the direction to the
respondent not to interfere in the peaceful
possession of the land in the license
agreement dated 30.4.1992, as contained in
Annexure-4 to the petition.

3. It is the case of the petitioner as
argued by his counsel that the respondentUttar Pradesh State Industrial Development
Corporation Ltd. (hereinafter referred to as
the "Corporation") had, for the purpose of
encouraging
industrialization
in
the
backward District of Hardoi, developed an
industrial area, in which the petitioner
company with an intent to establish a
chemical industry applied for allotment of
an industrial plot for the said purpose.
Respondent-Corporation allotted Plot No.
B-9-10-11 & D-11 to the petitioner
company on 17.7.1991. Although the
petitioner had applied for 72 acres of land
but final area of 119416.30 sq. mt. was
allotted, for which a total amount of Rs.
14,76,601.25
was
deposited
by
the
petitioner
in
lump-sum
before
the
respondent. Pursuant to such deposit, the
lease
agreement
was
executed
on
30.4.1992. Subsequently, the Chemical
Industry which the petitioner intended to
set up could not established because of ban
on import of finished goods. Later on, the
Export Import Policy of the Government of
India was liberalized and the Central
Government permitted such import of
finished products which resulted in the
steep fall in the prices of the product. Thus,
the industry which the petitioner was going
to set up became unviable.

4. The petitioner informed the
respondent-Corporation that the industry
which was initially intended to be set up
could not be set up because of various
reasons and the project had become
unviable. They had communicated the
decision to put up some other project in the
field of horticulture which would require
some time. The petitioner applied for
extension which was given. Subsequently,
the petitioner was issued a notice by the
respondent-Corporation in 2005 to show
cause as to why its allotment may not be
cancelled
as
the
petitioner
had not
complied with the terms of the agreement
and had not utilized the industrial plot for
the purpose for which it was allotted to it.
The petitioner immediately replied to the
said notice and communicated that it was
now intending to set up a Medicinal and
Aromatic Crop based industry and the
necessary soil testing, etc. would be carried
out
which
would
need
sometime.
Accordingly, a further time of three years
may be permitted to it for utilizing the land
as per the new proposal made by it. The
petitioner made all efforts to set up the new
industry but
the
respondent
by
the
impugned order dated 10.3.2008 informed
the petitioner that it had cancelled the
allotment
made
in
their
favour
on
3 All. M/S Vaid Organics & Chemical Industries Ltd. Vs. State of U.P. & Ors.
267
17.7.1991 and also the license agreement
dated 30.4.1992 as the petitioner had failed
to comply with stipulation under Clause
4(e) of the agreement. It was also informed
by the said impugned order that the Junior
Engineer posted at the site has been
directed to re-enter in the plot and submit
the re-entry memo within a week.

5. It has been argued by the learned
counsel for the petitioner that when the
petitioner had made an application for
extension of time in 2005 in response to
show cause notice issued to it, it was under
the bonafide impression that respondentCorporation would consider and decide
such application for extension of time and
the Corporation would follow the due
process for re-enter. Even thereafter, the
impugned order was passed. However, the
employees of the Corporation came on the
site on 31.3.2008 and informed the
petitioner that it should immediately
dismantle the barbed wire fencing and
harvest its crop so that the possession of the
plot may be taken by the respondentCorporation.

6. It has been argued by the learned
counsel for the petitioner that when the
matter was brought before this Court as
fresh on 1.4.2008, the Court directed the
counsel for the respondent to seek
instruction and in the meantime if crops
are there, the Court observed that the
same shall not be removed or cut. When
the matter was taken up on 30.4.2008, the
protection given on 1.4.2008 was directed
to be continued till the next date of
listing. The writ petition was dismissed
for want of prosecution twice but had
been restored thereafter and interim order
was still continue in favour of the
petitioner and it is still in possession of
the plot in question.

7. It has been argued on the basis of
judgment rendered by the Hon'ble Supreme
Court in State Of U.P. & Ors vs
Maharaja Dharmander Prasad Singh
[1989 SCC (2) 505] that once a lease
agreement is signed, then it could be only
cancelled through a civil suit and by
adopting due process of law for resuming
the possession. The respondents could not
have cancelled the allotment when the
application of the petitioner for extension
of time was pending.

8. Shri Kartikey Dubey, learned
counsel for the respondents, on the other
hand, has taken this Court through the
contents of the counter affidavit filed on
behalf of respondent no. 3. In the said
counter-affidavit, it has been stated that the
petitioner had submitted an application
dated 18.4.1991 for allotment of plot in
Sandila Industrial Area, Hardoi for setting
up of an Alcohol based Chemical Industry
along with a project report. Four plots of
land were allotted to the petitioner on
17.7.1991. Four plots of land were initially
allotted and the petitioner made an
application for surrender of one plot, the
same was accepted. The petitioner and the
Corporation signed an agreement on
30.4.1992, the petitioner had to commence
construction of the manufacturing unit
within nine months from the date of giving
possession. The possession was handed
over to the petitioner on 9.7.1992. The
petitioner made no attempt to construct the
manufacturing unit which ought to have
been started within nine months and
manufacturing was to be started within two
years of the same. The petitioner has been
issued show cause notice dated 8.2.1996
for showing cause within thirty days as to
why allotment in favour of the petitioner be
not cancelled. In reply to the same, the
petitioner requested for extension of time
268 INDIAN LAW REPORTS ALLAHABAD SERIES
for three years further time to start
manufacturing an Alcohol based Chemical
Industry. Copies of the representation of the
petitioner and its reply have been annexed
as Annexure No. C-4 and C-5 respectively
to the counter affidavit. The petitioner's
application
was
considered
and
the
Managing Director of the Corporation
allowed one years' time to the petitioner to
set up Alcohol based Chemical Industry
through
its
letter
dated
27.6.1996
communicated to the Regional Office,
Lucknow.

9. The petitioner was accordingly
granted extension of time through letter
dated 17.7.1996 but just before the expiry
of the said period, the petitioner submitted
another
representation
on
25.6.1997
requesting therein for extension of time for
completion
of
construction
and
commencement
of
manufacturing
and
production of Alcohol based Chemical
Industry within a period of three years. The
representation
of
the
petitioner
was
considered and an order passed on
19.11.1997 granting further one year period
as extension. When the petitioner did not
start any construction on the land in
question, a show cause notice was again
issued to the petitioner on 6.10.2005 to
show cause within a period of sixty days
why the allotment as well as the agreement
dated 30.4.1992 be not cancelled because
of violation of terms of the agreement. In
reply thereof, the petitioner did not make
any representation and at last the Regional
Office, Lucknow sent a proposal to Head
Office, Kanpur for cancellation of the
allotment and agreement dated 30.4.1992
through letter dated 30.6.2006. The Head
Office took sometime to clarify the
situation and the order impugned had not
passed after survey of the plot in question
was made and it was found that petitioner
had not made any attempt to raise any
construction on the plots allotted to it and
the aforesaid plots are lying vacant.

10. It has also been submitted by the
learned counsel for the Corporation that the
Corporation is a statutory corporation
established by the State Government for
industrial development of the State of Uttar
Pradesh. The land is acquired by the State
for the Corporation for allotment to
deserving applicants for setting up Small
and Medium Scale Industries. The land
which is acquired has been given at
subsidized rate to applicants who are
genuinely interest for raising industrial
units as stipulated in the agreement.
Learned counsel for the respondent has
taken this Court through a relevant clauses
of the agreement which have been quoted
in the order impugned. Clause 4(e) and
Clause 5 of the agreement signed between
the parties are relevant for the purpose
herein and are being quoted here-in-below.

4(e). That the Licensee at his own
cost shall erect on the plot of land in
accordance with the lay out plan, elevation
and design and in a position to be approved
both by the Grantor and the municipal or
other authority in writing and in a
substantial and workman like manner a
building to be used as industrial factory,
with all necessary out houses, sewers
drains and other appurtenances and proper
conveninces thereto according to the local
authority's rules and bye-laws in respect of
building,
drains
latrines
and
communication
with
severs
and
will
commence such construction within a
period of nine months or within such
extended time as may be allowed by the
Grantor in writing in its discretion at the
request of the Licensee from the date hereof
and shall completely finish the same fit for
3 All. M/S Vaid Organics & Chemical Industries Ltd. Vs. State of U.P. & Ors.
269
use and start the manufacturing and
production with in the period of 24 months
from the date of these presents or within
such extended time as may be allowed by
the Grantor in writing in its discretion or
the request of the Licensee.

5. If the Licensee fails to
commence and complete the building fit for
use and start the manufacturing and
production in the time and manner herein
before provided (time in this respect being
essence of contract) or shall not proceed with
the works with due diligence or shall have
failed to make payment of the interest
installment of premium on or before the due
date, the Grantor shall have the right and
power
to
re-enter
upon
and
resume
possession of the said land and everything
thereon, and thereupon this Agreement shall
cease and terminate and all erection and
materials, plant and things upon the said plot
and land shall belong to the Grantor without
payment of any compensation or allowance
to the Licensee for the same without prejudice
nevertheless to all other legal right and
remedies of the Grantor, against the licensee
the Grantor may permit the continuation of
the occupation of the Licensee upon the said
land on payment of such money and/or on
such terms and conditions, as may be decided
upon by the Grantor and/or to direct removal
or alteration of any building or structure
errected or used contrary to the conditions of
the grant within the time prescribed, cause
the same to be carried out and recover the
cost of carrying out the same from the
licensee and an amount equal to 20% of the
total premium together with out standing
interest due till date, use and occupational
charges due, and other dues, if any, shall
stand forfeited to the Grantor and the
licensee shall not be entitled to any
compensation whatsoever.

Provided that the Licensee shall
be at liberty to remove and appropriate to
himself
all
building,
erections
and
structures, if any, made by him and all
material thereof from the plot of the land
after paying up all dues, rent and all
municipal and other taxes, rates and
assessment then due and all damages and
other dues, occurring to the Grantor and to
remove the materials from the plot of land
within three months of the date of
revocation
or
termination
of
this
Agreement.

11. It has been argued by the learned
counsel appearing on behalf of the
respondent that after the cancellation of
allotment and agreement by the order dated
10.3.2008, the land in question was taken
in re-possession thereof on 17.3.2008 at
12:30 P.M., the copy of re-entry memo has
been filed as Annexure C-10 to counter
affidavit filed by the respondent no. 3. The
interim order that was granted by this Court
did not stay the order impugned but only
directed the crop of the petitioner if they
were standing thereon. It cannot be said
that the petitioner is in possession of the
plots in question.

12. The learned counsel for the
respondent-Corporation has placed reliance
on judgment rendered the judgment of the
Hon'ble Supreme Court in ITC Limited
Vs. State of U.P. [2011 (7) SCC 493] and
the order dated 7.1.2016 passed by the
Division Bench of this Court in Writ - C
No. 68500 of 2015 (Rakesh Kumar Garg
Vs. State of U.P. and Others). The
question before the Court was with regard
to leases of plot allotted by New Okhla
Industrial
Development
Authority
(hereinafter referred to as "NOIDA") for
construction of hotels in District Gautam
Buddh Nagar. NOIDA is constituted under
the UP Industrial Area Development Act,
1976 for development of industrial and
270 INDIAN LAW REPORTS ALLAHABAD SERIES
urban township in Uttar Pradesh and
neighboring city New Delhi to encourage
tourism. Certain plots were allotted but
because of non-compliance with the
conditions of the lease agreement, a
cancellation order was issued. The Court
was considering the question whether "plot
leased can be cancelled?" The Court
observed in Para 21, 22, 23 as follows:

21. A lease governed exclusively
by the provisions of Transfer of Property
Act, 1882 (`TP Act' for short) could be
cancelled only by filing a civil suit for its
cancellation or for a declaration that it is
illegal, null and void and for the
consequential relief of delivery back of
possession. Unless and until a court of
competent jurisdiction grants such a
decree, the lease will continue to be
effective
and
binding.
Unilateral
cancellation of a registered lease deed by
the lessor will neither terminate the lease
nor entitle a lessor to seek possession. This
is the position under private law.

22. But where the grant of lease
is governed by a statute or statutory
regulations, and if such statute expressly
reserves the power of cancellation or
revocation to the lessor, it will be
permissible for an Authority, as the lessor,
to cancel a duly executed and registered
lease deed, even if possession has been
delivered, on the specific grounds of
cancellation provided in the statute.

23. NOIDA is an authority
constituted for development of an industrial
and urban township (also known as Noida)
in Uttar Pradesh under the provisions of
the Act. Section 7 empowers the authority
to sell, lease or otherwise transfer whether
by auction, allotment or otherwise, any
land or building belonging to it in the
industrial development area, on such terms
and conditions as it may think fit to impose,
on such terms and conditions and subject to
any rules that may be made. Section 14
provides for forfeiture for breach of
conditions of transfer. The said section
empowers the Chief Executive Officer of
the Authority to resume a site or building
which had been transferred by the
Authority and forfeit the whole or part of
the money paid in regard to such transfer,
in the following two circumstances: a) non-
payment by the lessee, of consideration
money or any installment thereof due by the
lessee on account of the transfer of any site
or building by the Authority; or b) breach
of any condition of such transfer or breach
of any rules or regulations made under the
Act by the lessee. Sub-section (2) provides
that where the Chief Executive Officer of
the Authority resumes any site or building
under sub-section (1) of section 14, on his
requisition, the Collector may cause the
possession thereof to be taken from the
transferee by use of such force as may be
necessary and deliver the same to the
Authority. This makes it clear that if a
lessee commits default in paying either the
premium or the lease rent or other dues, or
commits breach of any term of the lease
deed or breach of any rules or regulations
under the Act, the Chief Executive Officer
of NOIDA can resume the leased plot or
building in the manner provided in the
statute, without filing a civil suit. The
authority to resume implies and includes
the authority to unilaterally cancel the
lease.

13. This Court finds that the facts as
mentioned in this Case before us are almost
the same as the land in question has been
given to the petitioner on lease by statutory
Corporation under the fixed terms of the
lease agreement and twice extension was
granted to the petitioner. The allotment of
these plots having been done in 1991 and
3 All. Rajesh Kumar Gupta & Ors. Vs. State of U.P. & Anr.
271
lease agreement having been signed in
1992, The Corporation waited till 2008 for
cancellation of the lease agreement. The
petitioner had to make construction and
start manufacturing within a period of two
years from the date of lease agreement, as
admittedly
the
lease
agreement
was
executed on 30.4.1992 and the two years'
period expired on 30.4.1994. Even after
that on the request of the petitioner, twice
the time was extended but the petitioner has
neither made any construction nor started
manufacturing which is in violation of
Clause 4(e) and Clause 5 of the lease
agreement.

14. The Corporation has been created
for encouraging industrialisation coupled
with the aim to generate employment and
for betterment of the economy. Due to the
non-adherence to the conditions in the lease
deed by the petitioner, the industrial
development for which the land was
allotted to the petitioner has been affected..

15. This Court finds no infirmity in
such order impugned.

16. Accordingly, the Writ Petition
stands dismissed.
----------

(2023) 3 ILRA 271
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 09.02.2023

BEFORE

THE HON'BLE SUNEET KUMAR, J.
THE HON'BLE RAJENDRA KUMAR-IV, J.

Writ C No. 3175 of 2023

Rajesh Kumar Gupta & Ors. ...Petitioners
Versus
State of U.P. & Anr. ...Respondents
Counsel for the Petitioners:
Sri Krishna Mohan Misra, Sri H.R. Mishra

Counsel for the Respondents:
C.S.C.

A. Civil Law - Urban Land (Ceiling &
Regulation) Act 1976- Section 10(4) -
During the period commencing on the
date of publication of the notification
under sub-section (1) and ending with the
date specified in the declaration made
under sub-section (3)- (i) no person shall
transfer by way of sale any excess vacant
land specified in the notification and any
such transfer made in contravention of
this provision shall be deemed to be null
and void - excess land declared surplus
pursuant to notification under Section
10(1) could not be transferred in view of
Sub-clause (4) of Section 10 (Para 17, 18)

B. Civil Law - Urban Land (Ceiling &
Regulation) Act 1976 - Notification u/s
10(1) was notified on 17.07.1982 followed
by notification u/s 10(3) notified on
28.07.1990 - Predecessor in interest of
the petitioner purchased the property in
1985, i.e., after notification issued under
Section 10(1) - Petitioners are subsequent
purchaser having purchased the surplus
land after issuance of notification under
Section 10(1) - In the representation,
petitioner sought release of the property
from the ceiling proceedings on a bald
statement
that
petitioners
are
in
possession of the declared excess land, in
view of Section 3 of the Urban Land
(Ceiling and Regulation) Repeal Act, 1999
- Held - in view of Sub-section 4 of Section
10 of the Act, the transfer of the declared
excess land is a nullity and does not
confer any right, title or authority upon
the petitioners - Also instant writ petition
filed after 22 years from the date of the
Repeal Act and after a lapse of over three
decades since notice under Section 10(5)
(Para 17, 21)

Dismissed. (E-5)

List of Cases cited: