SAGAR HOSIERY MILLS Vs. STATE OF WEST BENGAL

JUDGEMENT

(1.) THE short point involved in this case is whether the Government after allotting a plot of land for setting up of an industry at Salt Lake City can cancel the allotment on the plea that the partners of the allottee firm are members of the family of the partners of another firm which has been given a plot of land for industrial development in the Salt Lake City. The case was adjourned on the prayer of the respondents to enable them to produce the relevant Rule or Notification to show that the members of the same family cannot be given separately two plots of land at Salt Lake City to set up industries. No such Rule or notification could be produced. The only plea on behalf of the State Government is that this is the practice of the State of West Bengal, which is well-known to everybody. An allegation of suppression of material fact has also been alleged against the petitioners. I fail to see any justification in this stand taken by the State of West bengal. The allottee firm, M/s, Sagar Hosiery mills is a partnership firm, of which Sm. Malati Kundu and Sm. Shipra Kundu are partners. They have not given any false particulars in the application for allotment of land required by them. The applicants cannot be charged for not disclosing something which they were not called upon to disclose. There is another partnership firm, Hindusthan Textiles Ltd. , of which Ajit Kundu. Jagabandhu Kundu and a third person, who are partners. The fact that hindusthan Textiles Ltd. was allotted a plot of land at Salt Lake Industrial area had not been disclosed by Malati Kundu and Shipra Kundu when the application for allotment of land for M/s. Sagar Hosiery Mills was made. That is the gravamen of the charge against them. I fail to see why the writ petitioners should state something which they were not called upon to disclose. If a person makes an application for allotment of land at Salt Lake city for industrial purpose he is under no obligation to state whether his brothers, sisters or any other of his relations has been allotted a plot of land for setting up of industry at Salt Lake City. If this was the policy of the respondents, they should have clearly announced that before the land was allotted. A Rule might have been framed or a Notification issued in this regard. Even newspaper advertisements could have been given. It is the case of the writ petitioners that neither under various government notifications issued from time to time in regard to allotment of land in the Salt Lake Township nor in the advertisement given for allotment of plots in industrial sector of Salt Lake for establishment of small scale industries, it was stated that the members of one family will not get more than one plot of land in the Salt Lake Township. Another important point that is to be borne in mind is that both the firms, M/s. Sagar Hosiery Mills and Hindusthan Textiles Ltd. are registered under the Partnership Act. Each firm has got a separate permanent Income tax Number, registration number, trade licence, certificates for registration as a small scale industrial unit, separate licences under the Directorate of textile, Directorate of Cottage and Small Scale Industries and also are separately registered under the Trade and Merchandise Mark Act, 1958. The Government of West Bengal in the year 1962 published an advertisement that some plots of land in the Industrial Sector, Bidhannagar (Salt Lake) Section IV / V would be distributed for setting up small scale- industries in the industrial sector. It was also declared that the plot of lands might be available on lease for 999 years on payment of premium or salami charged by the respondent. Pursuant to such advertisement, the petitioners applied for allotment of a plot of 10 kothas in the Salt Lake City in Industrial Sector for establishment of Small Scale Industries in the name and style as Messrs sagar Hosiery for manufacturing hosiery goods. The respondent authorities by a letter bearing No. 1966/si (AL)/9l-41/82 dated 28. 5. 1982 informed the partners of M/s. Sagar Hosiery Mills that with reference to their application for allotment of plot in the Industrial Sector, Bidhannagar for setting up a small scale industry for 10 Kothas of plot, the Governor was pleased to offer M/s. Sagar Hosiery Mills to, grant on lease a plot measuring about 10 Kothas more or less in Section IV / V Bidhannagar (Salt Lake township) for 999 years for the purpose of setting up an industry for hosiery goods subject to submitting the certificates of certain deposit of money and subject to certain terms and conditions. According to the petitioners, pursuant to the said letter dated 28th May, 1982 the petitioners deposited an amount of Rs. 22,500/- being the 50% of the salami of 10 Kothas of land in sector IV / V of Bidhannagar (Salt Lake township) through Reserve bank of India and the respondent authorities issued the receipt of 16th June, 1982. Thereafter the respondent No. 4 by a letter bearing No. 9444 aal (EX/d) dated 7-10-82 requested the petitioners to meet the said respondent No. 4 on 20-10-82 at 1-30 o'clock for selection of the plot for small scale industrial plot in Section IV and V of Salt Lake City for their industry. Thereafter the petitioners on 28th October, 1982 appeared before the respondent no. 4 and signed in the printed form for choice of plot and informed that the petitioners have selected the Plot No. DN 17 (10%) in sector V for allotting in favour of the Petitioners and their representative has seen the plot and selected the same for the ordinary SSI plot and agreeable to abide by the rules as indicated by the Government in the original letter of offer. Thereafter the petitioners by their letter dated 2nd march, 1982 requested the respondent no. 4 to hand over physical possession of the plot being plot No. DN/17 (10%) in Sector V of Salt Lake city to enable the petitioners to import the machinery within time limit for their industry (Hosiery) and further requested the respondent No. 4 to inform the petitioners the total amount due for salami in respect of the said land which shall have to be paid by the petitioners on actual measurement of the allotted plot so that the petitioners can arrange for early payment of the same for taking over physical possession of the plot with the least possible delay. Thereafter, the respondent No. 4 by a letter dated 28th August 1983 and 6th September, 1983 informed the petitioners that on actual measurement the area of the plot No. 17 in Block No. DN in Sector V of the salt Lake Township which was allotted to the petitioner has been found to be 10. 12365 Kothas. An additional amount of Rs. 23,241. 90 as calculated is payable by the petitioners towards the salami for the plot and an additional amount of Rs. 30/- payable towards the cost of fixing boundary pillars in respect of the said plot. But the petitioner could not pay the salami in time due to unavoidable circumstances and strike which was going on at their existing factory premises at 13/5, Nathar Bagan Street, calcutta-5. The petitioners, therefore, by a letter dated 15th June, 1985 requested the respondents for extension of time to deposit the said amount, as directed by a letter dated 6th September. 1983. The Assistant secretary to the Government of West Bengal, Metropolitan Development department Salt Lake Development Project informed the petitioner that the governor was pleased to allow the petitioners an extension of time upto 18th June, 1985 for depositing the balance salami amounting to Rs. 23. 241. 90 for the Plot No. DN/17 on condition that the petitioners will pay interest at the rate of 7% per annum for the 4th year on the balance salami amount. The respondent No. 4 by a letter bearing No. 278 dated 21st January, 1986 called upon the petitioners to deposit an amount of Rs. 5,293. 36 on account of interest, as calculated in the said letter in respect of delayed payment of balance amount of salami and in pursuance of the said letter your petitioners on 26th February. 1986 deposited an amount of Rs. 598. 36 in the Reserve Bank of India in respect of payment as calculated by the respondents. After such deposit, the challan was produced before the respondent No. 4 issued a receipt thereof thereafter the respondent No. 3 by a letter dated 18th October, 1986 requested the petitioners to furnish the SSI Registration Certificate and clearance certificate from the Air and Water pollution Board. In reply to the said letter, on 16th December, 1988, the petitioners informed the respondent No. 3 that the SSI Registration Certificate and Clearance certificate from Air and Water Pollution Board have already been submitted along with the plan before the respondent and requested the respondent no. 3 to collect the said certificate and take necessary action. Thereupon the Executive Engineer, Design, Salt Lake Reclamation and Development Circle, Sech Bhavan by a letter dated 19th January, 1988 informed the petitioners to furnish the project report of the scheme duly approved by the SSI Department and documents showing financial ability for undertaking schemes and unless the said papers are submitted, the lease deed would not be executed pursuant to the said letter, the petitioners on July 27, 1988 submitted all the papers, as required by the respondents including the project report and the financial stability and xerox copies of the Proforma Invoice as well as Air Pollution Certificate and the respondents received the same on 29th July, 1988. Thereafter, the officer-on-special duty, by a letter dated 27th February, 1989 informed the petitioners that a Draft lease deed in connection with the grant of lease of plot measuring 10. 122365 Kothas in plot 17 Block DN at Salt Lake City in favour of the petitioners and requested the petitioners to type the lease deed on durable deed paper duly stamped and signed by the petitioners in presence of witness, who would also sign the documents appearing personally before the office of metropolitan Development Department and submitted to the Government for execution. The petitioners, thereafter, on 21st April, 1989 submitted the lease deed with original copy of the lease deed, a certified copy of duly typed in non-judicial stamp paper of Rs. 10/- and two office copies of the lease deed for execution. The State Government thereafter asked the writ petitioner Nos. 2 and 3 by two separate letters both dated 10th July, 1991 to show cause why the allotment of their plots should not be cancelled for suppression of material facts upon within 30 days. The petitioners duly showed cause but the respondent No. 3, Assistant Secretary to the Government of West Bengal metropolitan Development Department, Salt Lake by his letter dated october 6, 1990 informed the writ petitioners that the Governor was pleased to cancel the allotment of land in respect of Messrs Sagar Hosiery mills on the ground that Messrs Sagar Hosiery Mills and Hindusthan textiles Ltd. have the same telephone number and use the same trade name 'bapi'. It was further stated that Malati Kundu and Sipra Kundu were wives of Ajit Kundu and Jagabandhu Kundu respectively, who are partners of Hindusthan Textiles Ltd. and who have already been allotted a plot of land at Salt Lake City. In our view, no case of suppression of material facts has been made out by the respondents although a wild allegation has been made. It has not been denied that the partners of the petitioners firm are wives of partners of another firm which have been allotted a plot of land at Salt lake City. The decision conveyed by the Assistant Secretary by his letter dated october 6, 1990 was erroreous in law. It also appears that there was complete non-application of mind to the various documents that were placed before the Salt Lake Authority for allotment of land by the writ petitioner. In the Deed of partnership dated 7th September, 1971 it has been categorically recited that Ajit Kumar Kundu and Jagabandhu Kundu were the husbands of Malati Kundu and Sipra Kundu respectively. The place of business was disclosed at no. 13/5, Nather Bazar Street, Calcutta. But the firms have their separate factories and separate rent receipts are issued by the landlord. All these facts must have been known by the respondents before the allotment was made. The respondent also wrongly assumed that both the firms used the registered Trade name "bapi". Sagar Hossiery Mills uses the Trade names "simi" and "bappa" which are registered under Trade and Merchandise Act, 1958. Hindusthan Textiles registered Trade Name is "bapi". It has also been asserted on behalf of the writ petitioner that the government cannot change its position now. Sagar Hossiery Mills had imported machinery from Taiwan for the purpose of setting up its factory at the new site at the Salt Lake to the knowledge of the State Government. The respondents have failed to show how material suppression of facts have been made by the petitioners. Whatever facts that were required to be disclosed by the State respondents were clearly stated by the petitioners. The respondents never asked the petitioners to disclose whether any person related to them has been allotted to a plot of land at the industrial estate of Salt Lake. I fail to see why the petitioners can be held guilty of not disclosing something which they were not called upon to disclose. No Rule or Regulation or Notification has been produced in Court to that effect. It has been stated that the Government has decided to allot the disputed plot to a Government Undertaking called 'shilpa Barta'. But this decision can only be taken if the allotment of the plot of land to the petitioners is lawfully cancelled. That is a condition precedent. If the cancellation of allotment is unlawful, the Government cannot claim any right based on its wrongful conduct. The case was fixed for judgment on 27-8-93. Before the judgment could be delivered, further submissions were made on behalf of the State. It has been argued that allotment to Hindusthan Textiles means allotment to its partners, namely, Sri Ajit Kumar Kundu and Sri jagabandhu Kundu and similarly, allotment to Sagar Hosiery means allotment to both its partners, namely Sm. Malati Kundu and Sm. Sipra kundu. Therefore, if two plots are allotted to two partnership firms, that would mean allotment to husbands and wives aforesaid, who indisputably constitute a family. Sagar Hosiery is really a Benami of Hindusthan Textiles. Sagar Hosiery does not have a factory of its own or manufacturing activity. From the Income Tax Returns of Sagar Hosiery, it appears that Sagar Hosiery is selling the products of Hindusthan Textiles, which has got a manufacturing factory. Allotment to Hindustan Textiles has been sustained. A Deed of Lease in favour of Hindusthan Textiles has been executed on 6th november, 1990. Till now, Hindusthan Textiles has not taken any step for setting up any factory on the said leasehold land although possession has been taken as far back as on 7th December, 1990. Secondly, it has been argued that by an order dated 6th October, 1990, the allotment in favour of Sagar Hosiery has been cancelled. Thereafter, on 6th December, 1990 allotment of the plot of land has been made in favour of Shilpa Barta Printing Press Ltd. , a Government of West Bengal Undertaking. On December 20, 1990 writ petition was moved and was dismissed by the learned Trial Court. On 8th February, 1991 appeal was preferred and name of the allottee, Shilpa Barta, was disclosed on 14th February, 1991. Shilpa Barta was added as party respondent. No ground was taken in the writ petition for cancellation of allotment of Shilpa Barta. On 29-4-93, appeal was heard and when such contention was raised on behalf of the respondents, leave for amendment of the writ petition was obtained and thereafter, presumably by way of amendment of writ petition, new prayers have been added for cancellation of allotment of shilpa Barta and grounds have also been added therefor by way of amendment. From the supply copy of the amended writ petition, it. does not appear that there has been any re-verification for incorporating the amendment. Therefore, the amendment in the writ petition for challenging the allotment to Shilpa Barta cannot be taken note of. In any event, there has been gross delay in challenging the allotment in favour of Shilpa Barta. At least on 14th February, 1991, the appellants came to know of the allotment to Shillp Barta, prayer for amendment of the writ petition for challenging such allotment was not made until April 29, 1993. Thus, there is gross delay of more than 2 years. In the meantime, Shilpa Barta has paid the whole amount of allotment money on 5th February, 1991 and 4th June, 1991. The basic point has, however, not been met by the respondents. If a person is allotted a plot of land for seating up a small scale industry in the industrial sector of Salt Lake will that be a disqualification for a relation of the allottee for getting another plot of land for setting up another industrial unit. This was the basic ground for cancellation of the allotment made in favour of the petitioner. It was contended initially when the case was opened in this Court that there was a rule to that effect and time was taken to produce that rule in Court. The rule, however, could not be produced. It has now been contended that it was common knowledge and the petitioner was aware of this practice. This argument is unacceptable for two reasons. The common knowledge has to be established as a fact which the State has not done in this case. Secondly, if the Government wants to cancel an allotment already made, it is taking away vested right. This can only be done on the basis of violation of law or suppression of material facts or fraud. No rule or law has been produced to the effect that relations of an allottee of a plot of land are disqualified from getting another plot of land for setting up of industry in the industrial sector of Salt Lake City. No printed form has been produced whereby the appellants were required to disclose whether any relation has been allotted in a plot of land to the Salt Lake City. No allegation of fraud had at all been made. It has contended that ultimately the Government action has to be tested on the basis of reasonableness. If what the Government has done is reasonable, the Court should not intervene. This is a very wide proposition. It has been laid down by the Supreme Court in several cases that government action must be informed with reason. That does not, however, mean that the Government can disturb a vested right without any authority of law because it thinks it would be reasonable. There is no sanction of law to prevent the relation of an allottee to apply for and obtain a plot of land for setting up industry in the industrial sector. There is no law to that effect. It will be unreasonable to take away the land allotted to a person on the ground that a close relation of his had already been allotted another plot of land. Moreover, if the object of the State Government is to encourage industrial development, 1 fail to say how two members of the same family cannot set up separate industries in the industrial sector. The allotment letter dated 20th may, 1982 specifically made clear that it was only subject to sub mission of certificates as mentioned in clause 14 thereof. The Clause 14 has been set out at pages 103-104 of the paper Book. The said Clause 14 provides that the appellants shall produce certificates as follows : i) Provisional Small Scale Industries Registration Certificate issued by the Cottage and Small Scale Industrial Directorate, supported by approved scheme/project report, and ii) Clearance Certificate from the Competent Authority for Air and Water pollution. In Clause 15 of the said letter of allotment it was made clear that the plot shall stand cancelled for nan-compliance of any of the terms and conditions mentioned therein within the time limit. Thereafter, various correspondence went on between the appellants and the respondents for almost 7 years. The appellants deposited the entire amount payable by them with interest and also various other certificates and documents as required by the respondents were produced from time to time. Being satisfied with all the certificate furnished by the appellants and after scrutinising the matters for over years, the respondents wrote a letter dated the 27th February, 1989 enclosing a draft lease for execution. The appellants by letter dated 21st April, 1989 sent the original copy of the Lease Deed affixed with stamp of Rs. 4710/- together with office copies thereof. Thereafter, the following events happened : a) On 12th September, 1989 Officer on Special Duty requested M/s. Sagar Hosiery Mills - the appellant No. 1 and M/s. Hindusthan textiles to furnish two separate affidavits from the partners of the respective firms indicating the names, addressing and the husband's names of the partners of the two firms. b) On 15th February, 1990 the appellant No. 1 filed and affidavit of non-judicial stamp paper, for persual of the respondents. c) On 10th July. 1990 the respondents issued two show cause notices. In the said show cause notices it was alleged as follows : i) Two plots have been allotted in favour of members of the same family for running identical nature of industries. ii) The partners failed to disclose the material facts regarding such relationship between the partners of the two firms. iii) Why the allotment of the above two plots shall not be cancelled and/or revoked for suppression of material facts. d) On 31st Jury, 1990 it was pointed out by the appellants that M/s. Sagar Hosiery Mills and M/s. Hindusthan Textiles are completely separate and distinct partnership firms with separate Income Tax number, Textile Licence, Trade Licence, Small Scale Industry registration Number, etc. the partners of the said firms are of the same family. e) On 6th October, 1990 the respondents cancelled the allotment of 10 cottahs plot of land allotted in favour of the appellants. It was, alleged as follows : i) From the affidavits it is found that Sm. Malati Kundu and Sm. Sipra Kundu are the wives of Ajit Kundu and Jagabandhu kundu respectively. Sm. Malati Kundu and Sm. Sipra Kundu are the partners of Sagar Hosiery Mills and Ajit Kundu and jagabandhu Kundu are the partners of M/s. Hindusthan textiles: ii) Both the partnership firms have the same Telephone number, telegram Code and Trade name 'bapi'. iii) Two plots have been allotted in favour of same members of one and identical family for running identical nature of industries. iv) For suppression of material facts regarding such relationship between the partners of the two concerns, the allotment in favour of M/s. Sagar Hosiery Mills is cancelled. The above course of conduct indicates that the respondents were not acting on the basis of any rule of law, but on the assumption of a rule which did not exist. If there was a rule, the Government had to apply that rule reasonably. That is the trend of the various Supreme Court judgments. No case has been cited to show that the Supreme Court has held that even where there is no rule of law, the Government can take any action even where there is no rule and Government feels it is reasonable to do so. So far as belated addition of 'shilpa Barta' as a party is concerned this fact was not known to the writ petitioner the the case came up for hearing in this Court. When the fact was known, by amendment of the writ petition, 'shilpa Barta' was made a party. The basic point is that the allotment of the petitioner has been cancelled on the ground of allegation of suppression of material facts. It does not appear that from the facts placed before this Court that there has been any suppression of material facts. The State respondents did not produce any advertisement, tender paper or any other documents to show that it was incumbent upon the appellants to disclose their relationship as partners of M/s. Sagar Hosiery Mills with the partners of Hindusthan Textile. If there is no obligation to disclose such relationship, the question of nondisclosure of such facts was neither material nor germene to the issue. If cannot be said that there has been suppression of material facts. I am also not impressed with the argument that a Government undertaking has to be encouraged at any cost. It has not been stated on behalf of the State Government that no other plot of land is available at salt Lake which can be allotted to Shilpa Barta. Moreover, what is to be encouraged is the industrial growth of the State of West Bengal. The object of setting up industrial sector at the Salt Lake is for the promotion or development of industries. The plots of lands are allotted only on the basis of proposals to set up industry in the allotted lands. The writ petitioner in the instant case produced various documents from time to time to satisfy the State Authority that they proposed to set up an industry and on that basis was allotted a plot of land. By taking away the allotment of land in favour of the writ petitioner, the Government will in effect discourage the development of industry in the State of West Bengal. In any event a lawful allottee cannot be robbed of his allotment unlawfully to encourage a Government Undertaking. In view of the aforesaid the appeal is allowed and the allotment of land of M/s. Shilpa Barta Printing Press Ltd. will stand cancelled. Let there be orders as prayed in terms of Prayers (a), (b), b (1), b (2) and (d) of the writ petition. Prayer for stay of operation of the order passed in this judgment made by the respondents is refused. All parties are to act on a signed copy of the operative part of this judgment on the usual undertaking. Appeal Allowed.