07 July 2011 Property/Real Estate Law >> Property & Real Estate  

A recent judgment by the Patna High Court has shed light on the obligations of industrial development authorities in land allotment. The case involved a company and the Bihar Industrial Area Development Authority (BIADA), locked in a dispute over the cancellation of allotted land.

Background:

The company was initially allotted 5 acres of land by BIADA for establishing an industry. However, a crucial detail emerged – high-tension overhead wires ran through the plot, posing a significant obstacle to development. The company requested BIADA to remove the wires, but their pleas went unanswered. Subsequently, the company stopped paying instalments due to the impracticality of setting up operations under such circumstances. BIADA, however, took a hard line and cancelled the allotment citing non-payment of dues. The company challenged this decision, arguing that BIADA's failure to address the wire issue rendered the land unusable and constituted a breach of their own obligations.

Conclusion:

The court sided with the company, highlighting BIADA's shortcomings. The judge pointed out that BIADA, as the lessor, had a responsibility to ensure the land was free from hindrances for the intended industrial use. The company's delay in payments, the court reasoned, was a direct consequence of BIADA's inaction regarding the wires. Furthermore, the court found the cancellation to be lacking in fairness. The swift allotment of the same land to another party shortly after raised suspicions of favouritism.

This judgment serves as a reminder to development authorities of their responsibility to provide suitable land for allotted projects. The court's decision upholds the principle that a lessee's obligations are contingent upon the lessor fulfilling their duties. Additionally, it emphasizes the importance of due process and fair consideration before resorting to cancellation of land allotments.

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