Case Note & Summary
The petitioner, Hadee Forging Private Limited, a company incorporated under the Companies Act, 1956, was allotted 2 acres of industrial land by the Karnataka Industrial Areas Development Board (KIADB) at a lease premium of Rs. 50 lakhs per acre, as per the allotment letter. The petitioner paid the full premium and executed a lease deed on 03.05.2016. Subsequently, KIADB issued an order dated 18.03.2022 demanding an additional Rs. 50 lakhs per acre (total Rs. 100 lakhs) based on a revised government notification. The petitioner challenged this order by way of a writ petition under Articles 226 and 227 of the Constitution of India, seeking quashing of the demand and refund of the excess amount with interest. The court analyzed the provisions of the Karnataka Industrial Areas Development Act, 1966, particularly Section 3(1) which empowers the government to notify the rate of premium. The court held that KIADB cannot charge a premium higher than the rate notified by the government at the time of allotment. The demand for additional premium was arbitrary and without legal authority. The court allowed the petition, quashed the impugned order, and directed KIADB to refund Rs. 100 lakhs with interest at 12.5% per annum from the date of the lease deed until payment, within 30 days.
Headnote
A) Industrial Law - Land Allotment - Lease Premium - Section 3(1) of Karnataka Industrial Areas Development Act, 1966 - The petitioner was allotted 2 acres of land at a premium of Rs. 50 lakhs per acre as per the allotment letter, but KIADB subsequently demanded an additional Rs. 50 lakhs per acre based on a revised government order. The court held that the premium must be as per the rate notified at the time of allotment and any excess collection is illegal. (Paras 1-10) B) Administrative Law - Quasi-Judicial Orders - Writ of Certiorari - Articles 226 and 227 of Constitution of India - The impugned order of KIADB demanding excess premium was quashed as it was arbitrary and without authority. The court directed refund of Rs. 100 lakhs with interest at 12.5% per annum from the date of lease deed. (Paras 11-15)
Issue of Consideration
Whether the Karnataka Industrial Areas Development Board (KIADB) can demand and retain lease premium in excess of the rate notified by the State Government under Section 3(1) of the Karnataka Industrial Areas Development Act, 1966, and whether the petitioner is entitled to refund of such excess amount with interest.
Final Decision
Writ petition allowed. Impugned order dated 18.03.2022 quashed. KIADB directed to refund Rs. 100 lakhs with interest at 12.5% per annum from 03.05.2016 until payment, within 30 days.
Law Points
- Lease premium cannot exceed government-notified rate
- KIADB bound by its own allotment letter
- refund with interest for excess collection
- writ of certiorari lies against quasi-judicial orders of KIADB
