Case Note & Summary
The petitioner, M/s. Kamalalayaa Real Estates LLP, a limited liability partnership firm, was allotted land by the Karnataka Industrial Areas Development Board (KIADB) for establishing a software park. The allotment letter dated 05-06-2020 contained Condition No. 4 which required the allottee to obtain prior permission from the Board before transferring any shares of the company. The petitioner challenged this condition as ultra vires the Karnataka Industrial Areas Development Act, 1966. The Court examined the provisions of the Act and found that the Board's powers are limited to those expressly conferred by the statute. The Act does not authorize the Board to impose restrictions on share transfers of allottees. The Court held that Condition No. 4 was beyond the scope of the Act and therefore ultra vires. Consequently, the notice seeking cancellation of allotment based on violation of that condition was also quashed. The petition was allowed with no order as to costs.
Headnote
A) Administrative Law - Ultra Vires - Condition in Allotment Letter - Karnataka Industrial Areas Development Act, 1966 - Condition No. 4 requiring prior permission for transfer of shares of the allottee company was held to be beyond the powers conferred by the Act. The Court reasoned that the Act does not empower the Board to impose such a condition, and it is ultra vires. (Paras 1-10) B) Company Law - Transfer of Shares - Restriction by Statutory Authority - Limited Liability Partnership Act, 2008 - The Court held that a statutory authority cannot impose restrictions on transfer of shares of a company or LLP unless expressly authorized by the statute. The impugned condition was struck down as being without jurisdiction. (Paras 1-10)
Issue of Consideration
Whether Condition No. 4 in the allotment letter issued by the Karnataka Industrial Areas Development Board, which requires prior permission for transfer of shares of the allottee company, is ultra vires the Karnataka Industrial Areas Development Act, 1966.
Final Decision
The Court allowed the writ petition, declaring Condition No. 4 in the allotment letter dated 05-06-2020 as ultra vires the Karnataka Industrial Areas Development Act, 1966, and quashed the notice seeking cancellation of allotment. No order as to costs.
Law Points
- Ultra vires
- Doctrine of ultra vires
- Interpretation of statutes
- Powers of statutory authority
- Condition in allotment letter beyond the Act
