KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD & ANR. versus MIS. PRAKASH DAL MILL & ORS.

Citation: [2011] 5 S.C.R. 26 · Decided: 06-04-2011 · Supreme Court of India · Bench: B. SUDERSHAN REDDY · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2011] 5 S.C.R. 26 
A 
KARNATAKA INDUSTRIAL AREAS DEVELOPMENT 
BOARD & ANR. 
v. 
MIS. PRAKASH DAL MILL & ORS. 
(Civil Appeal Nos. 5406-5445 of 2005) 
B 
April 06, 2011 
[B. SUDERSHAN REDDY AND SURINDER SINGH 
NIJJAR, JJ.] 
Karnataka Industrial Area Development Board 
C 
Regulations, 1969 - Allotment of industrial sites by appellant-
1 nd ustri a I Area Development Board -
Application by 
respondents - Execution of lease-cum-sale agreement in 
favour of respondent - Fixation of final price by the Industrial 
Board - Thereafter, enhanced demand raised for payment of 
D 
final allotment price -
Writ petition by the respondents 
challenging the enhanced price dismissed - However, in writ 
appeal, the Division Bench of the High Court quashed the 
enhanced demands as proposed by the appellant -
On 
appeal, held: Division Bench of the High Court correctly 
E concluded that the fixation of final price by the Board was 
without authority of law and was violative of Article 14 of the 
Constitution - Even though the Clause 7(b) of the agreement 
gives the Board an undefined power to fix the final price, it 
would have to be exercised in accordance with the principle 
F 
of rationality and reasonableness - Respondents have 
placed on record sufficient material to show that acquisition 
and development of land in the industrial area was made in 
phases - Thus, it cannot be said that all the allottees formed 
one class - Earlier allottees having sites in fully developed 
segments cannot be intermingled with the subsequent 
G allottees in areas which may be wholly undeveloped - Also, 
once the allotment has been made, the Board cannot be 
permitted to exercise its powers of fixing the final price at any 
indefinite time in the future - Board sought to fix the final price 
H 
26 
KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD 
27 
v. PRAKASH DAL MILL 
after a gap of 13 years which is not permissible - Constitution A 
of India, 1950 - Article 14. 
Appellant No. 1, Industrial Area Development Board 
invited interested purchasers to make applications for 
allotment of industrial sites. The respondents applied for 8 
the allotment of sites at different points of time. The lease-
cum-sale agreements were executed in favour of the 
respondents on their complying with the conditions of 
allotment. The appellants issued letters to the 
respondents, raising the demands with regard to the 
penal allotment price and directed the respondents to pay C 
the balance of final allotment price within a stipulated 
period. The respondents filed a writ petition' challenging 
the issuance of the said letters enhancing the price and 
for a direction to the appellant to execute the sale deeds 
on the basis of the price indicated in the lease deed. The D 
High Court dismissed the same. The Division Bench 
allowed the appeal and quashed the enhanced demands 
as proposed by the appellants. Therefore, the appellants 
filed the instant appeals. 
E 
Dismissing the appeals, the Court 
HELD: 1. The High Court correctly concluded that 
the fixation of final price by the industrial Area 
Development Board is without authority of law. It violates 
Article 14 of the Constitution of India being arbitrary and 
F 
unreasonable exercise of discretionary powers. [Para 20] 
(43-C-D] 
2.1 Under Clause 7(b) of the lease•cum-sale-
agreement, the Board reserved to itself the right to fix the G 
final price of the demised premises as soon as it may be 
convenient to it and communicate the same to the 
concerned lessee. Upon communication of the price, the 
lessee is required to pay the balance of the value of the 
site. Determination of the price by the Board is binding H 
28 
SUPREME COURT REPORTS 
[2011] 5 S.C.R. 
A 
on the lessee. Clause 7(b) would not permit the Board to 
arbitrarily or irrationally fix the final price of the site 
without any rational basis. The power of price fixation 
under Clause 7 being statutory in nature would have to 
be exercised, in accordance with statutory provisions; it 
B can not be permitted to be exercised arbitrarily. The 
appellants are required to fix the price within the 
stipulated parameters contained in the Statute and the 
Board Regulations. [Paras 15, 16] [38·0-F; 40-8] 
C 
Premji Bhai Parmar and Ors. (1980) 2 SCC 129 -
distinguished. 
Centre for Public Interest Litigation and Anr. vs. Union 
of India and Ors. (2000) 8 SCC 606; Meerut Developent 
Authority vs. Association of Management Studies (2009) 6 
D SCC 171 - referred to. 
2.2 T

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