M/s Zoom Developers (Pvt) Ltd & Others v. State of Kerala and Kerala Industrial Infrastructure Development Corporation (KINFRA)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **THURSDAY ,THE 13TH DAY OF DECEMBER 2018 / 22ND AGRAHAYANA, 1940** ## **WP(C).No. 14239 of 2016** ## **PETITIONER/S:** - **1 M/S. ZOOM DEVELOPERS (PVT) LTD HAVING ITS REGISTERED OFFICE AT 703-705, 7TH FLOOR,CHETAK CENTRE, OPPOSITE AHURA CENTRE, 12/2 RNT MARG, INDORE, MADHYA PRADESH, 452 001,REPRESENTED BY ITS AUTHORISED SIGNATORYMANOG T.G.** - **2 MS. SIXTH DIMENSION PROJECTS SOLUTIONS PRIVATE LIMITED** - **T-461/561 6TH FLOOR, TOWER NO.3, ITC BELAPUR RAILWAY STATION COMPLEX,C&D BELAPUR, NAVI MUMBAI 400 614, MAHARASHTRA, REPRESENTED BY ITS AUTHORISED SIGNATORY, PRADEEP MANNAZHATH RAJAPPAN.** - **3 VERACIOUS INFRACON DEVELOPERS PRIVATE LIMITED T-461/561 6TH FLOOR, TOWER NO.3, ITC BELAPUR RAILWAY STATION COMPLEX,C&D BELAPUR, NAVI MUMBAI 400 614, MAHARASHTRA, REPRESENTED BY ITS AUTHORISED SIGNATORY, PRADEEP MANNAZHATH RAJAPPAN.** **BY ADVS. SRI.SANTHOSH MATHEW SRI.M.K.DAMODARAN (SR.) SRI.ARUN THOMAS SRI.JENNIS STEPHEN SRI.JOSEPH KODIANTHARA (SR.)** **RESPONDENT/S:** 2 _**WP(C).14239/16**_ **1 STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT,INDUSTRIES DEPARTMENT, GOVERNMENT SECRETARIATTHIRUVANANTHAPURAM 695 001.** **2 KERALA INDUSTRIAL INFRASTRUCTURE DEVELOPMENT CORPORATION KINFRA HOUSE, 31/2312, SASTHAMANGALAM,THIRUVANANTHAPURAM 695 010, REPRESENTED BYITS MANAGING DIRECTOR.** **BY ADVS. ADVOCATE GENERAL SRI.P.BENNY THOMAS GOVERNMENT PLEADER SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH** ## **OTHER PRESENT:** **GP E.S.ASHRAF.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17.09.2018, THE COURT ON 13.12.2018 DELIVERED THE FOLLOWING:** ## **ANU SIVARAMAN, J. ----------------------------------------------W.P(C).No. 14239 of 2016 ----------------------------------------------Dated this the 13[th] day of December, 2018** ## **JUDGMENT** The petitioners have approached this Court seeking the following reliefs: - _“i. call for the records leading to Exhibits P11, P12, P18 and Exhibit P21 and issue a writ of certiorari quashing the same._ - _ii. issue a writ of mandamus or any other appropriate writ order or direction, commanding the second respondent to permit the petitioners to proceed with the development of the project in accordance with the Supplementary Agreement executed between the first petitioner and the second respondent on 3.4.2014, after excluding the time 24.11.2014 till date, within a revised time limit prescribed by this Hon'ble Court.”_ 2. Heard the learned Senior Counsel Sri.Joseph Kodianthara appearing for the petitioners and the learned Advocate General appearing for the 1[st] respondent as well as Advocate Sri.Gopinatha Menon, the learned counsel appearing for the 2[nd] respondent. 3. It is submitted by the learned Senior Counsel appearing for the petitioners that the petitioners had executed Exhibit P1 4 _**WP(C).14239/16**_ lease deed with the 2[nd] respondent. Forty acres of land in Sy.No.321/1 part of Thrikkakara Village, Kanyannur Taluk, which forms part of an industrial park was leased out to the petitioners for developing an international exhibition and trade centre. It is stated that Exhibit P3 tripartite agreement dated 5.6.2009 was executed between petitioners 1 and 2 and the 2[nd] respondent for developing the project. It is stated that the first phase of the project was liable to be completed by 2.4.2016 in terms of Exhibit P10 supplementary agreement. As a condition for extending the time, the petitioners had remitted a sum of Rs.3 crores to the State Bank of India to close O.A.No.351 of 2011 filed before the Debt Recovery Tribunal, Ernakulam Bench. It is stated that transfer of lease was effected by the 1[st] petitioner in favour of the 3[rd] petitioner by document No.1345/14 of SRO, Edappally and all steps had been taken to complete the first phase before 2.4.2016. However, Exhibit P11 notice dated 24.11.2014 was issued requiring the 1[st] petitioner to surrender the land. Though the petitioners stated that time had been granted till 2.4.2016, further steps were taken seeking surrender of land which is under challenge. 4. It is stated that by Exhibit P14 judgment dated 17.3.2015, the 2[nd] respondent was directed to take appropriate steps in terms of Section 22 of the Kerala Industrial Infrastructure Development Act, 1993. It is stated that notices were thereafter issued which were answered by the 5 _**WP(C).14239/16**_ petitioners, but Exhibit P18 order dated 12.10.2015 was passed directing the vacating of the premises. Though Exhibit P20 appeal was preferred, which was directed to be considered by this Court, Exhibit P21 order has been passed by the Government on 30.3.2016. The learned Senior Counsel appearing for the petitioners submits that the appeal was heard by the Principal Secretary of the Industries Department, who is also the Director of the KINFRA and the Director of the Project Development Committee which was constituted by the 2[nd] respondent. It is stated that the appeal was therefore heard by an authority which has denied a proper consideration of the issue raised to the petitioners and has resulted in their claims being negated. 5. A preliminary objection had been raised to the writ petition by the respondents that the 1[st] petitioner Company was under orders of winding up in Company Petition No.9/11 before the High Court of Madhya Pradesh, Indore Bench and that an Official Liquidator had already been appointed on 20.11.2014 after which, this writ petition could not have been filed by the 1[st] petitioner as represented by an authorised signatory without the knowledge of the Official Liquidator. It is stated that the writ petition itself is therefore misconceived. This Court by order dated 18.4.2017, considered the issue and held that since materials had been produced to show that there was a supplementary agreement and assignment of lease in favour of petitioners 2 and 3, which were 6 _**WP(C).14239/16**_ presumably known to the 2[nd] respondent as well, the issue of maintainability would be heard on merits at the time of hearing of the writ petition. 6. A detailed counter affidavit has been filed by the State Government as well as the 2[nd] respondent. The counter affidavit filed by the State Government specifically states that the 2[nd] petitioner is not a party to Exhibit P1 lease deed and Exhibit P3 tripartite agreement and that the 2[nd] petitioner has no _locus standi_ to file this writ petition. It is stated that the 1[st] petitioner is under liquidation and could not have filed the writ petition in its own capacity suppressing the order of appointment of the Official Liquidator by the High Court of Madhya Pradesh, Indore Bench. It is stated that the 3[rd] petitioner also has not been given any right with the conjunction of the 2[nd] respondent and that therefore the writ petition itself is completely misconceived and is an abuse of process of court. It is stated that the agreement between the 1[st] petitioner and the 2[nd] respondent had been clearly violated and that action for resumption is therefore perfectly in order. It is stated that the 1[st] petitioner is a Company in winding up, which has defrauded public sector banks of several cores of rupees by indulging in corrupt practices and the present writ petition is only an extension of its illegal activities. It is stated that Exhibit P20 appeal was heard by the Secretary to Government, Industries Department to whom the appeal memorandum 7 _**WP(C).14239/16**_ was addressed by the 1[st] petitioner and that the entire factual aspects of the matter had been considered by the 1[st] respondent and Exhibit P21 order had been passed. It is stated that there was absolutely no whisper of any objection raised as against the person hearing the appeal by the 1[st] petitioner, it's representatives or the counsel appearing before the Government and that the said ground now raised is only a technical objection raised to delay the proceedings further. It is stated that the then Secretary to the Industries Department was hearing the appeal in his capacity as Secretary to Government and that absolutely no prejudice of any kind has been caused to the 1[st] petitioner, since all the contentions have clearly been addressed in Exhibit P21 order. 7. The 2[nd] respondent has also filed a counter affidavit challenging the _locus standi_ of the petitioners as also contending that the clauses of Exhibit P1 lease deed had been evidently violated by the 1[st] petitioner and the work had been abandoned by the 1[st] petitioner which had led to a show cause notice being issued on 24.9.2010 for termination of the lease. It is stated that further show cause notices had been issued on 6.1.2011 and 7.6.2012 and the 1[st] petitioner had been heard. It is stated that in spite of extension of the period of contract by Exhibit P10 supplementary agreement dated 1.10.2014, it was clear that the 1[st] petitioner is not in a position to execute the work and that no steps had been taken to comply with the supplementary agreement dated 8 _**WP(C).14239/16**_ 1.10.2014 also. It is further stated at paragraphs 7, 8 and 9 of the counter affidavit of the 2[nd] respondent as follows: _“7. It is most respectfully submitted that the 1[st] petitioner is not in a position to execute the work contemplated under the agreements executed with the 2[nd] respondent. It is submitted that the 2[nd] respondent has received a notice dated 28.5.2015 from the Directorate of Enforcement, Government of India, intimating that an offence was registered against the 1[st] petitioner herein under the provisions of Prevention of Money Laundering Act, 2002 and certain documents were to be furnished by the respondent herein. True copy of the notice no.ECIR/07/2012/AZO/IDR/ZOOM/17697 dated 28.5.2015 issued by the Directorate of Enforcement, Government of India to the 2[nd] respondent is produced herewith and marked as Exhibit R2(b) for identification. Thereafter this respondent ws served with a copyof the Provisional Attachment Order No.02/20015-16(INSZO) dated 28.7.2015 finding that the payments paid to the respondent herein and various others were diverted from Exchange Earners' Foreign Currency Account and that the amounts were used to acquire properties in the name of M/s.Zoom Reality Projects Pvt. Ltd. (Now known as M/s.Veracious Infracon Developers Pvt. Ltd.). It has been specifically indicated that the properties were being acquired out of proceeds of crime and in light of the same, the properties are being attached by the Directorate of Enforcement. True copy of the provisional attachment order no.02/2001516(INSZO) dated 28.07.2015 issued by the Directorate of Enforcement, Government of India is produced herewith and marked as Exhibit R2(c) for identification. It may be pertinent to notice here that one Mr.Sharad Kabra was arrested on 20.5.2015 for committing the offence of money laundering and that the said Mr.Sharad Kabra was the authorised signatory of the 1[st] petitioner_ 9 _**WP(C).14239/16**_ _in Exhibit P3 tripartite agreement._ _8. It is also reported that the 1[st] petitioner is one of the top 5 defaulters of the PSU banks and that the 1[st] petitioner company and its Directors have indulged in one of the biggest bank loan frauds reported in India. True copy of the news report in the newspaper Time of India on 3.7.2015 is produced herewith and marked as Exhibit R2(d) for identification. It is learnt that due to the proceedings, the petitioners are not in a position to undertake any obligation._ _9. The 1[st] petitioner, pursuant to Exhibti P10 supplementary agreement, have grossly failed to continue any further construction activities at the site location and the only work that was done was the repairing of the fence. The site location was in an abandoned condition and was without any security personnel. Due to the abandoned nature and the site location being unsupervised, the location was turned to be a dumping site for waste materials. Earlier the site location was also used by certain contractors of municipality to dump waste and due to intervention by police personnel, the perpetrators were caught. After taking possession of the land, the 2[nd] respondent has engaged security personnel to secure the site location.”_ 8. It is contended that in the facts and circumstances of the case, no equity is available to the petitioners whose clear attempt is to mislead this Court and to make undue gain out of public money. 9. I have considered the contentions advanced on either side. The 1[st] petitioner is M/s.Zoom Developers (Private) Limited, represented by its authorised signatory, Mr.Manoj T.G. M/s.Sixth Dimension Projects Solutions Pvt. Ltd. and M/s.Veracious Infracon Developers Private Limited are petitioners 2 and 3 respectively. Though it is stated that Exhibit P3 10 _**WP(C).14239/16**_ tripartite agreement has been entered into between the 1[st] petitioner, 2[nd] respondent and the 3[rd] petitioner, assigning the lease in favour of the 1[st] petitioner to the 3[rd] petitioner, the deed clearly shows that the 1[st] petitioner guaranteed the due performance of the terms and obligations of the lease deed dated 27.10.2006 by the 3[rd] petitioner, and it was specifically provided that the 1[st] petitioner shall be responsible and liable for any act or omission on the part of the 3[rd] petitioner in complying with the terms of the lease deed. No document is available on record to connect the 2[nd] petitioner with any of the transactions covered by Exhibit P1 lease deed. The point being raised is with regard to the maintainability of this writ petition at the instance of the 1[st] petitioner, which is a Company under liquidation, the 2[nd] petitioner, which is unconnected with the affairs of the Company and the 3[rd] petitioner which is admittedly a sub lessee, albeit by permission of the 2[nd] respondent. The orders under challenge are those issued to the 1[st] petitioner. 10. The learned Senior Counsel appearing for the petitioners would rely on the decision of the Apex Court in _**Phatu Rochiram Mulchandani v. Karnataka Industrial Areas Development Board**_ [JT 2014(4) 243] to contend that even in a case where an Official Liquidator is appointed and the Company is in the process of winding up, a promoter/shareholder of the Company would have _locus standi_ to maintain an action against an order of resumption of industrial land 11 _**WP(C).14239/16**_ allotted to the Company. The same decision is also relied on by the learned counsel appearing for the 2[nd] respondent to contend that where allotment is made with the time bound instructions and steps to be taken by the allottee within a fixed time, in case of failure to comply with such requirement within the stipulated time, the allotment is liable to be cancelled. 11. In the instant case, I notice that it is the specific case of the 2[nd] respondent that the 2[nd] respondent was never informed of the pendency of the winding up proceedings. It is therefore contended that the 1[st] petitioner cannot claim any equity or challenge the resumption. 12. The orders under challenge are specifically those issued as against the 1[st] petitioner terminating the lease in favour of the 1[st] petitioner. To the pointed argument of the learned Advocate General and the learned counsel for the 2[nd] respondent that the factum of the pendency of a winding up proceedings and the appointment of an Official Liquidator was never made known to the respondents in this writ petition, the learned Senior Counsel appearing for the petitioner has no reply. The question is not whether the Company stands wound up as on today, but whether the 1[st] petitioner has come to this Court seeking equitable and discretionary reliefs with clean hands. The order appointing Official Liquidator was one admittedly passed on 20.11.2014. It is thereafter that even the supplementary agreement has been entered 12 _**WP(C).14239/16**_ into by the 1[st] petitioner with the 2[nd] respondent. The pendency of the winding up proceedings was apparently not brought to the notice of the 1[st] or 2[nd] respondent in any of the proceedings. Once an official liquidator has been appointed by a competent Court or Tribunal in a petition filed for winding up of a Company, it is for such liquidator, with the sanction of the Court, to institute or defend any suit or legal proceedings for and on behalf of the Company. The order under challenge in this writ petition being one resuming the industrial land from the 1[st] petitioner, and since the 1[st] petitioner Company is admittedly under proceedings of winding up, I am of the opinion that this writ petition filed challenging the orders of resumption as also Exhibit P21 order of rejection of the appeal filed by the 1[st] petitioner cannot be independently maintained by the 3[rd] petitioner at all. No materials have been placed on record to connect the 2[nd] petitioner to the transactions in question. I am of the opinion that the writ petition, as filed, is not maintainable. I therefore do not labour to answer the other contentions raised in the writ petition. The writ petition fails and is accordingly dismissed. Sd/- **ANU SIVARAMAN JUDGE** _vgs_ 13 _**WP(C).14239/16**_ ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **P20 : TRUE COPY OF THE APPEAL DATED 1-12-2015 (WITHOUT ANNEXURES) SUBMITTED BY THE PETITIONER BEFORE THE FIRST RESPONDENT.** **P1 : TRUE COPY OF THE LEASE AGREEMENT DATED 2710-2006 EXECUTED BETWEEN THE FIRST PETITIONER AND THE SECOND RESPONDENT. P2 : TRUE COPY OF THE CORRECTION DEED DATED 21-52008 P3 : TRUE COPY OF THE TRIPARTITE AGREEMENT DATED 5TH JUNE 2009 P4 : TRUE COPY OF THE CERTIFICATE OF INCORPORATION PURSUANT TO THE CHANGE OF NAME OF ZOOM INFRA DEVELOPERS PRIVATE LIMITED INTO VERACIOUS INFRACON DEVELOPERS PRIVATE LIMITED. P5 : TRUE COPY OF THE SUPPLEMENTARY AGREEMENT EXECUTED ON 30-10-2009 P6 : TRUE COPY OF THE ORDER DATED 7-6-2012 ISSUED BY THE SECOND RESPONDENT TO THE FIRST PETITIONER. P7 : TRUE COPY OF THE MINUTES OF THE MEETING FORWARDED BY THE ADDITIONAL CHIEF SECRETARY TO GOVERNMENT OF THE FIRST PETITIONER. P8 : TRUE COPY OF THE RATING REPORT OF THE SECOND PETITIONER BY CRISIL P9 : TRUE COPY OF THE ORDER DATED 25TH MARCH 2014 ISSUED BY THE DEBTS RECOVERY TRIBUNAL, ERNAKULAM IN OA 351/2011. P10 : TRUE COPY OF THE SUPPLEMENTARY AGREEMENT DATED 3-4-2014 EXECUTED BETWEEN THE FIRST PETITIONER AND SECOND RESPONDENT.** 14 _**WP(C).14239/16**_ |**P10A :**|**A COPY OF THE MINUTES OF THE METTING DATED**| |---|---| ||**13TH NOVEMBER 2014.**| |**P11 :**|**TRUE COPY OF THE NOTICE DATED 24-11-2014**| ||**ISSUED ON BEHALF OF THE 2ND RESPONDENT TO**| ||**THE FIRST PETITIONER.**| |**P11A**|**A COPY OF THE MINUTES OF THE MEETING DATED**| ||**19TH DECEMBER 2014**| |**P12 :**|**TRUE COPY OF THE COMMUNICATION DATED 16-2-**| ||**2015 SENT BY THE SECOND RESPONDENT TO THE**| ||**FIRST PETITIONER.**| |**P13 :**|**PHOTOGRAPHS EVIDENCING THE WORK ALREADY**| ||**CARRIED OUT BY THE PETITIONERS.**| |**P14 :**|**TRUE COPY OF THE JUDGMENT DATED 17-3-2015 IN**| ||**WPC.NO. 7333/2015 OF THIS HONOURABLE COURT.**| |**P15 :**|**TRUE COPY OF THE NOTICE DATED 28-5-2015**| ||**ISSUED BY THE SECOND RESPONDENT TO THE FIRST**| ||**PETITIONER.**| |**P16 :**|**TRUE COPY OF THE NOTICE DATED 1-8-2015 SENT**| ||**BY THE SECOND RESPONDENT TO THE FIRST**| ||**PETITIONER.**| |**P17 :**|**TRUE COPY OF THE REPLY GIVEN BY THE FIRST**| ||**PETITIONER TO THE SECOND RESPONDENT DATED**| ||**14-9-2015.**| |**P18 :**|**TRUE COPY OF THE COMMUNICATION SENT BY THE**| ||**SECOND RESPONDENT TO THE FIRST PETITIONER**| ||**DATED 12-10-2015.**| |**P19 :**|**TRUE COPY OF THE JUDGMENT IN WPC.NO.33671 OF**| ||**2015 DATED 17-11-2015.**| |**P21 :**|**TRUE COPY OF GO(MS) NO.68/2016/ID DATED 30-**| ||**3-2016 ISSUED BY THE FIRST RESPONDENT.**| |**P22 :**|**A COPY OF THE STAY ORDER DATED 26-10-15**| ||**GRANTED BY THE HON'BLE SUPREME COURT IN**| ||**TRANSFER PETITION (CRIMINAL) NO. 368/2015.**| |**EXHIBIT 23**|**TRUE COPY OF THE LEASE DEED NO.1345/2014**| ||**DATED 22.3.2014 EXECUTED BETWEEN THE FIRST**| ||**PETITIONER AND THE THIRD PETITIONER.**| 15 _**WP(C).14239/16**_ ## **RESPONDENT'S/S EXHIBITS:** **EXHIBIT R2(A)** TRUE COPY OF THE EMAIL DATED 1.10.2014 TO THE 2ND RESPONDENT. **EXHIBIT R2(B)** TRUE COPY OF THE NOTICE NO. ECIR/07/2012/AZO/IDR/ZOOM/17697 DATED 28.5.2015 ISSUED BY THE DIRECTORATE OF ENFORCEMENT, GOVERNMENT OF INDIA TO THE 2ND RESPONDENT. **EXHIBIT R2(C)** TRUE COPY OF THE PROVISIONAL ATTACHMENT ORDER NO.02/2 015-16(INSZO) DATED 28.7.2015 ISSUED BY THE DIRECTORATE OF ENFORCEMENT, GOVERNMENT OF INDIA. **EXHIBIT R2(D)** TRUE COPY OF THE NEWS REPORT IN THE NEWSPAPER TIMES OF INDIA ON 3.7.2015. **EXHIBIT R2(E)** TRUE COPY OF THE LETTER DATED 20.4.2015 ISSUD IN THE LETTER HEAD OF THE IST PETITIONER SIGNED BY THE AUTHORIZED SIGNATORY OF THE IST PETITIONER AND I SMART BUSINESS SOLUTIONS PVT. LTD. **EXHIBIT R2(F)** TRUE COPY OF THE LETTER DATED 20.4.2015 UISSUED IN THE LETTER HEAD OF THE IST PETITIONER SIGNED BY THE AUTHORIZED SIGNATORY OF THE IST PETITIONER AND ISMART BUSINESS SOLUTIONS PVT. LTD. (WITHOUT ENCLOSURE). **EXHIBIT R2(G)** TRUE COPY OF THE LETTER NO.AMT/218/2016-17 DATED 14.11.2016 FROM THE STATE BANK OF INDIA TO THE 2ND RESPONDENT. **EXHIBIT R1(A)** TRUE COPY OF THE E-MAIL DATED 1.10.2014 TO THE 2ND RESPONDENT. **EXHIBIT R1(B)** TRUE COPY OF THE NOTICE NO.ECIR/07/2012/AZO/IDR/ZOOM/17697 DATED 28.5.2015 ISSUED BY THE DIRECTORATE OF ENFORCEMENT, GOVERNMENT OF INDIA TO THE 2ND RESPONDENT. **EXHIBIT R1(C)** TRUE COPY OF THE PROVISIONAL ATTACHMENT ORDER NO.02/2015-16(INSZO) DATED 28.7.2015 ISSUED BY THE DIRECTORATE OF ENFORCEMENT, GOVERNMENT OF INDIA. **EXHIBIT R1(D)** TRUE COPY OF THE NEWS REPORT IN THE NEWSPAPER TIMES OF INDIA ON 3.7.2015. **EXHIBIT R1(E)** TRUE COPY OF THE LETTER DATED 20.4.2015 ISSUED IN THE LETTER HEAD OF THE IST PETITIONER SIGNED BY THE AUTHORIZED SIGNATORY OF THE IST PETITIONER AND ISMART BUSINESS SOLUTIONS PVT. LTD. **EXHIBIT R1(F)** TRUE COPY OF THE LETTER DATED 20.4.2015 ISSUED IN THE LETTTER HEAD OF THE IST PETITIONER SIGNED BY THE AUTHORIZED SIGNATORYOF THE IST PETITIONER AND ISMART BUSINESS SOLUTION PVT. LTD.