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CASE NO.: Appeal (civil)  5542 of 2004

PETITIONER: Karnataka Industrial Areas Development Board

RESPONDENT: Nandi Cold Storage Pvt. Ltd

DATE OF JUDGMENT: 11/07/2007

BENCH: Dr. ARIJIT PASAYAT  P.K. BALASUBRAMANYAN & D.K. JAIN

JUDGMENT: J U D G M E N T  

I.A. NO.1   IN  CIVIL  APPEAL NO. 5542 OF 2004

Dr. ARIJIT PASAYAT, J.

1.      Challenge in this appeal is to the order passed by the  National Consumer Disputes Redressal Commission at New  Delhi (in short the ’National Commission’). Respondent had  filed a complaint against the appellant before the National  Commission.   

2.      Background facts in a nutshell are as follows:          3.      In the complaint respondent inter alia stated as follows:   The complainant company, desirous of opening a cold  storage unit in the State of Karnataka, applied for allotment of  land to the appellant in August 1991. After meeting all the  formalities required from time to time by the appellant, a plot  bearing No.2 of Chickballapur Industrial Area, measuring 2.5  acre of land, was allotted for setting up a cold storage.  Possession certificate was issued on 26/30.8.93. The  complainant also in the meantime obtained a loan of Rs.67  lakh from the Karnataka State Financial Corporation (in short  ’KFC’).  For the first time in August 1994, a letter was written  by appellant to the complainant that "the company could not  go ahead with construction activity on the plot allotted as the  erstwhile land owner of plot No.2 covered in Sy.No.29 and 30  of Jadalathimmanahally Village has obtained stay order from  the High Court of Karnataka in W.P.No.70/88 challenging the  acquisition proceedings. The Board initiated action for  vacating the stay order granted by the High Court of  Karnataka. However, the company could not go ahead with  implementation in view of the stay order granted by the High  Court. The complainant sought for permission to go ahead  with implementation after the litigation in respect of the above  land is disposed of by the High Court. The Board should also  grant extension of time to the company for implementation of  the project after disposal of the litigation.            4.      Original land holder took back possession forcibly in view  of the order of the Karnataka High Court. The writ petition  filed by the original land holder was allowed by the High Court  leaving the complainant high and dry without land, more so  when in September 1994, the KFC cancelled the term loan in

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view of the fact that no progress was made in the  implementation of the project. Since the complainant was keen  to go ahead with the project, on collecting some information, it  approached the appellant to allot plot No.1-A and 1-B which  was lying vacant, which were allotted to the complainant in  1995. But it seems that bad luck had not stopped chasing the  complainant. As soon as the allotment in respect of plot no.1- A and 1-B were made on a resumed plot, the original allottees  moved the High Court making the complainant a party before  it. However, after protracted litigation, the writ petition was  dismissed but in the meanwhile the loans had been cancelled  and the complainant was left high and dry. It is in these  circumstances that a complaint was filed alleging deficiency in  service.  

5.      The appellant-Board appeared before the National  Commission on issue of notice. It took the stand that there  was no deficiency in service and it acted in terms of the  procedure laid down in Karnataka Industrial Areas  Development Act, 1966 (in short the ’Act’) and Rules made  thereunder. The State Government had acquired the land and  handed over the same to the present appellant for  development and allotment for setting up the industries.  The  acquisition was done by the State Government. After the land  was handed over, same was developed and allotted to various  entrepreneurs.  Since the appellant came to know about the  pendency of the litigation between the Government and the  original landholder of plot No.2 it had given notice to the  complainant and all that was required to be done for the  complainant was done. There was no deficiency in the service  which was attributed by the government which acquired the  land from the appellant after such acquisition.  

6.      After hearing learned counsel for the parties the National  Commission held that the appellant was clearly at fault. There  was deficiency in service and it was, therefore, held that the  complaint was to be allowed. Considering the facts and  circumstances of the case the National Commission held that  the complainant was entitled to compensation of Rupees three  lakhs. The order of the National Commission is the subject  matter of challenge in this appeal.  

7.      In support of the appeal, it was submitted that there was  no deficiency in service in view of what has been stated above.  In any event, there was no scope for awarding compensation.

8.      Learned counsel for the respondent on the other hand  supported the order of the National Commission.  

9.      While issuing notice on 10.9.2004, the same was limited  to the question of compensation. In support of the appeal,  learned counsel for the appellant submitted that there is no  deficiency in service. All possible steps have been taken at  different points of time. In a hypothetical case which was not  established, the National Commission erroneously came to  hold that it was a case of deficiency in service.   

10.     In the notice, as noted above, it was indicated that the  same was limited to the question of compensation. About the  deficiency in service the correct approach has been adopted.  

11.     The only question however, is with regard to the  quantum. Considering the peculiar circumstances of the case,  we fix the same to be rupees one lakh. This is to be paid to the  appellant by the respondent within 4 weeks from today.

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12.     The appeal is allowed in the aforesaid circumstances. No  order is necessary in the I.A. in view of the disposal of appeal.  There will be no order as to costs.