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Madras High CourtWP/22402/2021disposed of

M/S.Steel Shoppe India Pvt Ltd v. The Managing Director

2021-11-02Honourable Mr Justice N. Anand Venkatesh5 pages

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 02.11.2021

CORAM:

THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH W.P.No.22402 of 2021 and WMP.No.23648/2021 M/s.Steel Shoppe India Pvt Ltd., AC-5, 4th Floor, 2nd Avenue, Anna Nagar West, Chennai 600 040 rep.by Mr.Panneerselvam Director [Projects]

...Petitioner

-Vs1.The Managing Director State Industries Promotion Corporation of Tamil Nadu Limited, [SIPCOT] No.19-A, Rukmani Lakshmipathy Road Post Box No.7223, Egmore Chenani 600 008.

2.The General Manager [P-II] i/c State Industries Promotion Corporation of Tamil Nadu [SIPCOT] No.19-A, Rukmani Lakshmipathy Road Post Box No.7223, Egmore Chenani 600 008.

3.The General Manager [P-I] State Industries Promotion Corporation of Tamil Nadu [SIPCOT] No.19-A, Rukmani Lakshmipathy Road Post Box No.7223, Egmore Chennai 600 008.

... Respondents Prayer:- Writ Petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of certiorari calling for the entire records in pursuant to the order vide No.P-I/SIP-IRU/Steel Shoppe/2015-21 dated 25.06.2021 and the consequential order of rejection vide No.P-I/IRU/Steel Shoppe/213/2016 dated 07.09.2021 both passed by the 1st respondent and quash both of them.

For Petitioner :

Mr.T.P.Prabakaran For Respondents :

Mr.S.Girish Standing counsel

O R D E R

This writ petition has been filed challenging the impugned proceedings of SIPCOT dated 25.06.2021 and the consequential rejection order dated 07.09.2021.

2. The case of the petitioner is that they are carrying on the business of manufacturing and marketing of steel products. In the year 2015, the petitioner company applied before the first respondent for allotment of a plot for setting up the industrial unit. The allotment order was issued in favour of the petitioner company through letter dated 10.02.2016 and accordingly the petitioner was allotted Plot No.G-8(A) with an extent of 5 acres situated at SIPCOT Industrial Park at Irungattukottai. The lease was granted in favour of the petitioner for 99 years. The petitioner company had also made the entire payment in this regard. The lease deed also came to be executed in favour of the petitioner and the same was registered on 08.03.2016.

3. One of the conditions that was imposed against the petitioner is that the petitioner should commence commercial production / trial production within 30 months from the date of the allotment order, failing which it will result in the cancellation of the allotment and forfeiture of the amounts paid by the petitioner. It was further provided that the petitioner will have to commence the construction of the building within six months from the date of the allotment order and it must be completed within a period of 24 months from the date of allotment.

4. For various reasons, the petitioner was not able to comply with the above conditions and hence the petitioner applied for extension of time for a further period of one year to complete the construction of the factory building and implement the project. The extension of time was granted and it was also made clear that no further request for extension of time will be entertained from the petitioner.

5. The petitioner was not able to complete the construction within the time stipulated by the first respondent and hence made one more representation through email dated 10.06.2021. In the said communication, the petitioner had given an undertaking to the effect that they will commence trial production by December 2021. On receipt of the same, the first respondent issued an order dated 25.06.2021, whereby the petitioner was directed to remit a penalty of a sum of Rs.38,30,600/- along with 18% GST totalling a sum of Rs.45,20,108 within 30 days from the date of the order. The petitioner made a request for waiving the penalty and the same was rejected by the first

respondent through letter dated 07.09.2021. Aggrieved by the same, the present writ petition has been filed before this Court.

6. When the matter came up for hearing on 28.10.2021, this Court passed the following order.

"

It is seen from records that the respondents granted extension of time to complete the construction of the factory building for a period of one year through letter dated 24.02.2020. Unfortunately, the petitioner was not able to proceed further due to the pandemic situation which arose from March 2020 onwards. Thereafter, the petitioner made a representation on 10.06.2021, seeking for further extension on the ground that they were not able to proceed further with the construction and that they will be able to commence the production by December 2021. On receipt of this representation, the SIPCOT has issued the impugned letter dated 25.06.2021, directing the petitioner to pay a penalty of 5% out of the total cost along with GST, which works out to a total sum of Rs.45,20,108/-.

2.It is brought to the notice of this Court that the construction has almost been completed and the petitioner will be able to commence the production during December 2021. In view of the same, it will not be reasonable to impose such a heity penalty against the petitioner. This is in view of the fact that the petitioner was not able to proceed further with the construction due to circumstances beyond his control.

3.Therefore, in order to strike a balance, this Court is inclined to direct the petitioner to pay a penalty at the rate of 1% along with GST and processing fees. The learned Standing Counsel appearing on behalf of the respondents shall take instructions and report before this Court.

4.Post this case immediately after admission on 02.11.2021."

7. When the matter was taken up for hearing today, the learned Standing Counsel appearing for SIPCOT submitted that the petitioner was given sufficient opportunity to complete the construction and commence the production and since the same was not done, the petitioner was directed to pay the penalty along with GST. The learned Standing Counsel further submitted that a similar penalty was imposed on persons who were equally placed

and the petitioner cannot be given a different treatment. Therefore, the learned Standing Counsel justified the imposition of penalty against the petitioner.

8. In the considered view of this Court, the reasoning given by this Court in the order dated 28.10.2021 is reiterated. The petitioner faced an extraordinary situation where it was not possible for the petitioner to proceed further with the construction due to the pandemic situation. Therefore, some balance has to be struck to ensure that the petitioner is not made to face stringent conditions imposed by the SIPCOT and at the same time, the petitioner is also made to make some payment for the delay in the completion of the construction and commencement of the production.

9. In view of the above discussion, the impugned order dated 25.06.2021 issued by first respondent is partially modified and there shall be a direction to the petitioner to pay the penalty at the rate of 1% along with GST at the rate of 18% and processing fees within a period of two weeks from the date of receipt of a copy of this order. The petitioner shall also give an undertaking before the first respondent with regard to the commencement of the trial production by the end of December 2021. On receipt of the same, the first respondent shall permit the petitioner to proceed further with the allotment / lease deed executed in his favour. It is made clear that if the petitioner fails to comply with any of the conditions imposed by this Court, it is always left open to the first respondent to proceed further without any reference to this Court.

10. This writ petition is disposed of with the above directions. No costs. Consequently, connected miscellaneous petition is closed.

Sd/- Assistant Registrar(CS II) //True Copy// Sub Assistant Registrar KST To 1.The Managing Director State Industries Promotion Corporation of Tamil Nadu Limited, [SIPCOT]

No.19-A, Rukmani Lakshmipathy Road Post Box No.7223, Egmore Chenani 600 008.

2.The General Manager [P-II] i/c State Industries Promotion Corporation of Tamil Nadu [SIPCOT] No.19-A, Rukmani Lakshmipathy Road Post Box No.7223, Egmore Chenani 600 008.

3.The General Manager [P-I] State Industries Promotion Corporation of Tamil Nadu [SIPCOT] No.19-A, Rukmani Lakshmipathy Road Post Box No.7223, Egmore Chennai 600 008.

+1 cc to Mr.T.P.Prabakaran, Advocate Sr.NO. 57060 W.P.No.22402 of 2021 MG(CO) A.SK(26.11.2021) 02.11.2021