Aman Semi-Conductors vs. HSIDC: Supreme Court Upholds Industrial Plot Resumption

The Supreme Court of India recently decided on the case of Aman Semi-Conductors (Pvt.) Ltd. vs. Haryana State Industrial Development Corporation Ltd. (HSIDC), addressing a long-standing dispute regarding the resumption of an industrial plot allotted to the appellant. The case involved allegations of non-compliance with allotment conditions, the failure to establish an industrial unit, and the legality of HSIDC’s actions in reclaiming the land.

Background of the Case

The dispute began when Aman Semi-Conductors, a proprietary firm, applied for an industrial plot in Udyog Vihar, Gurgaon, on February 28, 1994. The Haryana State Industrial Development Corporation (HSIDC) issued a letter of intent on September 9, 1994, with conditions that required the appellant to begin construction within six months and complete it within two years. The appellant took possession of the plot on December 29, 1995, but failed to start construction.

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Due to the lack of development, HSIDC issued multiple notices, ultimately resuming the plot in 1998 and refunding Rs. 1,66,425 to the appellant. The appellant challenged this action before consumer forums, which initially ruled in his favor. However, the National Consumer Disputes Redressal Commission (NCDRC) later upheld HSIDC’s decision, leading to an appeal before the Supreme Court.

Petitioner’s Arguments

The appellant, Aman Semi-Conductors, represented by counsel Mr. Rajiv K. Garg, argued:

• The company took necessary steps to set up the industrial unit, including obtaining an industrial certificate, applying for an electricity connection, and securing financial assistance.
• A change in government policy hindered the availability of financial support, making it impossible to commence construction on time.
• The resumption order was issued without giving the appellant a proper hearing, violating principles of natural justice.
• The order lacked reasoning, making it arbitrary and legally unsustainable.

Respondent’s Arguments

On the other hand, HSIDC, represented by Mr. Alok Sangwan, Additional Advocate General for Haryana, countered:

• The appellant was given ample time and multiple opportunities to comply with the allotment conditions but failed to take any meaningful steps toward establishing the industrial unit.
• HSIDC’s objective was to promote industrial development, and allotments were made with the expectation that allottees would use the land productively.
• The appellant appeared to have acquired the plot for speculative purposes rather than for industrial use.
• There was no merit in the claim that a lack of infrastructure hindered the project since other allottees in the same area managed to establish their industries.

Supreme Court’s Judgment

The Supreme Court analyzed the case in detail and ruled in favor of HSIDC, dismissing the appeals of Aman Semi-Conductors. The key findings of the Court included:

• The appellant’s inaction and failure to initiate any construction over five years demonstrated a lack of intent to establish an industrial unit.
• The requirement to begin construction and commence production within a specified period was a valid condition of the allotment.
• HSIDC’s resumption of the plot was justified, as the appellant did not fulfill its obligations under the agreement.
• The Court rejected the claim that the resumption order violated natural justice, as the appellant had received multiple notices and opportunities to present his case.

The Court concluded that “the appellant was always insincere and perhaps never intended to follow up and set up the industrial project.” As a result, the Supreme Court upheld HSIDC’s action but directed the corporation to refund Rs. 1,66,425 to the appellant with 6% interest from the date of resumption.

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Implications of the Ruling

This judgment reinforces the importance of compliance with industrial allotment conditions and deters speculative holding of land. It underscores that industrial land must be utilized for its intended purpose within the stipulated timeline and that development authorities have the right to reclaim plots if allottees fail to act.

Petitioner Name: Aman Semi-Conductors (Pvt.) Ltd..
Respondent Name: Haryana State Industrial Development Corporation Ltd..
Judgment By: Justice S. Ravindra Bhat, Justice Dipankar Datta.
Place Of Incident: Gurgaon, Haryana.
Judgment Date: 27-02-2023.

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