CAUSE TITLE:
Bishambhar Prasad Versus M/s Arfat Petrochemicals Pvt. Ltd. & Ors.
DATE OF ORDER:
20-04-2023
JUDGE(S):
Suryakant, Vikram Nath
PARTIES:
Petitioner:Bishambhar Prasad
Respondent:Arfat Petrochemicals Pvt. Ltd. & Ors.
Subject
The validity of "statutory rules" cannot be given to regulations that are established under the Articles of a non-statutory corporation, according to a Supreme Court bench composed of Justices Surya Kant and Vikram Nath.
Facts
- The issue stems from the 12.09.1958 land allocation of about 271.39 acres by the State of Rajasthan to J.K. Synthetics Ltd. ("JKSL") through the District Collector, Kota, in the Large-Scale Industrial Area, Kota ("LIA, Kota"). After the allotment, the Collector in Kota signed a leasing agreement with JKSL and gave the company permission to build industrial units there. Through the execution of new lease deeds about the same area as and when the period specified in the earlier lease expired, JKSL's retention of the property was made easier over the ensuing decades.
- To control the distribution of land to business owners and the growth of industrial areas throughout the State, the State Government exercised its authority under Section 100 of the Rajasthan Land Revenue Act, 1956, and created the Rajasthan Industrial Areas Allotment Rules, 1959 ("1959 Rules").
Analysis of court
- After considering the arguments, the Court determined that the State Government and JKSL/RIICO still had a lessor-lessee relationship that had not been adversely affected and stated that "the State Government has maintained the position of lessor from the first lease deed executed in 1967 to the present."
- The Rajasthan Industrial Areas Allotment Rules, 1959, were used to sign all of the leases, and the court noted that the conditions of each lease were obviously in line with those rules. Additionally, it was noted that the State Government retained title and ownership of the land and that it was never transferred to the RIICO.
- Additionally, the Court noted that "The land was also never allotted to RIICO on a leasehold basis under Rule 11A of the 1959 Rules." Therefore, under Rule 12 of the 1959 Rules, RIICO was never explicitly granted any leasehold rights and did not have the authority to further sublet the land.In any case, Rule 11A of the 1959 Rules is irrelevant because, following the implementation of Rules 11A and 12, the land had to be expressly allotted to RIICO on a leasehold basis. No such specific allocation in RIICO's favour has ever been made.
- The court continued by pointing out that the 1959 regulations did not refer to the 1979 RIICO Disposal of Land regulations, which were not statutory and did not have any legislative validity as a result of their mention in the 1959 rules. In that context, it was stated that "A company incorporated under the Companies Act is not a creation of the said Act but has come into the existence under the provisions of the Companies Act, establishing a distinction between companies that are brought into being "by" an Act, and those created "under" an Act."
- Additionally, it was noted that "In this case, there was no violation of the principles of natural justice. The whole justification for approving the land conversion and plot subdivision was based on RIICO's mistaken assertion of its authority to operate as LIA, Kota's lessor under the 1979 Rules. No land leasehold rights were ever granted to RIICO. There is no concept of giving the party a chance to be heard when the foundation for a benefit gained by a party is itself void.
- The court ruled that "there was neither a legitimate expectation nor a promissory estoppel that was able to function to the benefit of Respondent No. 1 as, once again, no sudefensesces could be raised based on RIICO's improper use of powers that vest only with the rightful lessor of LIA, Kota, which is the State Government. Furthermore, when societal interests are at stake, the public interest supersedes both of these doctrines and cannot intervene on behalf of a private party.
- Therefore, the appeals were granted.
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