- 1 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 09TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE E.S. INDIRESH WRIT PETITION NO.28675 OF 2023 (GM-KIADB) C/W WRIT PETITION NO.28955 OF 2023 IN WP NO.28675/2023 BETWEEN: M/S. METAL CRAFT INDUSTRIES A PARTNERSHIP FIRM, NO.220, B-4, GANGA BLOCK, NATIONAL GAMES VILLAGE, KORAMANGALA, BENGALURU - 560 047. BY ITS PARTNER SRI. HITESH KUMAR S/O RADHESHYAM SHARMA, AGED ABOUT 40 YEARS. ....PETITIONER (BY SRI. UDAYA PRAKASH M., ADVOCATE) AND: KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD (KIADB) NO.14/3, 2ND FLOOR, C.F.C. BUILDING, MAHARSHI ARAVINDA BHAVAN, NRUPATHUNGA ROAD, BENGALURU - 560 001. REP. BY ITS EXECUTIVE ENGINEER-2. …RESPONDENT (BY SRI. K. SHASHIKIRAN SHETTY, SENIOR ADVOCATE FOR SRI. ASHOK N. NAYAK, ADVOCATE) Digitally signed by ARUNKUMAR M S Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE DEMAND LETTER DATED 29TH OCTOBER, 2021 ISSUED BY THE RESPONDENT-BOARD TO THE PETITIONER, DEMANDING AN AMOUNT OF RS.1,75,14,299/- AS DIFFERENCE IN COST OF LAND VIDE ANNEXURE-A, THE SAME BEING WITHOUT ANY AUTHORITY OF LAW, UNFAIR, UNREASONABLE, ARBITRARY AND WHIMSICAL AND NOT BINDING ON THE PETITIONER BEING IN VIOLATION OF ARTICLE 14 AS ALSO ARTICLE 21 OF THE CONSTITUTION OF INDIA; AND ETC. IN WP NO.28955 OF 2023 BETWEEN: M/S. S.M. BALIGA & COMPANY A PARTNERSHIP FIRM, NO.52, R.V. ROAD, NEAR R.V. TEACHER'S COLLEGE, BASAVANAGUDI, BENGALURU - 560 004. BY ITS PARTNER SRI. SHAILESH MADHAV BALIGA S/O MADHAV R. BALIGA AGED ABOUT 73 YEARS. ....PETITIONER (BY SRI. UDAYA PRAKASH M., ADVOCATE) AND: KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD (KIADB) NO.14/3, 2ND FLOOR, C.F.C. BUILDING, MAHARSHI ARAVINDA BHAVAN, NRUPATHUNGA ROAD, BENGALURU - 560 001. REP. BY ITS EXECUTIVE ENGINEER-2. …RESPONDENT (BY SRI. K. SHASHIKIRAN SHETTY, SENIOR ADVOCATE FOR SRI. ASHOK N. NAYAK, ADVOCATE) - 3 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE DEMAND LETTER DATED 29TH OCTOBER, 2021 ISSUED BY THE RESPONDENT-BOARD TO THE PETITIONER, DEMANDING AN AMOUNT OF RS.1,65,39,096.00 AS DIFFERENCE IN COST OF LAND VIDE ANNEXURE-A, THE SAME BEING WITHOUT ANY AUTHORITY OF LAW, UNFAIR, UNREASONABLE, ARBITRARY AND WHIMSICAL AND NOT BINDING ON THE PETITIONER BEING IN VIOLATION OF ARTICLE 14 AS ALSO ARTICLE 21 OF THE CONSTITUTION OF INDIA; AND ETC. THESE WRIT PETITIONS HAVING BEEN RESERVED FOR ORDERS, COMING FOR PRONOUNCEMENT THIS DAY, E.S. INDIRESH J., MADE THE FOLLOWING: CORAM: HON'BLE MR. JUSTICE E.S. INDIRESH CAV ORDER Since the common question of law and facts are involved in these petitions, at the consent of the parties, petitions were clubbed and heard together and as such, disposed of by this common order. 2. It is the case of petitioners that, petitioners are the allottees of Plot at Narsapura 1st Phase Industrial Area, Kolar District by the respondent-KIADB during the year-2021. Petitioners had entered into lease-cum-Sale agreement with the respondent-KIADB subject to terms and conditions to be fulfilled by the petitioners so as to get the registered sale deed after ten years from the date of execution of lease-cum-sale - 4 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 agreement. It is further stated that the respondent-KIADB fixed the tentative price for the Plot at Rs.85,00,000/- (85.00 lakhs) per acre. It is also stated in the petitions that the respondent-KIADB issued impugned Demand Notices, enhancing the price of the plot exorbitantly. Being aggrieved by the same, petitioners presented these petitions on the ground that the respondents have not placed any material for enhancement of the price of the Plot unreasonably and that apart, no reasons have been assigned for enhancing the price of the Plot and therefore, it is the contention of petitioners that the claim made by the respondent-KIADB is unreasonable and contrary to Article 14 of the Constitution of India. 3. Heard learned counsel appearing for the parties. 4. Sri. Uday Prakash M., learned counsel appearing for petitioners contended that the respondent-KIADB has enhanced the price of the Plots without providing the break-up for enhancement of the price of the Plots in question. Learned counsel further contended that the respondent-KIADB paid lesser amount to the land owners and after including the service charges, cost of development including the cost of - 5 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 acquisition, had raised to Rs.1,68,50,000/- per acre and therefore, as there is no break-up figure shown by supporting relevant document and the respondent-KIADB is collecting exorbitant price from the allottees, the claim made by the respondent-KIADB in the impugned Demand Notices is unjust and contrary to law declared by Hon'ble Supreme Court in the case of KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD AND ANOTHER vs. PRAKASH DAL MILL AND OTHERS reported in (2011)6 SCC 714. 5. 5. It is also argued by learned counsel appearing for the petitioners that the entire acquisition proceedings was completed and land owners were paid compensation accordingly, and thereafter allotment commenced and the respondent-KIADB is demanding the petitioner/allottees to pay double the amount specified in the lease-cum-sale agreement and therefore, being an instrumentality of the State under Article 12 of the Constitution of India, respondent-KIADB shall not demand exorbitantly without reasons. Accordingly, he contended that the impugned Demand Notices issued by the - 6 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 respondent-KIADB does not survive for consideration and therefore, sought for interference of this Court. 6. Per contra, Sri. K. Shashi Kiran Shetty, learned Senior Counsel on behalf of Ashok N. Naik, appearing for the respondent-KIADB sought to justify the impugned Demand Notices and contended that the respondent-KIADB, being a statutory Board, allotting the Plots for the industrial growth in the State of Karnataka on 'no profit - no loss', however, the respondent-Board is collecting only services charges and therefore, sought for dismissal of the petitions. 7. Learned Senior Counsel appearing for the respondent- KIADB further contended that the allotment letters issued to the petitioners specifically mentioned about the tentative price of the land/plot, subject to adjustment of amount towards premium. By referring to Clause 3 of one such allotment letter dated 29th February, 2012 (Annexure-B in Writ Petition No.28675 of 2023), learned Senior Counsel argued that, soon after the completion of the entire project, the payment of 100% tentative cost of the land would be collected and the said aspect of the matter was reflected in the lease-cum-sale - 7 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 agreement (Clause 1(a) and 22) of lease-cum-sale Agreement dated 20th July, 2015 (Annexure-E in W.P. No.28675 of 2023) and therefore, the petitioners cannot raise plea on challenging the Demand Notice issued by the respondent-KIADB. 8. It is also argued by learned Senior Counsel Sri. K. Shashi Kiran Shetty that, the period was not fixed in the allotment letters or the lease-cum-sale agreement as to completion of the project and therefore, the grounds urged in writ petitions are untenable. In this regard, learned Senior Counsel places reliance on the judgment of Hon'ble Supreme Court in the case of BAREILLY DEVELOPMENT AUTHORITY AND ANOTHER vs. AJAI PAL SINGH AND OTHERS reported in (1989)2 SCC 116 and in the case of STATE OF U.P. AND OTHERS vs. BRIDGE & ROOF COMPANY (INDIA) LTD. reported in (1996)6 SCC 22 and argued that, writ petitions are not maintainable to challenge the impugned Demand Notices issued by the respondent-KIADB. Accordingly, sought for dismissal of the writ petitions. 9. Sri. Mahantesh Shettar, learned Additional Government Advocate appearing for the respondent-State - 8 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 argued on similar lines as that of learned Senior Counsel appearing for the respondent-KIADB. 10. In the light of the submission made by learned counsel appearing for the parties, I have carefully examined the grounds urged in writ petitions. The only grievance of the petitioners in these writ petitions is that the respondent-KIADB, though collected the sale consideration at the time of making allotment letters, demanding exorbitant sale consideration, after lapse of 7 years in respect of the Plots in question to execute the registered Sale Deeds in favour of the petitioner/allottees. 11. It is not in dispute that the respondent-KIADB had allotted Plots of different dimensions to the petitioners as per the allotment letters. On perusal of allotment letters, the same would indicate that the respondent-KIADB fixed the tentative price of the land at Rs.85,00,000/- (Rs.85.00 Lakhs) per acre. The terms and conditions in the allotment letter provides for payment of entire tentative cost of the land and thereafter, the possession certificate would be issued in favour of the allottes. It is also not in dispute that the lease-cum-sale agreement was - 9 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 executed by the respondent-KIADB in favour of the petitioner/allottees and the terms and conditions therein provide that the allotment of respective plots, wherein sale consideration is fixed tentatively. It is the case of the petitioners that the respondent-KIADB is claiming sale consideration exorbitantly and on the other hand, the arguments of the respondent-KIADB that the total cost of the land would be calculated based on the final acquisition cost, development of the land including the conversion charges and other statutory dues. In this regard, Hon'ble Supreme Court in the case of PRAKASH DAL MILL (supra) had an occasion to consider Regulation 7 of the Karnataka Industrial Areas Development Board Regulations, 1969 (for short, hereinafter referred to as 'Regulations-1969'). 12. I have carefully perused the Regulations-1969. Regulation 5 of the Regulations-1969 provides for manner of disposal of land; Regulation 8 provides for deposit to be made by the applicants towards cost of land and development charges on allotment and such deposit shall be adjusted towards the cost of land and further such other incidental - 10 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 expenses incurred by the respondent-KIADB after the completion of entire project as a whole. It is clearly mentioned in the Regulation 8 that the deposit that may be made by the applicants/allottees at the time of issuance of allotment letter and lease-cum-sale agreement is only the probable cost of the land and same is not conclusive. Regulation 10 provides for allotment of Plot to applicant/allottees. Regulation 11 provides for decision of the Board as to allot Plots/land in favour of such allottees. Regulation 15 provides that, after a issuance of allotment letter, the allottee will be considered as the licensee till the execution of lease-cum-sale agreement to be entered into with the respondent-KIADB. On perusal of the allotment letter and lease-cum-sale agreement referred to above, wherein it is clearly stated as to fix the tentative price for the land/plot and same has been accepted by the allottes much less the petitioners herein. In that view of the matter, the petitioners being accepted the terms and conditions in the allotment letter and entered into a registered lease-cum-sale agreement, cannot be permitted to turn around and say that the price of the plot is exorbitantly enhanced by the respondent-KIADB. It is pertinent to mention here that the - 11 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 object of the respondent-KIADB is to make special provision for securing the establishment of industrial areas in the State of Karnataka to promote and develop industries. The respondent- KIADB being a instrumentality of state under Article 12 of the Constitution of India, is facilitating the industrial entrepreneurs for establishment of industry on 'no profit - no loss' basis. Therefore, I am of the view that the contentions raised by the petitioners cannot be accepted. 13. It is well established principle in law that, when the instrumentality of State under Article 12 of the Constitution of India entered into contract with the private parties, the parties are governed by the terms of the contract and this Court is having limited jurisdiction to interfere with the contractual obligations between the parties. The said aspect of the matter was considered by Hon'ble Supreme Court in the case of AJAI PAL SING (supra) and in the case of BRIDGE AND ROOF COMPANY (INDIA) LTD. (supra). 14. Recently, Hon'ble Supreme Court in the case of SUBODH KUMAR SINGH RATHOUR vs. CHIEF EXECUTIVE OFFICER AND OTHERS reported in AIR 2024 SC 3784, it is - 12 - HC-KAR NC: 2025:KHC:51953 WP No.28675 of 2023 C/W WP NO.28955 OF 2023 held that, although disputes arising purely out of contracts are not amenable to writ jurisdiction, considering obligation of the State to act fairly and not arbitrarily or capriciously, when contractual power is being used for public purpose, it is amenable to judicial review. In the present case, the respondent-KIADB, after completion of project has calculated the expenses incurred for acquisition of land, development and payment of statutory dues etc., and therefore, this Court is declined to interfere with the decision taken by the respondent- KIADB, to issue impugned demand notices to the petitioners. In the result, writ petitions fail and accordingly, dismissed as devoid of merits. SD/- (E.S.INDIRESH) JUDGE ARK List No.: 1 Sl No.: 54