- 1 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF AUGUST, 2025 PRESENT THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE AND THE HON'BLE MR. JUSTICE C M JOSHI WRIT APPEAL NO. 946 OF 2025 (GM-KIADB) BETWEEN: 1. M/S. SHIKSHA INFOTECH PRIVATE LIMITED (A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1957) REPRESENTED BY ITS DIRECTOR SRI MAHENDRA PRATAP CHOUDHARY NO.90, MANKA (MANJUNATH KANIKA) GROUND FLOOR, 2ND MAIN PHASE-I, ELECTRONIC CITY BANGALORE - 560 100 …APPELLANT (BY SRI SRIDHAR G, ADVOCATE) AND: 1. STATE OF KARNATAKA REPRESENTED BY ITS SECRETARY DEPARTMENT OF INDUSTRIES AND COMMERCE VIDHANA SOUDHA DR. B.R. AMBEDKAR VEEDHI BENGALURU - 560 001 2. THE PRINCIPAL SECRETARY DEPARTMENT OF INDUSTRIES AND COMMERCE NO.49, KHANIJA BHAVAN SOUTH WING Digitally signed by AMBIKA H B Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 RACE COURSE ROAD BENGALURU - 560 001 3. THE CHIEF EXECUTIVE OFFICER AND EXECUTIVE MEMBER KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD 49, 4TH AND 5TH FLOOR EAST WING, KHANIJA BHAVAN RACE COURSE ROAD BENGALURU - 560 001 4. THE SECRETARY-1 KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD 49, 4TH AND 5TH FLOOR EAST WING KHANIJA BHAVAN RACECOURSE ROAD BENGALURU - 560 001 5. THE JOINT DIRECTOR KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD 49, 4TH AND 5TH FLOOR, EAST WING KHANIJA BHAVAN RACECOURSE ROAD BENGALURU - 560 001 6. THE EXECUTIVE ENGINEER-3 KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD ZONAL OFFICE BANGALORE - 560 001 7. MRS. DIVYA N W/O. VASU REDDY AGED ABOUT 45 YEARS PROPRIETOR OF M/S. R. N. ASSOCIATES NO. 222/51, 11TH CROSS WILSON GARDEN BANGALORE - 560 027 - 3 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 8. MR. N NARAYANA REDDY S/O NARASIMHA REDDY AGED ABOUT 75 YEARS MANAGING PARTNER OF M/S. EXCEL BUSINESS SOLUTIONS NO. 222/51, 11TH CROSS WILSON GARDEN BANGALORE - 560 027 …RESPONDENTS (SRI K.S. HARISH, GOVERNMENT ADVOCATE FOR RESPONDENT NOS.1 AND 2) THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE IMPUGNED ORDER DATED 02.06.2025 PASSED BY THE LEARNED SINGLE JUDGE OF THIS HON'BLE COURT IN WP No.17778/2024 (GM-KIADB) AND ALLOW THE ABOVE NUMBERED WRIT APPEAL WITH CONSEQUENTIAL RELIEF(S) AS PRAYED FOR IN THE WRIT PETITION & ETC. THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. VIBHU BAKHRU ,CHIEF JUSTICE and HON'BLE MR. JUSTICE C M JOSHI ORAL JUDGMENT (PER: HON'BLE MR. VIBHU BAKHRU,CHIEF JUSTICE) 1. The appellant has filed the present appeal impugning an order dated 02.06.2025 [impugned order] passed by the learned Single Judge in Writ Petition No.17778/2024 (GM-KIADB) captioned, 'M/s. Shiksha Infotech Private Limited v. State of Karnataka & Ors. - 4 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 2. The appellant had filed the aforementioned writ petition impugning an order dated 12.06.2024 passed by respondent No.3, inter alia, directing the appellant to handover the possession of Plot No.34 to respondent No.6, the Executive Engineer-3, Karnataka Industrial Areas Development Board [KIADB]. Further, respondent No.3 had directed that in the event the appellant fails to handover the possession of the subject plot before 11.07.2024, respondent No.6 would take over the possession of the same by drawing a mahazar in terms of Section 34-B(5) of the Karnataka Industrial Areas Development Act, 1966 [the KIAD Act]. 3. The appellant had also impugned an order dated 12.08.2022 and the notice dated 15.11.2023. In terms of the impugned order dated 12.08.2022, the appellant was permitted to implement the project within a period of nine months from the date of the said order subject to payment of penalty of `25,00,000/- computed at the rate of 2% of the allotment cost, within the period of 30 days from the date of the said order. The impugned notice dated 15.11.2023 was issued under Section 34-B(2) of the KIAD Act calling upon the appellant to show-cause why possession of the subject property not be resumed. - 5 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 4. The learned Single Judge did not find any fault with the KIADB initiating proceedings for imposition of penalty and resuming the subject property in terms of the impugned orders. The learned Single Judge found that the orders were in conformity with the provisions of the KIAD Act and the terms of the lease deed executed in favour of the appellant. Submissions 5. The appellant states that although the appellant had initially failed to comply with the terms and conditions of the allotment of the subject property within the prescribed period, the default was subsequently remedied. 6. The learned counsel appearing for the appellant contends that the application for building plans had been furnished to KIADB on 04.09.2019. However, the same had not been sanctioned. Therefore, the appellant was prevented from carrying on any construction and commencing the project for which the subject property was allotted. He contends that the appellant could not be faulted for any delay as the concerned authorities had failed to sanction the plan submitted by the appellant and the learned Single - 6 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 Judge had failed to consider the same. On the aforesaid basis, he contends that the impugned order resuming the land is liable to be set aside. 7. The limited question to be addressed is whether the learned Single Judge has erred in declining to interfere with the impugned orders dated 12.08.2022 and 12.06.2024, imposing penalty and resuming the subject property. 8. KIADB is a statutory body established under the KIAD Act with the object of promoting the establishment and orderly development of industries and industrial areas in the State. The State Government earmarks certain lands as industrial lands and also undertakes the exercise of acquiring the same under Section 28 of the KIAD Act. The acquired lands are handed over to the KIADB for development of industrial areas in the State of Karnataka and the same are allotted to prospective industries and entrepreneurs. 9. The appellant had applied for allotment of five Acres of land for establishing an Undertaking for software development and IT enabled services. The same was considered by the State Level - 7 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 Single Window Clearance Committee [SLSWCC], constituted under the Karnataka Industries (Facilitation) Act, 2002. The SLSWCC accepted the appellant's proposal at its 99th meeting held on 20.04.2017 and the appellant was allotted 5 Acres of land in Plot No.34 situated at Hi-tech Defence and Aero Space Park (IT Sector), Bengaluru Rural District [the subject property] in terms of an allotment letter dated 20.05.2017. It is material to note that the appellant had proposed to establish an Undertaking for software development and IT enabled services with an investment of Rs.40.77 crores. The proposal entailed generating employment to about 1200 persons. It is material to note that the appellant's proposal was sanctioned subject to certain terms and conditions. 10. Pursuant to the said decision of the SLSWCC, KIADB allotted the subject property on lease basis for a period of 99 years at a premium of `2,50,00,000/- per acre. The allotment letter clearly stipulated that the possession of the subject property would be handed over after receipt of 100% premium and on the appellant accepting the terms and conditions as set out in the allotment letter. Paragraph 6 of the said letter expressly provides that on taking over possession of the subject property, the - 8 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 appellant would adhere to the time schedule indicated in Annexure-A to the said letter. 11. A tabular statement containing the said time schedule as set out in Annexure-A to the allotment letter is reproduced below: 1.(a) For taking over possession of land. 30 days from the date of payment of entire premium. (b) For execution of Lease Agreement. 30 days from the date of Possession Certificate. (c) For commencement of construction and completion of project by commencing production Construction should be commenced within nine months from the date of taking over possession and production should be commenced :- 1) Within a period of three years after taking over possession in case of MSME and large industries ii) Within a period of five years after taking over possession in cases of mega, ultra mega and super mega projects. iii) Promoters to seek extension of time in writing by giving valid reasons to be concerned investment approving committees viz., DLSWCC / SLSWCC/ SHLCC prior to the above mentioned periods. - 9 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 12. The appellant paid the premium amount as stipulated in the allotment letter and on 29.08.2017, KIADB issued a confirmatory letter of allotment calling upon the appellant to take possession of the land within a month from the date of the said letter. Accordingly, the appellant took possession of the subject property and the possession certificate was issued on 29.11.2017. Thereafter, KIADB executed a lease deed dated 18.12.2017. The terms and conditions set out in the lease deed expressly stipulated that the appellant would commence civil constructions within a period of nine months and would complete the same within a period of three years. The lease deed also enabled the appellant to seek extension of time for valid reasons, which would be considered by the concerned investment approving committee at its discretion. Clauses 6 and 7 of the lease deed are relevant and are set out below: "6. TIME LIMIT FOR COMMENCEMENT AND COMPLETION OF CONSTRUCTION WORK. i) The Lessee shall commence civil construction works within nine months from the date of lease cum sale agreement for MSME & Large Enterprises and 15 months for Mega, Ultra Mega & Super Mega Enterprises and complete the project by commencing production - 10 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 a) Within a period of three years from the date of lease cum sale agreement, in case of MSME, Large and b) Five Years for Mega, Ultra Mega, Super Mega Projects. c) Promoters to obtain extensions of time if there are valid reasons. After obtaining licence from the Chief Inspector of Factories and Boilers in Karnataka and/or from any other Authority as required under law. ii) After construction of buildings, the Lessee shall not make any major modifications/alterations/additions to the existing buildings/structures except with the prior approval of the Lessor in writing. iii) The Lessee shall maintain the Schedule Property and the buildings erected thereon in good repairs and conditions to the satisfaction of the Lessor. iv) The Lessee, in respect of the Schedule Property, shall observe and conform to all rules, regulations and byelaws of the local Authority concerned or any other statutory regulations in force relating to public health and sanitation. 7. EXTENSION OF TIME i) The Lessee shall seek extension of time in writing by giving valid reasons to the concerned investment approving committees viz. DLSWCC/SLSWCC/ SHLCC through Lessor and the investment approval committees may at its discretion extend the time for completion of civil construction works, erection of machineries and commencement of production for a further period of: a) One year subject to the Lessee paying penalty of 2% of allotment cost. b) Subsequent extension of another one year subject to the Lessee paying penalty of 5% of allotment cost." - 11 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 13. It is admitted that the appellant did not take any steps for establishing the project after taking over possession of the subject property. 14. KIADB sent a letter dated 29.11.2018 reminding the appellant as to its obligations attendant to the allotment of the subject land and for implementing the project. It called upon the appellant to submit the building plans as per norms of the KIADB along with registered copy of the lease-cum-agreement. The KIADB also sent another letter dated 27.05.2019 calling upon the appellant to furnish detailed implementation report taken for implementation of the project on the subject property. 15. Undisputedly, the terms of allotment of the subject property and the lease deed executed in favour of the appellant were violated. Consequently, on 04.09.2019, KIADB issued a notice calling upon the appellant to remedy the breaches within the period of ninety days of the issuance of the said notice and cautioned the appellant that further steps would be taken to terminate the lease and resume possession of the subject land, if further steps were not taken. - 12 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 16. Thereafter, on 25.09.2019, the appellant submitted the building plans to respondent No.4 for approval. The appellant claims that it also sent a reminder on 28.01.2020. However, the appellant took no further effective steps. 17. On 17.03.2020, KIADB called upon the appellant to submit building plans to the Development Office-3 and Executive Engineer for necessary action. However, it does not appear that any effective steps were taken by the appellant in this regard. 18. On 25.10.2021, the KIADB called upon respondent No.6 to inspect the subject property and furnish a detailed implementation report along with sketch and photographs. The concerned officer submitted a report, which indicated that effective steps had not been taken for commencing any construction and the subject property remained vacant. 19. On 21.06.2022, the appellant sent a letter stating that it had submitted the building plans to KIADB office and was awaiting approval. The appellant further stated that its office was closed for almost two years and was hoping that it would go forward to accomplish all terms and conditions as per the agreement. The - 13 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 appellant also stated that it had given a contract for developing the subject property, for building boundary wall, security room and also obtaining electricity connection, which process would take 6 to 8 months. Therefore, the appellant requested the KIADB to grant extension of 6 to 8 months for completing the said works. 20. On 12.08.2022, the KIADB passed the impugned order imposing penalty of `25,00,000/- computed at 2% of the allotment value. The appellant was also instructed to obtain approval of the layout plan and implement the project within a period of nine months from the date of the said order. It was also expressly stipulated that if the appellant did into implement the project within the extended period, the order would stand terminated and the subject property would be repossessed. 21. It does not appear that any effective steps were taken for carrying out any development work or raising any construction. However, on 30.11.2022, the appellant sent a letter to BESCOM officer requesting that electricity connections be provided. On the very next date, the appellant also sent a letter to the KIADB in response to the notice dated 17.08.2022 requesting that the - 14 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 penalty imposed be waived. The appellant also reiterated that it had taken basic steps like construction of boundary wall, security rooms, etc. 22. As noted above, the appellant had made similar statement in its letter dated 21.06.2022. However, it is apparent that even the basic development work had not been completed as on 01.12.2022. 23. The KIADB issued a notice dated 15.11.2023 under Section 34-B(2) of the KIAD Act calling upon the appellant to show-cause why possession of the subject property should not be resumed. The appellant responded to the said notice on 13.12.2023 once again requesting for waiver of penalty and to provide extension of time for commencement and completion of the construction work. 24. The appellant's response was considered by respondent No.3. Additionally, respondent No.3 also considered the photographs of the subject property furnished by respondent No.6 on 19.04.2024. The said photographs indicate that only a boundary wall/railing had been constructed. In view of the above, respondent No.3 passed the impugned order under Section 34-B of - 15 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 the KIAD Act cancelling allotment of the subject land in favour of the appellant and calling upon the appellant to hand over possession of the subject property to respondent No.6. 25. It is clear from the facts on record that apart from writing few letters, the appellant had taken no steps whatsoever for development of the subject property and establishing the project, within the stipulated timelines. KIADB had sent letters dated 29.11.2018 and 27.05.2019, inter alia, reminding the appellant of its obligations under the lease agreement. Notwithstanding the same, the appellant had not taken any steps in that regard. 26. The appellant claims that after receiving a reminder dated 04.09.2019, it had furnished building plans for approval of respondent No.4. Thereafter, it claims to have sent a reminder on 28.01.2020. Apart from the same, no other effective steps were taken to pursue sanction of the plans or for carrying on any basic development work. 27. It is material to note that as on 25.09.2019, more than two years had elapsed from the date of taking over possession of the subject property. In terms of the allotment letter as well as the - 16 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 lease deed, the appellant was required to commence construction within a period of nine months from the date of taking over possession of the subject property. Thus, undisputedly, the appellant had breached the terms of the lease deed. 28. The contention that the appellant could not carry on any work as the building plans were not sanctioned is unpersuasive. There was no impediment for the appellant to carry on basic development work. It had in its letter dated 21.06.2022 sought time of 6 to 8 months to execute works like building boundary walls, site offices and other such works. But, had failed to complete even such limited works. This is evident from the photographs placed on record. 29. Although the appellant had written few letters regarding sanction of plans, it had taken no concrete steps in that regard. In the event the appellant was aggrieved by the non-sanction of building plans, it was necessary for the appellant to invoke its remedies in that regard. However, it is apparent that the appellant did not wish to proceed with the project at that stage. It claimed that it had suffered losses during COVID period as thus was - 17 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 constrained for funds. However, this contention also has little merit as there is no explanation why effective steps for commencing construction within the period of nine months from taking over possession of the subject property were not taken. 30. The appellant has placed certain current photographs on record, which establish that no substantial work has been taken at the site. The photographs show metal frame of a shed and the boundary wall. 31. KIADB had disputed that all facilities were not available as alleged by the appellant. The KIADB's contention in this regard appears merited as the photographs produced of the site clearly show that the adjoining properties have been developed and multi- storied buildings stand on the adjoining sites, which are visible in the photographs. 32. The KIADB has also produced a letter dated 17.03.2020 calling upon the appellant to submit building plans to the Development Office-3 and the Executive Engineer for necessary action. The appellant has not responded to the said letter as no such response has been placed on record. - 18 - HC-KAR NC: 2025:KHC:32062-DB WA No. 946 of 2025 33. In the given facts, we are unable to accept that the decision of the KIADB to cancel the lease and resume possession of the leased premises on account of failure on the part of the appellant to comply with the terms and conditions of the lease can be faulted. We find no ground to interfere with the impugned order passed by the learned Single Judge. 34. The appeal is, accordingly, dismissed. 35. Pending application also stands disposed of. Sd/- (VIBHU BAKHRU) CHIEF JUSTICE Sd/- (C M JOSHI) JUDGE AHB List No.: 1 Sl No.: 42