Karnataka Industrial Areas Development Board Vs. Nandi Cold Storage Pvt. Ltd
 Insc 723 (11 July 2007)
Dr. ARIJIT PASAYAT P.K. BALASUBRAMANYAN & D.K. JAIN
I.A. NO.1 IN CIVIL APPEAL NO. 5542 OF 2004 Dr. ARIJIT PASAYAT, J.
1. Challenge in this appeal is to the order passed by the National Consumer
Disputes Redressal Commission at New Delhi (in short the 'National
Commission'). Respondent had filed a complaint against the appellant before the
2. Background facts in a nutshell are as follows:
3. In the complaint respondent inter alia stated as follows:
The complainant company, desirous of opening a cold storage unit in the
State of Karnataka, applied for allotment of land to the appellant in August
1991. After meeting all the formalities required from time to time by the
appellant, a plot bearing No.2 of Chickballapur Industrial Area, measuring 2.5
acre of land, was allotted for setting up a cold storage.
Possession certificate was issued on 26/30.8.93. The complainant also in the
meantime obtained a loan of Rs.67 lakh from the Karnataka State Financial
Corporation (in short 'KFC'). For the first time in August 1994, a letter was
written by appellant to the complainant that "the company could not go
ahead with construction activity on the plot allotted as the erstwhile land
owner of plot No.2 covered in Sy.No.29 and 30 of Jadalathimmanahally Village
has obtained stay order from the High Court of Karnataka in W.P.No.70/88
challenging the acquisition proceedings. The Board initiated action for
vacating the stay order granted by the High Court of Karnataka. However, the
company could not go ahead with implementation in view of the stay order
granted by the High Court. The complainant sought for permission to go ahead
with implementation after the litigation in respect of the above land is
disposed of by the High Court. The Board should also grant extension of time to
the company for implementation of the project after disposal of the litigation.
4. Original land holder took back possession forcibly in view of the order
of the Karnataka High Court. The writ petition filed by the original land
holder was allowed by the High Court leaving the complainant high and dry
without land, more so when in September 1994, the KFC cancelled the term loan
in view of the fact that no progress was made in the implementation of the
project. Since the complainant was keen to go ahead with the project, on
collecting some information, it approached the appellant to allot plot No.1-A
and 1-B which was lying vacant, which were allotted to the complainant in 1995.
But it seems that bad luck had not stopped chasing the complainant. As soon as
the allotment in respect of plot no.1- A and 1-B were made on a resumed plot,
the original allottees moved the High Court making the complainant a party
before it. However, after protracted litigation, the writ petition was
dismissed but in the meanwhile the loans had been cancelled and the complainant
was left high and dry. It is in these circumstances that a complaint was filed
alleging deficiency in service.
5. The appellant-Board appeared before the National Commission on issue of
notice. It took the stand that there was no deficiency in service and it acted
in terms of the procedure laid down in Karnataka Industrial Areas Development
Act, 1966 (in short the 'Act') and Rules made thereunder. The State Government
had acquired the land and handed over the same to the present appellant for
development and allotment for setting up the industries. The acquisition was
done by the State Government. After the land was handed over, same was
developed and allotted to various entrepreneurs. Since the appellant came to
know about the pendency of the litigation between the Government and the
original landholder of plot No.2 it had given notice to the complainant and all
that was required to be done for the complainant was done. There was no
deficiency in the service which was attributed by the government which acquired
the land from the appellant after such acquisition.
6. After hearing learned counsel for the parties the National Commission
held that the appellant was clearly at fault. There was deficiency in service
and it was, therefore, held that the complaint was to be allowed. Considering
the facts and circumstances of the case the National Commission held that the
complainant was entitled to compensation of Rupees three lakhs. The order of
the National Commission is the subject matter of challenge in this appeal.
7. In support of the appeal, it was submitted that there was no deficiency
in service in view of what has been stated above.
In any event, there was no scope for awarding compensation.
8. Learned counsel for the respondent on the other hand supported the order
of the National Commission.
9. While issuing notice on 10.9.2004, the same was limited to the question
of compensation. In support of the appeal, learned counsel for the appellant
submitted that there is no deficiency in service. All possible steps have been
taken at different points of time. In a hypothetical case which was not
established, the National Commission erroneously came to hold that it was a
case of deficiency in service.
10. In the notice, as noted above, it was indicated that the same was
limited to the question of compensation. About the deficiency in service the
correct approach has been adopted.
11. The only question however, is with regard to the quantum. Considering
the peculiar circumstances of the case, we fix the same to be rupees one lakh.
This is to be paid to the appellant by the respondent within 4 weeks from
12. The appeal is allowed in the aforesaid circumstances. No order is
necessary in the I.A. in view of the disposal of appeal.
There will be no order as to costs.