Shyam Trading Corporation vs State industries Promotion Corporation of Tamil Na

2026:MHC:4336
W.A.No.3191 of 2026
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 26.10.2026
CORAM :
THE HONOURABLE MR. SUSHRUT ARVIND DHARMADHIKARI,
CHIEF JUSTICE
AND
THE HONOURABLE MR.JUSTICE G.ARUL MURUGAN
W.A. No. 3191 of 2026
CNR:{ HCMA012015712026 }
and C.M.P.No.28354 of 2026



Shyam Trading Corporation
Flat No.3B, 5, Lakshmi Street,
Kilpauk, Chennai – 600 010
Rep by its Managing Partner
Appellant(s)
Vs
1. State industries Promotion Corporation
of Tamil Nadu Ltd
19-A, Rukmani LakshMipathy Road,
Post Box No.7723, Egmore,
Chennai – 600 008
Rep by its Chairman and Managing Director.
2.The Joint Director
Directorate of Town and Country Planning,
Chingleput District, No.13, Varadarajan Street,
Vedachalam Nagar, Chingleput – 1.
Respondent(s)
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PRAYER : Appeal filed under Clause 15 of the Letters Patent to set aside
the order dated 25.06.2026 passed by the learned Single Judge in
W.P.No.4801 of 2020.
For Appellant(s): Mr.M.Vaidhiyanathan
For Respondent(s):Mr.M.Roshan Atiq,
Additional Government Pleader
for R2
JUDGMENT
(Delivered by the Hon'ble Chief Justice)
This intra-court appeal under Clause 15 of the Letters Patent
is directed against the order dated 25.06.2026 passed by the
learned Single Judge in W.P.No.4801 of 2020. The writ petition, filed
by the appellant, challenged the proceedings dated 06.02.2020 of
the first respondent/State Industries Promotion Corporation of Tamil
Nadu Limited (“SIPCOT”), whereby the allotment of an industrial
plot to the appellant was cancelled and the appellant was directed
to execute a surrender deed. The writ petition was dismissed.
Hence this appeal.
2.1. Succinctly put, the factual background runs thus: By
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Allotment Order dated 03.10.2007, SIPCOT allotted Plot No.C-1,
measuring 2.00 acres, in Phase-III of the SIPCOT Industrial Park,
Sriperumbudur, to the appellant on a lease for ninety-nine years for
establishment of a Hotel. The appellant’s project was a hotel with a
restaurant and a multipurpose hall. The price was Rs.90,00,000/-,
of which the balance of Rs.89,85,000/- (after adjusting the initial
deposit of Rs.15,000/-) was remitted in December 2007.
2.2. The Allotment Order, which the appellant accepted,
prescribed, inter alia , the following conditions:
(a) Condition 3(viii) – the project was to be
implemented and commercial production commenced
within thirty months from the date of the order,
failing which the allotment would be cancelled and
the initial deposit and development charges forfeited.
(b) Condition 6 – if, in the opinion of SIPCOT, the
land is not put to use for the purpose for which it
was allotted, SIPCOT may at any time cancel the
allotment and resume the land under the Tamil Nadu
Public Premises (Eviction of Unauthorised Occupants)
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Act, 1975 (“ the TNPP Act ”), without compensation for
improvements or buildings.
(c) Condition 13 – buildings must conform to the
bye-laws of the local body; in terms of
G.O.Ms.No.169, Industries (MIE.2) dated
12.09.1996, the allottee may start construction
immediately after submitting an application for
building plan approval, accompanied by the
certificate of a Chartered Architect or registered Civil
Engineer and an undertaking to demolish any portion
found to violate the rules; and the allottee must
obtain the clearances of the Public Health authorities,
the Inspectorate of Factories, the Pollution Control
Board and other agencies.
(e) Condition 22 – The firm has to get building plan
approval from the competent authority before
commencement of construction.
2.3. The Lease Deed was executed and registered on
29.12.2008 (Doc.No.681/2009), after a delay occasioned by third-
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party litigation concerning the land and possession was handed over
to the appellant. The recitals record that the appellant had accepted
the Allotment Order, and by Clause 4 the appellant agreed to abide
strictly by the terms of the Lease Deed as well as the terms and
conditions of the Allotment Order. The following clauses are
relevant:
(a) Clauses 5 and 16 – the appellant took possession
of the plot as it was, on an “as is where is” basis.
(b) Clause 8 – SIPCOT reserved the right to cancel
the allotment and forfeit the amounts remitted for
non-compliance with the terms and conditions of the
Allotment Order or of the Lease Deed.
(c) Clause 11(i) and (iii) – for violation of any
condition of the Lease Deed or of the Allotment
Order, SIPCOT may take possession of the plot
together with the buildings and fixtures, without
compensation, and may initiate proceedings under
the TNPP Act.
(d) Clause 13(i) – if, in the opinion of SIPCOT, the
land is not put to use for the purpose for which it
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was allotted, SIPCOT may at any time cancel the
allotment and resume the land under that Act.
(e) Clause 17 – the plot shall be utilised only for the
purpose for which it was allotted.
(f) Clause 18 – The allottee shall commence
commercial production/trial production within 30
months from the date of allotment order. Failure will
entail cancellation of the allotment and forfeiture of
total amount paid towards the extent allotted.
(g) Clause 19 – construction of buildings was to
commence within six months and be completed
within twenty-four months from the date of the
allotment order. Clause 19(i) reproduces the facility
under G.O.Ms.No.169 to commence construction on
submitting the application for building plan approval,
subject to an undertaking to demolish; Clause 19(v)
confines the role of SIPCOT’s Project Officer, as
regards building plans, to ensuring that a strip of five
metres is left open on all sides.
(h) Clause 33 – SIPCOT has the power to grant
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extension of time, subject to such conditions as it
may impose, for matters required to be done within
a prescribed time.
(i) Clauses 40 and 41 – the appellant must conform
to the conditions of the deed at all times. Under
Clause 41(a), SIPCOT may issue a No Objection
Certificate (“NOC”) for mortgage of the leasehold
rights to raise finance for the project; under Clause
41(b), on failure to comply with any term of the
Lease Deed, SIPCOT may cancel the allotment and
resume the land, the financing institution being given
a notice of 90 days to take remedial action.
2.4. Reckoned from the date of the Allotment Order, as the
contract provides, the period of six months for commencing
construction expired on 03.04.2008, that of twenty-four months for
completing it on 03.10.2009, and that of thirty months for
commencing commercial production on 03.04.2010.
2.5. SIPCOT issued show-cause notices dated 09.06.2011 and
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06.02.2012 invoking Clause 19, followed by a notice dated
01.08.2012 granting ninety days to take remedial action, in which it
recorded that the plot had been kept vacant for over four years. In
reply dated 22.06.2011, the appellant attributed the delay to the
litigation over the land, to the recession of 2009–2010 and to the
withdrawal of its co-developer; stated that only preliminary work
(levelling, fencing and fixing a main gate) had been done; and
sought time up to December 2011 to commence construction. The
reply made no mention of any difficulty with the planning authority.
2.6. By letters dated 13.08.2012 and 03.10.2012, the
appellant reported progress up to plinth, pillars and brick work, and
sought withdrawal of the notice and an extension. By proceedings
dated 18.12.2012, SIPCOT granted an extension of six months to
complete the construction. On the appellant’s request, SIPCOT also
issued the NOC dated 25.02.2013 to mortgage the leasehold rights
to Vijaya Bank for a term loan of Rs.150 lakhs, expressly subject to
the terms and conditions of the Allotment Order and the Lease
Deed, reserving its right to resume the land after ninety days’
notice and recording that no compensation would be payable for
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any superstructure. The construction nonetheless remained
incomplete after the extended period, and SIPCOT issued a further
ninety-day notice dated 29.01.2014.
2.7. The appellant applied to the second respondent/
Directorate of Town and Country Planning (“ DTCP ”) for building plan
approval only on 27.11.2012, nearly five years after the allotment.
By various letters, the DTCP called for particulars. By proceedings
dated 12.12.2013, the DTCP returned the application, observing
that the details called for had not been received, that the proposed
layout plan and sub-division details had not been received, and that
the SIPCOT layout/sub-division had not been approved by the Town
and Country Planning authority and, therefore, the proposal could
not be processed further.
2.8. In its reply dated 12.02.2014 to the notice of
29.01.2014, the appellant stated that the building had been
completed except for interior work; that the approvals of the
Inspectorate of Factories, the Fire Service, the Public Health
Department and the Pollution Control Board had been obtained;
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that the DTCP had declined approval because SIPCOT had not
secured approval of the layout; that it was “taking up the matter
with the DTCP regularly”; and that it would commence commercial
operations within ninety days of obtaining approval. By letter dated
20.11.2019, SIPCOT’s Project Officer called for an implementation
schedule, warning that cancellation would be recommended. The
appellant replied that only the interior work remained and that the
DTCP approval was awaited.
2.9. By the impugned proceedings dated 06.02.2020, SIPCOT,
relying on various clauses of the Allotment Order and the Lease
Deed, cancelled the allotment on the ground that even after more
than twelve years the construction had not been completed and
commercial production had not commenced. The appellant was
directed to execute a surrender deed within fifteen days, failing
which the plot would be resumed under the TNPP Act. In its reply to
the cancellation, the appellant asked for a further period of twelve
to eighteen months to finish the interior work, and asserted that
SIPCOT had always maintained that layout approval was “not
required” under the Government Order.
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2.10. The writ petition sought only a writ of certiorari
quashing the cancellation. No relief was claimed against the DTCP,
although it was a party. While the writ petition was pending, the
DTCP filed a memo dated 16.02.2024 stating, pursuant to the order
dated 03.01.2024, that SIPCOT had obtained no layout approval
because the land parcel does not lie in any layout and had been
allotted as a stand-alone site, and that it held no documents
relating to any layout.
2.11. In its affidavit dated 11.03.2024, SIPCOT stated that
stand-alone sites are allotted only after the applicant is informed
that the plot is not covered by SIPCOT’s layout and that the allottee
must obtain approvals on its own; that allottees of stand-alone sites
have obtained building plan approvals by applying to the DTCP
without seeking SIPCOT’s assistance; that the adjoining stand-alone
allottee, having remitted the penalty and obtained an extension, is
now constructing; and that SIPCOT would furnish any land-related
documents if requested.
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2.12. By order dated 12.03.2024, a learned Single Judge
recorded the statement of learned counsel for the appellant that an
application would be made to the competent authority. The
appellant filed an online application on 12.04.2024, which the DTCP,
describing the site as a “SIPCOT / stand alone site”, answered on
13.05.2024 by calling for particulars within seven days. Nothing
placed before us shows that those particulars were furnished. In the
meanwhile, by letter dated 02.04.2024, the appellant informed
SIPCOT that the hotel project was “not viable” and requested a
change of land utilisation from hotel to warehouse.
2.13. The learned Single Judge dismissed the writ petition. He
held that the Allotment Order and Lease Deed bound the appellant
to complete construction within twenty-four months and to
commence production within thirty months; that Conditions 13 and
22 and the related conditions placed on the appellant the burden of
securing all statutory approvals, including building plan approval;
that the plot was admittedly a stand-alone plot and the appellant
cannot call upon SIPCOT to furnish layout approval; that more than
three extensions of time had been granted without avail; that the
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appellant had enjoyed the land and the benefit of the NOC and the
bank loan for years without complying with the Lease Deed; and
that the cancellation was therefore neither arbitrary nor perverse.
3.1. Mr.M.Vaidhiyanathan, learned counsel for the appellant,
submitted that the delay was caused solely by SIPCOT’s failure to
furnish a sanctioned layout to the DTCP, which led to the return of
the building plan application; that SIPCOT has nowhere stated that
the DTCP’s approval was unnecessary; that the DTCP itself has
stated that a sanctioned plan was required; and that SIPCOT
undertook in the writ proceedings to furnish the documents sought
by the DTCP.
3.2. It was further submitted that SIPCOT was fully conscious
that the appellant, being merely a lessee of a portion of land
acquired and owned by SIPCOT, would not be able to obtain a
layout sanction, which only the owner could seek, and that
Condition 22 therefore placed on the appellant a burden which
SIPCOT knew it could not discharge without SIPCOT’s own
cooperation.
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3.3. Lastly, it was submitted that the appellant had invested
over Rs.1.50 crore, completed the superstructure and was left only
with interior works; that the cancellation and forced surrender are
penal and disproportionate; that they offend Article 14 of the
Constitution, similarly placed allottees having been granted
repeated extensions; that the order was passed without proper
consideration of the appellant’s explanations; and that the learned
Single Judge ought at least to have moulded the relief by directing
the respondents to facilitate the approvals and granting reasonable
time.
4. Learned Additional Government Pleader appearing for the
second respondent reiterated the submissions that weighed with the
learned Single Judge and prayed for dismissal of the writ appeal.
5. We have considered the rival submissions and perused the
documents on record.
6. In the case at hand, the rights of the parties are governed
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by the Allotment Order and the Lease Deed, which must be read
together. Clause 19 required construction to commence within six
months and to be completed within twenty-four months; Clause 18
and Condition 3(viii) required commercial production within thirty
months, failing which the allotment would be cancelled.
Furthermore, the responsibility for statutory approvals is cast on the
allottee. Condition 22 requires “the firm” to obtain building plan
approval from the competent authority, Condition 13 requires it to
obtain the clearances of the other agencies, and Condition 23
requires the consent of the Pollution Control Board. The plot was
taken on an “as is where is” basis. Nothing in the Allotment Order
or the Lease Deed obliges SIPCOT to procure a layout sanction or a
building plan approval for the allottee. Moreover, the consequences
of default are spelt out in various clauses of the said Allotment
Order and the Lease Deed. The impugned proceedings is passed in
exercise of the powers conferred under the said Allotment Order
and the Lease Deed.
7. The DTCP has confirmed that no layout approval was ever
obtained, as the parcel does not lie in a layout, and SIPCOT has
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explained that the plot was allotted as a stand-alone site only
because the appellant agreed to obtain plan approval on its own.
The appellant did not dispute this before the learned Single Judge.
There was thus no “sanctioned layout” in existence which SIPCOT
could have produced. The plea that the stand-alone character is an
afterthought cannot be accepted; it is apparent from the face of the
Lease Deed, and Condition 22 was framed precisely to meet it.
8. The contention of learned counsel for the appellant that the
SIPCOT was conscious that the appellant could not obtain a layout
sanction does not pass muster for the reason that a court cannot
import into a written commercial contract a reciprocal obligation
which the parties did not write into it. The appellant, a commercial
firm, accepted the special condition with open eyes, executed the
Lease Deed, took possession, raised a loan of Rs.150 lakhs on the
strength of the NOC and cannot now be heard to say that the very
condition on which it obtained the plot was incapable of
performance. A party cannot accept the benefit of a bargain and
disown its burden.
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9. The delay is not attributable to the DTCP’s approval. The
appellant did not apply to the DTCP until 27.11.2012. Its own
explanations in 2011 and 2012 for the delay were the litigation over
the land, which ended with the registration of the Lease Deed on
29.12.2008, the recession, and the withdrawal of its co-developer.
None of them mentioned the DTCP or a layout. The DTCP issue
surfaced for the first time in the reply dated 12.02.2014, nearly six
years after the original period had expired. A reason provided long
after a default has occurred and after multiple notices have already
been issued cannot be accepted as the cause of that default.
10. We find that the appellant took no step of any kind to
challenge the non-grant of approval by the DTCP, from the time the
notices began in 2011 and 2012 until the allotment was cancelled.
The DTCP returned the application on 12.12.2013. SIPCOT issued
ninety-day notices on 01.08.2012 and 29.01.2014. If the appellant
genuinely believed that approval was being withheld because of
something SIPCOT ought to have done, it had ample opportunity,
over more than six years, to seek redress in the manner known to
law.
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11. It is matter of record that the appellant did not challenge
before this Court or any other forum the return of its application by
the DTCP, or seek a mandamus directing the DTCP to process it; it
did not seek a mandamus against SIPCOT to furnish the
documents; it did not make a written demand on SIPCOT calling
upon it to furnish a layout sanction or any other document; its letter
of 12.02.2014 merely informed SIPCOT that it was “taking up the
matter with the DTCP regularly”; it did not comply with the DTCP’s
letters of 22.07.2013 and 23.08.2013 or resubmit its application
with the particulars sought; and it did not question SIPCOT’s notices
of 01.08.2012 and 29.01.2014, but continued only to request more
time.
12. The NOC dated 25.02.2013 was granted under Clause
41(a) at the appellant’s request, to enable it to finance the project.
It was expressly made subject to the terms and conditions of the
Allotment Order and the Lease Deed, and it expressly reserved
SIPCOT’s right to resume the land after notice and without
compensation for the superstructure. When the extended period
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lapsed without compliance, SIPCOT issued a further ninety-day
notice on 29.01.2014. No promise was ever made that default
would be condoned indefinitely, and a legitimate expectation cannot
arise against the express terms of a contract. The last ninety-day
notice expired in April 2014; the cancellation followed only in
February 2020, which shows that the appellant enjoyed nearly six
years of forbearance beyond what the contract itself prescribed.
13. Industrial plots allotted by SIPCOT are meant to generate
economic activity; they are allotted for a stated purpose and on a
stipulated time schedule. Nearly nineteen years after the allotment,
and well over seventeen years after possession, not a single day of
commercial operation has commenced. The appellant’s own letter
dated 02.04.2024 confirms that the original project has become
unviable and would require demolition of the existing structure.
Clause 17 confines the plot to the purpose for which it was allotted,
and an allottee cannot, after default proceedings have run their
course, demand a change of land use as of right.
14. The learned Single Judge rightly held that the
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discretionary jurisdiction under Article 226 of the Constitution
cannot be invoked to excuse a clear breach of the terms of a
commercial lease of public industrial land, more particularly where
the breach has persisted for well over a decade.
We find no illegality, infirmity or perversity in the order of the
learned Single Judge dated 25.06.2026. Accordingly, the writ appeal
is dismissed and the order of the learned Single Judge is confirmed.
There shall be no order as to costs. Consequently, the connected
miscellaneous petition is closed.
(SUSHRUT ARVIND DHARMADHIKARI, CJ) (G.ARUL MURUGAN,J)
26.10.2026
Index : Yes
Neutral Citation : Yes
sasi
To:
1. The Chairman and Managing Director
State industries Promotion Corporation of Tamil Nadu Ltd
19-A, Rukmani LakshMipathy Road, Post Box No.7723,
Egmore, Chennai – 600 008.
2.The Joint Director
Directorate of Town and Country Planning, Chingleput
District, No.13, Varadarajan Street, Vedachalam Nagar,
Chingleput – 1.
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THE HON'BLE CHIEF JUSTICE
AND
G.ARUL MURUGAN, J.
(sasi)
W.A.No.3191 of 2026

26.10.2026
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