Allotment deemed declined upon failure to execute lease-cum-sale agreement within stipulated time; Section 34-B notice not required.

IDBI Bank (Appellant) was allotted 4.5 acres in Bengaluru Hardware Park on a lease-cum-sale basis in 2013.

The Appellant paid the total cost and received a possession certificate on 27.12.2014.

Under the allotment terms, the Appellant was required to execute a lease-cum-sale agreement within 30 days of the possession certificate and commence production within 24 months.

The Appellant sought modifications to several clauses in the draft agreement (e.g., extensions of time and relaxation of employment conditions).

KIADB rejected these modifications in 2018 and directed the Appellant to seek time extensions from the State Level Single Window Clearance Committee (SLSWCC), which the Appellant failed to do.

On 20.12.2022, nearly ten years after the initial allotment and without the project commencing, KIADB cancelled the allotment.

The Appellant challenged this via a Writ Petition, which was dismissed by a learned Single Judge.

1. Whether the respondent was required to follow the statutory procedure under Section 34-B of the KIAD Act, including the issuance of a specific show-cause notice, before cancelling the allotment.

2. Whether the failure to execute a lease-cum-sale agreement and commence production within the stipulated time constitutes a "deemed decline" of allotment under the KIADB Regulations.

Regulation 10(d) of the KIADB Regulations, 1969, which stipulates that failure to execute an agreement renders the allottee "deemed to have declined the allotment".

Regulation 15, which defines an allottee without an executed lease deed as a "mere licensee" with limited rights to enter and construct.

Section 34-B of the KIAD Act, 1966: this provision pertains to the resumption of possession only after a lease has been executed or where possession is held without authority.

Orissa Industrial Infrastructure Development Corporation v. Mesco Kalinga Steel Ltd., which held that if a lease deed is never executed, no concluded contract exists and the transaction is void due to the inaction of the allottee.

The Court reasoned that because the Appellant never executed the lease-cum-sale agreement, the relationship of lessor and lessee never came into existence; the Appellant remained a "mere licensee" under Regulation 15.

Under Regulation 10(d), the failure to sign the agreement despite KIADB sending the draft in 2016 resulted in a deemed decline of the allotment by the Appellant.

The Court rejected the argument that Section 34-B of the KIAD Act applied, clarifying that statutory resumption procedures are triggered only after a formal lease is executed.

The Court observed that the Appellant had been lax for a decade, failing to approach the SLSWCC for extensions despite instructions to do so.

Since KIADB had clearly communicated since 2018 that no modifications to the draft would be accepted, the eventual cancellation in 2022 was not "sudden" and did not violate principles of natural justice.

The Division Bench upheld the Single Judge's order and dismissed the Writ Appeal, finding no infirmity in KIADB's cancellation communication dated 20.12.2022.