Any Loss Caused To State Corporation Is Loss To Public Exchequer: Supreme Court Directs Lessee To Pay Conversion Charges To KSEDCL

Case: Karnataka State Electronics Development Corporation Ltd. v Kumaon Entertainment and Hospitalities Pvt. Ltd.

Coram: Justice Vikram Nath and Justice Ahsanuddin Amanullah

Case No.: CIVIL APPEAL NO. 8073 OF 2022

Court Observation: “There is no denying the fact that the appellant is a fully owned Undertaking/ Corporation of the State of Karnataka. Any loss suffered by it would be a loss to the Public Exchequer. The respondent, on the other hand, has shifted its purpose of setting up an IT related industry to a Hospitality sector to set up a hotel. If the amount for such conversion of usage is not legally recovered from the respondent, as a result, loss being suffered by the appellant, would not be in public interest.”

“There is no denying the fact that the appellant is a fully owned Undertaking/ Corporation of the State of Karnataka. Any loss suffered by it would be a loss to the Public Exchequer. The respondent, on the other hand, has shifted its purpose of setting up an IT related industry to a Hospitality sector to set up a hotel. If the amount for such conversion of usage is not legally recovered from the respondent, as a result, loss being suffered by the appellant, would not be in public interest. It is also not disputed that all other similarly situate allottees have paid at the rate determined in the 141 Board Meeting of the appellant.”

“Neither the clerical staff nor an officer of the appellant would be competent to override or deviate from the decision of the Board of Directors taken in the 141st Board Meeting. The 141st Board Meeting has taken place prior to the respondent applying for change of use and issuing of the demand notice for conversion, there could be no justification for not adhering to the decision taken in the 141st Board Meeting. A bona fide mistake could always be corrected.”

“The respondent cannot, in any manner, go against the terms and conditions given under the Letter of Allotment as also the Lease Agreement. Once the respondent is bound by the terms and conditions, the final rate determined by the Board in its 141st meeting, being the prevailing rate of the Collector, would be binding on the respondent”

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Keywords

Any Loss Caused To State Corporation