Chennai: Lease conditions are binding contractual obligations, and courts cannot interfere with contractual terms unless they are illegal, arbitrary, or violate constitutional principles, the Madras high court said, while allowing Sipcot to reclaim land allotted to a private industry at Pillaipakkam, Sriperumbudur. Sipcot resorted to the action since Enco Engineers Combine (Plant-II) Pvt Ltd, a Gurgaon-based company, failed to commence industrial activity even after eight years of allotment of the land. “The purpose of allotting industrial plots by Sipcot is to develop industrial activities in the state. Therefore, conditions are imposed on the allottees to begin construction within the time limit agreed in the lease deed and commence industrial activities,” a division bench of Justice S M Subramaniam and Justice C Kumarappan said. Undoubtedly, the jurisdiction of the court on contractual obligations between the parties is limited. Only if the conditions imposed run counter to any statute or are found to be ultra vires, then alone will the court exercise the power of judicial review to intervene with the conditions of lease, the bench said.“In all the other circumstances, the conditions of lease agreed between the parties are binding, and violation by any one of the parties will entitle the other party to act in accordance with the clauses agreed between the parties,” the judges added. In the present case, the industry was not constructed within the time limit, and industrial activities were not commenced for several years. Therefore, the order of cancellation was issued through proceedings dated March 23, 2021, after a lapse of 10 years from the date of allotment of the plot. That being the case, granting any discretionary relief would cause prejudice to Sipcot and to the industrial activities to be developed in industrial plots, the bench said.
