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Civil Property & InheritanceSupreme Court of India

The Andhra Pradesh Industrial Infrastructure Corporation Ltd. and Ors. v. S.N. Raj Kumar and Anr.

Civil Appeal · 2018 INSC 323Decided 10 Apr 2018
Civil Appeal No. 3020 of 2018
Justice A.K. Sikri · Justice Ashok Bhushan

Background

A state industrial development corporation in Andhra Pradesh allotted industrial plots to several transport companies in the late 1990s, with a condition in the allotment letters that they build their units within two years or face cancellation. The companies paid full consideration and the corporation executed registered sale deeds transferring ownership to them, but the sale deeds themselves contained no such two-year construction deadline. Roughly six years later, the corporation issued show-cause notices and then cancelled the allotments for failure to build, even though it had only supplied basic infrastructure like roads and electricity to the plots in 2006, after the cancellation dispute had already started. The corporation later softened its stance, offering to restore the plots if the companies paid 50% of the current market value, which the companies challenged; the High Court's Single Judge and then a Division Bench both ruled in the companies' favour.

Decision Breakdown

The Supreme Court agreed with the High Court that once a registered sale deed is executed and ownership is fully conveyed under the Transfer of Property Act, 1882, conditions that existed only in the earlier allotment letter (and not in the sale deed itself) cease to have legal effect: the corporation could not resurrect the two-year construction condition or demand extra money after it had already sold the land outright. The Court distinguished its earlier ruling in Indu Kakkar v. Haryana State Industrial Development Corporation, noting that case involved a construction condition actually written into the agreement/sale deed itself (a valid "condition super-added"), unlike here. It also held the corporation could not raise, for the first time in litigation, a new justification (land put to a different use) that was never the actual basis for the original cancellation or the 50% demand, citing the principle that a public authority's order must be judged only by the reasons it originally gave. Since there was no legal basis for demanding 50% of market value after full, unconditional sale, all the corporation's appeals were dismissed, with costs.

Lesson Learnt

Once you buy land and get a registered sale deed with no restrictive condition written into it, the seller cannot later reach back into an earlier allotment letter to impose new conditions, penalties, or demands: conditions that are not carried into the final sale deed generally do not survive the sale.

The Andhra Pradesh Industrial Infrastructure Corporation Ltd. and Ors. v. S.N. Raj Kumar and Anr. – Legal Case Shots | LegalAware