HC Ruling Puts MNCs in Spot

The Punjab and Haryana High Court’s order cancelling the sale of a 30-acre piece of land in Gurgaon and to demolish all construction on it, has put a question mark on the future of the DLF-sponsored Silokhra IT and IT-enabled Services SEZ, where many MNCs have commenced business.

The 30-acre piece of land has a long legal history. It was part of 210 acres, which the government sought to acquire in 1989 by invoking Section 4 of the Land Acquisition Act for a residential and commercial sector. East India Hotel Limited (EIH) owned this piece of land. In 1984 the company got a licence for setting up a hospital and a management training institute on about 18 acres. Before the construction could start, acquisition proceedings were initiated.

Though initially the government intended to acquire 210 acres, when Section 6 was invoked in 1990, it was only qua 169 acres. About 41 acres was released by the then Janata Dal government. Interestingly, the award under Section 9 was passed in 1992-only qua 8.64 acres out of the 210 acres to be acquired initially. The remaining land was either released by the Bhajan Lal government or the acquisition proceedings were challenged before the High Court. The meagre eight acres at its disposal forced the government to drop its plan of setting up a residential and commercial sector on the land.

Thirtyfour writs were filed in the 1990s challenging the acquisition proceedings. Staying the dispossession, the HC admitted the writ petitions. While the petition of East India Hotel was disposed of in 2000, the remaining petitions were decided in January 2010 when the court quashed the acquisition proceedings.

In September, 1995, the Bhajan Lal government wrote to East India Hotel that its land could be released from the acquisition proceedings on certain conditions, which included that the company would seek the prior approval of the government if it wanted to sell the land and that it would take change of land use (CLU) permission before starting construction.

The company agreed to the conditions, leading to a written pact between the government and the company in 1997 when Bansi Lal was the CM. After the East India Hotel petition was disposed of in 2000, the company applied for CLU, which was rejected in June, 2001. The appeal was also rejected.

Having failed to obtain the requisite CLU, the company sought the government’s permission for sale of the land. The Legal Remembrancer (LR) advised the government to grant the permission on certain conditions.

After the government granted permission to the company in 2008, it sold the land to the DLF. Meanwhile, an SEZ was sanctioned under the Haryana SEZ Act on this piece of land. Now the HC has held that the release of land to East India Hotel by way of a compromise signed on October 13, 1997 “was fraudulent”.