In the matter of Bishambhar Prasad v. Arfat Petrochemicals (P) Ltd A number of appeals were filed against the High Court of Rajasthan’s judgement, which upheld Arfat Petrochemicals Pvt. Ltd.’s petition and overturned the Cabinet Committee of the State of Rajasthan’s decision and directive to the Rajasthan State Industrial Development and Investment Corporation Ltd. to revoke a number of permissions and approvals given to the respondent with regard to industrial land in Kota, Rajasthan.
- Whether the State Government might have used its authority to order cancellation under Article 138 of the AoA of RIICO.
- Whether the RIICO Rules from 1979 are legally binding?
Analysis of Court Verdict
Justices Surya Kant and Vikram Nath of the Supreme Court’s Division Bench ruled that when the actions of a Committee created by the Cabinet are approved by the Council of Ministers and the other members of the Council, it ensures that the State Government complied with the Rules of Business when making decisions.
The Court stated that it is important to remember that RIICO is not a statutory entity right away. The State of Rajasthan, which owns 100% of the company’s shares, established it under the Companies Act of 1956. A company incorporated under the Companies Act has not been created by the said Act; rather, it has come into existence in line with its terms. This is the difference between companies created under an Act and those brought into existence by an Act. The Court added that RIICO was established under the Companies Act and is subject to its terms rather than deriving its existence from a statute. The Companies Act does not create it; rather, it just governs it. According to the court, Rule 12 of the 1959 Rules simply specifies that lands allocated to RIICO shall be handled by the Corporation in accordance with the 1979 Rules in the current case.
The Court concluded that the extra leases that Respondent and RIICO had signed were untenable. The land in LIA, Kota remained continuously under the ownership and control of the State Government from the initial lease signed with JKSL to the present, the Court ruled, meaning that RIICO lacked the power to enter into the agreements. The Court further found that the Appellants’ actions to annul the decisions made by RIICO and to order the termination of the 2018 additional leases did not violate any laws or regulations. The Court thus supported the cancellation of the supplemental deeds and the revocation of the permits for the conversion of the land and the subdividing of the plots. The impugned judgement from the High Court, which was dated July 20, 2021, was consequently annulled as a result of the Court allowing the appeals by the State of Rajasthan and RIICO.