Installing solar panels not valid industrial use of allotted land: Madras High Court

The Madras High Court has held that installing solar panels on an industrial plot does not amount to using the land for "industrial purpose" for which it was allotted [Kems Vs SIPCOT].

A Division Bench of Justices SM Subramaniam and K Surender made the observation while upholding the decision of State Industries Promotion Corporation of Tamil Nadu (SIPCOT) to reacquire land allotted to a company.

The Court was hearing an appeal filed by the company, Kems Forging Ltd., against a single-judge order that had upheld SIPCOT’s cancellation and reacquisition of 3.70 acres of unutilised land from an industrial plot allotted to the company.

"The said photograph shown before this Court is of no avail, since Solar Panel is not an industrial structure and the unutilised portion of the land has not been utilized to set up a unit for the manufacture of forged/ machined auto components," the Division Bench said.

The Bench noted that SIPCOT had allotted the plot to the company in December 2005 for establishing a unit to manufacture forged and machined auto components, following which a lease deed was executed on March 2, 2006.

However, SIPCOT found that 3.70 acres of the allotted land remained unutilised. The corporation directed the company to surrender the unused portion and execute a surrender deed by May 15, 2012. When the company failed to comply, SIPCOT invoked Clause 14(i) of the lease deed, which permits cancellation and resumption of land that is unused or in excess of the allottee’s requirement.

The company challenged the decision before the High Court. A single-judge dismissed the petition and upheld SIPCOT’s action, while directing the corporation to refund the plot deposit as provided under the lease deed.

In appeal, the company argued that the land was not lying idle since solar panels had been installed on the disputed portion of the plot. The company also produced a photograph before the Division Bench to support this claim.

However, the Court rejected the argument, observing that the installation of solar panels could not be treated as utilisation of land for the purpose for which it was allotted.

“Solar Panel is not an industrial structure and the unutilised portion of the land has not been utilised to set up a unit for the manufacture of forged/machined auto components,” the Bench observed.

It emphasised that Clause 14(i) of the lease deed clearly authorised SIPCOT to cancel allotment and reacquire land that is not used for the purpose for which it was allotted.

Since the authorities had found that the land had not been utilised for the intended industrial activity, SIPCOT was justified in its actions, the Court held.

Hence, it dismissed the appeal.

The company was represented by advocate Anand Gopalan from Agam Legal.

SIPCOT was represented by standing counsel R Revathi

[Read Judgment]