Enforceable industrial land allotment conditions permit resumption on breach of time-bound use and construction covenants.

A contractual condition in an industrial land allotment requiring the allottee to use the land for the specified industrial purpose and complete construction within the stipulated time was held valid and enforceable. Breach of those covenants permitted automatic cancellation of the allotment and resumption of possession, even though the full sale consideration had been paid. The court applied the principle that a time-bound condition linked to continued rights in the property is not hit by section 11 of the Transfer of Property Act, and treated the resumption power as flowing from the express contractual terms. The plea of material alteration in the agreement failed because no contemporaneous objection had been raised.

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Issues: Whether the industrial development corporation was entitled to cancel the allotment of land and resume possession after the allottee failed to utilise the land for the agreed industrial purpose and failed to commence construction within the stipulated time.

Analysis: The agreement bound the allottee to use the land only for the specified industrial purpose, to commence and complete construction within the stipulated period, and provided that breach of the covenants would automatically cancel the allotment and permit resumption of possession. The Court held that these covenants were enforceable even though the entire sale consideration had been paid. It relied on the principle that a condition requiring performance within a specified time, failing which the interest would cease, is a valid condition and is not hit by section 11 of the Transfer of Property Act, 1882. The Court followed the principle approved in the earlier Supreme Court decision upholding a similar resumption clause, distinguished the decision dealing with resumption as a last resort on its facts, and rejected the plea of material alteration in the agreement because the allottee had not contemporaneously objected and the resumption power flowed from the express contractual clauses.

Conclusion: The corporation was justified in invoking the contractual resumption clauses, and the plea that the clauses were unenforceable or vitiated by alteration failed.

Final Conclusion: Permission was granted to the applicant to cancel the land allotment and proceed in accordance with law for resumption, while considering the question of forfeiture or refund of the consideration paid.

Ratio Decidendi: A contractual condition in an industrial land allotment that makes continued title or possession dependent on timely utilisation and completion of construction is valid and enforceable, and upon breach the allotting authority may resume the land in terms of the agreement.

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