Telangana HC stays BIFR order on IDPL land

The Telangana High Court has stayed a 2008 order of the now-defunct BIFR that restrained the State from reacquiring 891 acres of land allotted to IDPL at Balanagar, Hyderabad. The Court held that the order violated principles of natural justice and noted that the land had already been resumed by the government in 2008.

By Our Legal Correspondent

Hyderabad: Justice Nagesh Bheemapaka of the Telangana High Court on Tuesday passed interim orders staying the 2008 directions of the Board for Industrial and Financial Reconstruction (BIFR) in a dispute relating to 891.38 acres of land originally allotted to Indian Drugs and Pharmaceuticals Limited (IDPL) at Balanagar.

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The Court prima facie found that the BIFR’s order restraining the State from reacquiring the land lacked rationale, particularly when the land had already been formally resumed by the government in 2008. It observed that implementation of the BIFR order would result in irreparable loss to the State.

Taking note of the procedure adopted, the Court held that the BIFR had issued directions without putting the State government on notice or affording it an opportunity of hearing. It further recorded that the land in question has since been handed over to the Telangana State Industrial Infrastructure Corporation.

The dispute has its origins in the 1990s, when the State acquired the land for public purpose and transferred it to IDPL for establishing a pharmaceutical manufacturing unit, subject to conditions restricting its use to industrial purposes.

Alleging deviation from these conditions, the State later initiated steps to resume the land after learning that IDPL had attempted to lease out portions, including administrative buildings, to private entities. When the matter reached the BIFR, it directed the District Collector to withdraw the acquisition proceedings and refrain from coercive action against the company.

Challenging these directions, the State approached the High Court. Advocate General A. Sudarshan Reddy, appearing for the State, contended that the BIFR order was passed in violation of principles of natural justice, as no notice had been issued to the government. He submitted that land allotted for a specified public purpose could not be treated on a par with private property and that leasing or sub-leasing such land to third parties would defeat the very object of allotment.

He further argued that permitting such arrangements would amount to alienation of valuable public land and adversely affect public interest.

Counsel for IDPL, on the other hand, raised the issue of delay in challenging the 2008 order and sought dismissal of the petition on that ground. It was also contended that the dispute ought to be resolved within the framework of insolvency law.

After hearing the parties, the Court observed that the legal position has undergone a substantial change since 2008, noting that the BIFR has since been abolished and there was no material to indicate that the proceedings had been validly transferred to the National Company Law Tribunal.

It also expressed the view that leasing of the land, even for meeting day-to-day expenses, could not be justified. Accordingly, the Court granted interim stay of the BIFR’s order and posted the matter for further hearing on June 22.