Solar Panel Installation Does Not Amount To Industrial Use, SIPCOT Can Resume Unutilised Land: Madras High Court

"Clause 14(i) Reiterates That The Allotted Land Must Be Utilised For The Purpose For Which It Was Allotted", In a ruling that serves as a stern reminder to industrial plot allottees of their obligations under lease deeds with SIPCOT, the Madras High Court has upheld the cancellation and resumption of 3.70 acres of unutilised industrial land, dismissing the allottee's contention that installation of a solar panel on the said portion constituted sufficient utilisation of the allotted land.

A Division Bench of Justice S.M. Subramaniam and Justice K. Surender, deciding Writ Appeal, dismissed the appeal filed by Kems Forging Ltd. (formerly Sri Lakshmi Industrial Forge and Engineers Ltd.) and confirmed the order of the learned Single Judge dated 22.07.2022, which had upheld SIPCOT's proceedings dated 25.03.2012 cancelling the unutilised portion of the allotted plot and ordering its resumption under Clause 14(i) of the Lease Deed.

The appellant was allotted an industrial plot on 05.12.2005 for manufacture of Forged/Machined Auto Components, and a Lease Deed was executed with SIPCOT on 02.03.2006. SIPCOT found that 3.70 acres of the allotted land in Plot No. E-12 remained unutilised and called upon the appellant to surrender the said portion and execute a Surrender Deed on or before 15.05.2012. The appellant declined to comply. SIPCOT thereupon invoked Clause 14(i) of the Lease Deed and issued proceedings dated 25.03.2012 cancelling the unutilised portion and ordering its resumption. The Single Judge upheld SIPCOT's action and directed refund of the deposit amount as stipulated under Clause 14(i). The appellant challenged that order in the present Writ Appeal.

Whether SIPCOT was entitled to invoke Clause 14(i) of the Lease Deed and cancel and resume the unutilised portion of the allotted industrial land. Whether installation of a solar panel on the subject land constituted utilisation of the land for the industrial purpose for which it was allotted.

"A Solar Panel Is Not An Industrial Structure — The Photograph Produced Is Of No Avail"

The Division Bench found no infirmity whatsoever in the Single Judge's order and affirmed it in its entirety.

The Court examined Clause 14(i) of the Lease Deed, which reads: "If, in the opinion of the Party of the First Part, it is found that the land allotted to the Party of the Second Part is not put to use for the purpose for which it was allotted or is in excess of the actual requirements of the Party of the Second Part for the purpose for which it was allotted, the Party of the First Part shall at any time have the right to cancel the allotment in respect of such land or excess land as the case may be, and resume the same under the provision of TNPPE Act."

The Court held that the clause "in unequivocal terms reiterates" SIPCOT's right to cancel and resume allotted land that is either not put to use for the stipulated purpose or is found to be in excess of actual requirements. Having agreed to the terms and conditions of the Lease Deed, the appellant was bound by Clause 14(i). SIPCOT, upon finding that 3.70 acres remained unutilised and the appellant having declined to surrender the same voluntarily, was fully entitled to invoke the clause and proceed with cancellation and resumption.

The Court dealt shortly and decisively with the appellant's sole ground of challenge — that a solar panel had been installed on the subject portion of land, supported by a photograph placed before the Court. The Bench was unimpressed: "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 utilised to set up a unit for the manufacture of Forged/Machined Auto Components." The Court underlined that the allotment was specifically for a manufacturing unit, and Clause 14(i) mandated that the land be utilised "strictly for the purpose for which it was allotted." A solar panel installation simply did not answer that requirement.

On the question of refund, the Court noted that under Clause 14(i), upon resumption of excess land, the allottee is entitled only to refund of the plot deposit. Development charges, additional development charges, lease rent, interest and enhanced interest already paid or due are not subject to any refund — a condition expressly agreed to by the appellant under the Lease Deed itself. The Single Judge had already directed SIPCOT to refund the deposit amount accordingly, and the Division Bench confirmed that SIPCOT was bound to comply with that direction.

Dismissing the Writ Appeal and confirming the impugned order, the Division Bench held that SIPCOT's cancellation and resumption of 3.70 acres of unutilised industrial land was lawful and in accordance with Clause 14(i) of the Lease Deed. The installation of a solar panel on the land did not constitute industrial use for the purpose of the allotment. SIPCOT was directed to refund the deposit amount as stipulated under the Lease Deed.

Date of Decision: 02 March 2026