Case Note & Summary
The petitioner, Narayani Trexim Pvt. Ltd., participated in a tender floated by CIDCO for lease of a plot in Sector 18, Vashi, Navi Mumbai. It was the highest bidder and an allotment letter was issued on 13 February 2020. The total lease premium was Rs. 52,30,95,520/-. The petitioner paid the EMD of Rs. 3,56,79,618/- and was required to pay the balance in installments. Due to the COVID-19 pandemic and other reasons, the petitioner failed to pay the installments on time. CIDCO issued a letter on 27 June 2022 terminating the allotment and forfeiting the EMD. The petitioner challenged this termination in the High Court. During the pendency of the petition, the petitioner paid the entire lease premium along with delayed payment charges (DPC). The court considered whether the delay in payment should be condoned. The court noted that the petitioner had paid all dues and was willing to pay interest. The court held that the termination was too harsh and that the petitioner should be allowed to retain the allotment upon payment of interest on delayed installments. The court directed CIDCO to restore the allotment and not forfeit the EMD, subject to payment of interest as determined by CIDCO. The petition was allowed.
Headnote
A) Contract Law - Lease Allotment - Condonation of Delay - Petitioner failed to pay lease premium installments on time due to COVID-19 pandemic and other reasons - CIDCO terminated allotment and forfeited EMD - Petitioner paid entire lease premium with DPC during pendency of petition - Court held that delay can be condoned on payment of interest and DPC, and allotment restored - Held that forfeiture of EMD is not justified when petitioner is willing to pay all dues (Paras 1-19).
Issue of Consideration
Whether the petitioner is entitled to retain the allotment of the plot despite delay in payment of lease premium installments, and whether the termination of allotment and forfeiture of earnest money by CIDCO is valid.
Final Decision
The court allowed the petition, set aside the termination letter dated 27 June 2022, and directed CIDCO to restore the allotment of the plot to the petitioner. The court held that the forfeiture of earnest money deposit is not justified and directed CIDCO to adjust the EMD towards the lease premium. The petitioner was directed to pay interest on delayed installments as determined by CIDCO.
Law Points
- Condonation of delay
- Lease premium
- Delayed payment charges
- Forfeiture of earnest money
- COVID-19 pandemic
- Writ jurisdiction
- Contractual obligations
- CIDCO allotment
Case Details
2023 LawText (BOM) (04) 47
Writ Petition No.5619 of 2021
S. V. Gangapurwala, ACJ, Sandeep V. Marne, J.
Mr. Rajiv Chavan, Sr. Advocate i/b. Mrs. Priyanka Brahmdev Chavan for the Petitioner; Mr. R. P. Kadam, AGP for State – Respondent No.1; Mr. Ashutosh Kulkarni, a/w. Mr. Siddharth Shitole for Respondent No.2 to 4 (CIDCO)
Narayani Trexim Pvt. Ltd.
State of Maharashtra, City and Industrial Development Corporation of Maharashtra Ltd., Marketing Manager-I, CIDCO, Managing Director, CIDCO
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Nature of Litigation
Writ petition challenging termination of allotment letter and forfeiture of earnest money deposit by CIDCO for non-payment of lease premium installments.
Remedy Sought
Petitioner seeks quashing of termination letter dated 27 June 2022 and restoration of allotment of plot, with condonation of delay in payment of installments.
Filing Reason
CIDCO terminated the allotment letter and forfeited the earnest money deposit due to petitioner's failure to pay agreed installments of lease premium and delayed payment charges within the permissible period.
Issues
Whether the termination of allotment and forfeiture of earnest money by CIDCO is valid.
Whether the petitioner is entitled to condonation of delay in payment of lease premium installments.
Submissions/Arguments
Petitioner argued that delay was due to COVID-19 pandemic and other reasons, and that it has paid entire lease premium with DPC during pendency of petition.
CIDCO argued that the petitioner failed to comply with payment schedule and that termination and forfeiture are justified under the terms of allotment.
Ratio Decidendi
The court held that when the petitioner has paid the entire lease premium along with delayed payment charges during the pendency of the petition, the termination of allotment and forfeiture of earnest money is too harsh. The delay in payment can be condoned on payment of interest, and the allotment should be restored. Forfeiture of earnest money is not justified when the petitioner is willing to pay all dues.
Judgment Excerpts
By this petition, petitioner challenges latter dated 27th June 2022 by which City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO) has terminated the allotment letter and forfeited the earnest money deposit in respect of Plot No.3-1C, Sector 18, Vashi, Navi Mumbai.
During pendency of the Petition, Petitioner has paid the entire lease premium together with DPC. It now wants to retain the allotment by seeking condonation of delay in payment of amount of lease premium.
Procedural History
Petitioner filed Writ Petition No.5619 of 2021 challenging termination letter dated 27 June 2022. During pendency, petitioner paid entire lease premium with DPC. Petition heard and reserved on 5 April 2023, judgment pronounced on 19 April 2023.
