Case Note & Summary
The petitioners, Raghuleela Builders Private Limited and Reliance Industries Limited, filed a writ petition before the Bombay High Court challenging the demand letters and recovery notices issued by the Mumbai Metropolitan Region Development Authority (MMRDA) demanding payment of penalty premium and interest aggregating Rs.432 crore for alleged delay in completing construction of the building 'One BKC' at Plot No.C-66, Bandra Kurla Complex. The dispute arose from a tender awarded by MMRDA in 2007 for the lease of land and construction of a commercial complex of 30,550 sq.mtrs built-up area and public car parking. A lease deed was executed on 15 July 2008, stipulating a four-year deadline from the date of the lease for completion of construction, with provision for extension upon payment of additional premium. However, the petitioners faced delays because the demarcated land could not be fully handed over due to an encroachment by an adjoining sewage pumping station, and boundary discrepancies reduced the available plot area. MMRDA eventually approved plans for construction in June 2011 after accepting that open spaces could be computed without accounting for the encroachment. In the meantime, MMRDA allotted an additional built-up area of 67,000 sq.mtrs to the petitioners in 2012 for use in the same building, and the supplementary lease deed expressly stated that there was no time limit for completing the additional construction. The petitioners contended that the original four-year deadline could not be applied in these circumstances, particularly when the additional area was to be integrated into the same building. MMRDA, however, in 2014 demanded penalty premium for the delay and threatened to revoke the commencement certificate, determine the lease, and recover the amount as arrears of land revenue. The petitioners argued that the demand was arbitrary and ultra vires the lease terms. By way of interim orders, the High Court restrained MMRDA from taking coercive steps against the petitioners. The court heard arguments and reserved judgment on 9 August 2019, and the matter was pending final disposal.
Headnote
A) Administrative Law - Disposal of Government Land - MMRDA (Disposal of Land) Regulations, 1977 and Mumbai Metropolitan Region Development Authority Act, 1974, Section 50 - Petition sought quashing of MMRDA's letters demanding penalty premium at 10% per annum for delay in construction of commercial complex, and recovery of Rs.432 crore as penalty and interest - Petitioners contended that original construction deadline was frustrated by encroachment and that subsequent allotment of additional 67,000 sq.mtrs built-up area without time limit rendered original deadline inapplicable - Court, while issuing interim orders, restrained MMRDA from taking any coercive steps against petitioners pending final adjudication (Paras 1-4).
Issue of Consideration
Whether the time limit for completing construction of basic built-up area under Clause 2(d) of the lease deed dated 15 July 2008 is overridden by subsequent grant of additional built-up area without time limit and whether MMRDA's demand for penalty premium is arbitrary and illegal, particularly given the delay caused by encroachment and failure to hand over demarcated land.
Case Details
2019 LawText (BOM) (11) 44
Writ Petition No. 586 of 2018
Ranjit More, Bharati H. Dangre
Aspi Chinoy, Vaibhav Krishna, Mayuresh Botrkar, Veeral Vakhari, Ahtesham Khatri, Devang Lakhotia, Tahir Prande for Petitioners; P. K. Dhakephalkar, Nivit Srivastav, Mrs. Sneha Patil for Respondents
Raghuleela Builders Private Limited and Reliance Industries Limited
The Mumbai Metropolitan Region Development Authority (MMRDA) and Ors.
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Nature of Litigation
Writ petition challenging MMRDA's demand for penalty premium and interest for alleged delay in construction of commercial complex and public car parking on leased plot in Bandra Kurla Complex.
Remedy Sought
Quashing of letters/orders dated 11 February 2014 and 23 December 2014 demanding penalty premium and demand notice dated 12 September 2017 for recovery of Rs.432 crore; permanent injunction restraining coercive action.
Filing Reason
MMRDA demanded penalty premium despite delay being caused by encroachment on the plot and failure to hand over demarcated land, and despite subsequent allotment of additional built-up area without time limit, which petitioners argued rendered the original completion deadline inapplicable.
Previous Decisions
Interim order passed restraining MMRDA from taking any coercive steps against the petitioners.
Issues
Whether the time limit of four years for completion of construction under Clause 2(d) of the lease deed dated 15 July 2008 continued to apply after MMRDA allotted additional built-up area of 67,000 sq.mtrs without time limit.
Whether MMRDA's demand for penalty premium at 10% per annum was arbitrary and illegal, given the encroachment and demarcation issues that delayed the project.
Whether the commencement of the four-year period could be reckoned from the date of issuance of the commencement certificate in June 2011, or from the date of the lease.
Submissions/Arguments
Petitioners argued that the first respondent's reliance on the time limit in Clause 2(d) of the lease deed for completion of the basic built-up area was ex-facie ultra vires, arbitrary and illegal, because the respondent had subsequently, within the four-year period, allotted an additional built-up area of 67,000 sq.mtrs for use in the same building while expressly stipulating no time limit for constructing such additional area.
Petitioners contended that the plot could not be fully demarcated and handed over due to encroachment by an adjoining sewage pumping station, which delayed the submission of plans and commencement of construction, and that MMRDA was fully aware of this and made no grievance about non-submission of plans within the initial three-month period.
Petitioners requested that the four-year period be computed from the date of the commencement certificate (June 2011) because construction could only start after MMRDA approved the plans and issued the certificate, and because the delay in obtaining the certificate was attributable to MMRDA's failure to resolve the boundary issue.
Judgment Excerpts
By way of interim orders, Respondent No.1 was restrained from taking any coercive steps against the Petitioners.
the first respondent’s reliance on time limit of 4 years in Clause 2(d) of the lease-deed for completion/occupation of basic BUA of 30,550 sq.mtrs of commercial built-up area to require payment of penalty/ additional premium from the Petitioner notwithstanding that the first respondent had subsequently within the time limit of four years provided in the lease-deed, allotted an additional BUA of 67,000 sq.mtrs for use in the same building, whilst expressly stipulating that there was no time period/limit for constructing such additional BUA, is ex-facie ultra vires, arbitrary and illegal.
the plot boundary of adjacent sewage pumping plot is encroaching upon C-66 by 0.91 meters, 2.68 meters, 2.86 meters at A, B, C respectively. Thus area of C-66 is overlapping with that of pumping station (Physical area of Plot C-66 available is less than allotted to RIL)
Procedural History
Writ petition filed in 2018. Interim order passed restraining MMRDA from coercive steps. Arguments concluded on August 9, 2019. Judgment pronounced on November 20, 2019.
Acts & Sections
- Mumbai Metropolitan Region Development Authority Act, 1974: Section 50
- Mumbai Metropolitan Region Development Authority (Disposal of Land) Regulations, 1977:
- Bandra Kurla Complex Notified Area Development Control Regulations, 1979:
