Case Note & Summary
The petitioner, M/s. Trishul Construction Co., was allotted three plots by CIDCO (respondent No.1) in 2007. The payment schedule required a first installment by January 2008 and a second by February 2008. Due to the global recession in 2008, the petitioner could not pay the second installment and sought extension. CIDCO initially granted extension till August 2008, but the petitioner still could not pay and requested refund. Meanwhile, CIDCO itself requested the State Government to relax the New Bombay Disposal Land Regulations, 1975, to allow extension for allottees affected by the recession. The State Government approved this relaxation in 2010. The petitioner continued to request regularization. CIDCO sent a note to the State Government in 2017 recommending regularization by charging delayed payment charges, which would yield significant revenue. However, without finalizing this, the State Government (respondent No.2) cancelled the allotment and forfeited the earnest money and 25% of the lease premium paid via letter dated 30th January 2024. The petitioner challenged this cancellation. The court held that the cancellation was arbitrary and violative of the petitioner's legitimate expectation, as CIDCO itself had sought relaxation and the State Government had approved it. The court quashed the cancellation and forfeiture order and directed CIDCO to issue a demand letter for the second installment with late payment charges as per the government's policy, allowing the petitioner to pay within a specified period.
Headnote
A) Administrative Law - Legitimate Expectation - Condonation of Delay - New Bombay Disposal Land Regulations, 1975, Regulation 5 and 15 - The petitioner, an allottee of plots, failed to pay the second installment of lease premium within time due to global recession. CIDCO itself requested the State Government to relax the regulations and condone delays, which was approved. The petitioner had a legitimate expectation that its delay would be condoned similarly. The subsequent cancellation and forfeiture without considering the earlier approvals was arbitrary and violative of principles of natural justice. (Paras 2-18) B) Contract Law - Forfeiture of Earnest Money - Penalty - The forfeiture of earnest money and 25% of lease premium without any notice or opportunity to the petitioner was held to be punitive and disproportionate. The court directed that the petitioner be given an opportunity to pay the second installment with late payment charges as per the government's policy. (Paras 19-22) C) Constitutional Law - Article 14 - Arbitrariness - The action of CIDCO in cancelling the allotment and forfeiting amounts while other similarly situated allottees were granted extension was discriminatory and arbitrary, violating Article 14 of the Constitution. (Paras 23-25)
Issue of Consideration
Whether the cancellation of allotment of plots and forfeiture of earnest money and 25% of lease premium by CIDCO was valid in light of the State Government's approval for relaxation of time limits and the petitioner's legitimate expectation of regularization.
Final Decision
The court allowed the writ petition, quashed the cancellation and forfeiture order dated 30th January 2024, and directed CIDCO to issue a demand letter for the second installment of lease premium with late payment charges as per the government's policy, giving the petitioner 90 days to pay. If paid, the allotment shall be regularized; if not, CIDCO may proceed according to law.
Law Points
- Relaxation of regulations under Regulation 15 of New Bombay Disposal Land Regulations
- 1975
- Condonation of delay in payment of lease premium
- Forfeiture of earnest money and lease premium
- Legitimate expectation
- Government policy directives
