Case Note & Summary
The present writ petition was filed by Shree Naman Hotels Pvt. Ltd., a subsidiary of Shree Naman Developers Ltd., against the Mumbai Metropolitan Region Development Authority (MMRDA) and its Metropolitan Commissioner, challenging a demand notice dated 12 September 2017 for payment of additional premium with interest on account of alleged delay in completion of construction of a star category hotel at Bandra-Kurla Complex. MMRDA, a statutory authority under the MMRDA Act, 1974, had floated a tender in February 2005 for an 80-year lease of two combined plots for construction of a hotel with a maximum built-up area of 18,600 sq. mtrs. The bid of the petitioner’s parent company was accepted in February 2006, and after payment of the entire lease premium of Rs.204.60 crores, a lease deed was executed on 9 June 2006. The lease deed provided that construction be completed within four years, i.e., by 9 June 2010, failing which the Metropolitan Commissioner could grant extension upon payment of additional premium. The leasehold rights were subsequently assigned to the petitioner with MMRDA’s approval in August 2006. The petitioner encountered several statutory hurdles: a September 2006 notification required Environmental Impact Assessment clearance, which was obtained on 2 March 2007; excavation permission was granted on 8 March 2007; height clearance from the Civil Aviation Ministry was obtained with restrictions in March 2008; and various commencement certificates were issued between October 2007 and July 2010. The petitioner also sought and obtained permission to utilise additional built-up area against premium, which resulted in construction of two extra floors, but no time limit was stipulated for this additional work. Construction was completed on 14 June 2011, certified by MMRDA on 17 June 2011. MMRDA issued a conditional occupation certificate on 11 October 2011, imposing free usage of suites and conference facilities and requiring payment of additional premium before commencing operations. The petitioner had earlier, on 12 October 2011, been served a demand for additional premium of Rs.25.42 crores for delay beyond the stipulated four-year period. Despite representations for waiver being rejected in January 2012, the petitioner paid a part of the demanded amount under protest but was compelled to give an undertaking not to operate the hotel until full payment. Further demands were made in September 2014 and April 2015, culminating in the impugned demand notice of 12 September 2017. The petitioner contended that the delay was primarily attributable to MMRDA’s own processing time for approvals and unforeseen regulatory changes, and that the demand for the basic built-up area was contrary to the lease deed’s terms, and was arbitrary, illegal, and violative of Article 14 of the Constitution. The matter was heard by a Division Bench of the Bombay High Court, but the excerpt provided does not contain the court’s final decision.
Headnote
A) Constitutional Law - Article 14 - Arbitrary Demand for Additional Premium - Constitution of India, 1950, Article 14 - The petitioner challenged MMRDA's demand for additional premium for delay in construction of a hotel, contending that the delay was caused by MMRDA's own delays in granting statutory approvals and unforeseen regulatory requirements, making the demand arbitrary and discriminatory - The court examined whether the demand violated the right to equality under the Constitution. (Paras 3, 9, 11-14, 21)
Issue of Consideration
Whether the demand for additional premium by MMRDA for delay in completion of construction was contrary to the terms of the lease deed and arbitrary, thus violating Article 14 of the Constitution.
Law Points
- lease deed interpretation
- time for completion
- extension of time
- additional premium
- delay due to authority
- Article 14
- arbitrary demand
- writ jurisdiction
