Case Note & Summary
The Supreme Court allowed the appeal filed by City & Industrial Development Corporation of Maharashtra Ltd. (CIDCO) against the order of the Bombay High Court. The dispute arose from the allotment of a plot by CIDCO to M/s Mehak Developers Pvt. Ltd. (respondent No.3) under a lease agreement dated 04.08.1995, governed by the New Bombay Disposal of Land Regulations, 1975. The lessee was required to complete construction within a stipulated time, failing which additional lease premium would be payable retrospectively from 06.08.2001. The lessee completed 'A' Wing by 31.12.2005 but sought extension for 'B' Wing, which was granted up to 31.12.2008. The lessee claimed construction was completed by 24.12.2008, but CIDCO contended that only a completion certificate was created, not actual completion. CIDCO issued a demand letter dated 20.04.2016/01.07.2016 for Rs.14,05,60,587/- towards additional lease premium. Respondents No.1 and 2, who purchased 'B' Wing under a sale deed dated 16.06.2011, challenged this demand in the High Court, seeking a 'No Dues Certificate' to obtain an occupancy certificate. The High Court quashed the demand and directed CIDCO to issue the certificate. The Supreme Court held that respondents No.1 and 2 had limited locus to challenge the demand as it affected their right to occupancy, but they could not establish the fact of timely completion of construction, which was the lessee's burden. The Court found that the lessee had not challenged the demand, and the High Court had not given CIDCO an opportunity to verify completion. The Supreme Court set aside the High Court's order and remanded the matter for fresh consideration, allowing CIDCO to file a counter affidavit and the lessee to establish completion. The appeal was allowed with no order as to costs.
Headnote
A) Civil Procedure - Locus Standi - Subsequent Purchaser - Privity of Contract - A subsequent purchaser of a building, though not in privity of contract with the lessor, has limited locus to challenge a demand for additional lease premium if the demand affects their right to obtain an occupancy certificate, but cannot contest the factual completion of construction within the time frame, which is a matter for the original lessee to establish. (Paras 8-9) B) Property Law - Lease - Additional Lease Premium - Completion of Construction - Undertaking - Under the New Bombay Disposal of Land Regulations, 1975, Regulations 6 and 7, a lessee who fails to complete construction within the extended time is liable to pay additional lease premium retrospectively from the original due date, as per the undertaking given. The burden of proving timely completion lies on the lessee. (Paras 10-12) C) Constitutional Law - Writ Jurisdiction - High Court's Power - The High Court erred in quashing the demand for additional lease premium and directing issuance of 'No Dues Certificate' without giving the appellant an opportunity to verify the completion of construction, especially when the lessee had not challenged the demand. The matter requires reconsideration by the High Court. (Paras 13-18)
Issue of Consideration
Whether the High Court was justified in quashing the demand for additional lease premium and directing issuance of 'No Dues Certificate' when the construction was allegedly not completed within the extended time, and whether the respondents No.1 and 2 had locus to challenge the demand.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court order dated 29.08.2018, and remanded the matter to the High Court for fresh consideration. The High Court was directed to permit the appellant to file a counter affidavit and the respondent No.3 to establish completion of construction within the extended time. The interim order passed by this Court shall continue until the High Court disposes of the petition. No order as to costs.
Law Points
- Locus standi of subsequent purchaser
- Privity of contract
- Additional lease premium
- Completion of construction
- Undertaking
- New Bombay Disposal of Land Regulations
- 1975
