In a significant legal case, the Supreme Court of India addressed a land dispute involving Mehak Developers Pvt. Ltd. and ARG. The Court’s judgment emphasized the importance of balancing equities and safeguarding the interests of the parties involved. The dispute revolved around the completion of construction and the payment of additional lease premiums, with implications for both Mehak Developers Pvt. Ltd. and ARG.
Facts
- Appellant contends that Respondent No.3 is liable to pay additional lease premium retrospectively from 06.08.2001.
- Communication dated 20.04.2016/01.07.2016 issued to Respondent No.3 to pay additional lease premium.
- Order passed in writ petition by Petitioner 1 and 2 challenging the letter demanding lease premium from Respondent No.3.
- Dispute arises regarding construction of ‘B’ Wing of Arneja Chambers II.
- Construction was to be completed by 31.12.2008. Appellant claims construction was not complete.
- Non-completion of construction to attract payment of additional lease premium from 06.08.2001.
- Construction of ‘A’ Wing completed within initially extended period by Respondent No.3.
- High Court quashed the demand for lease premium and directed issuance of ‘No dues Certificate’.
- High Court also directed processing of Occupation Certificate application by Respondent No.4.
- Appellant aggrieved by the High Court order and is appealing against it.
- Plot was allotted to Mehak Developers Pvt. Ltd., governed by Agreement of Lease dated 04.08.1995.
Also Read: Solapur Municipal Corporation vs. Majarewadi Gram Panchayat Employees
Issue
- The covenant in the Sale Deed created an inter-se liability between the parties regarding costs for securing a ‘No Dues Certificate’.
- The Sale Deed specified a deposit of Rs. 20,00,000/- to be released upon obtaining the Occupancy Certificate and No Dues Certificate from CIDCO.
- The costs for obtaining an extension of time period leading to the No Dues Certificate were to be shared equally between the parties.
- The issue before the Court is whether the demand for additional lease premium of Rs. 14,05,60,587/- is justified as per the communication dated 20.04.2016/01.07.2016.
- The Court needs to determine whether the challenge to this demand could have been raised by the parties involved.
Arguments
- The High Court quashed the communication issued to ARG (Petitioner) dated 20.04.2016/01.07.2016.
- The High Court directed the issuance of a ‘No Dues Certificate’ even though ARG was not the direct recipient of the demand in the communication.
- ARG argued that since there was no privity of contract between them and the respondents No.1 and 2, the respondents had no right to challenge the communication sent to another party.
- Respondents No.1 and 2 claimed that they purchased a property from ARG after the completion of construction and made a payment of Rs. 7,21,00,000 where Rs. 7,01,00,000 was paid directly to ARG and Rs. 20,00,000 was deposited based on mutual understanding.
- Respondent No.1 and Respondent No.2, bonafide purchasers, had interest in the property in question.
- Regulations required a ‘No due Certificate’ for securing the Occupation Certificate.
- Respondent No.1 and Respondent No.2 had no alternative but to approach the High Court for relief.
- Respondent No.3 supported the contentions of Respondent No.1 and Respondent No.2.
- Respondent No.3 was a party to the petition and their contentions were before the Court.
- High Court entertaining the writ petition was in accordance with the law.
Also Read: Jagdishchandra v. Joint Charity Commissioner & Ors.
Analysis
- The appellant issued a communication demanding payment for the construction period till 30.03.2007, despite the appellant’s contention that construction was not completed by 31.12.2008.
- An undertaking was submitted by Mehak Developers promising to apply for an occupancy certificate by 31.12.2005 or pay additional lease premiums.
- The High Court found a lack of compliance with the principles of Natural Justice by the appellant when demanding additional lease premiums.
- The completion certificate dated 24.12.2008, relied upon by Mehak Developers, was subject to further requirements for occupancy certification.
- The appellant was expected to follow a proper procedure in determining the completion of construction and levy of additional lease premiums.
- There was no privity of contract between the appellant and the purchasers of the constructed building.
- The High Court should have directed the appellant to adhere to a proper procedure and issue a reasoned order regarding the completion of construction and additional lease premiums.
- The time for completion was extended to 31.12.2008, but the completion details were disputed.
- The purchasers of the building, despite their desire for occupation, cannot contest the completion of construction as it is the responsibility of Mehak Developers.
- The regulations outlined the completion requirements for the construction project.
- The appellant’s communication regarding additional lease premiums was challenged by Mehak Developers, leading to the judicial review.
- The communication dated 20.04.2016/01.07.2016 was unsustainable and rightly quashed by the High Court.
- The High Court should have remitted the matter to the appellant for providing an opportunity to the respondent No.3 to submit necessary documents for the completion certificate.
- This would enable a fresh factual determination to be made, considering all aspects of the matter.
- Equities need to be balanced to protect the interests of all parties involved, particularly those who have made significant investments in the property.
Decision
- Appellant to reconsider the claim for additional lease premium if construction completed after 31.12.2008
- If construction is deemed completed as per extension granted, Rs.3,50,00,000 to be returned to depositing parties
- If additional lease premium is due from respondent, appellant can recover it and place charge on property
- Appellant can withdraw provisional ‘No dues Certificate’ if amount is not paid by respondent
- Deposit of Rs.3,50,00,000 by parties would allow them to work out inter-se rights against respondent
- Appeal allowed in part based on directions in para 16 and 17 without expressing opinion on merits
- No costs ordered, all pending applications disposed of pending reconsideration by the appellant
- Provisional additional lease premium of Rs.3,50,00,000 to be deposited for final decision, ‘No dues Certificate’ to be issued for occupancy certificate
- Occupancy certificate for ‘B’ Wing can be obtained by submitting provisional ‘No dues Certificate’ to respondent No.4
Case Title: CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA LIMITED Vs. LAMBDA THERAPEUTIC RESEARCH LIMITED
Case Number: C.A. No.-008443-008443 / 2019
