Back
Allottee Who Took Lesser Land Can't Claim Full :
The has delivered a nuanced ruling on the application of the "" policy for stalled real estate projects, holding that a developer who knowingly accepted a lease for a smaller portion of allotted land cannot claim the benefit in its entirety. The judgment modifies a state 's order that had granted 100% to the consortium led by , and imposes conditions to protect home buyers.
The Road to Dispute: A Tale of Fragmented Land and Unfulfilled Promises
The case traces back to 2011 when the ) allotted a residential township plot measuring 414,538 square meters to a consortium of four companies, with Sunworld City as the lead member. The consortium failed to pay the balance premium, leading to cancellation. When the matter reached court, an on allowed the allotment to be revived upon deposit of dues.
Crucially, informed the consortium that only 263,483 square meters were available due to and land belonging to the that had not been resumed. The allottee, through a letter dated , stated it would take the available land immediately and wait for the remaining area whenever could hand it over. A for the smaller area was executed on .
Despite the lease, no construction began. Part of the leased land remained scattered, without an approach road, and portions were still under court orders or affected by the issue. In 2017, granted for part of the area from to , but conditions were not met. The consortium then applied to surrender the plot in 2019, but that decision was later rescinded after opposition from another member of the consortium.
Policy Framework and the 's Order
The State Government issued a policy on , followed by a modified policy on and a legacy policy on . Under these policies, if more than 30% of the allotted land is affected by litigation or other impediments, the developer is eligible for 100% relief—meaning no interest or penal interest for that duration and a forward shift of instalments.
The under , accepted the consortium's plea and by order dated granted from the date of allotment till the date of its order. It also directed to execute the lease for the remaining land and hand over physical possession. challenged this order.
Arguments Before the High Court
's Contentions:
The authority argued that the allottee had not applied within the prescribed two-month window under the 2019 Government Order, nor given a written assurance to complete the project by June 2021. It had already extended the benefit of the legacy policy and Covid
. The allottee had taken the plot on an
"
"
and signed the
without reservation. The
exceeded its powers by ignoring the surrender proceedings and the fact that the consortium itself was in default.
Consortium's Stance: The allottee countered that possession was handed over only on paper and in a scattered manner. There was still no approach road. The surrender was never legally completed because the conditions in the brochure—requiring a board resolution and execution of a —were never fulfilled. was itself at fault for allotting land it did not own and for failing to carry out its obligation under Clause 21 of the to provide .
Court's Reasoning: Balancing Faults and Protecting Interests
Justice Saurabh Shyam Shamshery, after examining the material, found fault on both sides. The allottee could not claim ignorance of the land's status, having knowingly accepted a lease for a smaller area with a promise to wait for the balance. The court observed:
"A claim of being totally unaware of position of land on spot is, therefore, not accepted and, therefore, cannot claim benefit of only on basis of default of ."
Yet, too had acted in . It had failed to disclose that even the available land was non-contiguous. The court noted:
"The conduct of was also similarly not . They were aware about nature of land and that they were not in position to handover entire land."
On the applicability of the 2019 policy, the court held that since the allottee did not apply within the stipulated time or give the required undertaking, it could not claim relief under that policy. However, the subsequent Government Order dated carried similar conditions and adopted the same calculation method. The allottee was entitled to consideration under that later policy, and 's objections based on the 2019 policy could not defeat the claim entirely.
The Final Decision: with Conditions
The High Court upheld the grant of but modified the extent. Since the allottee was well aware of the limitations when it executed the lease in 2012, it could not claim the benefit in full. The court directed:
- The allottee shall pass on at least 25% of the financial benefit of the to home buyers.
- shall complete the lease execution for the remaining area within one month so that construction can commence.
- If the allottee fails to get the lease executed, the benefit will come to an end.
- Once the entire land is handed over, the allottee must complete at least 25% construction within nine months, failing which the benefit will also terminate.
The parties were directed to exchange their calculations before makes a final determination. Liberty was granted to either side to apply for extension of time if circumstances require.
Key Observations
The judgment includes several important observations:
"The Court takes note that at the time when lease was executed for a lessor land there was an offer that Respondent-1 can left remaining area, however, despite it had knowledge about location of land, Respondent-1 has executed lease for a lessor area with further declaration that it will wait for remaining area to be available with , therefore, Respondent-1 was well aware that certain area was definitely not in possession of when lease was executed way back in the year 2012. Therefore benefit of can be granted to Respondent-1 but not in entirety."
The court also stressed the need to protect home buyers, directing that at least a quarter of the benefit must flow to them. The decision strikes a balance between the developer's expectations and the authority's obligations, while ensuring that stalled projects are completed in a time-bound manner.
The was accordingly disposed of on .
