1. Appeal against lease cancellation of an industrial plot due to failure to meet construction and operational timelines stipulated in the lease agreement by the industrial developer. (Para 2 , 3 , 11 , 14 , 17 , 18 )
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2026 Supreme(SC) 347
SUPREME COURT OF INDIA
VIKRAM NATH, SANDEEP MEHTA, N.V. ANJARIA, JJ.
M/s. Piaggio Vehicles Pvt. Ltd. – Appellant
Versus
State of U.P. and Others – Respondents
Civil Appeal No. 1944 of 2011
Decided On : 06-04-2026
Important Points
Failure to comply with lease conditions justifies cancellation of the lease, emphasizing the necessity for timely establishment of operations by allottees under industrial development regulations.
Subject
Property Law - Lease Agreements and Cancellation
Act Referred
Headnote
(A) Constitution of India - Article 226 - Uttar Pradesh Industrial Area Development Act, 1976 - Lease Cancellation - The appellant company’s lease was forfeited by UPSIDA due to failure to complete construction within stipulated period as per the lease deed. The High Court upheld this forfeiture, finding no bonafide intent to establish operations as required, stating: 'The appellant-company has failed to demonstrate any convincing effort or bona fide intent to establish a full-scale industrial manufacturing unit' (Paras 63, 64, 79).
(B) Preventive Measures - The Court observed that the lease conditions necessitate strict adherence to timeliness by allottees for accountability, emphasizing that 'Equities cannot work in favour of the litigants whose conduct is callous, laconic and in clear violation of the applicable rules' (Paras 73, 78).
Facts of the case:
The appellant’s failure to start construction within the mandated period led to forfeiture of lease in 2008, which the High Court upheld.
Findings of Court:
Appellant failed to justify delays in establishing their facility, and their efforts to negotiate extensions were unconvincing.
Issues: The legality of lease cancellation and the legitimacy of extensions requested by the appellant were key points of contention.
Ratio Decidendi: The lease agreement's stipulations were binding, with the appellant’s non-compliance resulting in forfeiture; the failure to adhere to timeliness underscores the necessity for strict compliance with allotment conditions.
Result: Appeal dismissed; possession to be handed over to UPSIDA within 30 days.
(B) Preventive Measures - The Court observed that the lease conditions necessitate strict adherence to timeliness by allottees for accountability, emphasizing that 'Equities cannot work in favour of the litigants whose conduct is callous, laconic and in clear violation of the applicable rules' (Paras 73, 78).
Facts of the case:
The appellant’s failure to start construction within the mandated period led to forfeiture of lease in 2008, which the High Court upheld.
Findings of Court:
Appellant failed to justify delays in establishing their facility, and their efforts to negotiate extensions were unconvincing.
Issues: The legality of lease cancellation and the legitimacy of extensions requested by the appellant were key points of contention.
Ratio Decidendi: The lease agreement's stipulations were binding, with the appellant’s non-compliance resulting in forfeiture; the failure to adhere to timeliness underscores the necessity for strict compliance with allotment conditions.
Result: Appeal dismissed; possession to be handed over to UPSIDA within 30 days.
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) : Ms. Suman Kukrety, AOR
For the Respondent(s): Mr. Shashank Shekhar Singh, AOR Mr. Abhinav Singh, Adv. Mr. Atmaram N S Nadkarni, Sr. Adv. Ms. Ruchira Gupta, Adv. Mr. Salvador Santosh Rebello, AOR Ms. Pooja Tripathi, Adv. Mr. Mohtisham Ali, Adv. Ms. Yashika Sharma, Adv. Ms. Sumriddhi Agrawal, Adv. Mr. Nitender Yadav, Adv.
For the Appellant(s) : Ms. Suman Kukrety, AOR
For the Respondent(s): Mr. Shashank Shekhar Singh, AOR Mr. Abhinav Singh, Adv. Mr. Atmaram N S Nadkarni, Sr. Adv. Ms. Ruchira Gupta, Adv. Mr. Salvador Santosh Rebello, AOR Ms. Pooja Tripathi, Adv. Mr. Mohtisham Ali, Adv. Ms. Yashika Sharma, Adv. Ms. Sumriddhi Agrawal, Adv. Mr. Nitender Yadav, Adv.
Table of Contents
2. Appellant contended bona fide constraints and substantial intent to set up production, while respondents argued gross violation of lease terms by failing to construct within the prescribed timeframe. (Para 30 , 31 , 33 , 39 , 45 , 48 , 50 )
3. Court observed that the appellant consistently failed to adhere to time-bound construction obligations, deliberately omitted mandatory affidavit conditions, and lacked bona fide intent for industrial development. (Para 57 , 63 , 67 , 71 , 73 , 74 )
4. Stringent adherence to time-bound industrial development covenants in a lease deed is mandatory; failure to perform these obligations justifies cancellation without discretionary equitable relief. (Para 58 , 60 , 65 , 69 , 78 )
5. Dismissal of appeal; the appellant directed to surrender vacant peaceful possession of the industrial plot within thirty days of the judgment, with refund of deposited amounts. (Para 80 , 81 )
6. Can an industrial allottee claim equitable relief against lease cancellation for non-performance of time-bound construction obligations?
No. When an allottee consistently fails to follow mandatory construction and production timelines for an industrial plot, the court will not exercise its extraordinary jurisdiction to provide equitable relief, especially where the allottee has failed to act in good faith or comply with the stipulated procedure. (Para 63 , 71 , 73 , 78 )
7. Does the execution of subsequent deeds modify original time-bound construction obligations in an industrial lease?
No. Fundamental conditions regarding construction and industrial usage within a specific timeframe stipulated in the original lease remain fully binding and are not altered by the mere formal execution of a subsequent lease deed reflecting a change in the name of the lessee. (Para 65 , 66 )
8. What is the legal effect of an allottee intentionally omitting mandatory conditions in a required compliance affidavit?
The intentional omission of mandatory declarations regarding construction and production timelines in a required affidavit constitutes a failure to satisfy the conditions for extension, justifying the lessor's decision to cancel the allotment for breach of the lease agreement. (Para 69 , 71 , 72 )
JUDGMENT :
SANDEEP MEHTA, J.
1. Heard.
2. This appeal is preferred by the appellant, M/s. Piaggio Vehicles Pvt. Ltd.1 [Formerly known as M/s. Piaggio (India) Pvt. Ltd. Hereinafter, referred to as “appellant-company”] for assailing the judgment and order dated 15th October, 2009 passed by the Division Bench of the Allahabad High Court2 [Hereinafter, referred to as “High Court”] in Civil Miscellaneous Writ Petition No. 47482 of 2008 whereby, the aforesaid petition under Article 226 of the Constitution of India preferred by the appellant-company was dismissed, thereby affirming the order dated 25th August, 2008 passed by the Joint Managing Director of the Uttar Pradesh State Industrial Development Corporation (now Uttar Pradesh State Industrial Development Authority).3 [UPSIDA was formerly known as the Uttar Pradesh State Industrial Development Corporation (UPSIDC). UPSIDC was merged into and reconstituted as UPSIDA pursuant to the Uttar Pradesh State Industrial Development Corporation Limited (Transfer of Assets and Liabilities) Ordinance, 2018 (promulgated on 27.06.2018), and the subsequent UPSIDC Limited (Transfer of Assets and Liabilities) Act, 2018 (enacted on 10.09.2018). Hereinafter, referred to as “UPSIDA”]
3. By order dated 25th August, 2008, UPSIDA forfeited the lease of Plot No. A-1, Site-B, admeasuring 33 acres at Surajpur Industrial Area, District Gautam Budh Nagar, Uttar Pradesh which had been granted under lease deeds dated 19th March, 2002 and 10th July, 2007. The former lease deed was executed in favour of M/s. Piaggio India (P) Ltd., while the latter was executed in the name of the amalgamated entity, M/s. Piaggio Vehicles Pvt. Ltd. i.e. the appellant-company. The forfeiture was on account of breach of terms and conditions stipulated under sub-clauses (e) and (o) of Clause 3 read with Clause 5 of the lease deed i.e. for failing to complete construction of the factory building within the stipulated period or the extended time permitted thereunder. By the very same order, UPSIDA also notified its intent to re-enter the plot and to forfeit the premium paid by the appellant-company.
4. Before we delve into the factual and legal aspects of the matter, it would be apposite to refer to the proceedings which transpired after the order of forfeiture.
5. The High Court, vide order dated 12th September, 2008 passed in the captioned writ petition, directed the parties to maintain status quo, which continued till the dismissal of the writ petition.
6. Being aggrieved by the dismissal of the writ petition, the appellant-company approached this Court by way of this appeal by special leave, and the interim protection was extended vide order dated 27th October, 2009. The stay order was further modified on 6th November, 2009, restraining the respondents from taking possession of the subject plot. Leave in the matter was granted on 8th February, 2011.
7. During the pendency of the civil appeal, the appellant-company approached the concerned authorities for a settlement but the same did not fructify. Again, on 17th January, 2017, this Court directed the Managing Director, UPSIDA, to deliberate upon the possibility of an amicable settlement. The appellant-company was granted liberty to make a representation to the Managing Director, UPSIDA, for attempting a settlement which ultimately did not materialise.
8. On 6th March, 2024, considering the submissions advanced by the learned Counsel representing the appellant-company, this Court passed the following order:
“Mr. Tarun Gulati, learned senior counsel appearing for the appellant, makes the following submissions:
(1) That the total outstanding dues as communicated by the Regional Manager of Uttar Pradesh State Industrial Development Authority (for short, “UPSIDA”) was Rs. 10,95,52,825/- which amount the appellant is ready and willing to deposit with the respondent-UPSIDA and they have a draft ready for the same.
(2) The second submission is that considering the demand, promotion and government p
