(PER DR.D.Y.CHANDRACHUD, J.) :

1. Rule, by consent made returnable forthwith. The learned counsel appearing on behalf of the Respondents waive service on behalf of the respective Respondents. By consent, the Petition is taken up for hearing and final disposal.

2. Air India, during the period when a proposal to set up an airport at Navi Mumbai was under consideration, had submitted a proposal to CIDCO for the allotment of land on which it would construct staff quarters for its employees. Initially a plot of land (Plot No.24 admeasuring 1,00,021.60 sq. mtrs. in Sector 27 of Nerul) was allotted to Air India. On 30 January 1992 an agreement to lease was executed by CIDCO in favour of Air India. The land was allotted on a concessional lease premium of Rs.750/-per sq. mtr. amounting to Rs.7.50 Crores. Air India being an organisation of the Central Government, such an allotment was permissible under the policy of CIDCO as approved by the State Government. The lease agreement envisaged that for a period of four years Air India would have a licence to enter upon the land; that the agreement would not constitute a demise of the land and that eventually a lease would be granted upon a certification by the Town Planning Officer that buildings had been erected by Air India in accordance with the terms of the agreement. The lease was to be executed for a period of sixty years. Clause 7A of the agreement stipulated that the terms under which CIDCO had agreed to execute a lease in favour of Air India were governed inter alia by the New Bombay Disposal of Lands Regulations 1975 for the time being in force. Clause 7A provided as follows :

“7A. It is hereby agreed and declared between the parties hereto that the Corporation has agreed to lease the said land to the Licensee and the Licensee has agreed to have such lease upon the terms and conditions contained herein and subject to Section 118 and other applicable provisions of the Maharashtra Regional and Town Planning Act, 1966 (Maharashtra Act XXXVII of 1966) and rules and regulations made thereunder including the New Bombay Disposal of Lands Regulations 1975 for the time being in force.”

3. The buildings which were to be constructed on the plot of land were to be used by Air India only for accommodating the members of its staff and could not be sold either individually or to a co-operative housing society of the employees without the prior permission of CIDCO. In an affidavit filed in the earlier proceedings by CIDCO, it has been stated that under the Regulations of 1975, in the case of an intended transfer the lessee was required to approach CIDCO and to pay additional lease premium and transfer charges and thereupon opt for transfer.

4. According to CIDCO, though it was obligatory for Air India to commence and complete the construction of a housing complex on or before 29 January 1997 and though a commencement certificate was obtained from the Navi Mumbai Municipal Corporation, Air India failed to complete the construction within the prescribed period. As a result that failure amounted to a breach of the material terms of allotment which could be remedied only upon the payment of additional lease premium under Regulation 7 of the New Bombay Disposal of Lands Regulations 1975 (NBDLR).

Ultimately, Air India constructed 508 flats on a part of the area admeasuring 34,347.45 sq. mtrs. without obtaining an extension of the permission for the period for construction. Air India proceeded to allot the flats in issue to the members of its staff on a permanent basis and accepted amounts from the employees who were to then form a co-operative housing society. According to CIDCO (paragraph 10 of the affidavit dated June 2010 of Marathe Vivek Shrikant in Writ Petition 336 of 2010.), Air India paid an additional lease premium of Rs.4.50 Crores to CIDCO while obtaining an occupancy certificate for the built-up area admeasuring 34,347.45 sq. mtrs. The balance FSI upon the construction of 508 flats