2026 Supreme(Bom) 276

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SHREE CHANDRASHEKHAR, CJ.,  SUMAN SHYAM, J.
Reliance Industries Limited – Appellant
Versus 
Mumbai Metropolitan Region Development Authority (MMRDA) – Respondent 
Writ Petition No. 242 of 2018 With Interim Application No. 2172 of 2020
Decided On : 08-04-2026

Penalty for construction delay under lease quashed due to delays from court stay, statutory approvals, additional area; writ maintainable for arbitrary state action; 6-year extension non-discriminatory; coerced payment refunded.

Headnote:(A) Constitution of India - Articles 14 and 226 - Lease deed clauses 2(d) and 2(e) under Disposal of Land Regulations 1977 - Demand for additional premium/penalty for delay in construction completion - Writ petition challenging demand notices - Maintainable despite contractual nature where public law element and arbitrariness involved; no bar for disputed facts if based on admitted documents; no effective alternative remedy under appeal provisions - Delays due to interim court order, additional built-up area allotment requiring revised plans and statutory approvals (environment clearance, height clearance, etc.), commencement certificate issuance - Four-year completion period computed from commencement certificate date, excluding stay period; no time limit for additional area per authority communication; promissory estoppel applies to exclude stay and impose no time limit - Six-year extension policy applicable even to prior leases to avoid discrimination; penalty demand arbitrary, without prior show cause notice, violating natural justice - Payment under protest/coercion refundable under Section 72 Contract Act. (Paras 46-55, 63-102)

(B) Promissory Estoppel - Authority representations (no time limit for additional area, exclude stay period) binding; cannot resile prejudicially. (Paras 74-76)

(C) Contract Interpretation - Composite construction with common basement/foundation; timelines not severable; construction commences post-commencement certificate; delay not attributable to lessee if due to approvals beyond control. (Paras 66-73, 77)

(D) Refund of Coerced Payments - Deposit under threat of withholding occupation certificate and lease termination recoverable; undertaking under duress not binding. (Paras 85-92)

Facts of the case:
Petitioner leased plot for convention centre and commercial complex (initial 1,15,000 sq mtrs built-up area). Additional areas allotted (72,500 then 1,25,000 sq mtrs, total 3,12,500 sq mtrs) requiring plan revisions, approvals. Interim order restrained part utilization till 2012; commencement certificate for full project in 2014. Authority demanded penalty for 7 years 12 days delay post-4 years from lease; further demand for additional area delay. Petitioner deposited under protest, challenged notices.

Findings of Court:
Impugned notices quashed; entitled to refund of Rs.646,77,68,594 deposited; bank guarantees valid 90 days; refund within 90 days else interest; 6-year completion + excluded stay period applicable; no penalty due.

Issues: Maintainability of writ in contractual dispute; validity of penalty under lease clauses for delay; computation excluding stay/approvals/additional area; applicability of 6-year policy to prior leases; refund of coerced deposit.

Ratio Decidendi: Penalty demands invalid as delays not lessee's fault (court stay, approvals, integrated project); timelines from effective commencement certificate; authority bound by promises; discriminatory policy violative of equality; process lacked natural justice; writ jurisdiction extends to arbitrary state action in contracts.

Result: Writ petition allowed.