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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SHREE CHANDRASHEKHAR, CJ., SUMAN SHYAM, J.
Indian Newspaper Society – Appellant
Versus
Mumbai Metropolitan Region Development Authority – Respondent
Writ Petition No. 864 of 2018
Decided On : 08-04-2026
| Table of Content |
|---|
| 1. lease imposes four-year construction completion obligation (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10) |
| 2. additional fsi allotted without revised time limit (Para 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 3. penalty paid under protest pending extensions (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28) |
| 4. preliminary objections to writ jurisdiction raised (Para 29 , 30 , 31 , 32 , 33 , 34) |
| 5. no absolute bar to writs in contractual disputes (Para 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44) |
| 6. precedent quashes similar penalty demands (Para 45 , 46 , 47 , 48 , 49 , 50) |
| 7. completion impossibility due to composite construction argued (Para 51 , 52 , 53) |
| 8. no time limit for additional built-up area (Para 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62) |
| 9. ambiguities construed against lease drafter (Para 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70 , 71) |
| 10. duress payments must be refunded (Para 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79) |
| 11. arbitrary classification violates article 14 (Para 80 , 81 , 82 , 83 , 84) |
| 12. impugned demands illegal; refund directed (Para 85 , 86 , 87 , 88 , 89 , 90) |
Judgment :
Suman Shyam, J.
1. Rule. Rule is made returnable forthwith.
2. By consent of the parties, the matter is taken up for final hearing.
3. Assailing the demand notice dated 12th September 2017 (Exhibit-N) the Writ Petitioner has approached this Court inter alia contending that the demand for penalty/additional premium on account of late completion of the construction, raised by the Respondent No. 1, i.e., Mumbai Metropolitan Region Development Authority (“MMRDA”), is contrary to the terms and conditions of the Lease Agreement and, therefore, arbitrary and illegal. The facts and circumstances, giving rise to the filing of the Writ Petition, shorn of unnecessary details, are as hereunder.
4. The Writ Petitioner is a registered company having its office at INS Building, Rafi Marg, New Delhi 110 001. The Petitioner is a non-profit organization and plays a central role in protecting and promoting the interest of the Press in India. The Respondent No. 1 (MMRDA), is an authority set up under a statute viz. the Mumbai Metropolitan Regional Development Authority Act, 1974 (hereinafter referred to as “MMRDA Act”) and the Respondent No. 2 is its Chief Executive Officer.
5. Based on an application made by the Petitioner-Company, the Respondent No. 1 had allotted the Plot No. C-63 in ‘G’ Block at Bandra-Kurla Complex (BKC) vide authority of approval granted in its 120th meeting held on 24th December 2007.
6. On 17th November 2005, the Respondent No. 1 had allotted the aforesaid plot admeasuring 10,450 sq. mtrs. to the Writ Petitioner, on a long term lease of 80 years, for construction of office complex, on payment of lease premium of Rs.88,52,75,000/- (Rupees Eighty Eight crores Fifty Two lakhs and Seventy Five thousand), calculated at the rate of Rs.42,500/- per sq. mtr.
7. On 1st December 2005, the Respondent No. 1 permitted the Petitioner to transfer 40% of the built up area to third party subject to the condition that the same shall be used only for office purpose. Consequently, on 14th February 2008, the Petitioner had entered into a Development Agreement with M/s. Orbit Enterprise (“Developer”) for development of the said plot.
8. On 18th February 2008, the Petitioner paid the entire lease premium of Rs.88,52,75,000/- (Rupees Eighty Eight Crores Fifty Two Lakhs and Seventy Five Thousand) to the Respondent No. 1, pursuant whereto, Lease Deed dated 9th April 2008, leasing out the area of 10415 sq. mtrs of land, for a period of 80 years, was executed by and between the Petitioner and the Respondent No. 1. As per the Lease Agreement, the permissible built-up area was 20,830 sq. mtrs.
9. Article 2(c) of the Lease Deed dated 9th April 2008 stipulates that no work shall commence till the plan is approved by the authority; Article 2(d) lays down that the construction will be completed within a period of four years from the date of execution of the Lease D
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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-discriminato....
Lease penalty for construction delay invalid where lessor nondiscloses material site defects, supplementary deed removes time limit for additional built-up area, delays due to approvals/statutory fac....
Additional premium demand for construction delay under lease held arbitrary where caused by statutory approvals, late commencement certificates, and extra built-up area without timeline; applicable s....
Imposing penal charges for contract breaches is valid when stipulated policies and terms align with contractual obligations, and acceptance of penalties post-acceptance negates protest claims.
The court ruled that the lack of adherence to procedural fairness in demanding additional lease premium necessitated reconsideration, balancing the interests of both parties.
The court emphasized that administrative discretion must be exercised fairly, considering both parties' interests, especially when external factors impede contractual obligations.
The authority has the power to terminate a lease in case of breach, and a notice must be served before termination.
The refusal of a No Objection Certificate for redevelopment based on misinterpretation of lease terms was deemed arbitrary, reinforcing the need for state entities to act fairly under Article 14 of t....
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