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.

JUDGMENT :

SUVRA GHOSH, J.

1. The petitioners have prayed for issuance of writ of certiorari quashing/setting aside the penal charges and interest imposed by the respondents/KMDA for delay in construction and delay in payment of penal charges. The petitioners have also sought a direction upon the respondents to refund the amount deposited by them on protest.

2. The factual matrix of the case is as hereunder:-

The first petitioner applied before the KMDA for lease of a plot of land for expanding the printing infrastructure of his company in West Bengal. Since process of acquisition of the land comprising the property was not completed by the State of West Bengal, the KMDA was not in a position to grant lease of the land and agreed to grant permissive possession of 30.037 cottahs in plot no. I-V/III/Zone-1 of the EKADP in anticipation of grant of future lease of the said land. Possession certificate was issued in favour of the petitioners on November 8, 2006 and deed of license was executed by the KMDA in favour of the first petitioner on August 21, 2007. The first petitioner applied for mutation of the plot on August 22, 2008 and mutation certificate was issued in his favour on November 17, 2008 recording his name as the licensee and the KMDA as the licensor. On November 22, 2009 the first petitioner informed the respondents about taking necessary steps for the purpose of applying for sanction of building plan. The first petitioner sought extension of the period of commencement of work till December, 2010 which was allowed by the KMDA on June 23, 2010 subject to payment of penal charges @ 10% of the then land value. Since sanctioned plan was not granted to the petitioners on the ground that they were mere licensees, the petitioners informed the same to the KMDA and requested them to advise the KMC to sanction building plan in favour of the petitioners. The building plan was sanctioned by the KMC on November 27, 2010 and the petitioners commenced construction on December 31, 2010 upon serving notice of commencement of work upon the KMC. The petitioners were directed to deposit a sum of Rs. 63,11,473/- as penal charges for delayed construction alongwith a sum of Rs. 38,17,790/- as penal interest for delay in payment of the penal charges. The petitioners’ request for waiver of such charges was turned down by the respondents for which the petitioners were compelled to deposit such charges on protest. The deed of lease was executed by the KMDA in favour of the first petitioner on May 3, 2016.

3. Learned counsel for the petitioners has submitted that though clause-4 (iii) of the deed of license stipulated that the licensee would start construction within two years from the date of execution of the deed, such construction could not have been commenced without obtaining the sanctioned plan. The delay in obtaining the sanctioned plan cannot be attributed to the petitioners. The petitioners were refused sanction since they were mere licensees and they had to request the respondents to take up the issue with the KMC. The respondents wrote to the KMC only on July 14, 2010 after which the building plan was sanctioned on November 27, 2010. The petitioners commenced construction soon thereafter. The petitioners’ request for extension of time to complete the construction was granted and despite their being no provision in the license deed for levy of penalty by the respondents, they levied penal charges on the petitioners and also withheld execution and regi