Unilateral retrospective enhancement of lease rent by an authority, without executing a supplementary deed, is illegal, and higher authority’s orders must be implemented by lower bodies.

JUDGMENT :

Swarupama Chaturvedi, J.

1. Heard Sri Tarun Agarwal, learned Senior Advocate assisted by Sri Prashant Mishra, learned counsel for the petitioner, Sri Shivam Yadav, learned counsel for the respondents no. 2 to 4 and Sri Devesh Vikram, learned Additional Chief Standing Counsel for the State respondents.

2. By means of this petition filed under Article 226 of the Constitution, petitioner has prayed for quashing of the order dated 12.12.2024 passed by respondent no. 3 raising a demand of Rs. 5,28,85,639/- and order dated 15.05.2025 whereby the petitioner’s request for grant of early production incentive has been rejected as well as the consequential final notice before cancellation of allotment dated 23.12.2024. Further it is prayed that a direction be issued to the respondents to recalculate the lease rent dues according to the directions contained in the revisional order dated 27.07.2023 as well as grant the petitioner the benefit of early production incentive rebate of Rs. 9.02 lacs as applied on 27.03.2003. Also a direction to respondents be issued to grant the petitioner the benefit of waiver of past interest in accordance with the office order dated 05.12.2013.

3. Brief facts of the case are that the petitioner is a company engaged in the manufacture of corrugated boxes, which got allotted Industrial Plot No. 11-B, Udyog Vihar, Greater Noida, by final allotment letter dated 09.02.2001. Thereafter, a lease deed was executed on 26.02.2002 for a period of ninety years, providing for an annual lease rent of Rs. 2,96,907/- for the first ten years. The lease deed specifically stipulated that any enhancement of rent could be effected only every ten years and strictly through execution of a supplementary lease deed.

4. The petitioner commenced construction strictly in accordance with Clause 16 of the lease deed. After obtaining due approval of the building plan from the Lessor, the Lessee was required to commence construction on the demised premises within six months from the date of possession and to make the industrial unit operational within a period of thirty-six months, or within such extended time as may be permitted by the Lessor. The petitioner duly complied with the said stipulations, commenced construction within the prescribed period, made the unit operational on 11.11.2002, and has since continuously maintained its operations, while duly fulfilling all statutory and contractual obligations.

5. Learned counsel for the petitioner submits that the petitioner was fulfilling all conditions to receive the early production benefit under the promotional scheme, and, therefore, applied for early production incentive rebate of Rs. 9.02 lakhs in March 2003, being fully eligible under the applicable scheme. However, the Authority neither decided the application nor raised objections for over two decades and then got rejected by the means of impugned order dated 12.12.2024.

6. Learned counsel further submits that the rebate amount was almost equal to the three years of lease rent about which the petitioner could not get response from the respondents. Due to oversight and lack of regular follow up by employees of the petitioner and failure of authority to update records, lease rent for certain years got delayed, which was later regularized by depositing all principal amounts along with advance lease rent to avail waiver of interest as per the Authority’s office order dated 05.12.2013. Despite this, the Authority retrospectively enhanced the annual lease ren