M/S.Angel Baby Products Pvt.Ltd vs New Okhla Indust.Dev.Auth. & Ors

quashing of the notices dated 1.5.2002, 25.7.2002, 2

6.9.2002 and 22.3.2003 sent by the authorities of

The New Okhla Industrial Development Authority,

hereinafter referred to as `NOIDA', imposing

penalty against the writ petitioners for failing to

get the lease deed for commercial plot no.1/1-A,

Sector 27, NOIDA, executed within the stipulated

period of 120 days from the date of allotment of

the plot. The said plot measuring 2970 sq. meters

was initially allotted to the Writ Petitioner No.1,

Hira Lal Gupta, at the rate of Rs.15,552/- per sq.

meter. Later on, a revised allotment order was

issued to Shri Gupta reducing the area of the plot

from 2970 sq. meters to 2590 sq. meters and the

consideration for allotment of the plot was

proportionately reduced. Subsequently, disputes

arose in regard to an irrigation drain which

existed on a portion of the said plot, although,

the existence thereof was not indicated in the

brochure published by NOIDA. According to the Writ

Petitioners, since the said problem was not 3

attended to, the lease deed could not be submitted

for execution within the prescribed period of 120

days which attracted imposition of penalty.

2. On 24th March, 2002, the Petitioners made a

representation to the Chief Executive Officer,

NOIDA, for waiver of penalty on the ground that

since the exact area and location of the plot was

different from that specified in the brochure, the

delay in execution of the lease deed could not be

attributed to the Writ Petitioners and,

accordingly, penalty could not be imposed against

them. It appears that the Chief Executive Officer,

NOIDA, waived the penalty imposed on the Writ

Petitioners and granted them further two months'

time to complete the execution of the lease deed.

However, before the expiry of the said period of

two months, the NOIDA authorities had written to

the Writ Petitioners on 1st May, 2002, indicating

that penalty would be charged with effect from 22nd

November, 2001. The Writ Petitioners responded to 4

the said letter by submitting a representation

dated 15th May, 2002, praying for waiving the

penalty on account of the drain passing through

plot and also for providing any alternative plot in

lieu of the plot already allotted.

3. The Writ Petitioners were informed on 22nd

March, 2003, that the Board of NOIDA had rejected

their proposal for waiver of the penalty and that

the same would have to be paid within 30 days,

otherwise their allotment would be cancelled. At

the initial stage when the Writ Petition was filed,

the High Court had passed an interim order on 18th

April, 2003, staying the operation of imposition of

penalty against the Writ Petitioners. Ultimately,

after considering the submissions made on behalf of

the respective parties, the High Court took note of

Clause 25 of the Scheme indicating that the plots

were to be sold on "as is where is" basis, leading

to the presumption that the Writ Petitioners had

knowledge of the existing irrigation drain on the 5

plot. The High Court also took note of the power

reserved to the NOIDA authorities to vary the area

of the plot, which the allottee was bound to accept

as final. The High Court also took into

consideration the submissions made on behalf of the

Board of NOIDA that in its 113th meeting held on 10th

February, 2003, the Petitioners' representation was

finally rejected but despite the same they did not

deposit the penalty and insisted upon the waiver of

penalty and interest.

4. Having arrived at the conclusion that the Writ

Petitioners had knowledge of all the terms and

conditions, status, location and other details

about the plot, which was advertised for allotment,

the High Court felt that there was no merit in the

Writ Petition and dismissed the same. The interim

order passed in the matter was also vacated.

5. Mr. Jayant Bhushan, learned Senior Advocate,

who appeared for the Petitioner Company, submitted 6

that having auctioned the plot in question without

proper specifications and contrary to the

description in its brochure, it was not within the

competence of the NOIDA authorities to impose

penalty on the Petitioner Company for not

completing the execution of the lease deed within

the stipulated period of 120 days from the date of

allotment. In fact, in the aforesaid background, a

representation was made by Shri Hira Lal Gupta to

the Chief Executive Officer, NOIDA, indicating that

he wanted to transfer the plot in question to the

Petitioner Company, wherein he and his son are

Directors. Since the said formalities were likely

to take some time, a prayer was made to the

aforesaid Authority to extend the time for

depositing the instalments and for making the

application in Form 37-I. In the same

communication, a further prayer was made to waive

the penalty due to the delay in execution of the

lease deed. It is on that basis that Shri Hira Lal 7

Gupta was granted two months' time, without

penalty, for completion of formalities.

6. The said extension came to be considered by the

Officer on Special Duty (G), who interpreted the

same to mean that the Petitioner Company had been

given two months' time without penalty only for

change of constitution, but that the interest on

the outstanding instalments, penal interest and

penalty, whatever was outstanding, would have to be

recovered, as it was. On 1st May, 2002, the Deputy

Manager (C), NOIDA, wrote to Shri Hira Lal Gupta in

regard to his request for effecting the change

relating to the transfer of the plot to the

Petitioner Company. In his said letter, the said

Authority requested Shri Gupta to submit the

documents indicated in the said letter in order to

effect the change of constitution in regard to the

allottee of the plot in question. In addition,

Shri Gupta was informed that on his failure to

complete execution of the lease deed, a sum of 8

Rs.62,18,088.00 had become payable by way of late

fee for the period between 22nd November, 2001 to

30th April, 2002. Furthermore, after the said

period, penalty of Rs.38,863.05 per day would also

be payable. The Petitioner was requested to deposit

the penalty amount for completion of Form 37-I for

change of constitution and execution of the lease

deed.

7. As indicated hereinabove, the imposition of

penalty is the bone of contention in this Special

Leave Petition.

8. Mr. Bhushan reiterated the submissions made

before the High Court that on 24th March, 2002,

when two months' time had been granted to the

Petitioner Company by the Chief Executive Officer,

NOIDA, for completion of the formalities for change

of constitution, the Officer on Special Duty had

acted illegally by passing an order on 11th April,

2002, which was within three weeks from the date of 9

the order of the Chief Executive Officer, demanding

payment of penal interest and penalty. Mr. Bhushan

contended that during the extended period of two

months, the Officer on Special Duty was not

entitled to demand payment of penalty when, in

fact, payment of such penalty had been specifically

waived by the Chief Executive Officer.

9. On the other hand, learned counsel for the

Respondent Authority, supported the order of the

Officer on Special Duty on the ground that the

period for execution of the lease had been extended

by a period of two months by the Chief Executive

Officer in view of the prayer made by Shri Hira Lal

Gupta to transfer the allotment in the name of the

Petitioner Company, wherein both he and his son

were Directors. Learned counsel reiterated the

submissions made before the High Court that the

order of the Chief Executive Officer, NOIDA,

extending the time for completion of the execution

of the lease deed would have to be considered in 10

that context only. He urged that notwithstanding

the time extended for completion of constitutional

changes, the liability for payment of penalty did

not stop on account of the order of the Chief

Executive Officer which continued to remain

operative after the expiry of 120 days from the

date of allotment and the Petitioner Company was,

therefore, liable to pay both the penalty charges

as also the lease rent at the rate of Rs.38,863.05

per day. Mr. Ravindra Kumar specifically referred

to the subsequent order of the Chief Executive

Officer dated 22nd July, 2002, by which he directed

that the land (2590.86 sq. meters) shown in the

brochure be given to Shri Hira Lal Gupta and

penalty be recovered as per rules. He urged that

the effect of the earlier order passed by the Chief

Executive Officer on 24th March, 2002, stood

superseded by the subsequent order, whereby penalty

was directed to be recovered from the Writ

Petitioners, according to the rules. 11

10. It was also reiterated that since the

Petitioner Company had decided to invest a huge sum

of money in the allotted land, it is difficult to

accept that the Petitioner Company or its Directors

would not have made enquiries as to the nature of

the land which was being allotted to them. In

other words, it has to be held that the Writ

Petitioners were fully aware of the existence of

the municipal drain on the land and absence of

knowledge thereof was nothing but a ploy on the

part of the Petitioner Company to avoid its

responsibility regarding payment of penalty for

non-compliance of the conditions to complete

execution of the lease deed within 120 days from

the date of allotment of the plot. Learned counsel

submitted that the position stood further

compounded by the fact that under Clause 25 of the

general terms and conditions spelt out in the

brochure, it was clearly indicated that the

allotment of the land was subject to variations in 12

the area of the plot and that the same would have

to be accepted by the allottees on "as is where is"

basis.

11. Mr. Ravindra Kumar submitted that no case had

at all been made out for interference with the

orders passed by the High Court dismissing the Writ

Petition.

12. For the reasons hereinafter following, we are

unable to accept Mr. Jayant Bhushan's submissions

questioning the order passed by the Officer on

Special Duty dated 11th April, 2002, and the various

notices subsequently issued on the basis thereof,

demanding payment of penalty despite the order of

the Chief Executive Officer waiving imposition of

such penalty for the delay in execution of the

lease deed.

13. The materials on record indicate that there

had been correspondence exchanged between the

parties with regard to the land allotted and the 13

area thereof on account of the existence of the

municipal drain either on the plot or in its

vicinity. Shri Hira Lal Gupta had also made a

request for the plot allotted in his name to be

transferred in the name of the Petitioner Company

in which he and his son were Directors. Since the

same was likely to take some time for completion of

the formalities, a specific prayer was made to

serve the penalty due to delay in the execution of

the lease deed. In such background, the Chief

Executive Officer, NOIDA, extended the period for

completion of the formalities relating to the

constitutional change by a period of two months

without penalty from 24th March, 2002. Before the

said period could expire, the Officer on Special

Duty, on a misunderstanding of the order passed by

the Chief Executive Officer, NOIDA, indicated by

his order dated 11th April, 2002, that since the

Chief Executive Officer had given two months' time

without penalty only for change of constitution, 14

interest on the outstanding instalments, penal

interest and penalty, were liable to be recovered

from the Writ Petitioners. To add to the confusion,

a further order was passed by the Officer on

Special Duty (G) on 26th April, 2002, directing that

steps be taken in terms of his earlier order dated

11th April, 2002, and indicating that two months'

time given to the Writ Petitioners was for

completion of formalities for change of the name of

the allottee.

14. Up to this stage, the case of the Petitioner

Company for waiver of penalty can be accepted, but

the subsequent correspondence which followed

between the parties and the failure of the

Petitioner Company and Shri Hira Lal Gupta to

complete the execution of the lease deed even

within the extended time of two months, indicate

that neither Shri Gupta nor the Petitioner Company

had any inclination to complete the formalities for

execution of the lease deed pursuant to the change 15

in the name of the allottee from Shri Hira Lal

Gupta to the Petitioner Company.

15. From the materials on record and the subsequent

correspondence beginning with the letter dated 1st

May, 2002, written by the Deputy Manager (C),

NOIDA, it is apparent that the Petitioner Company

and Shri Hira Lal Gupta were given a great degree

of latitude to complete the transaction. In fact,

meetings of the Committee had been convened on 23rd

October, 2002 and 26th November, 2002, in which Shri

Hira Lal Gupta appeared and made submissions for

waiver of the penalty but on the basis of the

record, the Committee rejected Shri Gupta's

submissions and Shri Gupta was subsequently

informed of the decision of the Committee which was

approved at a meeting of the Authority convened on

15th February, 2003, under the Chairmanship of the

Additional Chief Executive Officer, NOIDA. Even if

initially a case may have been made out on behalf

of the Petitioner Company that the execution of the 16

lease deed could not be completed on account of the

mis-description of the plot and in view of the

prayer for change in the name of the allottee, on

account of the subsequent conduct of the Petitioner

Company and Shri Gupta, we are not inclined to

interfere with the order of the High Court or the

decision of the NOIDA relating to imposition of

penalty and interest. However, we are also not

inclined to accept the interpretation given by the

Officer on Special Duty to the order passed by the

Chief Executive Officer on 24th March, 2002, and,

accordingly, we direct that in calculating the

penalty and interest as payable under the agreement

entered into between the parties, the said period

of two months from the date of the order dated 24th

March, 2002, shall be excluded.

16. With the aforesaid modification of the order

passed by the Chief Executive Officer on 22nd July,

2002 and the subsequent resolution of the NOIDA 17

taken at the meeting convened on 15th February,

2003, the Special Leave Petition stands dismissed.

17. There will, however, be no order as to costs.

................................................J. (ALTAMAS KABIR)

................................................J. (A.K. PATNAIK) New Delhi Dated: 27.10.2010