Supreme Court Revises Land Resumption Terms in Noida Hotel Plot Case: Hampshire Hotels and Resorts vs. Ritu Maheshwari (2021)

Introduction

Date of the Judgment: March 09, 2021
Citation: Not Available
Judges: Uday Umesh Lalit, J., Indu Malhotra, J., Krishna Murari, J.

Can a public authority modify the terms of land resumption after a court order? The Supreme Court of India recently addressed this question in a contempt petition arising from a land allotment dispute in Noida. The court clarified the terms for land resumption and refunds, aiming to balance the interests of both the allottees and the New Okhla Industrial Development Authority (NOIDA). The bench comprised Justices Uday Umesh Lalit, Indu Malhotra, and Krishna Murari, with the judgment authored by Justice Uday Umesh Lalit.

Case Background

The case originates from a 2006 policy by the Uttar Pradesh government to attract investment in the hotel industry, particularly in anticipation of the 2010 Commonwealth Games. NOIDA, the New Okhla Industrial Development Authority, decided to allot plots for hotels at rates applicable to industrial areas. In 2006, NOIDA identified 14 plots for hotels, which were later increased to 25. The Hampshire Hotels and Resorts (Noida) Pvt. Ltd. was allotted a plot of 24,000 square meters in Sector 96, Noida. A lease deed was executed on March 28, 2007, for a total premium of Rs. 19,53,60,000.

The allotment was challenged in the High Court of Judicature at Allahabad, which led to the State Government directing NOIDA to cancel the allotments. The High Court set aside the cancellation orders on the grounds of violation of natural justice. The State Government then cancelled the allotments again, which led to the matter reaching the Supreme Court. In 2011, the Supreme Court upheld the allotment but directed the allottees to pay a premium of Rs. 70,000 per square meter, which was the prevailing market rate, and gave them an option to continue the lease.

The petitioners exercised their option to continue the lease, and deposited 25% of the premium and lease rent on 29.09.2011. They also deposited an additional amount of Rs. 5 crores on 03.04.2013. However, NOIDA did not execute the supplementary lease deed, leading to the filing of the present contempt petitions.

Timeline

Legal Framework

The core issue revolves around the implementation of the Supreme Court’s order dated 05.07.2011 in Civil Appeal No. 4564 of 2008. The Supreme Court had directed that allottees who were willing to pay the premium at Rs.70,000/- per square meter could continue their leases. The court also specified that those unwilling to pay the higher premium would have their leases cancelled and receive a refund of their payments along with interest. The court had also directed that the period between 01.08.2007 to 31.07.2011 shall be excluded for calculating the lease period of 90 years.

The judgment also refers to the initial allotment scheme floated by NOIDA on 17.10.2006 in compliance with the Tourism Department, U.P. Government Order No.984/41-06-180/2005 dated 22/05/2006. The lease deed executed between the Petitioner and NOIDA on 28.03.2007 also forms part of the legal framework, particularly concerning the payment of premium and lease rent.

Arguments

Petitioners’ Arguments:

• The Petitioners argued that they had exercised their option to continue the lease by paying the premium at Rs. 70,000 per square meter.
• They contended that despite making the required deposits, NOIDA failed to execute the supplementary lease deed, which prevented them from raising finance and proceeding with the project.
• The Petitioners submitted that the delay in executing the supplementary lease deed was due to the indifferent and recalcitrant attitude of NOIDA.
• They argued that NOIDA’s offer to refund the deposited amounts after deducting 30% of the premium without any interest was unfair, especially considering the current market prices of land.
• The Petitioners cited the Supreme Court’s 2011 judgment, which allowed allottees to withdraw from the arrangement and receive a refund of all amounts, including stamp duty and registration charges, with interest at 18% per annum.
• The petitioners were willing to forego the amounts indicated at Sl. Nos. 1, 5 and 6 of the illustrative chart quoted in the Order dated 17.09.2019.

NOIDA’s Arguments:

• NOIDA argued that the lease rent and other dues had to be cleared before the supplementary lease deed could be executed.
• NOIDA contended that the Petitioners had been in possession of the leased plot since September 2009 and had failed to pay all the 16 installments.
• NOIDA claimed that the processing fees was non-refundable.
• NOIDA argued that the stamp duty was paid to the State Government and not to NOIDA and as per the directions issued by this Hon’ble Court in its Judgment dated 5.7.2011, the stamp duty was refundable only in the event the allottee were to exercise the option of not accepting the rate fixed by this Hon’ble Court i.e. Rs.70,000/- per sq.mt.
• NOIDA argued that the interest that was paid was only on account of the delay on the part of the petitioner – allottee-lessee in not paying the amount on time for which the petitioner -allottee-lessee itself is responsible.
• NOIDA submitted that in case the Petitioners express their intention not to continue with the allotment and seek refund, the case would be required to be considered as surrender in terms of Clause ‘N’ of the Brochure, in which case the deposited sum or 30% of the premium, whichever is less, would be required to be forfeited.

Issues Framed by the Supreme Court

The Supreme Court did not frame specific issues in the traditional sense but rather considered the following points:

1. Whether NOIDA was in contempt of the Supreme Court’s 2011 order.
2. What would be the appropriate terms for land resumption and refunds to balance the interests of both parties.
3. Whether the second option suggested in the order dated 05.09.2019 could be availed, subject to modification.

Treatment of the Issue by the Court

Authorities

The Court primarily relied on its own judgment dated 05.07.2011 in Civil Appeal No.4564 of 2008, which had established the framework for the allotment and the option for the allottees to continue their leases. The court also considered the communication dated 21.10.2019 issued by the Commercial Department of NOIDA to M/S INGKA Centres India Pvt. Ltd., which accepted an E-bid for a commercial property at the rate of Rs.1,59,010.4528 per sq. metres, as a benchmark for current market prices.

Judgment

The Supreme Court, while not explicitly holding NOIDA in contempt, addressed the core issue of non-compliance with its 2011 order. The Court acknowledged the stalemate caused by the dispute and sought to find a solution that would serve the interests of both parties and the public. The court modified the second option suggested earlier, emphasizing a fair and equitable resolution.

How each authority was viewed by the Court?

• The Judgment dated 05.07.2011 in Civil Appeal No.4564 of 2008 [CITATION] was the basis of the present judgment. The Court relied on its own judgment to establish the framework for the allotment and the option for the allottees to continue their leases. The Court also referred to the directions given in the said judgment for refund of amounts to the allottees who were unwilling to continue with the lease.
• The communication dated 21.10.2019 [CITATION] was used as a benchmark for current market prices of land in the area, to determine the minimum price for re-sale of the plots.

What weighed in the mind of the Court?

The Court was primarily concerned with resolving the long-standing stalemate and ensuring that public interest was served. The Court emphasized the need for a fair and equitable solution that would balance the interests of both the petitioners and NOIDA. The Court also considered the current market prices of land in the area, as evidenced by the communication dated 21.10.2019, to ensure that NOIDA would receive a fair price for the plots.

Fact:Law Ratio

The Court’s reasoning was guided by the need to balance the factual circumstances of the case with the legal principles and precedents. The Court considered the factual aspects of the case, such as the failure of NOIDA to execute the supplementary lease deed and the long-standing stalemate, while also considering the legal principles and precedents, such as the Supreme Court’s 2011 order and the need to ensure that public interest is served.

The Court considered alternative interpretations, such as NOIDA’s claim that the case would be considered a surrender in terms of Clause ‘N’ of the Brochure, but rejected them in favor of a more equitable solution. The Court also considered the possibility of directing NOIDA to execute the supplementary lease deed but ultimately decided that the revised second option would be more beneficial for all parties involved.

The Court’s decision was based on the following reasons:

• The need to resolve the long-standing stalemate.
• The need to ensure that public interest is served.
• The need to provide a fair and equitable solution for both the petitioners and NOIDA.
• The need to consider the current market prices of land in the area.
• The need to ensure that NOIDA receives a fair price for the plots.

The Court’s decision was unanimous, with all three judges concurring in the judgment.

“The present status is nothing but a stalemate in which valuable assets of a public authority are locked completely.”

“The modality devised above will ensure that as against the promised rate of Rs.70,000 per sq. metre, which premium is also in arrears in the present cases, NOIDA shall get much more than that towards price of land and will also stand to gain considerably.”

“The endeavour was to see that the interest of both sides is sufficiently taken care of and more than anything else, the public interest must stand subserved.”

Key Takeaways

• The Supreme Court modified the terms for land resumption in cases where allottees were unable to proceed with their projects due to disputes with the authority.
• The Court emphasized the need for a fair and equitable solution that balances the interests of both the allottees and the authority.
• The Court set a minimum price for the re-sale of the plots to ensure that the authority receives a fair price.
• The Court clarified the method for refunding premium and lease rent, and the calculation of interest.
• The decision may have implications for future cases involving land allotment disputes and the need for authorities to act fairly and transparently.

Directions

The Supreme Court directed the following:

• The plots allotted to the Petitioners shall be sold by NOIDA by inviting E-bids or by auction.
• If the price quoted is more than one and a half times of the price at which the arrangement with the Petitioners was arrived at (i.e., more than Rs.1,05,000 per sq. meter), the Petitioners shall be returned the amounts deposited towards premium.
• If there is a shortfall as against the rate of Rs.1,05,000/- per sq. metre, the shortfall shall be made good by the Petitioners.
• The refund of amounts towards the remainder part of the lease rent and the component of interest shall be made over only if the price received by NOIDA in fresh sale of said plots is in excess of Rs.1,05,000/- per sq. metre.
• The Petitioners shall be entitled to 7% annual interest on the amounts deposited by them towards premium from time to time, calculated up to 30.04.2021.
• The Petitioners must exercise the option of the revised second option by filing an appropriate affidavit with NOIDA along with a resolution of the Board of the concerned Company within two weeks from the date of the order.
• NOIDA must communicate all the details, including the proposed user as well as the minimum price at which the plots would be put up for sale, to each of the Petitioners exercising such option on or before 17.05.2021.
• The possession of the concerned plots must be delivered by each of the Petitioners back to NOIDA by 31.05.2021.
• NOIDA shall put up the plots for auction or invite E-bids within three months.
• The amounts indicated above shall be paid to each of the Petitioners exercising such Second Option in accordance with the principles as stated above, within three months of the sale.

Development of Law

The ratio decidendi of this case is that in cases of land allotment disputes, the court must strive to find a fair and equitable solution that balances the interests of both the allottees and the authority, while also ensuring that public interest is served. This case also clarifies the terms for land resumption and refunds in such disputes, providing a framework for future cases. The Court has also clarified the modalities for refund of amounts to the allottees.

Conclusion

The Supreme Court’s judgment in the Hampshire Hotels case provides a revised framework for resolving land allotment disputes, particularly in cases where there has been a failure to comply with previous court orders. The court’s decision emphasizes the need for a fair and equitable solution that balances the interests of all parties involved and ensures that public interest is served. By setting a minimum price for the re-sale of the plots and clarifying the method for refunding premium and lease rent, the court has provided a clear path forward for resolving similar disputes in the future.