Supreme Court sets aside Allahabad High Court order on land allotment rates: NOIDA vs. 24 Oranges Lab LLP (2021)

Date of the Judgment: September 21, 2021
Citation: Not Available
Judges: M. R. Shah, J., A.S. Bopanna, J.
Can a lease deed executed based on an interim court order be considered final and binding? The Supreme Court of India recently addressed this question in a dispute over land allotment rates. This case involves the New Okhla Industrial Development Authority (NOIDA) and a private company, 24 Oranges Lab LLP, concerning the finality of rates for an industrial plot. The judgment was delivered by a two-judge bench comprising Justice M. R. Shah and Justice A.S. Bopanna, with Justice M.R. Shah authoring the opinion for the court.

Case Background

The dispute began when NOIDA sought to charge 24 Oranges Lab LLP an enhanced rate for an industrial plot. The company had previously won a legal battle to secure the allotment of the plot. However, NOIDA then tried to apply a new, higher rate. The company challenged this demand, leading to a writ petition before the High Court of Judicature at Allahabad. During the proceedings, the High Court passed an interim order on July 7, 2014, directing NOIDA to allot the plot at a rate of Rs. 5900 per sq. meter. Subsequently, a lease deed was executed on October 21, 2014, at this rate. The High Court then disposed of the writ petition, concluding that the lease deed at Rs. 5900 per sq. meter was final and binding. NOIDA appealed this decision, arguing that the rate was only an interim measure.

Timeline

Course of Proceedings

The High Court of Judicature at Allahabad initially directed NOIDA to consider 24 Oranges Lab LLP’s application for land allotment, which NOIDA had previously denied. NOIDA’s appeal against this order was dismissed by the Supreme Court. Subsequently, NOIDA issued an allotment letter at an enhanced rate, which was challenged by the company in another writ petition. The High Court, through an interim order, fixed the rate at Rs. 5900 per sq. meter, leading to the execution of a lease deed at this rate. The High Court then disposed of the writ petition, stating the lease deed was final. NOIDA appealed this decision to the Supreme Court, arguing that the rate was based on an interim order and not final.

Legal Framework

The judgment refers to Clause 2(d) of the terms and conditions for the allotment of industrial plots. This clause states that the rates of allotment in the allotment letter are subject to change without notice and that the rates prevailing on the date of issue of the allotment letter would be applicable, irrespective of the date of application and interview.

Arguments

Appellants (NOIDA) Arguments:

• NOIDA argued that the High Court erred in disposing of the writ petition by considering the lease deed dated 21.10.2014 as final.
• They submitted that the rate of Rs. 5900 per sq. meter in the lease deed was based on an interim order by the High Court dated 07.07.2014 and was subject to the outcome of the writ petition.
• NOIDA contended that the price in the lease deed was interim and ad hoc, not final, and the High Court should not have treated it as such.
• They relied on Clause 2(d) of the allotment terms, which allows for rate changes without notice.

Respondents (24 Oranges Lab LLP) Arguments:

• The respondents argued that the lease deed dated 21.10.2014 did not mention that it was subject to the outcome of the writ petition or that the rate of Rs. 5900 per sq. meter was tentative.
• They contended that the lease deed was final and conclusive, and the High Court rightly accepted the rate of Rs. 5900 per sq. meter.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in the judgment. However, the core issue before the court was:

1. Whether the High Court was correct in holding that the rate mentioned in the lease deed dated 21.10.2014 was final and binding between the parties, overriding the conditions mentioned in the allotment order dated 08.05.2014.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following:

• Interim order dated 07.07.2014 of the High Court of Judicature at Allahabad in Writ Petition No. 27632 of 2014.
• Clause 2(d) of the terms and conditions for the allotment of industrial plots.

Judgment

The Supreme Court held that the High Court erred in considering the rate of Rs. 5900 per sq. meter in the lease deed as final and binding. The Court emphasized that the rate was fixed based on an interim order, which explicitly stated it was an interim measure. Therefore, the High Court should not have treated it as conclusive.

The Court stated:

• “the High Court has not at all appreciated and/or considered the fact that the rate of Rs.5900/­ per sq.meter was fixed by the NOIDA as mentioned in the lease deed in view of the interim order passed by the High Court vide order dated 07.07.2014 which as such was by way of interim measure.”
• “What was ordered by way of interim measure cannot be said to be final and conclusive between the parties.”
• “The High Court has disposed of the writ petition solely on the basis of the execution of the lease deed dated 21.10.2014 at Rs.5900/­ per sq.meter which as observed hereinabove was only by way of interim measure pursuant to the interim order dated 08.05.2014 passed by the High Court vide order dated 07.07.2014.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the High Court had not properly considered that the lease deed rate was based on an interim order. The Court emphasized that an interim measure cannot be considered final and binding. The Court focused on the procedural aspect of the case, specifically that the High Court had not considered the interim nature of the rate before disposing of the writ petition.

The Court’s reasoning was primarily based on the legal interpretation of interim orders and their binding nature.

Key Takeaways

• Interim orders are not final and binding.
• Lease deeds based on interim orders are subject to the final outcome of the case.
• Courts must consider the interim nature of orders before treating them as conclusive.

Directions

The Supreme Court set aside the High Court’s judgment and remanded the matter back to the High Court for fresh consideration. The High Court was directed to dispose of the writ petition on its merits, considering the observations made by the Supreme Court, preferably within six months.

Development of Law

The ratio decidendi of this case is that an interim order cannot be treated as final and conclusive, and any action taken based on an interim order is subject to the final outcome of the case. This judgment clarifies that a lease deed executed based on an interim court order does not automatically become final and binding if the interim order is not explicitly stated to be so.

Conclusion

The Supreme Court’s decision in this case clarifies the legal position regarding interim orders and their effect on subsequent actions. The Court emphasized that the High Court should not have treated the lease deed rate as final since it was based on an interim order. The matter has been remanded to the High Court for fresh consideration on merits.