M/s Aloft Solutions Private Limited vs State Of Uttar Pradesh & Ors.

(Per : Siddhartha Varma, J.)

Heard Shri Anurag Khanna Senior Advocate assisted by Ms. Himadri Batra and Ms. Radhika Bansal for the petitioners, Shri Shivam Yadav learned Advocate on behalf of the New Okhla Industrial Development Authority and learned Standing Counsel on behalf of the State respondents.

The present petition has been filed for the following reliefs:

In the district Gautam Budh Nagar, the New Okhla Industrial Development Authority (“the Authority” for brevity) had advertised with regard to plots in Sectors 42 and 43. The scheme bore No.2007-08 (builder Plot No.l).

The petitioner applied for getting the plot, which was advertised and on 26.7.2007 the bid made by the petitioner was accepted and on 27.7.2007, the petitioner was allotted a commercial builder Plot No.146/2, Block-A Sector-43. The area of this plot was 782.42 sq. meter and the premium for this plot was ₹9,31,07,197.58. When the allotment was made, an earnest money deposit was done of ₹35,00,000/-. The allotment money, which was 25% of the entire premium, was ₹2,32,76,799.40. The balance of the allotment money payable after the adjustment of amount deposited came to ₹6,98,30,400/- and in the allotment letter itself it was stated that the payment was to be made in 16 equal instalments. The allotment letter had also disclosed that the lease rent of one year would be @ 2.5% of the total premium i.e. ₹23,27,679.94. The lease deed was thereafter executed by the Authority on 04.01.2008. The first instalment was to be paid on 27.01.2008 while the 16^th instalment was to be paid by 07.07.2015. After the lease was executed, the petitioner also got possession, only on paper, on 20.02.2008. In the meantime, there were certain developments happening over the land situate in Sectors 42 and 43. One Kendriya Karamchari Sahkari Greh Nirman Samiti Limited (“the Samiti” for brevity) had been allotted some land in Sectors 42 and 43 and when the Samiti’s allotment was cancelled, the Samiti filed an Original Suit, being Original Suit No.273 of 2006 against the Authority. In this Suit, the application filed under Order 39 Rule 1 and 2, came to be rejected vide order dated 30.05.2006. The Samiti then filed a First Appeal From Order, being First Appeal From Order No.1850 of 2006 (Kendriya Karamchari Sahkari Greh Nirman Samiti Limited Vs. New Okhla Industrial Development Authority). In the First Appeal From Order filed in the High Court on 10.11.2006, a temporary injunction for maintaining status-quo between the parties was passed. The interim injunction, which was passed by this Court in First Appeal From Order on 10.11.2006, is reproduced herein below:-

Thereafter, the original suit was decreed on 10.09.2008. The Authority, being aggrieved by the decree, filed a First Appeal in the High Court, being First Appeal No.790 of 2008, in which on 29.01.2009 the following order was passed:-

It is the case of the petitioner that despite the fact that the lease-deed was signed on 04.01.2008 and paper possession was given on 20.02.2008, the petitioner never got any possession and the petitioner, therefore, refrained from depositing the instalments, which were fixed by the lease deed.

Because of non-payment of the instalments, a show-case notice was issued on 31.07.2013 by the Authority asking the petitioner as to why the allotment of the commercial plot No.A-146/2, Sector 43, NOIDA, be not cancelled on the violation of terms and conditions of the lease-deed. The show cause notice dated 31.07.2013 is being reproduced herein below:-

The petitioner replied to the show cause notice. However, the reply did not find favour with the Authority and, therefore, a consequential order for cancellation of allotment and of the lease was passed on 14.10.2013, which is reproduced here under:-

Undeterred by the passing of the aforesaid orders, the petitioner persuaded the Authority to recall the orders so that it could continue with its business on the allotted plot. On 22.07.2014, in reply to the various requests of the petitioner, the Authority passed an order that they were ready to restore the lease-deed provided the restoration charges and the interest thereon were paid. The order dated 22.7.2014 is reproduced here under:

In the meantime, relying upon the fact that there was an order of status-quo passed by the High Court on 29.01.2009, which had an all-encompassing effect on all the land in Sectors 42 and 43, the Authority, which was the appellant in the High Court in First Appeal No.790 of 2008, filed an application for modification of order dated 29.01.2009. On 22.07.2016, the High Court, upon being persuaded that the earlier order dated 29.01.2009 works against the interest of the Authority inasmuch as the plaintiff namely the Samiti was entitled to only 3,24,000 sq. meters in Sectors 42 and 43 and they never had a claim over the remaining area of these sectors. The order dated 29.01.2009 was modified to the extent that the order of status-quo would remain operative only in respect of an area of 3,24,000 sq. meters being 40% of the total area of the land of plaintiff i.e. Kendriya Karamchari Sahkari Greh Nirman Samiti Limited. The order dated 22.07.2026 passed in First Appeal No.790 of 2008 is reproduced herein below:-

The petitioner, however, had consistently requested the Authority to waive off the demand of restoration charges and also now when the petitioner came to know that status-quo order dated 29.01.2009 was modified by the High Court on 22.7.2016, it requested that the possession of the plot no. A-146/2, Sector-43, be handed over to it and the entire period since the allotment was made on 27.07.2007 till such period as the possession was given be treated as a zero period. It had also throughout prayed that since the cancellation had occurred on account of the fact that the Authority had not been able to give the possession on the land in question because of the order of status-quo which was prevailing, therefore, the petitioner also requested that no restoration charges be taken from the petitioner. Finding that the petitioner's request had substance, the Chief Executive Officer of Authority on 08.12.2023 asked for a report as to how the petitioner could be given possession over the plots in question. In answer to the Chief Executive Officer's query as to whether the petitioner could be given the plot in question, the Junior Engineer of the Authority on 08.12.2023 gave a report that possession could not be delivered to the petitioner. The report dated 08.12.2023 is being reproduced herein below:-

In the meantime, the cancellation order dated 14.10.2023 and the demand for restoration charge dated 08.04.2023 were challenged before the State Government under section 41(3) of the U.P. Urban Planning and Development Act, 1973 (“the 1973 Act” for brevity) read with section 12 of the U.P. Industrial Area Development Act, 1976 (“the 1976 Act” for brevity). This revision came to be allowed on 08.07.2024. By this order, the order dated 14.10.2013 by which the allotment was cancelled was set aside and the order dated 08.04.2022 by which the demand for restoration charges was made was also set aside. Also, since the petitioner had prayed that the possession was not given immediately after the execution of the lease-deed, the period from the date when the lease was executed till such time as the possession was given was directed to be treated as zero period and the Revisional Court had thus allowed the prayer of the petitioner and had allowed the revision accordingly. Paragraph no.17 of the Revisional Court order which had directed the Authority to again pass a speaking order after cancelling the order dated 14.10.2013 (cancellation of allotment) and the order dated 8.4.2022 (by which the restoration charges were demanded) were set aside is being reproduced herein below:-

Consequent to passing of the order of Revisional Court, three orders were passed; firstly, on 03.04.2025 by which the Authority did restore the lease-deed but had imposed restoration charges; secondly, the order dated 07.05.2025 by which the recommendations of the Committee, which had been constituted, were accepted and it was said that (1) restoration charges would be applicable; (2) since before the order of modification dated 29.1.2009, there were 3 instalments already due and they were not paid, therefore, penal interest had to be charged on the three defaulted instalments; (3) the benefit of zero period was given starting from the date 29.1.2009 when the status-quo order was passed (4) because of the fact that the petitioner had not been able to do any work on the land situate in Sector 43 because of the fact that no amenities etc. were there, therefore, two years extension was given for the purpose of building etc. The third order which was passed by the Authority and the quashing of it has been demanded is 19.08.2025. By the said order, demands were raised in the following manner ; (i) the premium amount (ii) simple interest on the premium amount which had not been paid (iii) the penal interest on the three instalments which had accrued before the date 29.1.2009 (iv) the lease rent for occupation of the plot in question since the execution of the lease-deed dated 4.1.2008 and (v) interest on the non-payment of lease rent; and (vi) the restoration charge.

A further prayer in the writ petition was made to restore the allotment of plot No.A-146/2, Block-A, Sector-43, NOIDA, without any restoration charge. Not satisfied with the zero period which had been given w.e.f. 29.01.2009, the petitioner had also prayed that zero period be extended to the benefit the petitioner in a manner that zero period had to commence from 27.07.2007 i.e. the date of allotment. Also, the possession of the property in question was prayed for.

Learned Senior Counsel for the petitioner, made the following submissions in support of the relief asked for :-

Sri Shivam Yadav learned Counsel for the Authority has opposed the writ petition vehemently and has submitted that the petitioner was a lessee who ought to have come with open eyes and if it had got the allotment and if the lease-deed was executed in its favour then the petitioner had to be bound by the terms of the lease.

Learned Counsel appearing for the Authority further submits that the petitioner was given the benefit of zero period w.e.f. 29.01.2009 and, therefore, all instalments, which were payable before that period, ought to have been paid and, therefore, the imposition of penal interest of ₹ 57,82,697/- was justified. He also states that for no reason, the land was left unoccupied and, therefore, the lease rent as had been demanded by the demand letter dated 19.08.2025 ought to have been paid by the petitioner.

Learned Standing counsel for respondent 1 submitted that the State Government exercising its powers under section 41(3) of the 1973 Act read with section 12 of the 1976 Act had already taken into consideration the difficulties faced by the petitioner with regard to the disputed land and had already set aside the cancellation order and its subsequent order for restoration charges. Learned Standing Counsel submitted that the State Government had already directed the Authority to give benefit of zero-period and to pass a fresh order keeping in mind the facts of the case especially the status quo order. It was further submitted that after the impugned order was passed, no revision was filed, therefore as on date the State Government has already exercised its discretion and granted relief to the petitioner. As regarding the challenge to the impugned order, the same is based upon the factors taken into consideration by the Authority and the same has to be tested considering the revisional order and the particular facts of the case.

We have heard the rival submissions and perused the records of the case. Based on the submission and records annexed the following points of determination are framed for adjudication of the dispute.

The following points of determination arise in the present case:

Before this Court examines the rival submissions, certain unrefuted facts must be kept in mind to help understand the controversy better. They are as follows:

Keeping in mind the above un-refuted facts, we have considered the rival submissions. Perusal of the records of the case show that when the allotment was made, the Original Suit No. 273 of 2006 was already instituted by the Samiti for plots in sector 42 and 43. The first status quo order in First Appeal From Order was granted on 10.11.2006. The status quo order was in respect of sector 42 and 43 and there was no way of ascertaining whether the plot allotted to the petitioner was outside the scope of litigation. This question becomes material considering the modification order passed by the High Court dated 22.07.2016 in First Appeal filed by the Authority against the judgment and decree passed against the Authority in the Original Suit of the Samiti. It is on 22.07.2016, the Authority could give possession of plot which would come in the land which was outside the 3,24,000 sq. mtrs on which status quo order was existing.

The cancellation order dated 14.10.2013 was passed when the status quo order in respect of entire lands of sector 42 and 43 was operating. However, the effects of the status quo order need not be elaborated as the order dated 14.10.2013 was subsequently set aside in the revision filed by the petitioner along with the order dated 08.04.2022 regarding rejection of request for restoration as well as request for zero period. The order dated 08.07.2024 was not challenged by the Authority and therefore the setting aside of the cancellation order as well as rejection of the request for restoration and grant of zero period is now final. Furthermore, the Authority has now proceeded to pass fresh orders in light of directions given in the revisional order which are now the impugned orders.

A perusal of the order of the revisional authority would reveal that the revision was allowed on the ground that the Authority while issuing the cancellation order did not consider that a status quo order was passed against the Authority due to which no possession could be handed over. The relevant portion of the order of the revision authority is reproduced below for better understanding:

The revisional Authority was conscious of the fact that there was a status quo order which prevented the plot from being handed over to the petitioner. Also, if the zero period is allowed to the petitioner, then the reason for cancellation i.e. default in the lease premium would shift to a period after the expiry of the zero period as has been quoted above. Furthermore, the revisional authority held as following:

Upon examining the impugned order dated 07.05.2025, this Court cannot help but notice that the Authority has again failed to make amends to the mistakes committed while cancelling the allotment and rejected the request for restoration and grant of zero period. The revisional authority was clear in its order that the Authority will have to see the effect of the status quo order. The Authority while passing the impugned order gave the benefit of the zero period from the date the High Court granted the status quo order in the First Appeal filed by the Authority i.e. 29.01.2009 but in complete defiance of the order of the revisional authority setting aside the cancellation order, imposed restoration charges on the petitioner. The Authority further directed that penal interest be charged on the three defaulted instalments.

Once the revisional authority had set aside the cancellation order and the subsequent rejection of request for restoration and grant of zero period, then the issue of restoration charges in the impugned order dated 07.05.2025 is patently illegal and arbitrary. The question of grant of restoration charges would only arise if the Authority were to decide the issue of restoration again in accordance with law. But in the present case, the revisional authority did not direct for decision on the request for restoration but rather directed for further action to be taken after confirming the fact of possession not being handed over to the petitioner. The revisional Authority held that “ऐसी स्थिति में आदेश दिनांक 14.10.2013 एवं आदेश दिनांक 08.04.2022 निरस्त किया जाता है एवं प्राधिकरण को निर्देशित किया जाता है कि उपरोक्त तथ्यों की विवेचना पुनः कर ली जाए।” Once the cancellation of the allotment was set aside then by necessary legal fiction, the plot stood restored and therefore there was no discretion left upon the Authority to examine the issue of restoration and imposition of restoration charges. Furthermore, imposition of restoration charges would apply when the order of cancellation was in operation. Here, the order of cancellation was set aside, therefore there is no question of any restoration much less any imposition of charges to restore the allotment.

The Authority having held that restoration charges would be applicable, it then proceeded to impose restoration charges to the tune of ₹1,63,60,868/- by means of order dated 19.08.2025. This imposition, in the considered view of this Court, is patently illegal and arbitrary. The reason being that the cancellation order stood set aside and the plot stood restored by the revisional authority. It also held that as the plot was cancelled due to default in payment of instalment, the same must be seen after grant of zero period to the petitioner as the grant of zero period would change the payment schedule to a period after the zero-period expired.

Thus, considering the above, the imposition of restoration charges upon the petitioner are illegal and arbitrary and are liable to be set aside. Accordingly, the imposition of restoration charges in the order dated 07.05.2025 and the calculation of the restoration charges by order dated 19.08.2025 are set aside.

The next issue that the Authority had to consider was grant of zero period as the revisional court held that “यदि मा० उच्च न्यायालय के यथास्थिति के आदेश से प्रश्नगत भूखण्ड प्रभावित था, तो ऐसी दशा में प्राधिकरण द्वारा अपनी शून्य काल दिये जाने की नीति के अंतर्गत कार्यवाही की जानी अपेक्षित थी। इस प्रकरण में प्राधिकरण द्वारा निरस्तीकरण आदेश इसलिए जारी किया गया है, क्योंकि पुनरीक्षणकर्ता संस्था द्वारा अपने देयकों को समय से जमा नहीं किया गया है। यदि प्राधिकरण की नीति के अंतर्गत उसे शून्य काल का लाभ प्रदान किया जाएगा, तो निश्चित ही ऐसे देयक भी प्रभावित होंगे।”

As the Authority in its order dated 07.05.2025 has already granted benefit of zero period from 21.01.2009 to 07.05.2025, we need not examine this period as according to us, the benefit was rightly granted. However, the issue remains regarding grant of zero period from the date of allotment i.e. 27.07.2007 to the date of actual physical possession. This aspect has neither been considered in the order of the revisional authority nor in the impugned order even though the grant of first status quo order in the First Appeal from Order has an important bearing in the present dispute. As per the report of the Authority dated 08.12.2023, the Authority could not hand over the physical possession. Thus, from the date of allotment till today, no actual physical possession has been handed over to the petitioner.

The Authority was aware that an original suit regrading land in sector 42 and 43 was filed against it in the Civil Court. The Authority was also aware that a status quo order was passed by the High Court in the First Appeal from Order filed by the Samiti. On the date the allotment was made, the status quo order was in operation imposing a restriction on the Authority to physically hand over the allotted plot. Despite being aware of first status quo order, the Authority chose to execute a lease deed in favour of the petitioner without disclosing the actual location of the allotted plot. The status quo order continued during the pendency of the suit and upon the admission of the First Appeal by the Authority, another status quo order was granted. It is only on 22.07.2016, that the status quo order granted in the First Appeal was modified and it was clarified that the status quo order pertained only to 3,24,000 sq. mtrs of land allotted to the Samiti. In light of the above, it is clear to us that interest of justice would require us to grant the benefit of zero period from the date of allotment as otherwise the Authority would benefit from its own wrong. The Authority being fully aware of the restriction imposed upon it by the first status quo order chose to proceed further. Therefore, the conduct of the Authority does not justify the non-grant of zero period from the date of allotment. Even though the Authority only considers the grant of zero period benefit from the date of status quo order in the First appeal i.e. 21.09.2009, however in the present case, the grant of zero period must be reckoned from even before that. In coming to this conclusion, we have also taken into consideration that till date no actual physical possession has been given to the petitioner due to the status quo order.

Thus, in our considered view, the non-grant of zero period from the date of allotment is not justified. The zero period must be granted from 27.07.2007 i.e. the date of allotment.

The issue of imposition of penal interest due to default in payment of three instalments is justified or not is also to be considered. The Authority by its order dated 07.05.2025 held that as three instalments were due towards premium before 21.09.2009 therefore the petitioner is liable to charge penal interest. By means of order dated 19.08.2025, the same was quantified to ₹57,82,697/-. It must be kept in mind that the revisional authority had already held that as the cancellation order was passed only due to default in payment of instalments therefore if zero period is to be granted to the petitioner, then the liability to pay instalments along with interest would shift to a time period after the zero period expires. The Authority has already given a zero period from 21.09.2009 till 07.05.2025 and has accordingly shifted the instalments but we have held above that zero period must be granted from the date of allotment i.e. 27.07.2007 due to possession not being given to the petitioner therefore the penal interest is also liable to be set aside. Accordingly, the penal interest on defaulted instalments is set aside.

The quantification by the Authority in its order dated 19.08.2025 has also been challenged by the petitioner stating that the entire calculation is arbitrary and illegal. Contention has been raised that the premium was to be paid in 16 equal instalments and a tabular chart was also given to the petitioner showing the payment schedule after considering the zero period. However, by means of order dated 19.08.2025, the entire premium has been asked for. Lease rent has also been quantified which cannot be done as no possession has been handed over to the petitioner. Upon examination of the order dated 19.08.2025 and the payment schedule attached along with the order, we find that the entire premium that was due amounting to ₹6,98,30,400/- has indeed been demanded even though the payment schedule attached with the order specifies various dates, the last being 23.04.2031 before which the last instalment is to be paid. The counter affidavit filed by the Authority is completely silent regarding this aspect and therefore we have no hesitation to hold that the demand of the entire premium amount is completely unjustified. There is no denial of the liability to pay the premium, but the liability is contingent upon 16 instalments given to the petitioner. The last instalment is due on 23.04.2031 and therefore even from the own records of the Authority there is no justification to demand the entire premium in one go when as per the covenants of the lease deed, the petitioner is entitled to 16 instalments to pay the premium. Accordingly, the demand of the entire lease premium in one go is unjustified and is accordingly set aside. Consequently, the demand of interest on the lease premium is also set aside. The petitioner is entitled to payment of instalments as per the covenants of the lease deed which shall be calculated and payment schedule intimated taking into consideration the grant of zero period.

The question of demand of lease rent has also been contented as being illegal. In this context it would be useful to refer to the directions of the revisional authority which directed that possession be given as per the prevailing policy of the Authority. It is also admitted that till date the petitioner has not been given the actual physical possession of the allotted plot. The same is borne out from the report dated 08.12.2023. The question whether lease rent is payable when physical possession has not been given is no longer res-integra. In Vision Town Planners Private Limited vs. State of U.P. and 2 others^{11.2026(1) ADJ 574}; it was held that if possession has not been given then there is no question of any lease rent being paid. In M/S Silverline Furnishing And Furnitures Private Limited vs. State of U.P. and others²; a coordinate bench of this Court was called upon to consider whether lease rent was justified when the possession was not handed over. The Court concluded that as no possession was given, imposition of lease rent was not justified. We have perused the same and see no reason to differ from the ratio laid down in the Vision Town Planner (supra) and Silverline Furnishing (supra). Accordingly, we hold that the demand of lease rent is unjustified and is set aside. Consequently, the demand for interest on lease rent is also set aside. The same can only be made once actual physical possession is given to the petitioner.

The order dated 23.04.2025 is a mere intimation that the plot has been restored with certain charges. As we have held that restoration charges were unjustified as well as the zero period was to be granted from 27.07.2007 therefore the order dated 23.04.2025 is also set aside considering the above findings.

Since we have already held above that the allotment of the plot already stood restored by order dated 08.07.2024 and the imposition of restoration charges along with other charges are unjustified, therefore the petitioner is entitled to actual physical possession of the plot which shall now be given by the Authority in accordance with the directions issued by this Court.

Regarding issue no. 1 as to Whether the impugned orders dated 23.04.2025, 07.05.2025 and 19.08.2025 are liable to be set aside as being illegal and arbitrary the issue is answered in the affirmative holding that the orders are unjustified and are set aside.

Regarding Issue no. 2 as to Whether the petitioner is liable to be granted zero period from the date of allotment i.e. 27.07.2007 or from the date the High Court granted status quo order in First Appeal No. 790 of 2008 i.e. 29.01.2009 the issue is answered holding that the zero period is to be reckoned from 27.07.2007 i.e. the date of allotment.

Regarding issue no. 3 as to Whether the petitioner is entitled to any relief if (I) and (II) is answered in favour of the petitioner, the following directions are issued:

In light of the findings and directions given above, the writ petition is accordingly, allowed. There shall be no order as to cost.