NOIDA: The Allahabad High Court has overturned a nearly Rs 12 crore demand made by Noida Authority from Windsor Corporate Tower.
In a ruling delivered on October 31, Justice Prakash Padia stated that extension fees should be calculated based on the original lease premium rather than current allotment rates or location fees.
The court annulled three orders — dated May 25, 2018, September 3, 2020, and January 15, 2021 — issued by Noida Authority and the state government.
The court mandated that the Authority must recalculate the extension fees strictly according to the original lease agreement and reimburse any excess amounts within one month, including 6% annual interest for delayed refunds. “Charging extension fees based on current allotment rates plus location charges is illegal and has been quashed,” remarked Justice Padia.
The court emphasized that based on previous decisions, extension or delay penalties should be determined according to the original premium, not the market value.
The HC instructed Noida to reassess the fees for the period from December 21, 2017, to October 20, 2020, granting Covid-related relief, and return any excess funds from the Rs 3 crore paid by Windsor during the litigation.
The case pertains to an institutional plot in Sector 16A, which was initially allocated to Carnoustie Management (India) in November 2008. A lease agreement was finalized in December 2009, mandating construction completion within five years. According to Clause 8(c) of the lease, an extension could be granted with a payment of 4% of the total lease premium each year.
The lease permitted the transfer of the plot to another party with Noida’s consent after paying 10% of the existing allotment rate as transfer fees.
The original allottee was unable to finish construction and requested an extension from November 2012 to December 2017, which Noida approved in October 2015, upon receiving Rs 2.39 crore. Subsequently, the company transferred the plot to Windsor Corporate Tower, with Noida finalizing the transfer in November 2015.
The transferee paid Rs 6.63 crore in transfer fees and an annual lease rent of 2.5% of the premium, calculated on the current allotment rate plus location fees. Although the transfer deed was signed in January 2016, the provision regarding extension fees remained unchanged, mandating payment based on the original lease premium.
Windsor later sought an extension until December 2018, depositing over Rs 48 lakh.
However, in May 2018, Noida demanded a recalculation of extension fees at 4% of the current allotment rate of Rs 1.22 per square meter, along with 2% location charges, totaling approximately Rs 5.15 crore. Windsor contested the demand, arguing that while Noida could adjust the extension fee rate, it could not modify the calculation basis.
After completing the project, the company applied for a completion certificate on August 31, 2020, paying an additional Rs 75 lakh for the 2018–2020 period.
Despite this, Noida issued a new demand of nearly Rs 12 crore in September 2020, without a prior hearing.
The Authority argued that it had the authority to apply current rates based on its internal policy and cited Clause 24(ii) of the lease agreement, which empowers its CEO or chairman to amend lease terms. The Authority claimed that the plot’s current premium value was Rs 67.6 crore, indicating Windsor owed 4% of this amount in extension fees.
After considering both parties’ arguments, the HC concluded that Clause 8(c) explicitly limited Noida’s authority to changing the extension fee rate, not the calculation basis.
The court determined that the memorandum of transfer referred solely to annual lease rent, separate from extension fees.
The court also noted that Windsor was entitled to the same extension granted to the original allottee until December 20, 2017, thus, restrictions on that period were not applicable.
Additionally, it was concluded that once Windsor applied for a completion certificate, it should not be liable for further extension fees due to Noida’s delay in providing the certificate.
