NOIDA: The Allahabad High Court has annulled a lease rent demand of approximately Rs 168 crore raised by the Noida Authority against Vision Town Planners concerning a commercial plot in Sector 94 that was initially allocated to BPTP International Trade Centre Ltd.
On December 19, Justice Prakash Padia also mandated a refund of around Rs 7.4 crore collected as change in constitution (CIC) charges, along with 9% annual interest.
The court ruled that the authority acted unlawfully by imposing lease rent without providing legal possession of the subdivided plot, and improperly retained CIC charges, despite established judicial precedents that deemed such levies impermissible.
The original allotment spanned approximately 3.8 lakh sqm, with a total premium nearing Rs 5,000 crore. The allottee paid approximately Rs 1,115 crore and requested a reduction of the plot size in relation to the already paid amount.
The Noida Authority accepted this request, reducing the plot to around 85,700 sqm, corresponding to the revised premium already paid. A lease deed was signed on February 9, 2009, setting the annual lease rent at 2.5% of the premium.
In February 2010, the authority permitted the subdivision of the plot into two sections under specific conditions, one of which required the execution of separate sub-lease deeds and issuance of independent possession certificates for each subdivided section.
However, instead of fulfilling these conditions, the authority merely executed a correction deed, splitting the land into Plot No 2A (approximately 28,300 sqm) and Plot No 2B (approximately 57,300 sqm). Plot No 2A was subsequently transferred to Vision Town Planners with the authority’s approval through a registered transfer deed executed in February 2010.
The court determined that the critical condition regarding possession was not met, stating, “As per condition No 3 of the letter dated February 16, 2010, a separate possession letter was required, which was not issued by the development authority.”
Rejecting Noida’s argument that possession given to the original allottee prior to subdivision was sufficient, the court maintained that “the respondent development authority cannot take two stands.”
The ruling noted that although leasehold rights were transferred and symbolic possession was given, “independent possession through possession certificates for the two divided plots was not provided,” thus “lawful possession of the petitioner cannot be assumed over Plot No 2A, Sector 94.”
Referencing consistent rulings from the Allahabad and Delhi High Courts, the court reiterated that lease rent can only be charged after actual and lawful possession is granted. It firmly concluded that since lawful possession of the subdivided plot wasn’t given to either the original allottee or the petitioner, the development authority could not impose lease rent.
The duration between the execution of the sub-lease deed in favor of Vision Town Planners and the granting of lawful possession was classified as a “zero period,” during which no lease rent could be collected.
The court took a strong stance against the authority regarding CIC charges. Following the transfer of Plot No 2A, the petitioner company underwent a complete change in shareholding and management.
Upon applying to record these changes, the Noida Authority issued a demand for around Rs 7.4 crore, which was paid in 2010.
The court remarked that this charge contradicted established law, stating, “a mere change in shareholding does not alter the status of the company, as it has its own legal identity.”
It noted that the authority was fully aware that CIC charges could not be imposed solely due to share transfers absent any change in the company’s form or nature.
The judgement stated that “the levy of CIC charges on August 23, 2010, and acceptance of its deposit on October 5, 2010, is clearly unjust to the petitioner,” adding that the authority’s actions were “unfair, unreasonable, and contemptuous in nature.” The court annulled the October 17, 2024 order of the state’s industrial development department, which upheld the lease rent demand and denied a refund of CIC charges.
Noida Authority was instructed to recalculate lease rent only from the date a valid possession certificate for Plot No 2A is issued and to promptly refund any excess amounts. Any remaining balance should be settled by the petitioner within two months; failing which, the authority may pursue legal action.
The government was not mentioned in the original text.
