CIDCO has to adopt an appropriate procedure to levy the additional lease premium City and Industrial Development Corporation of Maharashtra Ltd., (‘CIDCO’ for short) issued letter dated 20.04.2016, (signed on 01.07.2016 to the respondent No.3 herein requiring them to pay the sum of Rs.14,05,60,587/­ (Rupees Fourteen Crores, Five Lakhs, Sixty Thousand, Five Hundred and Eighty Seven) towards additional lease premium up to 30.03.2007 so as to process the request of respondent No.3 for grant of ‘No dues Certificate’ in their favour which in turn was required to secure Occupation Certificate in respect of the building, from respondent No.4. – the appellant herein allotted plot bearing No.7, Sector 15, CIDCO, Belapur, Navi Mumbai, measuring 3176.25 sq.mtrs to M/s Mehak Developers Pvt. Ltd., the respondent No.3 herein in terms of the New Bombay Disposal of Land Regulations, 1975.The construction was required to be completed by the respondent No.3 as per the time frame agreed including the extended time period. Not putting up the construction within the time frame agreed was to attract payment of additional lease premium retrospectively from 06.08.2001 as per the agreed terms. The fact that the respondent No.3 completed construction of ‘A’ Wing of the building known as Arneja Chambers II within the initially extended period i.e. 31.12.2005 is not in dispute. The issue that has given rise to the instant dispute between the parties is relating to the construction put up as ‘B’ Wing of Arneja Chambers II, in the residual area. In that regard, the fact remains that as per time extended for completion of the construction, the same was to be completed on or before 31.12.2008 – the case of the appellant herein is that the construction as required had not been completed except for creation of certain documents in the nature of completion certificate dated 24.12.2008. The appellant contends that the respondent No.3 was, therefore, liable to pay the additional lease premium retrospectively from 06.08.2001 and as such the communication dated 20.04.2016/01.07.2016 was issued to respondent No.3 which is in accordance with the terms of allotment. It is the further contention on behalf of the appellant that there is no privity of contract between the respondents No.1 and 2 herein on the one hand and the appellant on the other. As such, in respect of the said communication issued to respondent No.3 the respondents No. 1 and 2 cannot raise any grievance. It is contended that the writ petition therefore ought not to have been entertained. – writ petition instituted by the respondents No.1 and 2 – against the High court order appeal preferred to the Apex court – whether in the present circumstance the demand for additional lease premium amounting to Rs.14,05,60,587/­ in the manner as has been demanded through the communication dated 20.04.2016/01.07.2016 is justified and as to whether the challenge to the same could have been raised by the respondents No.1 and 2 herein.- whether the High Court was justified in quashing the said communication as a final conclusion and directing issue of ‘No dues Certificate’ more so- Essentially when the plot was allotted on certain conditions and the same stipulated completion of the construction in a time frame to avoid liability and when the statutory provisions required the ‘No dues Certificate’ from the appellant so as to seek occupancy certificate from the respondent No.4 the primary procedure is for the respondent No.3 to submit necessary documents to the appellant to establish that the construction is put up within the time frame stipulated and to indicate that they are not liable to pay any additional lease premium. In the instant case we do not find that such procedure has been complied with -Even if the requirement was not complied and if the appellant was entitled to levy the additional lease premium the same was required to be done by adopting an appropriate procedure.- The High Court, in our view, shall have issued direction to the appellant Corporation to follow appropriate procedure in that regard and pass a reasoned order. – Remanded the matter for fresh consideration to the appellant -when a discretionary jurisdiction is being exercised by this Court the equities are also required to be worked out and balanced so as to protect the interest of all parties before the Court in the meanwhile. – pending reconsideration of the matter by the appellant, the respondents No.1 to 3 shall either jointly or severally deposit a sum of Rs.3,50,00,000/­ (Rupees Three Crores Fifty Lakhs) with the appellant towards provisional additional lease premium which would be subject to final decision. On the said amount being deposited the appellant shall issue a provisional ‘No dues Certificate’ limited for the purpose of enabling respondent No.3 to secure the occupancy certificate from the respondent No.4. On such provisional ‘No dues Certificate’ being submitted to the respondent No.4, the respondent No.4 shall process the application for issue of occupancy certificate for the ‘B’ Wing of the building Arneja Chambers II.

                 NON­ REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8443 OF 2019
(Arising out of SLP (Civil) No.8864 of 2019)
City & Industrial Development .… Appellant(s)
Corporation of Maharashtra Ltd.
Versus
Lambda Therapeutic Research ….Respondent(s)
Ltd.& Ors.

J U D G M E N T
A.S. Bopanna,J.

       Leave granted.    
  1. The appellant­ City and Industrial Development
    Corporation of Maharashtra Ltd., (‘CIDCO’ for short) is before
    this Court in this appeal assailing the order dated 29.08.2018
    passed by the High Court of Judicature at Bombay in
    W.P.No.12674 of 2017. The said order was passed in the writ
    petition instituted by the respondents No.1 and 2 herein
    claiming to be aggrieved by the letter dated 20.04.2016,
    (signed on 01.07.2016) issued by the appellant herein to the

Page 1 of 18
respondent No.3 herein requiring them to pay the sum of
Rs.14,05,60,587/­ (Rupees Fourteen Crores, Five Lakhs,
Sixty Thousand, Five Hundred and Eighty Seven) towards
additional lease premium up to 30.03.2007 so as to process
the request of respondent No.3 for grant of ‘No dues
Certificate’ in their favour which in turn was required to
secure Occupation Certificate in respect of the building, from
respondent No.4. The High Court having considered the
matter has quashed the demand made through the impugned
letter dated 20.04.2016/01.07.2016 and has directed the
appellant herein to issue ‘No dues Certificate’. The High Court
has further directed the respondent No.4 herein to process
the application for Occupation Certificate. The appellant is
therefore, aggrieved by the order impugned herein.

  1. The brief facts leading to the present situation is that
    the appellant herein allotted plot bearing No.7, Sector 15,
    CIDCO, Belapur, Navi Mumbai, measuring 3176.25 sq.mtrs
    to M/s Mehak Developers Pvt. Ltd., the respondent No.3
    herein in terms of the New Bombay Disposal of Land
    Regulations, 1975. The said allotment was governed by the

Page 2 of 18
terms and conditions contained in the Agreement of Lease
dated 04.08.1995. The construction was required to be
completed by the respondent No.3 as per the time frame
agreed including the extended time period. Not putting up
the construction within the time frame agreed was to attract
payment of additional lease premium retrospectively from
06.08.2001 as per the agreed terms. The fact that the
respondent No.3 completed construction of ‘A’ Wing of the
building known as Arneja Chambers II within the initially
extended period i.e. 31.12.2005 is not in dispute.

  1. The issue that has given rise to the instant dispute
    between the parties is relating to the construction put up as
    ‘B’ Wing of Arneja Chambers II, in the residual area. In that
    regard, the fact remains that as per time extended for
    completion of the construction, the same was to be completed
    on or before 31.12.2008. Though the respondents No.1 and 2
    herein who were the writ petitioners before the High Court
    and respondent No.3 herein have sought to contend that the
    construction was complete in all respects prior to 31.12.2008
    and, therefore, they are entitled to seek for issue of ‘No dues

Page 3 of 18
Certificate’ so as to secure the occupancy certificate without
levy of the additional lease premium, the case of the appellant
herein is that the construction as required had not been
completed except for creation of certain documents in the
nature of completion certificate dated 24.12.2008. The
appellant contends that the respondent No.3 was, therefore,
liable to pay the additional lease premium retrospectively
from 06.08.2001 and as such the communication dated
20.04.2016/01.07.2016 was issued to respondent No.3 which
is in accordance with the terms of allotment. It is the further
contention on behalf of the appellant that there is no privity
of contract between the respondents No.1 and 2 herein on the
one hand and the appellant on the other. As such, in respect
of the said communication issued to respondent No.3 the
respondents No. 1 and 2 cannot raise any grievance. It is
contended that the writ petition therefore ought not to have
been entertained.

  1. In the above background, we have heard Mr. Ajit S.
    Bhasme, learned senior advocate for the appellant, Mr.
    Shyam Divan, learned senior advocate for respondents No.1

Page 4 of 18
and 2, Mr. V. Giri, learned senior advocate for respondent
No.3 and Mr. Suhas Kadam, learned advocate for respondent
No.4. We have perused the appeal papers.

  1. As noted, there is no dispute between the contesting
    parties with regard to the allotment of plot made by the
    appellant in favour of the respondent No.3, the completion of
    the construction of ‘A’ Wing of the building Arneja Chambers
    II within the initial extended period i.e. 31.12.2005 and the
    permission having granted by the appellant to the respondent
    No.3 for putting up construction of the ‘B’ Wing of the
    building Arneja Chambers II in the residual area. The
    extension of time for completion of construction of ‘B’ Wing
    being granted upto 31.12.2008 is also not in dispute. The
    issue which however engages the consideration of the Court
    is as to whether in the present circumstance the demand for
    additional lease premium amounting to Rs.14,05,60,587/­ in
    the manner as has been demanded through the
    communication dated 20.04.2016/01.07.2016 is justified and
    as to whether the challenge to the same could have been
    raised by the respondents No.1 and 2 herein. The question

Page 5 of 18
ultimately is, in that background whether the High Court was
justified in quashing the said communication as a final
conclusion and directing issue of ‘No dues Certificate’ more so
when the respondents No.1 and 2 herein were before the
Court in that regard, while the demand contained therein was
made against the respondent No.3 and they had not assailed
the same.

  1. The learned senior advocate for the appellant has at
    the outset contended that there being no privity of contract
    between the appellant and the respondents No.1 and 2, the
    respondents No.1 and 2 had no locus to assail the
    communication dated 20.04.2016/01.07.2016 issued to
    respondent No.3. The learned senior advocate representing
    respondents No.1 and 2 would however seek to contend that
    the respondent No.3 after having obtained the allotment of
    the plot as also approval and extension of the period for
    construction had completed the construction as on
    31.12.2018 and in that view the respondents No.1 and 2 had
    purchased the ‘B’ Wing of the building Arneja Chambers II
    under the Sale Deed dated 16.06.2011 for a consideration of

Page 6 of 18
Rs. 7,21,00,000/­ (Rupees Seven Crores Twenty­One Lakhs).
In that regard a sum of Rs. 7,01,00,000/­ (Rupees Seven
Crores One Lakh) was paid to respondent No.3 and a sum of
Rs.20,00,000/­ (Rupees Twenty Lakhs) was deposited in
terms of the mutual understanding between the parties. In
such circumstance the respondents No.1 and 2 being a
bonafide purchaser for valuable consideration had interest in
the property in issue and since the regulations required issue
of ‘No due Certificate’ for securing the Occupation Certificate
the respondents No.1 and 2 were left with no other alternative
but to approach the High Court and seek for the relief as has
been done. The learned senior advocate for respondent No.3
would support the contention of respondents No.1 and 2 and
contended that as respondent No.3 was arrayed as a party to
the petition and the contention on their behalf was also
available before the Court, the writ petition being entertained
by the High Court was in accordance with law.

  1. Having adverted to the said contention we find that
    essentially it is no doubt true that there is no privity of
    contract between the appellant and the respondents No.1 and

Page 7 of 18
2 herein if looked at in technical terms. However, what
cannot be lost sight is that the construction in question is
put up by the respondent No.3 on a plot allotted by the
appellant and such building constructed has been purchased
by the respondents No.1 and 2 under registered Sale Deed
dated 16.06.2011 for a valuable sale consideration. In that
circumstance the respondents No.1 and 2 are desirous of
occupying the building. Though the right in that regard in a
normal circumstance is to be exercised and the specific
performance for possession with Occupation Certificate is to
be enforced against the respondent No.3 who is their vendor,
the respondent No.4 which is the statutory authority for
issuing the Occupation Certificate was also arrayed as a
respondent. The respondents No.1 and 2 while seeking
appropriate directions against the respondent No.4, having
noticed that the impugned communication would come in
their way of securing Occupation Certificate have chosen to
assail the same.

  1. Further the covenant contained in the Sale Deed dated
    16.06.2011 between respondents No. 1 and 3 in para 6 (G)

Page 8 of 18
creates an inter­se liability on mutual understanding with
regard to the costs incurred for securing ‘No dues Certificate’
from appellant which reads as hereunder;
“The Purchasers have deposited in escrow the a
sum of Rs. 20,00,000/­ (Rupees Twenty Lakhs
only) with M/s. Khaitan & Jayakar, Advocates &
Solicitors, which will be released to the Developers
as and when the Developers obtain the Occupancy
Certificate for the said premises from the NMMC
and upon receipt of approval for extension of time
period, and consequent issue of No dues
Certificate from CIDCO. The costs incurred for
receipt, of approval for extension of time; period
which shall lead to issue of no dues Certificate
from CIDCO shall be borne by the Developers and
the Purchasers equal proportions.”
Therefore, if the said aspect of the matter is kept in view the
respondents No.1 and 2, to the limited extent can be
considered as aggrieved persons for examination of their
contention to the limited extent. The contentions to indicate
that the construction was completed before 31.12.2008 and
that respondent No.3 is therefore not liable to pay the
amount indicated in the impugned communication cannot
however be accepted at the instance of respondents No.1 and
2 since the fact of completion of construction within the time
frame is to be established by respondent No. 3 alone. Hence

Page 9 of 18
the further examination herein is to be made keeping in view
this aspect as well.

  1. Having arrived at the above conclusion what is
    required to be taken note is that the respondent No.3 herein
    had submitted an undertaking dated 19.05.2004 which reads
    as hereunder:
    “UNDERTAKING
    We M/s. Mehak Developers undertake to
    apply for occupancy certificate for plot no.7,
    Sector 15, C.B.D. by 31.12.2005 to N.M.M.C.
    failing which we undertake to pay additional
    lease premium as applicable from
    06.08.2001 for the area for which the
    occupancy has not been applied for.
    For Mehak Developers,
    (Proprietor)
    Add:­ 507, Sharda Chambers,
    15, New Marine Lines,
    Mumbai – 400 020.”
  2. Though the period for completion indicated in the
    undertaking is 31.12.2005, the undisputed position is that
    the time has been extended upto 31.12.2008 and the issue is
    as to whether the respondent No.3 has in fact completed the

Page 10 of 18
construction within the said period and whether that will be
sufficient to avoid the levy of additional lease premium. The
extension was granted through the communication dated
31.07.2007 (Annexure P6). The said extension is in terms of
the Regulations 6 and 7 contained in Regulations of 1975
which read as hereunder:
Regulations­6
“Completion of building, factory, structure or
other work within the prescribed time – The
Lessee shall complete building, factory
structure or other work for which the land
has been granted within the time prescribed
by the Managing Director.”
Regulation – 7
“Permission for extension of time – If the
Intending Lessee obtains development
permission and commences construction
accordance with the conditions of agreement
to lease made between him and the
Corporation but has been unable to complete
the construction within the time stipulated
in the agreement to lease for reasons beyond
his control, the Managing Director may
permit extension of time for completion of
buildings, factory, structure or other work on
payment of additional premium.”

  1. The respondent No.3 has relied on the completion
    certificate dated 24.12.2008 issued by the architects

Page 11 of 18
addressed to the respondent No.4 herein. Though the
respondent No.3 has sought to rely on the same, what is
required to be taken note is the communication dated
09.02.2009 addressed by the respondent No.4 to respondent
No.3 indicating the requirement to be complied for grant of
occupancy certificate. What is inter alia sought therein is ‘No
dues Certificate’ from the appellant to be submitted to
respondent No.4. The same would indicate that the
respondent No.3 herein though claimed to have completed
the construction before 31.12.2008 had only sought for issue
of ‘No dues Certificate’ from the appellant herein through the
communication dated 11.08.2010. Subsequently, a letter
dated 31.01.2011 was issued, whereafter the reminder dated
04.05.2013 was sent by respondent No.3 to the appellant
seeking for ‘No dues Certificate’. In the said reminder dated
04.05.2013 reference is made to the occupancy certificate
obtained for 78 per cent of the FSI which relates to ‘A’ Wing
and it has been indicated therein that the balance 22 per cent
was completed by 31.12.2008. It is in reply to the
said letter the impugned communication dated
20.04.2016/01.07.2016 was issued.

Page 12 of 18

  1. In the present circumstance from what has been
    narrated above it is noticed that there is lacuna in the
    manner in which the appellant has also dealt with the matter.
    However, neither the High Court nor this Court while
    exercising the limited jurisdiction of judicial review can enter
    into the factual aspects to determine whether the
    construction in fact had been completed prior to 31.12.2018
    before a decision is taken on that aspect by the appellant,
    based on the available records and spot verification if need
    be. This is more so when that aspect of the matter is disputed
    by the appellant herein. The respondents no doubt have
    relied on the completion certificate dated 24.12.2008, which
    as already taken note has been addressed to the respondent
    No.4 and the copy of the same has been furnished to the
    appellant while making a request for issue of the ‘No dues
    Certificate’. Essentially when the plot was allotted on certain
    conditions and the same stipulated completion of the
    construction in a time frame to avoid liability and when the
    statutory provisions required the ‘No dues Certificate’ from
    the appellant so as to seek occupancy certificate from the
    respondent No.4 the primary procedure is for the respondent

Page 13 of 18
No.3 to submit necessary documents to the appellant to
establish that the construction is put up within the time
frame stipulated and to indicate that they are not liable to
pay any additional lease premium. In the instant case we do
not find that such procedure has been complied with. Even if
the requirement was not complied and if the appellant was
entitled to levy the additional lease premium the same was
required to be done by adopting an appropriate procedure.
Hence to that extent the observations of the High Court that
the Principle of Natural Justice has not been complied by the
appellant is justified. However, such lapse in procedure was
not sufficient to nullify the demand in absolute terms. The
High Court, in our view, shall have issued direction to the
appellant Corporation to follow appropriate procedure in that
regard and pass a reasoned order.

  1. Further, we take note that the demand made in the
    impugned communication is for the period till 30.03.2007
    though it is contended by the appellant that the construction
    has not been completed as on 31.12.2008 nor would the
    communication indicate as to when according to them the

Page 14 of 18
construction was completed. That apart though certain
details were indicated with regard to the construction in the
reminder letter dated 24.05.2013, in response to which the
impugned communication is issued, there is no reference to
the details therein. Hence, despite the manner in which the
impugned communication dated 20.04.2016/01.07.2016
issued not being sustainable and the quashing of the same as
made by the High Court is justified, the appropriate course
that ought to have been followed by the High Court is to remit
the matter to the appellant herein by directing them to
provide opportunity to the respondent No.3 to file necessary
documents in support of the completion certificate dated
24.12.2008 issued by the Architect so as to enable the
appellant to make a factual determination and to arrive at an
appropriate conclusion afresh by taking into consideration all
aspects of the matter. Hence in that view it would be
appropriate for us to order accordingly.

  1. Notwithstanding the said conclusion what cannot be
    overlooked is also the fact that the respondents No.1 and 2
    who had made a sizeable investment to purchase the

Page 15 of 18
property are the ones who would be ultimately affected and
when a discretionary jurisdiction is being exercised by this
Court the equities are also required to be worked out and
balanced so as to protect the interest of all parties before the
Court in the meanwhile. Hence pending such reconsideration
an avenue is to be created for the respondent No.4 to issue
the occupancy certificate so as to enable the respondents
No.1 and 2 to occupy and at the same time the interest of the
appellant is also required to be secured.

  1. Therefore, pending reconsideration of the matter by
    the appellant, the respondents No.1 to 3 shall either jointly or
    severally deposit a sum of Rs.3,50,00,000/­ (Rupees Three
    Crores Fifty Lakhs) with the appellant towards provisional
    additional lease premium which would be subject to final
    decision. On the said amount being deposited the appellant
    shall issue a provisional ‘No dues Certificate’ limited for the
    purpose of enabling respondent No.3 to secure the occupancy
    certificate from the respondent No.4. On such provisional ‘No
    dues Certificate’ being submitted to the respondent No.4, the
    respondent No.4 shall process the application for issue of

Page 16 of 18
occupancy certificate for the ‘B’ Wing of the building Arneja
Chambers II.

  1. Insofar as the claim of the appellant for an additional
    lease premium in the event of the respondent No.3 does not
    satisfy the construction was completed before the
    31.12.2008, the appellant shall provide opportunity and pass
    fresh orders in that regard. If the appellant is satisfied that
    the construction is completed in terms of the extension
    granted and if it is found they are not liable for the levy of
    additional lease premium the amount of Rs.3,50,00,000/­
    (Rupees Three Crores Fifty Lakhs) as indicated above shall be
    returned to the parties who deposits the same. On the other
    hand, on determination it is concluded that the respondent
    No.3 is due to pay any additional lease premium, the
    appellant would be entitled to recover the same from the
    respondent No.3 and until the said aspect attains finality,
    there shall be charge over the property purchased by
    respondents No.1 and 2. Ultimately if the amount is held to
    be due from the respondent No.3 and if the same is not paid,
    the appellant will have the liberty of withdrawing the

Page 17 of 18
provisional “No dues Certificate” issued pursuant to the
direction of this Court and intimate respondent No.4 in that
regard for appropriate action. Needless to mention that if the
interim amount of Rs.3,50,00,000/­ (Rupees Three Crores
Fifty Lakhs) is deposited by respondents No.1 and 2, they
would be entitled to work out their inter­se right against
respondent No.3.

  1. The appeal is accordingly allowed in part, in terms of
    the observations and directions contained in para 16 and 17
    supra. It is made clear that we have not expressed any
    opinion on the merits of the matter. There shall be no order
    as to costs. All pending applications shall stand disposed of.
    ….……………………….J.
    (R. BANUMATHI)
    ….……………………….J.
    (A.S. BOPANNA)
    ….……………………….J.
    (HRISHIKESH ROY)
    New Delhi,
    November 06, 2019

Page 18 of 18