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.     

2.     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.

3. 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

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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.

4. 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.     

5. 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

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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.

6. 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

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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.  

7. 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.   

8. 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

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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.  

9. Further the covenant contained in the Sale Deed dated

16.06.2011 between respondents No. 1 and 3 in para 6 (G)

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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

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the further examination herein is to be made keeping in view

this aspect as well.   

10. 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.”

11. 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

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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.”

12. The respondent No.3 has relied on the completion

certificate dated 24.12.2008 issued by the architects

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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

13. 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.   

14. 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.

15. 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.   

16.       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.   

17. 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.

18. 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

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