REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (CIVIL) NO.10940 OF 2008

M/S. ANGEL BABY PRODUCTS PVT. LTD.    … PETITIONER VERSUS

NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY & ORS. … RESPONDENT

 J U D G M E N T

ALTAMAS KABIR, J.

1. In this Special Leave Petition, the Petitioner  

has challenged the decision of the Allahabad High  

Court dismissing Writ Petition No.16819 of 2003,  

filed by one Hira Lal Gupta and another praying for  

quashing of the notices dated 1.5.2002, 25.7.2002,

6.9.2002 and 22.3.2003 sent by the authorities of  

The  New  Okhla  Industrial  Development  Authority,  

hereinafter  referred  to  as  ‘NOIDA’,  imposing  

penalty against the writ petitioners for failing to  

get the lease deed for commercial plot no.1/1-A,  

Sector 27, NOIDA, executed within the stipulated  

period of 120 days from the date of allotment of  

the plot.  The said plot measuring 2970 sq. meters  

was initially allotted to the Writ Petitioner No.1,  

Hira Lal Gupta, at the rate of Rs.15,552/- per sq.  

meter.  Later on, a revised allotment order was  

issued to Shri Gupta reducing the area of the plot  

from 2970 sq. meters to 2590 sq. meters and the  

consideration  for  allotment  of  the  plot  was  

proportionately  reduced.  Subsequently,  disputes  

arose  in  regard  to  an  irrigation  drain  which  

existed on a portion of the said plot, although,  

the  existence  thereof  was  not  indicated  in  the  

brochure published by NOIDA. According to the Writ  

Petitioners,  since  the  said  problem  was  not  

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attended to, the lease deed could not be submitted  

for execution within the prescribed period of 120  

days which attracted imposition of penalty.   

2. On  24th March,  2002,  the  Petitioners  made  a  

representation  to  the  Chief  Executive  Officer,  

NOIDA, for waiver of penalty on the ground that  

since the exact area and location of the plot was  

different from that specified in the brochure, the  

delay in execution of the lease deed could not be  

attributed  to  the  Writ  Petitioners  and,  

accordingly, penalty could not be imposed against  

them.  It appears that the Chief Executive Officer,  

NOIDA,  waived  the  penalty  imposed  on  the  Writ  

Petitioners and granted them further two months’  

time to complete the execution of the lease deed.  

However, before the expiry of the said period of  

two months, the NOIDA authorities had written to  

the Writ Petitioners on 1st May, 2002, indicating  

that penalty would be charged with effect from 22nd  

November, 2001.  The Writ Petitioners responded to  

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the  said  letter  by  submitting  a  representation  

dated  15th May,  2002,  praying  for  waiving  the  

penalty  on  account  of  the  drain  passing  through  

plot and also for providing any alternative plot in  

lieu of the plot already allotted.   

3. The  Writ  Petitioners  were  informed  on  22nd  

March, 2003, that the Board of NOIDA had rejected  

their proposal for waiver of the penalty and that  

the same would have to be paid within 30 days,  

otherwise their allotment would be cancelled. At  

the initial stage when the Writ Petition was filed,  

the High Court had passed an interim order on 18th  

April, 2003, staying the operation of imposition of  

penalty against the Writ Petitioners. Ultimately,  

after considering the submissions made on behalf of  

the respective parties, the High Court took note of  

Clause 25 of the Scheme indicating that the plots  

were to be sold on “as is where is” basis, leading  

to the presumption that the Writ Petitioners had  

knowledge of the existing irrigation drain on the  

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plot. The High Court also took note of the power  

reserved to the NOIDA authorities to vary the area  

of the plot, which the allottee was bound to accept  

as  final.  The  High  Court  also  took  into  

consideration the submissions made on behalf of the  

Board of NOIDA that in its 113th meeting held on 10th  

February, 2003, the Petitioners’ representation was  

finally rejected but despite the same they did not  

deposit the penalty and insisted upon the waiver of  

penalty and interest.    

4. Having arrived at the conclusion that the Writ  

Petitioners  had  knowledge  of  all  the  terms  and  

conditions,  status,  location  and  other  details  

about the plot, which was advertised for allotment,  

the High Court felt that there was no merit in the  

Writ Petition and dismissed the same.  The interim  

order passed in the matter was also vacated.   

5. Mr.  Jayant  Bhushan,  learned  Senior  Advocate,  

who appeared for the Petitioner Company, submitted  

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that having auctioned the plot in question without  

proper  specifications  and  contrary  to  the  

description in its brochure, it was not within the  

competence  of  the  NOIDA  authorities  to  impose  

penalty  on  the  Petitioner  Company  for  not  

completing the execution of the lease deed within  

the stipulated period of 120 days from the date of  

allotment.  In fact, in the aforesaid background, a  

representation was made by Shri Hira Lal Gupta to  

the Chief Executive Officer, NOIDA, indicating that  

he wanted to transfer the plot in question to the  

Petitioner  Company,  wherein  he  and  his  son  are  

Directors.  Since the said formalities were likely  

to  take  some  time,  a  prayer  was  made  to  the  

aforesaid  Authority  to  extend  the  time  for  

depositing  the  instalments  and  for  making  the  

application  in  Form  37-I.  In  the  same  

communication, a further prayer was made to waive  

the penalty due to the delay in execution of the  

lease deed. It is on that basis that Shri Hira Lal  

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Gupta  was  granted  two  months'  time,  without  

penalty, for completion of formalities.   

6. The said extension came to be considered by the  

Officer on Special Duty (G), who interpreted the  

same to mean that the Petitioner Company had been  

given  two  months'  time  without  penalty  only  for  

change of constitution, but that the interest on  

the  outstanding  instalments,  penal  interest  and  

penalty, whatever was outstanding, would have to be  

recovered, as it was.  On 1st May, 2002, the Deputy  

Manager (C), NOIDA, wrote to Shri Hira Lal Gupta in  

regard  to  his  request  for  effecting  the  change  

relating  to  the  transfer  of  the  plot  to  the  

Petitioner Company.   In his said letter, the said  

Authority  requested  Shri  Gupta  to  submit  the  

documents indicated in the said letter in order to  

effect the change of constitution in regard to the  

allottee of the plot in question.  In addition,  

Shri  Gupta  was  informed  that  on  his  failure  to  

complete  execution  of  the  lease  deed,  a  sum  of  

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Rs.62,18,088.00 had become payable by way of late  

fee for the period between 22nd November, 2001 to  

30th  April,  2002.  Furthermore,  after  the  said  

period, penalty of Rs.38,863.05 per day would also  

be payable. The Petitioner was requested to deposit  

the penalty amount for completion of Form 37-I for  

change of constitution and execution of the lease  

deed.

7. As  indicated  hereinabove,  the  imposition  of  

penalty is the bone of contention in this Special  

Leave Petition.  

8. Mr.  Bhushan  reiterated  the  submissions  made  

before the High Court that on 24th March, 2002,  

when  two  months'  time  had  been  granted  to  the  

Petitioner Company by the Chief Executive Officer,  

NOIDA, for completion of the formalities for change  

of constitution, the Officer on Special Duty had  

acted illegally by passing an order on 11th April,  

2002, which was within three weeks from the date of  

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the order of the Chief Executive Officer, demanding  

payment of penal interest and penalty.  Mr. Bhushan  

contended that during the extended period of two  

months,  the  Officer  on  Special  Duty  was  not  

entitled  to  demand  payment  of  penalty  when,  in  

fact, payment of such penalty had been specifically  

waived by the Chief Executive Officer.   

9. On  the  other  hand,  learned  counsel  for  the  

Respondent Authority, supported the order of the  

Officer  on  Special  Duty  on  the  ground  that  the  

period for execution of the lease had been extended  

by a period of two months by the Chief Executive  

Officer in view of the prayer made by Shri Hira Lal  

Gupta to transfer the allotment in the name of the  

Petitioner  Company,  wherein  both  he  and  his  son  

were  Directors.   Learned  counsel  reiterated  the  

submissions  made  before  the  High  Court  that  the  

order  of  the  Chief  Executive  Officer,  NOIDA,  

extending the time for completion of the execution  

of the lease deed would have to be considered in  

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that context only.  He urged that notwithstanding  

the time extended for completion of constitutional  

changes, the liability for payment of penalty did  

not  stop  on  account  of  the  order  of  the  Chief  

Executive  Officer  which  continued  to  remain  

operative after the expiry of 120 days from the  

date of allotment and the Petitioner Company was,  

therefore, liable to pay both the penalty charges  

as also the lease rent at the rate of Rs.38,863.05  

per day. Mr. Ravindra Kumar specifically referred  

to  the  subsequent  order  of  the  Chief  Executive  

Officer dated 22nd July, 2002, by which he directed  

that the land (2590.86 sq. meters) shown in the  

brochure  be  given  to  Shri  Hira  Lal  Gupta  and  

penalty be recovered as per rules.  He urged that  

the effect of the earlier order passed by the Chief  

Executive  Officer  on  24th  March,  2002,  stood  

superseded by the subsequent order, whereby penalty  

was  directed  to  be  recovered  from  the  Writ  

Petitioners, according to the rules.   

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10. It  was  also  reiterated  that  since  the  

Petitioner Company had decided to invest a huge sum  

of money in the allotted land, it is difficult to  

accept that the Petitioner Company or its Directors  

would not have made enquiries as to the nature of  

the land which was being allotted to them.  In  

other  words,  it  has  to  be  held  that  the  Writ  

Petitioners were fully aware of the existence of  

the  municipal  drain  on  the  land  and  absence  of  

knowledge thereof was nothing but a ploy on the  

part  of  the  Petitioner  Company  to  avoid  its  

responsibility  regarding  payment  of  penalty  for  

non-compliance  of  the  conditions  to  complete  

execution of the lease deed within 120 days from  

the date of allotment of the plot.  Learned counsel  

submitted  that  the  position  stood  further  

compounded by the fact that under Clause 25 of the  

general  terms  and  conditions  spelt  out  in  the  

brochure,  it  was  clearly  indicated  that  the  

allotment of the land was subject to variations in  

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the area of the plot and that the same would have  

to be accepted by the allottees on “as is where is”  

basis.    

11. Mr. Ravindra Kumar submitted that no case had  

at  all  been  made  out  for  interference  with  the  

orders passed by the High Court dismissing the Writ  

Petition.   

12. For the reasons hereinafter following, we are  

unable to accept Mr. Jayant Bhushan’s submissions  

questioning  the  order  passed  by  the  Officer  on  

Special Duty dated 11th April, 2002, and the various  

notices subsequently issued on the basis thereof,  

demanding payment of penalty despite the order of  

the Chief Executive Officer waiving imposition of  

such  penalty  for  the  delay  in  execution  of  the  

lease deed.   

13.  The materials on record indicate that there  

had  been  correspondence  exchanged  between  the  

parties with regard to the land allotted and the  

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area thereof on account of the existence of the  

municipal  drain  either  on  the  plot  or  in  its  

vicinity.  Shri Hira Lal Gupta had also made a  

request for the plot allotted in his name to be  

transferred in the name of the Petitioner Company  

in which he and his son were Directors.   Since the  

same was likely to take some time for completion of  

the  formalities,  a  specific  prayer  was  made  to  

serve the penalty due to delay in the execution of  

the  lease  deed.   In  such  background,  the  Chief  

Executive Officer, NOIDA, extended the period for  

completion  of  the  formalities  relating  to  the  

constitutional  change  by  a  period  of  two  months  

without penalty from 24th March, 2002.   Before the  

said period could expire, the Officer on Special  

Duty, on a misunderstanding of the order passed by  

the Chief Executive Officer, NOIDA, indicated by  

his order dated 11th April, 2002, that since the  

Chief Executive Officer had given two months’ time  

without penalty only for change of constitution,  

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interest  on  the  outstanding  instalments,  penal  

interest and penalty, were liable to be recovered  

from the Writ Petitioners. To add to the confusion,  

a  further  order  was  passed  by  the  Officer  on  

Special Duty (G) on 26th April, 2002, directing that  

steps be taken in terms of his earlier order dated  

11th April, 2002, and indicating that two months’  

time  given  to  the  Writ  Petitioners  was  for  

completion of formalities for change of the name of  

the allottee.

14. Up to this stage, the case of the Petitioner  

Company for waiver of penalty can be accepted, but  

the  subsequent  correspondence  which  followed  

between  the  parties  and  the  failure  of  the  

Petitioner  Company  and  Shri  Hira  Lal  Gupta  to  

complete  the  execution  of  the  lease  deed  even  

within the extended time of two months, indicate  

that neither Shri Gupta nor the Petitioner Company  

had any inclination to complete the formalities for  

execution of the lease deed pursuant to the change  

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in the name of the allottee from Shri Hira Lal  

Gupta to the Petitioner Company.   

15. From the materials on record and the subsequent  

correspondence beginning with the letter dated 1st  

May,  2002,  written  by  the  Deputy  Manager  (C),  

NOIDA, it is apparent that the Petitioner Company  

and Shri Hira Lal Gupta were given a great degree  

of latitude to complete the transaction.   In fact,  

meetings of the Committee had been convened on 23rd  

October, 2002 and 26th November, 2002, in which Shri  

Hira Lal Gupta appeared and made submissions for  

waiver  of  the  penalty  but  on  the  basis  of  the  

record,  the  Committee  rejected  Shri  Gupta’s  

submissions  and  Shri  Gupta  was  subsequently  

informed of the decision of the Committee which was  

approved at a meeting of the Authority convened on  

15th February, 2003, under the Chairmanship of the  

Additional Chief Executive Officer, NOIDA.  Even if  

initially a case may have been made out on behalf  

of the Petitioner Company that the execution of the  

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lease deed could not be completed on account of the  

mis-description  of  the  plot  and  in  view  of  the  

prayer for change in the name of the allottee, on  

account of the subsequent conduct of the Petitioner  

Company  and  Shri  Gupta,  we  are  not  inclined  to  

interfere with the order of the High Court or the  

decision  of  the  NOIDA  relating  to  imposition  of  

penalty and interest.  However, we are also not  

inclined to accept the interpretation given by the  

Officer on Special Duty to the order passed by the  

Chief Executive Officer on 24th March, 2002, and,  

accordingly,  we  direct  that  in  calculating  the  

penalty and interest as payable under the agreement  

entered into between the parties, the said period  

of two months from the date of the order dated 24th  

March, 2002, shall be excluded.  

16. With the aforesaid modification of the order  

passed by the Chief Executive Officer on 22nd July,  

2002  and  the  subsequent  resolution  of  the  NOIDA  

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taken  at  the  meeting  convened  on  15th February,  

2003, the Special Leave Petition stands dismissed.  

17. There will, however, be no order as to costs.  

…………………………………………J. (ALTAMAS KABIR)

…………………………………………J. (A.K. PATNAIK)

New Delhi Dated: 27.10.2010   

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