Adjudicating on a matter pertaining to five-star hotel JW Marriot, Sector 35, a court held by the UT advisor on Thursday held that the municipal corporation (MC) cannot charge its allottees 20% penal interest on account of delayed ground rent payment and can only impose 6% interest.

The advisor set aside the resumption order issued to the Sector 35 hotel by the Chandigarh MC’s estate office branch. The firm had filed a revision petition against the order passed by the chief administrator in respect of the site. The revision petition was filed by advocates SK Jain and Vikas Jain.

The petitioner’s counsel submitted that the MC’s additional commissioner-cum-estate officer had cancelled the allotment or lease of the site on account of non-payment of ground rent. The petitioner contended that the authorities had wrongly charged 20% interest on account of non-payment of ground rent while applying condition five of the allotment letter.

The counsel argued that condition five applied to non-payment of principal amount of premium and not non-payment of ground rent.

The petitioner submitted that the MC’s additional commissioner wrongly cancelled the lease of the site and imposed 20% interest while passing the impugned order dated November 11. The appeal filed by the petitioner had also been dismissed by the chief administrator on March 20, 2020.

The counsel for the MC submitted that it was clearly mentioned in clause five of the allotment letter that in case the petitioner failed to make payment of outstanding dues then he is liable to pay 20% interest on account of non-payment of ground rent.

The petitioner’s counsel said, “There is no provision under the Chandigarh Leasehold Sites and Building Rules, 1973, for charging of 20% interest on non-payment of ground rent and for cancellation of the site for non-payment of the part amount of the ground rent.”

“As per the settled law any interest imposed by the allotting authority must be by way of notification or the notification has to adopted by the allotting authority. In the present case, there is no provision for charging 20% interest in the rules or acts nor have municipal corporations adopted the notification for imposition of interest,” he said.

The petitioner’s counsel held that his client had been harassed because of wrongful imposition of 20% interest for non-payment of ground rent against the municipal corporation’s rules.

In his order, Manoj Parida set aside the impugned order and remanded the case back to the MC additional commissioner for a fresh decision and asked him to pass a speaking order in accordance with law.

Parida said, “It is clear that condition five of the allotment letter providing 20% interest is applicable only to non-payment of the principal amount premium. There is a separate provision for non-payment of ground rent under the act as well as in the allotment letter. Since the additional commissioner has not applied the relevant rules while passing the impunged orders, therefore, the revision petition deserves to be accepted.”

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