In a high stakes dispute over massive lease rent arrears and regulatory overreach, the Allahabad High Court stepped in to scrutinise the Noida Development Authority’s insistence on recovering Rs.168.37 crore as annual lease rent and its refusal to refund Rs. 7.38 crore collected as Change-in-constitution (CIC) charges, raising serious questions about whether an authority can demand money without ever handing over lawful possession of land.
The controversy began when a commercial plot in Sector 94, Noida, originally allotted to BPTP International Trade Centre Ltd., was subdivided and partially transferred to the petitioner company. While the subdivision was expressly permitted subject to strict conditions, including the mandatory issuance of a separate possession certificate, the authority never complied with this requirement. Despite this admitted lapse, Noida went on to cancel the allotment, raise an eye-watering lease rent demand, and retain crores collected as CIC charges, even as multiple court rulings had already declared such levies illegal.
Counsel for the petitioner argued that without lawful possession, the authority could not charge lease rent and that the CIC demand was void in law. The authority, on the other hand, claimed that “peaceful possession” through the earlier allottee was enough and accused the petitioner of raising objections too late.
The High Court firmly rejected this stand, holding that Noida could not “speak in two voices.” Emphasising that Condition No. 3 of the subdivision permission was mandatory, the Court noted that “once condition has been imposed it was mandatorily required to be complied with by NOIDA Authority.” It found that no separate possession certificate was ever issued and ruled that symbolic or indirect possession could not substitute lawful possession.
On the CIC issue, the Court was even more scathing, observing that the authority’s conduct in retaining Rs. 7.38 crore despite binding precedents was “not only both unfair and unreasonable but contemptuous in nature.”
Quoting settled law, the Court reiterated that a company’s legal identity does not change merely due to a transfer of shareholding and that CIC charges for such changes are illegal. Consequently, the High Court allowed the writ petition, set aside the Rs. 168.37 crore lease rent demand, quashed the refusal to refund CIC charges, ordered recalculation of lease rent only from the date of lawful possession, and directed refund of Rs. 7.38 crore with 9% interest.
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