The Bombay High Court has set aside demand notices issued by the Mumbai Metropolitan Region Development Authority against Reliance Industries Limited, holding that no additional premium or penalty was payable for the alleged delay in completion of a Convention & Exhibition Centre and Commercial Complex project at Bandra-Kurla Complex (BKC).
Allowing the writ petition, the Division Bench quashed the demand-cum-show cause notice dated September 12, 2017 and the subsequent communication dated June 13, 2019, by which MMRDA had sought to recover over ₹1,100 crore on account of delay in completing construction.
The Court held that the condition precedent for invoking penalty under the lease deed was not satisfied and that the delay in construction could not be attributed to the developer. It noted that the project underwent substantial changes over time, including allotment of additional built-up area and revision of plans, and was further impacted by interim court orders as well as the need to obtain multiple statutory approvals from various authorities.
Observing that construction could not commence without requisite approvals and commencement certificates, the Bench ruled that the four-year completion period stipulated in the lease deed could not be mechanically computed from the date of execution of the lease. Instead, it held that the timeline must be reckoned from April 16, 2014, when the effective commencement certificate for the composite project was issued.
The Court further found that the project was an integrated development with a common foundation and infrastructure, making it impractical to segregate timelines for different components. It also noted that MMRDA had itself extended the permissible construction period from four to six years and held that restricting such benefit only to leases executed after August 2015 was arbitrary and discriminatory.
Taking into account the exclusion of the period during which court-imposed restraints were in force, the Court concluded that the petitioner was effectively entitled to more than ten years to complete the construction. It also recorded that MMRDA had earlier assured that the period of restraint would be excluded and that no time limit would apply to certain additional built-up areas, and held that the authority could not resile from such representations.
Holding the demand notices to be unsustainable, the Court directed MMRDA to refund ₹646.77 crore already deposited by Reliance within 90 days, failing which the amount would carry interest at the applicable contractual rate. It also held that no additional premium or penalty was recoverable from the petitioner in the facts of the case.
Appearances:
For the Petitioners : Mr. Vikram Nankani, Senior Advocate, with Mr. Vikramaditya Deshmukh, Mr. Ashwin Dave, Mr. Ameya Nabar & Ms. Swati Jain, i/b A. S. Dayal & Associates.
For Respondents: MMRDA Dr. Birendra Saraf, Senior Advocate, with Mr. Nishant Chotani, Mr. Nivit Srivastava, Ms. Sneha Patil, Ms. Aditi Sinha, Mr. Hrishikesh
Joshi & Ms. Isha Vyas, i/b Maniar Srivastava Associates.
