Though the scope of the Contempt Petitions was restricted to see whether functionaries of NOIDA were guilty of disobedience of the directions issued by this Court, the matter was considered from the standpoint of enabling both sides to settle their disputes and get over the stalemate which has been obtaining for the last 10 years. The endeavour was to see that the interest of both sides is sufficiently taken care of and more than anything else, the public interest must stand subserved.(Para 20)
Hampshire Hotels & Resorts (NOIDA) Pvt. Ltd. V. Ritu Maheshwari, CEO, NOIDA Authority
Contempt Petition (Civil) No. 413 of 2019 [In Civil Appeal No. 4564 of 2008]
Decided on 9th March, 2021.
The present case was decided by a bench of the Supreme Court consisting of Justice Uday Umesh Lalit, Justice Indu Malhotra and Justice Krishna Murari.
Though the scope of the Contempt Petitions was restricted to see whether functionaries of NOIDA were guilty of disobedience of the directions issued by this Court, the matter was considered from the standpoint of enabling both sides to settle their disputes and get over the stalemate which has been obtaining for the last 10 years. The endeavour was to see that the interest of both sides is sufficiently taken care of and more than anything else, the public interest must stand subserved.(Para 20)
In June, 2006, the NOIDA authority allotted a to the M/s Hampshire Hotels & Resorts, as part of the Hotel Site Allotment Scheme, established on 17.10.2006, which aimed at setting up 25 hotels in Noida for the upcoming Commonwealth Games in Delhi in 2010. The Petitioners, according to the lease deed, had to pay the premium, take possession and execute the lease deed within the stipulated time period.
The allotment of the hotel sites was challenged by two Writ Petition (Civil Misc. Writ Petition No. 24917/2007 and PIL Writ Petition No. 29252/2007) in the High Court, submitting that the allotment was done at a very low price. This Court found that the allotment of commercial plots to the allottees was valid and legal, but the premium could be fetched at a rate of 70,000 per sq.m., instead of 7,400 per sq.m.
In August, 2011, this Court gave the solution that the lessees could pay the difference in consideration, instead of cancelling the leases. The option given was as follows: Permission to pay the balance to make up 25% of the premium before 30.9.2011 and the balance 75% of premium in sixteen half yearly instalments, at 11% per annum. (Para 116)
In case the lessees wish to forego the option, the lease would stand cancelled, and NOIDA would have to return all the amounts paid by the appellant.
The Petitioners exercised their option to continue their respective leases by paying the increased premium at Rs. 70,000 per square metre. On 29.09.2011, 25% of the premium and lease rent was deposited by the Petitioner, and on 03.04.2013, Rs. 5 crores were deposited. Despite these deposits, no lease deed was executed by NOIDA.
The petitioners argued that the lease deed had to be executed after depositing the additional amount. On the other hand, NOIDA argued that the lease rent and other dues had to be cleared first, after which the deed would be executed.
It is in this regard that the present Contempt Petitions have been filed in this Court, based on the contempt of this Court on behalf of NOIDA.
During the course of the hearings of these Contempt Petitions, on 05.09.2019, two options were suggested to resolve the dispute between the parties:
“All the contempt petitioners-allottees shall pay up all the amounts that are due along with the accrued interest whereafter, NOIDA shall execute a supplementary lease deed in favour of the contempt petitioners-allottees.
OR
The plots allotted to the contempt petitioners-allottees be put up for fresh auction, and from the proceeds the money deposited by each of the contempt petitioners-allottees be returned by the NOIDA along with interest @ 11% p.a.”(Para 9)
The Petitioners were willing to exercise the second option, containing instructions to cancel the allotment by holding auctions. The money received from the auction would be deposited to the allottees by NOIDA, at an interest rate of 11% p.a.
NOIDA submitted its affidavit clarifying certain costs which were non-refundable. These included the processing fees, the stamp duty and the interest amount.
The matter was heard again on 17.09.2019, wherein the Court considered the question whether certain elements out of the amounts mentioned by the contempt petitioners, to be refunded, were non-refundable. The respondent authority also argued for the interest rate of 11% p.a. to be scaled down, keeping in mind the prevalent rates at the time.
The Court heard learned Senior Advocate Mukul Rohatgi, on behalf of the contempt-petitioners, and Mr. Ravindra Kumar, learned advocate, on behalf of NOIDA.
Mr. Rohatgi submitted that the processing fees, the interests paid, and the stamp duty may not be refunded, provided a reasonable rate of 11% p.a. was given.
Mr. Kumar argued that the contempt petitioners had been enjoying the property, so they were not entitled to any interest on the amounts deposited by them. To this, Mr. Rohatgi submitted that the land was lying without any profitable use.
The Court which decided that the appropriate interest rate could be at 7% p.a. In the circumstances, the options given in order dated 05.09.2019 could be availed, subject to the aforesaid modification. It further asked both parties to submit affidavits indicating all amounts those which would not be refundable. This affidavit was submitted by NOIDA on 25.11.2019.
In further arguments, NOIDA suggested in its affidavit, a deduction of 30% of the premium. The petitioners argued that this would be unfair, given that they are willing to forego the non-refundable deposits. It was also submitted that the fault actually lies with NOIDA in not permitting the petitioners to enter into financial accommodation, resulting in lack of development. The Court also said that in case the fresh auction was held at a lower price, the difference would be made good by the petitioners.
The Court was worried about the wastage of the land, which was against public interest. It also highlighted that NOIDA is not getting instalments towards premium in time. Keeping these factors in mind, the Court suggested certain modalities to the second option given by it in the order dated 05.09.2019. It also clarified the amounts that the Petitioners would be entitled to:
a. Not the processing fees, interests and stamp duty
b. That component of amount of one-time lease rent (Rs. 5,37,24,000) which proportionately represents the remainder period after the plots are sold, without interest
c. 7% annual interest on the amounts deposited by them towards premium
Based on the above discussion, the second option was revised as follows:
a. The plots to be sold by NOIDA by inviting E-bids or by auction
b. If the price in such E-bid for each plot is more than 1.5 times of Rs. 70,000, that is, more than Rs. 1,05,000 per sq.m., the petitioners be returned the amounts deposited towards premium in each case.
c. In case there is a shortfall as against the rate of Rs. 1,05,000, the shortfall shall be made good by the Petitioners. To that extent, the amount refundable towards premium, shall be reduced.
d. With regard to the remainder part of the lease rent and the interest payable to the petitioners, they shall be refunded only if the price received by NOIDA in fresh sale is over Rs. 1,05,000 per sq.m.
In other words, the Petitioners are first entitled to the premium paid by them in the manner stated above. It is only if the rent fetched in the re-sale is more than Rs. 1,05,000 per sq.m., that the Petitioners shall be paid the excess amount towards the remainder part of lease rent and the interest.
The modality devised above will ensure that NOIDA shall get much more than the price of land and will also stand to gain considerably. Not only will the public interest stand subserved, but the projects which have run into stalemate, will also come out of difficulties. (Para 23)
The Court ordered that the second option gives in the order on 05.09.2019, shall be modified accordingly. NOIDA shall calculate the amounts deposited by each Petitioner towards the lease rent and interest at 7% p.a., up to 30.04.2021. The possession shall be delivered by the petitioners back to NOIDA by 31.05.2021. NOIDA shall put the plots for auction or E-bids within 3 months. From out of the sale proceeds received, the amounts indicated above shall be paid to each of the Petitioners who choose to exercise the second option, within 3 months of the sale.
The case was decided by the Supreme Court keeping in mind the stalemate and wastage of land for the past 10 years. This served no public interest, and both parties entered into a wasteful cycle of pointing the finger at the other. While the question was regarding the contempt of Court, the Court focused on the aspect of public interest, and ending the stalemate between the parties, to ensure that both interests are fulfilled.
View/Download Judgment: Hampshire Hotels & Resorts (NOIDA) Pvt. Ltd. V. Ritu Maheshwari, CEO, NOIDA Authority
Navya Shukla
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