Developer Can't Be Blamed For Delay When Plea Seeking Permission For Construction Kept Pending By Development Authority: Allahabad High Court

The Allahabad High Court has observed that when the application for grant of permission for construction has been kept pending by the Greater Noida Industrial Development Authority (GNIDA), the developer cannot be blamed for not constructing flats within the stipulated period in the lease deed.

While granting relief to M/s Kinetic Buildtech Pvt. Ltd., petitioner on cancellation of allotment by GNIDA, Justice Prakash Padia observed,

“The development authority kept the application for grant of permission for construction pending with him, as such, it cannot be blamed that petitioner has not carried on the construction within the stipulated period.”

Petitioner was allotted group housing Plot No. GH-03, Sector-10, Greater Noida having an area of 64,000 square meters by GNIDA. Subsequently, lease deed was executed. Counsel for petitioner argued that despite the fact that the authority showed that possession had been transferred to the petitioner, the same had not been done. The possession certificate was, for the first time, seen by the petitioner when it was produced during the course of hearing.

It was also argued that GNIDA had unilaterally made changes in the site plan and had not executed the correction/ supplementary deed. It was argued that GNIDA was obligated to execute the correction deed which would also result in changes in payment of premium and other dues.

Counsel for petitioner argued that the cancellation was wrong as the possession had not been handed over, the date of payment of dues would be when the same is done. Further, it was argued that the authority could not cancel the lease on grounds of no construction as the application for grant of sanction for construction and for sanction of map was pending with the authority.

The Court observed that since the possession letter produced before the Court did not contain the signature of the allotee, the possession was never actually transferred and no correction/ supplementary deed was executed by GNIDA in favour of the petitioner though in similar circumstances, GNIDA had executed a correction deed for another developer of the same consortium.

“As the physical possession of the plot, as per the amended site plan has not been handed over and in absence of correction/surrender deed executed between the parties making liability upon the petitioner to make payment of premium is contrary to the terms and conditions of the lease deed and thus, cannot be a ground for cancellation of the allotment.”

Noting that the application for grant of sanction for construction filed by the petitioner before the Authority was still pending, the Court held that

“Unless and until the application filed by the petitioner for sanction of building plan is accepted, the petitioner cannot raise constructions. In view of inaction on part of the development authority in deciding the application for grant of permission for construction, the petitioner could not float the construction plan and could not collect the funds from the market to be paid to the development authority.”

Accordingly, the Court held that petitioner could not be blamed and penalized for the inaction on part of the authority. The letter cancelling petitioner's allotment was quashed.

Case Title: M/S Kinetic Buildtech Pvt. Ltd. v. State of U.P. and Another [WRIT - C No. - 16306 of 2023]

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