'Amounts To Unjust Enrichment': Punjab & Haryana HC Partly Quashes 2020 Amendment To Haryana Development, Regulation Of Urban Areas Rules
The Punjab & Haryana High Court set aside the part of 2020 amendment to the Haryana Development and Regulation of Urban Areas Rules that required the scrutiny fees, licence fees, conversion charges etc to be forfeited in exchange for surrender of development license. Justice Sureshwar Thakur and Justice Vikas Suri said, "the impugned annexures are quashed, and, set aside to the extent...
The Punjab & Haryana High Court set aside the part of 2020 amendment to the Haryana Development and Regulation of Urban Areas Rules that required the scrutiny fees, licence fees, conversion charges etc to be forfeited in exchange for surrender of development license.
Justice Sureshwar Thakur and Justice Vikas Suri said, "the impugned annexures are quashed, and, set aside to the extent that therebys unjust enrichments are ill endowed to the licensor, besides therebys unjust expropriations qua the sums of moneys earlier deposited are made against the licencee."
The Court further added that, "the impugned notification when has unilaterally made the said re-claims, therebys the said impugned notification in the instant factual scenario, is partly set aside to the extent that paragraph 3 thereof, becomes declared to be ultra vires the fundamental rights of practice, business and profession, but subject to the further condition that the interest accrued on the principals of the amounts of license fee, conversion charges, and, infrastructure development charges, but are amenable to be surrendered or forfeited to the licencing authority concerned."
The plea was filed by a company engaged in real estate development, challenging the actions of the Haryana Government related to the development of a group housing project in Sohna under licences issued in 2014.
Despite investing approximately Rs. 618 crores and paying all required charges, the State failed to provide the essential infrastructure promised under the Sohna 2031 Development Plan.
After years of inaction by the State, the petitioner sought to surrender two licences due to mounting liabilities. However, under a policy dated 24.07.2020 (Rule 17-B), the petitioner was forced to forfeit Rs. 31.76 crores and transfer 4.40 acres of land without compensation. The petition also highlighted the halting of further approvals due to an internal government decision based on outstanding dues and contests the forfeiture of charges, arguing that necessary fees had already been paid.
During proceedings, the petitioner withdrew claims related to interest and scrutiny fee but continues to seek relief from the forfeiture of licence fees, conversion charges, and infrastructure charges.
Senior counsel appearing for the petitioner argued that Rule 17-B(3) of the 1976 Rules, which allows for forfeiture of various fees and charges, is unreasonable and amounts to an unjust penalty. He contends these re-demands are punitive and unjustified, especially since no development occurred on the land. Moreover, since the policy permits surrender of licences and issuance of fresh ones even without any construction, the forfeiture is excessive and leads to unjust enrichment by the State.
The State counsel contended that the petitioner's failure to develop the land since 2014 constitutes a breach of contract, justifying the re-demand of fees as liquidated damages under the Indian Contract Act. The counsel asserted that re-demands are necessary for the surrender of the licence and issuance of a new one, making them lawful.
After analysing the submissions, the court accepted the petitioner's arguments and rejected the state's claims.
It opined that re-claims were penalties "unjust enrichments are ill endowed to the licensor, besides therebys unjust expropriations qua the sums of moneys earlier deposited are made against the licencee."
"When therebys the respondent concerned, has arrogated onto itself the jurisdiction of a Civil Court of competent jurisdiction, which otherwise alone has the powers to determine the liquidated damages or damages of some other genre," added the Court.
In the light of the above, the plea was allowed.
Mr. Puneet Bali, Senior Advocate with Mr. Prateek Rathee, Advocate,
Ms. Niharika Mittal, Advocate, Mr. Asutosh Singh, Advocate and Mr. Shwas Bajaj, Advocate for the petitioner.
Ms. Svaneel Jaswal, Addl. A.G., Haryana.
Mr. Kunal Soni, Advocate for Mr. Prateek Mahajan, Advocate for respondent No. 4-HSVP.
Title: Faith Buildtech Private Limited v. State of Haryana and others