Allottee Not Responsible If Delay In Construction Is Due To Procedural Requirements, Punjab & Haryana HC Quashes ₹94 Cr Extension Fees By HUDA

The Punjab & Haryana High Court has quashed the extension fees of Rs. 93.12 Crore imposed on a government organisation by the Haryana Urban Development Authority (HUDA) for delay in construction of flats for government employee on land allotted in 1996.

The Court found that the delay in construction was due to procedural and administrative requirements, hence the delay period will be considered as as "zero period."

Justice Sureshwar Thakur and Justice Vikas Suri said, "that the HUDA, Faridabad, has not till date sanctioned the buildings plan of the present petitioner, whereas, the sanctioning of the said plan was peremptory for construction being undertaken on the relevant sites. Therefore, the effect of all (supra) is that, the (supra) period reiteratedly was to be construed to be a zero period, besides when the controversy which emerged amongst the parties at lis become settled through an irreviewable verdict."

M/S Power Grid Corporation of India Ltd, , a government organization, was allotted land in Faridabad by HUDA (now HSVP) for building staff quarters  and office spaces in 1996.

It was submitted that over the years, the petitioner faced delays in construction due to procedural and administrative requirements typical for a government body.  The petitioner contended that despite repeated requests for extension of time and payment of applicable fees, HUDA issued multiple show cause and resumption notices under the Haryana Urban Development Authority Act, 1977, for non- construction.

Though the petitioner explained delays and sought extensions, HUDA resumed the land in 2012. The petitioner appealed, and in 2013, the Chief Administrator ruled in its favor, acknowledging the delays were beyond the petitioner's control. Meanwhile, HUDA issued a policy in 2013 stating resumed plots for non-construction should instead be regularized upon payment of extension fees.

The petitioner repeatedly requested calculation and communication of extension fees but faced inaction. Eventually, the matter reached the High Court, which directed HUDA to inform the petitioner of the dues based on the prior order. In 2016, HUDA informed the petitioner of the extension fees due, and the petitioner paid over Rs. 4 crore in compliance.

In 2016, the petitioner assigned construction work for a residential complex to M/s VRC Shivalik Buildtech-JV. It was submitted that despite complying with court and government directives, HUDA failed to approve the building plans. In 2017, HUDA raised a demand of Rs.93.12 crore as extension fee, enhancement, and service tax, which the petitioner contested as inflated and unjust, blaming HUDA for delays from 2011 to 2016.

The petitioner approached the High Court via writ petition in 2017, resulting in a multi-member committee being formed. In 2018–2019, the petitioner made multiple representations regarding erroneous fee calculations.

Referring to a 2016 order, the petitioner had already paid Rs.4.09 crore and claimed that the delay period should be treated as a “zero period” due to HUDA's inaction.

 After hearing the submissions the Court agreed with petitioner's submission and said "the impugned letter...whereby a demand of Rs.93.12 crore has been raised by respondents towards enhancement, extension fees and service tax is hereby quashed and set aside. Further the respondents are directed to issue No Dues Certificate in favour of the petitioner."

Mr. Akshay Bhan, Senior Advocate assisted by Mr. Aman Bansal, Advocate for the petitioner.

Mr. Deepak Sabherwal, Advocate for the respondent-HSVP.

Title: M/S POWER GRID CORPORATION OF INDIA LTD. v. HARYANA SHEHRI VIKAS PRADHIKARAN AND OTHERS

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