RAJKUMAR CHANDRASEN CHAVAN v. MANAGING DIRECTOR CIDCO LIMITED
Quashing of CIDCO's Demand for Additional Lease Premium where Construction Delay was Caused by Bona Fide Litigation and Resistance by the Original Allottee.
Court: Bombay High Court
Citation: 2026:BHC-AS:15409-DB
Decision Date: 27-03-2026
List of Laws
Constitution of India, Articles 226 and 227; Navi Mumbai Disposal of Lands (Amendment) Regulations, 2008; Specific Relief Act, 1963 (Suit for Specific Performance); Administrative Law - Principle of Arbitrariness and Fairness
- Facts: The City and Industrial Development Corporation of Maharashtra Limited (CIDCO) allotted a plot in Kharghar to one Mr. Mapara in 2005, executing a lease agreement in 2010 which required construction completion within four years. In 2010, before the lease was finalized, Mr. Mapara entered into an agreement to transfer his rights to the petitioner, Shri Rajkumar Chandrasen Chavan, for Rs.55,00,000. However, Mr. Mapara subsequently refused to perform the contract. The petitioner filed a suit for specific performance in 2011, during which the Trial Court granted an injunction restraining the defendants from creating third-party interests. The suit was eventually decreed in favor of the petitioner in 2018. During execution proceedings, a Court Commissioner was appointed to execute the tripartite agreement. CIDCO issued demand notices in June 2024, insisting on the payment of an Additional Lease Premium (ALP) of approximately Rs.80.72 lakhs for the extension of the construction period from 2014 to 2024. The petitioner challenged these notices, arguing that the delay was due to the protracted litigation and that ALP should be levied at 0% as per CIDCO's own Board Resolutions regarding delays caused by court cases.
- Procedural Posture: The petitioner approached the High Court of Bombay under Article 226 of the Constitution of India, seeking a Writ of Certiorari to quash the demand notices issued by CIDCO.
- Issue: Whether a transferee of leasehold rights is liable to pay Additional Lease Premium (ALP) for a delay in construction when said delay was caused by a long-standing litigation for specific performance against the original allottee and CIDCO.
- Holding: No, the demand for ALP from the petitioner in these specific circumstances is arbitrary and must be set aside.
- Reasoning: The Court observed that while Regulation 10 of the Navi Mumbai Disposal of Lands (Amendment) Regulations, 2008, binds a transferee to the original lease conditions, the facts here were peculiar. The petitioner could not have commenced construction because the original allottee, Mr. Mapara, contested the transfer and held possession until the decree was executed. CIDCO’s own Board Resolution provides that ALP shall be levied at 0% when a licensee is restrained from construction due to "court cases". Although the specific injunction in this case only restrained the creation of third-party rights, the Court held it was "unjustified" and "unfair" to expect the petitioner to start construction before his rights were crystallized by a court decree. The Court concluded that the petitioner should not suffer for the breach and resistance of the original allottee, especially since the suit was not collusive. CIDCO remains free to pursue Mr. Mapara for any dues if legally permissible.
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