INDIAN NEWSPAPAER SOCIETY v. MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY AND ANR
Quashing of Arbitrary Penalty Demands by Statutory Authorities; Supplementary Lease Deeds Overriding Original Time Restrictions and Application of the Contra Proferentum Rule in Contractual Disputes involving Instrumentalities of State.
Court: Bombay High Court
Citation: 2026:BHC-OS:8910-DB
Decision Date: 08-04-2026
List of Laws
Constitution of India, Article 14 and Article 226; Indian Contract Act, 1872, Section 10 and Section 72; Mumbai Metropolitan Region Development Authority Act, 1974; Principle of Contra Proferentum; Doctrine of Judicial Discipline and Precedent
- Facts: The Petitioner, Indian Newspaper Society, was allotted a plot in Bandra-Kurla Complex by the Mumbai Metropolitan Region Development Authority (MMRDA) on a long-term lease. A Lease Deed was executed in 2008, stipulating a four-year period for completion of construction under Article 2(d). Subsequently, additional Built-Up Area (BUA) was allotted, and a Supplementary Lease Deed was executed in 2013. Article 2(c) of this Supplementary Deed explicitly stated there would be "no time limit" as stipulated in the original deed for completing construction using the additional BUA. Despite this, MMRDA issued demand notices in 2014 and 2017, claiming additional premium/penalties for delays in construction beyond the original four-year window. The Petitioner paid certain amounts under protest to avoid lease termination and subsequently challenged the demand notices.
- Procedural Posture: The Petitioner filed a Writ Petition under Article 226 of the Constitution of India before the Bombay High Court seeking to quash the demand notices and obtain a refund of the penalties paid under protest.
- Issue: Whether the MMRDA was legally entitled to levy penalties for delay in construction despite the "no time limit" clause in the Supplementary Lease Deed, and whether such demands were arbitrary and violative of Article 14 of the Constitution.
- Holding: Yes, the demand notices were illegal. The Court set aside the notices and directed MMRDA to refund the penalty amounts with interest.
- Reasoning: The Court reasoned that the Supplementary Lease Deed created a "composite construction" scenario where the original and additional BUA could not be physically segregated. Article 2(c) of the 2013 Deed, which removed the time limit, represented a clear policy shift that displaced the original four-year restriction. Applying the doctrine of "Contra Proferentum", the Court held that any ambiguity in the contract drafted by MMRDA must be resolved in favor of the Petitioner. Furthermore, the Court found the demands to be discriminatory, as MMRDA had granted six-year extensions to other lessees post-2015 without similar penalties. The Court also held that payments made under threat of lease cancellation constitute "coercion" under Section 72 of the Indian Contract Act, making them refundable. Finally, following judicial discipline, the Court adhered to a similar view previously taken by a Coordinate Bench in the Raghuleela Builders case.
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