“Shocking”: Allahabad High Court Waives Interest Levied During Pendency Of Time Extension Application By UPSIDC

The Allahabad High Court expressed shock over levy of interest by Uttar Pradesh State Industrial Development Corporation for a period of 8 years for which time extension application filed by the allotee was kept pending by it.

Noting that the petitioner allottee also did not take steps towards ensuring that the application was decided, the bench of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar observed that

“Shockingly, the respondents sat tight on this application and it is only after lapse of 8 years on 29.10.2020, the respondents have allowed the application for extension of time asking the petitioner to pay Rs.86,41,002/- towards time extension fee. No reason has been assigned by the respondents to demonstrate as to why there was a delay of 8 years to take a decision.”

Petitioner leased the property in question through transfer from another allotee. Petitioner applied for sanction of building plan, however, UPSIDC responded that the same could not be granted till time extension was sought. Accordingly, petitioner filed a time extension application on 14.02.2011. Petitioner also sent a reminder on 02.07.2021. It was informed that the application had been sent to the headquarters and thereafter no action was taken.

In 2015, UPSIDC wrote to the petitioner to start production within 30 days as there was breach of the conditions of lease. Petitioner replied that the building plan was not approved and hence the petitioner could not proceed. Petitioner requested the Headquarter to send approval for the time extension application for approval of the building plan. Petitioner again sent reminders in 2016, 2018 and 2020.

On 29.10.2020, UPSIDC approved petitioner's application subject to payment of Rs.86,41,002.42/- as time extension charges. Petitioner stated that the charges had already been paid and there was no rational basis for such imposition. Petitioner challenged the demand before the High Court in 2021.

In the counter affidavit, it was stated that Rs.50,11,425/- was charged towards time extension fee upto 11.01.2022 and Rs.34,24,703/- is towards interest on time extension fee on this time.

The Court observed that for stay on the time extension charges, petitioner was asked to deposit Rs. 25 lakhs which were deposited. Even then UPSIDC had refused to grant functional certificate to the building of the petitioner. This denial was also challenged before the High Court.

Noting that the petitioner was also responsible for the delay as it did not approach the High Court seeking a writ of mandamus against UPSIDC, the Court held

“In this case, the respondent (UPSIDC) was apparently responsible for the delay of 8 years in deciding the application for extension of time as the same was kept pending with them. Once the time extension was granted, the time extension fee was levied as per the lease deed and the resolution passed by the Board of Directors. However, a sum of Rs.34,24,703/- was charged towards interest on time extension fee.”

Though the Court observed that the petitioner had not taken any concrete steps to get the application decided earlier, it set aside the interest levied by UPSIDC for the 8 years the application was pending. However, the Court observed that interest would be leviable from the date of order on the time extension application till the payment of the date of the order.

Accordingly, the writ petition was disposed of.

Case Title: M/S Uttam Lifestyle Hotels Private Limited Versus State Of U.P. And 3 Others

Counsel for Petitioners(s) : Abhinav Gaur, Vibhu Rai

Counsel for Respondent(s) : Ambrish Shukla, Fuzail Ahmad Ansari, Megha Bansal

Click Here To Read/Download Order