SC to Noida authority: Can’t cancel lease deeds over own failure

The Supreme Court on Tuesday cleared decks for the construction of a commercial project in Noida’s Sector 94, holding that the Noida authority cannot cancel a lease deed for delays without themself fulfilling the commitment to provide a 45-metre access road to the developer as per the approved site plan

The Supreme Court on Tuesday cleared decks for the construction of a commercial project in Noida’s Sector 94, holding that the Noida authority cannot cancel a lease deed for delays without themself fulfilling the commitment to provide a 45-metre access road to the developer as per the approved site plan.

Setting aside Noida’s lease deed cancellation order of June 14, 2022, a bench of justices PS Narasimha and Alok Aradhe directed the authority to approve the developer’s revised site plan.

Setting aside Noida’s lease deed cancellation order of June 14, 2022, a bench of justices PS Narasimha and Alok Aradhe directed the authority to approve the developer’s revised site plan. M/s Sunshine Trade Tower Pvt Ltd, the developer, gave an undertaking to complete the project in four years from the date of approval and agreed to deposit the remaining construction cost of over ₹100 crore with Noida in eight instalments.

“If private enterprise is to participate in infrastructure development by undertaking major financial investments, then it is necessary for public authorities, such as Noida, to create a conducive environment in which there is security as well as certainty vis-à-vis the investment that private enterprise risks and undertakes,” the bench observed.

Noida authority had allowed Sunshine Trade Tower to develop the site under its 2011 policy for commercial infrastructure. The order detailed that the plot was approved for a total sale price of over ₹133 crore, with the site plan allowing a 45-metre-wide front road and a 24-metre-wide side road. However, the 45-metre road was fully inhabited and encroached, and since the land was not acquired, clearing it would have required the consent of all landowners.

Officials said the project was temporarily stalled by a 2013 National Green Tribunal (NGT) order directing a halt to construction within 10km of the Okhla Bird Sanctuary. Work resumed after the Centre set a cut-off date of August 19, 2015, stating the rule would apply only to projects commencing after that date.

The developer filed a revised site plan changing the building’s frontage towards the 24-metre road. However, in 2022, Noida authority cancelled the lease deed citing project delays and rejected the revised plan in June 2023. The developer moved the high court, which ruled in its favour on July 19, 2024. Noida authority then appealed to the Supreme Court.

“We are of the opinion that the developer can neither be expected to proceed with the project in terms of the original site plan nor can it be fastened with any liability for Noida’s failure to discharge its obligation to provide the 45-metre front road,” the bench said.

The top court upheld the high court’s direction to Noida authority to extend the “Zero Period Policy” benefit and sanction the revised plan. The high court had directed the authority to issue fresh calculations granting Zero Period benefits and raise the demand within two weeks, to be deposited by the developer within eight weeks.

Under the “zero period” benefit, interest and penalty charges for real estate developers are waived off during the time their housing projects were legally or logistically stalled.

The developer had argued that the unavailability of the 45-metre front road necessitated changes to frontage, setbacks, and building configuration, materially affecting visibility and commercial viability. It sought the Zero Period benefit from the execution of the lease deed on January 11, 2012, until the sanction of the revised plan.

The court found merit in the argument, noting that reports from the tehsildar, deputy collector, and Noida’s own inspection confirmed the 45-metre road could not be acquired.

“The present project must be viewed in the context of the authority’s larger scheme to create the infrastructure necessary for the development of commercial activities, which, in turn, have the positive effect of employment and wealth generation,” the bench said. “If adequate access was not provided for reasons attributable to Noida authority, then the benefit of the Zero Period Policy cannot be denied, least of all on the ground that some access was available.”

The bench observed that in real estate, elevation and frontage are not merely matters of architectural aesthetics but important determinants of commercial value and marketability. “It goes without saying that the change from a 45-metre frontage to a 24-metre frontage has a direct effect on the development potential and commercial attractiveness of the subject plot,” it said, directing Noida to issue necessary directions for commencement of the project with revised schedules.