M/S Shanti Lal Arun Kumar vs. Up State Industrial Development Authority And 2 Others

Facts

The petitioner, M/s Shanti Lal Arun Kumar, was allotted a plot in 2001, which was later transferred to them in 2009. The respondent-Authority charged a transfer levy and subsequently lease rent and maintenance charges. The petitioner consistently raised grievances regarding the lack of development, specifically the absence of an approach road, which prevented them from establishing an industry. Despite repeated communications and inspections confirming the lack of development, the respondent-Authority continued to demand payments, including GST of Rs. 1,04,555/-, and threatened cancellation of allotment. Eventually, the respondent-Authority issued a communication in August 2024, admitting inability to provide possession and offering refund with 6% interest or a two-year wait for an alternative plot. The petitioner protested, seeking an alternative plot, but the respondent-Authority later stated they could not allot an alternative plot.

Held

The Court found sufficient force in the petitioner's case, holding that the respondent-Authority's actions were arbitrary, unjust, unfair, and fraudulent. The Court noted that the respondent-Authority should have refunded the money within a reasonable time after realizing the plot did not exist or the road could not be constructed. Instead, they continued to make illegal demands and collect payments. The Court also found that the petitioner had not agreed to Option No. 2, which involved a two-year extension for possession and a refund with 6% interest in case of failure. The Court concluded that the respondent-Authority's approach amounted to unjust enrichment and harassment, especially by offering a mere 6% interest after retaining funds for approximately twenty-three years, while the petitioner would have been liable for 15% interest for any default. The Court held that the respondent-Authority's conduct reflected a monopolistic and high-handed approach. The Court directed the respondent-Authority to refund the entire amount realized from the petitioner and their predecessor-in-interest with interest at the rate of 15% per annum within four weeks. Additionally, the respondent-Authority was ordered to pay Rs. 10,00,000/- as compensation for harassment and mental agony within two weeks.

Key Issues

1. Whether the respondent-Authority's actions in demanding payments and threatening cancellation of allotment without providing the allotted plot or necessary infrastructure, such as an approach road, are arbitrary, unjust, and unfair, constituting unjust enrichment and harassment of the petitioner? 2. Whether the options offered by the respondent-Authority in its communications dated 16.8.2024 and 25.10.2024, particularly the refund with 6% simple interest after retaining funds for over two decades, are reasonable and just, considering the petitioner's inability to set up an industry due to the respondent's failures? Petitioner's Arguments: The petitioner argued that the respondent-Authority acted with high-handedness, irresponsibility, and recklessness. They contended that the plot was not developed, lacked an approach road, and in essence, did not exist on the ground as per the layout plan. The continued demands for maintenance charges, lease rent, and GST, along with threats of cancellation, were illegal and fraudulent. The petitioner asserted that the options provided were arbitrary and unjust, especially the offer of a meager 6% interest on the refunded amount after a long period. They also highlighted that their response to option 2 was a willingness to accept an alternative plot, not an agreement to the two-year extension and subsequent refund. Respondent's Arguments: The judgment does not explicitly record arguments made by the respondent-Authority. However, their actions and communications, as detailed in the facts, suggest a stance of offering a refund with statutory interest or a delayed allotment.