Full Judgment Text
2026 INSC 321
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S).1944 OF 2011
M/S. PIAGGIO VEHICLES
PVT. LTD. ….APPELLANT(S)
VERSUS
STATE OF U.P. & ORS. ….RESPONDENT(S)
J U D G M E N T
Mehta, J.
1. Heard.
2. This appeal is preferred by the appellant, M/s.
1
Piaggio Vehicles Pvt. Ltd. , for assailing the judgment
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and order dated 15 October, 2009 passed by the
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Division Bench of the Allahabad High Court in Civil
Miscellaneous Writ Petition No.47482 of 2008
whereby, the aforesaid petition under Article 226 of
the Constitution of India preferred by the appellant-
company was dismissed, thereby affirming the order
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dated 25 August, 2008 passed by the Joint
1
Formerly known as M/s. Piaggio (India) Pvt. Ltd. Hereinafter, referred to
as “appellant-company”.
2
Hereinafter, referred to as “High Court”.
Signature Not Verified
Digitally signed by
SHIPRA NARANG
Date: 2026.04.06
17:21:30 IST
Reason:
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Managing Director of the Uttar Pradesh State
Industrial Development Corporation (now Uttar
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Pradesh State Industrial Development Authority) .
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3. By order dated 25 August, 2008, UPSIDA
forfeited the lease of Plot No. A-1, Site-B,
admeasuring 33 acres at Surajpur Industrial Area,
District Gautam Budh Nagar, Uttar Pradesh which
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had been granted under lease deeds dated 19
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March, 2002 and 10 July, 2007. The former lease
deed was executed in favour of M/s. Piaggio India (P)
Ltd., while the latter was executed in the name of the
amalgamated entity, M/s. Piaggio Vehicles Pvt. Ltd.
i.e., the appellant-company. The forfeiture was on
account of breach of terms and conditions stipulated
under sub-clauses (e) and (o) of Clause 3 read with
Clause 5 of the lease deed i.e., for failing to complete
construction of the factory building within the
stipulated period or the extended time permitted
thereunder. By the very same order, UPSIDA also
3
UPSIDA was formerly known as the Uttar Pradesh State Industrial
Development Corporation (UPSIDC). UPSIDC was merged into and
reconstituted as UPSIDA pursuant to the Uttar Pradesh State Industrial
Development Corporation Limited (Transfer of Assets and Liabilities)
Ordinance, 2018 (promulgated on 27.06.2018), and the subsequent
UPSIDC Limited (Transfer of Assets and Liabilities) Act, 2018 (enacted on
10.09.2018). Hereinafter, referred to as “UPSIDA”.
2
notified its intent to re-enter the plot and to forfeit the
premium paid by the appellant-company.
4. Before we delve into the factual and legal
aspects of the matter, it would be apposite to refer to
the proceedings which transpired after the order of
forfeiture.
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5. The High Court, vide order dated 12
September, 2008 passed in the captioned writ
petition, directed the parties to maintain status quo,
which continued till the dismissal of the writ petition.
6. Being aggrieved by the dismissal of the writ
petition, the appellant-company approached this
Court by way of this appeal by special leave, and the
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interim protection was extended vide order dated 27
October, 2009. The stay order was further modified
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on 6 November, 2009, restraining the respondents
from taking possession of the subject plot. Leave in
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the matter was granted on 8 February, 2011.
7. During the pendency of the civil appeal, the
appellant-company approached the concerned
authorities for a settlement but the same did not
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fructify. Again, on 17 January, 2017, this Court
directed the Managing Director, UPSIDA, to
deliberate upon the possibility of an amicable
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settlement. The appellant-company was granted
liberty to make a representation to the Managing
Director, UPSIDA, for attempting a settlement which
ultimately did not materialise.
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8. On 6 March, 2024, considering the
submissions advanced by the learned Counsel
representing the appellant-company, this Court
passed the following order:-
“Mr. Tarun Gulati, learned senior counsel
appearing for the appellant, makes the following
submissions:
(1) That the total outstanding dues as
communicated by the Regional Manager of Uttar
Pradesh State Industrial Development Authority
(for short, “UPSIDA”) was Rs.10,95,52,825/-,
which amount the appellant is ready and willing to
deposit with the respondent-UPSIDA and they have
a draft ready for the same.
(2) The second submission is that considering the
demand, promotion and government policies of
encouraging e-vehicles, the appellant-company has
submitted a proposal, according to which within six
months the unit at Surajpur Industrial Area will
start manufacturing only e-vehicles. Such proposal
has been placed along with an application (IA
No.47583 of 2024), which application, learned
senior counsel submits, may be considered
favourably.
(3) That the appellant may approach the State of
Uttar Pradesh with their proposal as contained in
Clause-2, above.
In response to above, Mr. A.N.S. Nadkarni, learned
senior counsel appearing for the UPSIDA submits
that according to him the instructions are that the
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amount of dues indicated were by the Regional
Manager without approval of the competent
authority, as such they are not willing to accept the
said amount and their stand relating to the
cancellation of the allotment still stands.
With respect to the second and third submissions,
he prays that some time may be granted to seek
response to the application annexing proposal for
manufacturing of e-vehicles.
Considering the submissions, we direct the
appellant to deposit the bank draft(s) with the
Registry of this Court to be kept in a safe custody.
However, such deposit would be without prejudice
to the rights of the respondent-UPSIDA.
Further, the respondents may file response to the
application (IA No.47583 of 2024) within four
weeks.
In the meantime, the appellant may submit its
proposal to the State Government which may be
considered on its own merits in accordance to law.”
9. By the aforesaid order, liberty was granted to
the appellant-company to try and negotiate with the
State Government for acceptance of their new
proposal for manufacturing e-vehicles at Surajpur
Industrial Area, Uttar Pradesh. However, the said
proposal was ultimately turned down by the State
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Government, as recorded in the order dated 23
January, 2025. Accordingly, the matter was posted
for hearing, and detailed arguments were advanced
on behalf of the parties.
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BRIEF FACTS
10. Having taken note of the intervening
developments and the abortive attempts at
settlement, now, we shall briefly advert to the facts
relevant and essential for the disposal of the present
appeal.
11. The industrial plot in question was originally
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allotted on 16 May, 1985 to an entity named, M/s.
Stallion Shox Limited. The said entity transferred its
rights and interests to the appellant-company’s
predecessor, M/s. Piaggio (India) Pvt. Ltd., and said
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transfer was ratified and approved by UPSIDA on 14
December, 2001. A formal lease deed was
subsequently executed between M/s. Piaggio (India)
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Pvt. Ltd. and UPSIDA on 19 March, 2002.
12. A No-Objection Certificate was issued by the
U.P. Pollution Control Board, Gomati Nagar,
Lucknow to M/s. Piaggio (India) Pvt. Ltd. for setting
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up the new unit vide letter dated 4 July, 2002.
Other necessary permissions, including the requisite
licenses, were obtained from the Department of
Explosives, Ministry of Commerce & Industry,
Government of India and the office of Senior
Superintendent of Police, Gautam Budh Nagar.
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13. Pursuant to grant of such permissions, M/s.
Piaggio (India) Pvt. Ltd. claims to have established a
state-of-the-art testing facility within the existing
constructions on the subject plot. It is further the
case of the appellant-company that a significant
investment of approximately Rs. 27.89 crores was
made for this purpose, and a workforce consisting of
more than 300 workmen was employed to operate the
testing plant and laboratory.
14. M/s. Piaggio (India) Pvt. Ltd. and M/s. Piaggio
Vehicles Ltd. were amalgamated under orders of the
High Courts of Mumbai and Delhi pursuant to an
application filed under the Companies Act, 1956. The
official scheme of amalgamation was sanctioned
vide
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orders dated 24 September, 2003 and 26
September, 2003. The allotting authority, namely,
UPSIDA, granted permission for change of name of
the lessee, and the lease of the industrial plot was
accordingly ordered to be transferred to M/s. Piaggio
Vehicles Pvt. Ltd., i.e. the appellant-company,
, vide
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approval letter dated 8 November, 2004.
Maintenance charges and lease rent for the
intervening period were duly paid by the appellant-
company, and consequently, a fresh lease deed dated
7
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10 July, 2007 was executed by UPSIDA in the name
of the appellant-company.
15. The appellant-company claims that, by virtue of
execution of the aforesaid lease deed, the
requirement to raise construction within the original
two-year period stipulated under the original lease
deed was rendered otiose, as that timeframe had long
since expired and was impliedly waived by UPSIDA.
16. In preparation for full operations, the appellant-
company acquired an electric connection with
requisite load, obtained an Import-Export Code for
the premises, and registered itself with the provident
fund and the sales tax authorities.
17. However, the appellant-company has admitted
that, owing to compelling circumstances, to be
specific, the pressure to rapidly scale up manpower
and facilities at its alternate facility at Baramati,
Maharashtra, the entire industrial set-up could not
be installed at the location in question.
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18. A letter dated 26 September, 2007 was issued
by the Regional Manager, UPSIDA to the appellant-
company raising a concern that construction of the
industrial unit had neither been
commenced/completed nor production had been
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started within the period mandated under the lease,
and thus, the appellant-company had committed a
breach of the covenants as mentioned in sub-clauses
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(e) and (o) of Clause 3 of the lease deed dated 19
March, 2002.
19. In response, the appellant-company addressed
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a letter dated 15 October, 2007, to the Regional
Manager, UPSIDA, supported by documents and
reasons explaining why maximum utilisation of the
industrial plot could not be undertaken. In this
communication, the appellant-company sought a
two-year extension for raising construction and
setting up the industry.
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20. Subsequently, a letter dated 31 January, 2008
was issued by the Regional Manager, UPSIDA,
apprising the appellant-company that, if it was
interested in seeking an extension of time, it must
deposit a sum of Rs. 35,93,963.60/- (Rupees Thirty
Five Lakh Ninety Three Thousand Nine Hundred
Sixty Three and Sixty Paise Only), and furnish an
affidavit in the annexed format, so that a request for
one-year extension could be considered.
21. The appellant-company responded to aforesaid
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communication of UPSIDA vide letter dated 25
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February, 2008, praying that an extension of two
years was necessary to make the unit fully
functional. This request was reiterated vide letter
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dated 6 March, 2008.
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22. On 17 April, 2008, the Joint Managing
Director, UPSIDA informed the appellant-company
that a two-year extension was not permissible under
the extant policy and called upon the appellant-
company to show cause as to why the allotment
should not be cancelled for failure to fully utilise the
plot. The appellant-company responded to the said
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notice on 22 April, 2008, conveying that it was not
practically feasible to comply with the terms and
conditions of the lease deed in totality and repeated
the request for grant of two years’ extension for
bringing the unit into full operation.
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23. On 19 May, 2008, the appellant-company
deposited a cheque bearing No. 012833 for a sum of
Rs.35,93,964/- (Rupees Thirty Five Lakh Ninety
Three Thousand Nine Hundred Sixty Four Only),
towards the time extension fee, as per the demand
raised by UPSIDA. The appellant-company claims
that upon contacting the office of UPSIDA, it was
informed that the cheque would not be accepted and
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that a demand draft must be deposited instead.
Accordingly, the appellant-company deposited a
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demand draft dated 20 June, 2008, drawn on the
State Bank of India, Greater Noida, towards the Time
Extension Fee.
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24. On 25 June, 2008, the Regional Manager,
UPSIDA returned the cheque deposited earlier and
directed the appellant-company to furnish an
affidavit in the requisite format. Pursuant to the
aforesaid direction, the appellant-company, vide
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letter dated 1 July, 2008, furnished an affidavit
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dated 20 June, 2008 executed by its Company
Secretary, Shri Ashok Medankar. However, UPSIDA
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returned the demand draft vide letter dated 28 July,
2008, noting that the affidavit was not in the
prescribed format and directed its re-submission in
the proper form.
25. The appellant-company claims that the said
letter was received by it at its operational unit at
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Baramati, Maharashtra, on 6 August, 2008,
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whereupon a fresh affidavit dated 11 August, 2008
was executed by its Chairman and Managing
Director, Shri Ravi Chopra. Notably, the appellant-
company contends that the contents of the
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prescribed format were neither relevant nor germane
to the peculiar circumstances.
26. Thereafter, the appellant-company’s
representative approached the office of Regional
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Manager, UPSIDA, at Surajpur, Uttar Pradesh on 18
August, 2008, for depositing the demand draft along
with the affidavit referred to supra . Allegedly, the
respondent authorities refused to accept the said
affidavit on the premise that it had been executed in
English and was required to be furnished in Hindi
language only.
27. Accordingly, the appellant-company got a fresh
affidavit prepared in Hindi, duly sworn by its
Company Secretary, Shri Ashok Medankar, and
attempted to submit the same along with the demand
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draft on 20 August, 2008. Although the affidavit and
the draft were eventually accepted by an official of
UPSIDA, the appellant-company claims that the
officials desisted from issuing a formal
acknowledgment, allegedly upon specific directions of
respondent No. 3. E-converso, UPSIDA contends that
said demand draft was deposited directly into its
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account, which stood automatically credited on 23
12
August, 2008, two days prior to the formal issuance
of the cancellation letter.
28. The efforts of the appellant-company to retain
the plot and seek a further extension were finally
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rejected by UPSIDA vide order dated 25 August,
2008, whereby the lease was cancelled and the
premium was forfeited, with the UPSIDA notifying its
intention to re-enter the plot.
29. Compelled by these punitive actions, the
appellant-company made several representations to
UPSIDA for seeking justice and an extension of time.
However, upon receiving no relief, the appellant-
company proceeded to prefer the captioned writ
petition, which stands rejected by the High Court
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vide judgment and order dated 15 October, 2009
which is the subject matter of challenge in this
appeal.
SUBMISSIONS ON BEHALF OF THE APPELLANT-
COMPANY
30. Shri Amar Dave, learned senior counsel
appearing for the appellant-company, advanced the
following submissions to urge that the determination
of the lease and the refusal of the authorities to
extend the period for setting up the industrial unit, is
13
highly arbitrary, unjustified, and contrary to the
applicable rules and provisions.
31. He submitted that the appellant-company, from
the very inception, sincerely and faithfully intended
to set up an industrial unit on the subject plot.
However, it was prevented from doing so within the
stipulated time frame because, in the very same
period, the appellant-company was required to
rapidly scale up its manufacturing facility at
Baramati, Maharashtra. Hence, the appellant-
company was bona fide prevented from commencing
full-scale industrial activities on the plot in question.
32. It was submitted that the appellant-company
regularly pursued the matter with the concerned
authorities, repeatedly praying for an extension of
time so that the construction of the industrial unit
could be completed. However, the authorities acted
with closed minds and refused to acknowledge the
genuine request of the appellant-company.
33. An extension fee to the tune of Rs. 35,93,964/-
(Rupees Thirty Five Lakh Ninety Three Thousand
Nine Hundred Sixty Four Only), was deposited by the
appellant-company with the respondent authorities
in furtherance of the communication received from
14
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UPSIDA on 31 January, 2008. Hence, as per Shri
Dave, UPSIDA is estopped from taking a contrary
stand and denying the benefit of extension of time to
the appellant-company.
34. Shri Dave submitted that now, the erstwhile
provision of the Uttar Pradesh Industrial Area
4
Development Act, 1976 has been amended in the
following terms:-
“ 2. Amendment of Section 7 of U.P. Act no. 6
of 1976 .-In Section 7 of the Uttar Pradesh
Industrial Area Development Act, 1976 the
following proviso shall be inserted , namely:-
“Provided that where any land so allotted
is not utilized for the purpose for which it
was allotted within the period of five years
from the date of possession or within the
period fixed for such utilisation in the
conditions of allotment, whichever is
longer, the lease deed will stand cancelled
and the land shall vest with the
Authority.
Provided further where the aforesaid
period has already lapsed before the
commencement of this Act, the Authority
shall give a notice to the allottee to use
the land for the purpose for which it was
allotted within a period of one year and if
within the above period of one year the
allottee does not use the land, then the
allotment and lease deed shall stand
automatically cancelled.”
4
Uttar Pradesh Industrial Area Development (Amendment) Act, 2020.
15
35. Shri Dave contended that the aforesaid
provision gives liberty to UPSIDA to grant extension
of a further period of one year before the drastic
action of cancellation of the lease is taken. He further
submitted that the respondents have renewed the
leases of various allottees placed at par with the
appellant-company.
36. Shri Dave further submitted that the allotment
rate of land by UPSIDA in the Surajpur area is
Rs.10,320/- per sq. meter, whereas the circle rate
determined by the District Magistrate is only
Rs.6,500/- per sq. meter. The total value of land,
calculated as per the allotment rate of UPSIDA, works
out to Rs. 138 crores. The appellant-company has
already deposited a sum of Rs.10,95,52,825/-
(Rupees Ten Crore Ninety Five Lakh Fifty Two
Thousand Eight Hundred Twenty Five Only) in the
Registry of this Court, which, including accrued
interest in the fixed deposit receipt, currently totals
Rs. 11,73,75,386/- (Rupees Eleven Crore Seventy
Three Lakh Seventy Five Thousand Three Hundred
Eighty Six Only) and is ready to deposit the balance
16
5
amount in terms of the allotment rate of UPSIDA so
as to seek restoration of the lease. He, therefore,
submitted that it is a fit case where, this Court
should feel persuaded to exercise its extraordinary
jurisdiction so as to balance the equities by extending
the period and directing restoration of allotment in
favour of the appellant-company.
37. He also urged that, under the Electric Vehicle
Policy of the Government of India, UPSIDA is now
allotting plots to genuine parties on a walk-in basis,
and hence it is a fit case wherein this Court should
exercise its jurisdiction in favour of restoration by
setting aside cancellation, particularly as the
appellant-company, being a premier manufacturer in
the electric vehicle segment, is keen to establish its
unit at the subject location for manufacture of
electric vehicles.
38. On these grounds, learned counsel for the
appellant-company, sought reversal of the impugned
judgment and prayed that the appeal be allowed.
5
Supra.
17
SUBMISSIONS ON BEHALF OF THE
RESPONDENTS
39. Per contra , Shri Atmaram N.S. Nadkarni,
learned senior counsel representing UPSIDA, urged
that the appellant-company has acted in gross
violation of the requirements of the lease deed right
from the inception. The plot in question, which was
originally allotted to M/s. Stallion Shox Limited, was
transferred to the appellant-company’s sister
concern M/s. Piaggio (India) Pvt. Ltd., way back on
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14 December, 2001. Shri Nadkarni referred to the
original transfer letter, which contains the following
stipulation:-
“7. The transferee will submit definite time
bound programme for completion of the
construction and/or implementation of the
project on the aforesaid plot not exceeding
two years .”
(Emphasis supplied)
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40. He also referred to a letter dated 30 April, 2002
forwarded by UPSIDA to the appellant-company and
relied upon condition No. 11 of the said letter which
reads as below:-
“11. The applicant will submit Fire NOC & Pollution
NOC within one month from the date of dispatch of
this sanction memo otherwise the approval will be
assumed cancelled without information.”
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41. Shri Nadkarni submitted that the sub-clause (o)
of Clause 3 of the lease deed executed between the
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parties on 19 March, 2002, unequivocally
mandated that the lessee shall raise construction on
the demised land and put the same to use within six
calendar months from the date of possession, or
within such extended period, as the lessor may allow
in writing. Furthermore, Clause 5 of the lease deed
stipulated that the lessee shall put up whole of the
demised property to industrial use to the satisfaction
of the lessor, who reserved the right to determine the
lease in respect of such portion of the plot as had not
been put to use within a reasonable time.
42. Shri Nadkarni pointed out that when
possession of the plot was handed over to M/s.
Piaggio (India) Pvt. Ltd., construction covering 7.68%
of the area pre-existed on the said plot, having being
completed by the original allottee, M/s. Stallion Shox
Limited. He urged that the appellant-company did
not put up a single brick on the subject land over and
above what already existed.
43. Pursuant to the amalgamation, the appellant-
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company issued a letter dated 24 November, 2003,
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in which it expressly agreed and undertook to abide
by the terms and conditions of the original lease deed.
Consequently, permission for change of name of the
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lessee was granted by UPSIDA vide letter dated 8
November, 2004, subject to the conditions set out
below:-
“1. You will have to pay our dues time to time as
demanded.
2. All the terms and conditions of allotment letter
dated 16.05.1985, transfer letter dated 14.12.2001
and lease deed executed on 19.03.2002 shall all
remain unchanged.”
44. The fresh lease deed executed between the
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parties on 10 July, 2007 was only a formal
document, executed solely to reflect the change of
name following the amalgamation of companies. In
that view of the matter, the substantive stipulations
contained in the original lease deed remain
unaltered.
45. It is the specific case of UPSIDA that even after
lapse of six years since the execution of the lease deed
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dated 19 March, 2002, no construction was raised
on the demised land, and no effort whatsoever was
made by the appellant-company for commencing the
industrial activities. Thus, learned counsel for the
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respondents urged that the appellant-company was
in clear breach of sub-clauses (e) and (o) of Clause 3
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of the lease deed dated 19 March, 2002. A notice
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dated 26 September, 2007 was accordingly issued
to the appellant-company setting out the concerns
regarding breach of the lease conditions. In its
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response dated 15 October, 2007, the appellant-
company admitted the breach and offered an
unconvincing justification for the delay stating that it
had been under pressure to scale up manpower and
facilities at its unit in Baramati, Maharashtra which
caused a slight set back at the Surajpur site, Uttar
Pradesh and requested a two-year extension to
achieve peak operations.
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46. Shri Nadkarni referred to a letter dated 31
January, 2008 issued by the Regional Manager,
UPSIDA requiring the appellant-company to deposit
a sum of Rs.35,93,963.60/- (Rupees Thirty Five
Lakh Ninety Three Thousand Nine Hundred Sixty
Three and Sixty Paise Only), and submission of an
affidavit in the prescribed format, so that the prayer
for extension of one-year could be considered. He
urged that as late as January, 2008, the appellant-
company had not shown any intent to set up the
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manufacturing unit, as even the approved site plan
was not in existence till that date.
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47. In spite of the intimation dated 31 January,
2008, neither the time extension fee was paid nor was
the required affidavit furnished. A belated letter dated
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6 March, 2008 was thereafter forwarded by the
appellant-company informing that, due to the
compelling circumstances and lack of resources, the
unit could not be made fully functional, once again
highlighting the appellant-company’s focus on
expanding its three-wheeler manufacturing facility in
Baramati, Maharashtra.
48. In response, the Joint Managing Director,
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UPSIDA forwarded a letter dated 17 April, 2008
refusing the prayer for grant of extension for two
years and requiring the appellant-company to show
cause as to why the allotment of the plot should not
be cancelled. Shri Nadkarni relied upon the following
extracts from the said letter to buttress the
contention that the appellant-company never
demonstrated a bona fide intention to establish the
manufacturing unit on the subject plot:-
“Please refer to your letter dated 25.02.08 vide
which you have requested for allowing two years
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time extension to make the unit on the plot fully
operational. It is understood that the said
application has been filed by you after receiving a
notice dated 26.9.07 & 31.1.2008 for meager
utilization of the plot admeasuring 33 acres. Your
above letter written after five months of original
notice still lacks any concrete proposal for the full
utilization of the plot. You have casually asked for
two years time extension without giving any time
bound programme etc.
As you are aware that the plot no. A-1 Industrial
Area, Surajpur side-B Distt Gautam Budh Nagar
was leased to you on 10.7.2007. The condition no.5
of the lease deed clearly state ‘Notwithstanding any
other provision herein before contained to the
contrary the lessee shall put up the whole of the
property demised under this present for the
industrial use to the satisfaction of the lessor and
the lessor shall have the right to, determine the
lease of that much area of the plot of land demised
which has not been actually so put to use within a
reasonable time at its discretion or even to
determine the lease of the whole of the land
demised under these present. The decision of the
lessor shall be binding with regard to the extent of
the user as aforesaid as to whether the whole of
demised land has been unutilised or only a portion
has been used and the lessee shall be bound by the
decision of the lessor in this regard. The lessee
hereby expressly agrees to the determination of the
lease in n part at the discretion of the lessor.
As per records available in office only 7.68% of
sanctioned building plan area has been covered by
the you and no construction or production activity
was witnessed on the plot. You will appreciate that
you have utilized very minute portion of the pot by
keeping the major portion of the plot unutilized you
are denying the opportunity to the other genuine
interested entrepreneurs to set functional unit on
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plot, needless to say that establishment of industry
covering optimum land is the prime motive for
allotment of the plot as it would result in generation
of employment for the local populace.
Your request for further time extension for two
years is not permissible under the present policy of
corporation. You are required to show cause as to
why the allotment of the plot be not cancelled in
accordance to the condition of the lease deed as
elaborated above for fully utilize the leased to you.”
49. Shri Nadkarni further submitted that the
prescribed format of the affidavit, required to be
furnished by the appellant-company for extension of
time, contained a declaration in clear terms that if
within nine months of extension granted, the unit
does not commence production, UPSIDA shall cancel
the lease of the plot, and the appellant-company
would be precluded from raising any dispute against
such action.
50. He submitted that the affidavit in the prescribed
format was intentionally not furnished by the
appellant-company and hence, the only logical
outcome was to terminate the lease granted in favour
of the appellant-company, on account of its failure to
comply with the terms and conditions of the lease
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deed as well as notices dated 26 September, 2007
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and 17 April, 2008.
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51. Shri Nadkarni further urged that a subsequent
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letter dated 28 August 2008, along with the affidavit
in the prescribed format, was received by the
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respondents on 1 September, 2008, i.e. , well after
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the lease deed had been terminated on 25 August,
2008. He submitted that even in the delayed affidavit,
no clear intent to commence production was
expressed.
52. Shri Nadkarni also referred to the Authorities
Operating Manual, 2011, to contend that where an
allottee has been unsuccessful in challenging the
cancellation of a plot before any court, such allottee
would not be entitled to the benefit of the restoration
policy. This contention was raised to oppose the plea
advanced by the learned senior counsel for the
appellant-company, who had urged that the plot in
question could and ought to be restored under the
respondents’ restoration policy.
53. On the aspect of the prescribed rates referred to
by Shri Dave, Shri Nadkarni submitted that plots of
similar size at the location in question upon being
auctioned by UPSIDA, have fetched revenue of almost
Rs. 300 crores.
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54. Shri Nadkarni concluded his submissions
urging that as the appellant-company is in clear
violation of the terms and conditions of the lease
deed, it does not deserve any degree of equitable relief
in exercise of the extraordinary jurisdiction conferred
upon this Court under Article 136 of the Constitution
of India and sought dismissal of the appeal.
ANALYSIS AND DISCUSSION
55. We have heard learned counsel for the parties
at length and have carefully considered the material
placed on record and so also the impugned judgment.
56. Since the matter pertains to cancellation of
industrial plot issued to the appellant-company, it
would be apposite to refer to the objectives behind
establishment of an industrial area/industrial
corridors as contained in the article titled “Concept
of Industrial Corridors and International Best
6
Practices” :-
“ Key features of industrial corridors
1. Integrated infrastructure: Industrial corridors
feature robust infrastructure that includes
multimodal transport systems, utilities and
6
Invest India, “Concept of Industrial Corridors and International Best
Practices” available at : https://www.investindia.gov.in/blogs/concept-
industrial-corridors-and-international-best-
practices#:~:text=This%20includes%20prebuilt%20industrial%20plots,%
2C%20investment%2Dfriendly%20smart%20cities.
26
Information and Communication Technology-
enabled (ICT-enabled) services. This infrastructure
is designed to support the operational needs of
industries and facilitate seamless movement of
goods.
2. Plug-and-play facilities: Many successful
corridors offer ready-to-use facilities that allow
businesses to start operations with minimal set-up
time. This includes prebuilt industrial plots. access
to utilities and streamlined regulatory processes.
3. Sustainability initiatives: Modern industrial
corridors incorporate sustainable practices such as
waste recycling, renewable energy utilization and
green building standards to minimize
environmental impact.
4. Skill development and employment
generation: These corridors often focus on
creating a skilled workforce through training
programs and partnerships with educational
institutions, thereby enhancing local
employment opportunities.
5. Special Economic Zones: industrial corridors
often include special economic zones that provide
tax incentives and regulatory advantages to attract
foreign investment and promote exports.
6. Public-Private Partnerships: Successful
industrial corridors are often developed through
collaborations between government bodies and
private enterprises, ensuring efficient resource
allocation and management.
7. Walk-to-work culture: It reduces traffic and
pollution, promotes healthier lifestyles and boosts
productivity by minimizing commuting time.
Supported by pedestrian-friendly infrastructure,
green spaces and efficient public transport, it
enhances work-life balance and creates appealing
Investment-friendly smart cities.”(Emphasis
supplied)
27
57. Seen in light of the above objectives, it is
apparent that the primary purposes behind
establishment of an industrial area are to generate
revenue, create employment opportunities and foster
overall economic development of the area in question.
The allottees, in turn, are granted large tracts of land
at subsidised rates, supported by infrastructural
developments intended to transform the area into a
wholesome productive industrial hub.
58. To achieve these salutary objectives, the
allottees are mandated to strictly comply with the
terms and conditions of allotment, including time-
bound schedules for project implementation. The
lease deed executed between the parties is the
inter se
governing instrument of this relationship, and the
parties are legally bound by its covenants.
59. In the present matter, UPSIDA contends that
the obligations regarding construction and
commencement of production remained binding and
unchanged even after execution of the subsequent
lease deed in 2007. It is therefore apposite to
reproduce the relevant clauses of the lease deed
th
dated 19 March, 2002, as they are directly relevant
28
and germane to the present controversy regarding the
alleged breach of industrial use:-
“ 3. AND THE LESSEE DOTH HEREBY
COVENANT WITH THE LESSOR AS UNDER:
(e) That the Lessee will keep the demised
premises and the buildings thereon at all
times in a state of good and substantial
repairs and in sanitary condition at its own
costs.
…
(o) That the Lessee shall put the demised
premises with the buildings constructed
thereon to the use hereinbefore mentioned
within 06 calendar month from the date of
possession of the said land is handed over to
him and in any case within six (6) calendar
month from the date of this deed or such
extended period of time as may be allowed by
the lessor in writing in its discretion provided
that the extension of time for putting the
premises to use under this clause shall not be
admissible except wherein the opinion of the
lessor the delay is caused for reasons beyond
the control of the Lessee.
5. Notwithstanding any other provisions
hereinbefore contained to the contrary the Lessee
shall put up the whole of the property demised
under this presents for the Industrial use to the
satisfaction of the Lessor and the lessor shall have
the right to determine the Lease of that much area
of the plot of land demised which has not been
actually so put to use within a reasonable time at
its discretion or even to determine the lease of the
whole of the land demised under these presents.
The decision of the Lessor shall be binding with
regard to the extent of the user as aforesaid as to
whether the whole of demised land has been
utilized or only a portion has been used and the
29
Lessee shall be bound by the decision of the lessor
in this regard. The Lessee hereby expressly agrees
to the determination of the lease in part of the
discretion of the same.”
60. Clauses 3(e) and 3(o) of the lease deed make it
abundantly clear that the lessee, upon execution of
the lease deed and handing over of possession, would
be under an obligation to raise construction of the
industrial unit within the stipulated period of six
months, or within such extended period as may be
allowed.
61. It is a matter of record, and a focal contention
raised by Shri Nadkarni, learned senior counsel
representing UPSIDA, that no construction was ever
raised by the appellant-company on the leased
industrial plot. Rather, the appellant-company
claims to have operated a testing facility within the
pre-existing constructions that had been raised by
the erstwhile allottee, M/s. Stallion Shox Limited.
62. During the course of submissions, a pertinent
query was posed to learned senior counsel Shri Amar
Dave as to whether the appellant-company had ever
submitted any proposal for approval of a layout plan.
In response whereto, Shri Dave candidly conceded
that such approved layout plan is not available with
30
the appellant-company. However, his contention was
that the layout plan must have been submitted at the
time of obtaining other approvals, viz., pollution
control clearance, electricity connection, etc. and
that the respondents would be in possession of the
approved plan in their records. We, prima facie , find
the said submission to be fallacious and untenable.
The appellant-company, being a well-established
corporate entity, cannot be allowed to take refuge
behind the veil of ignorance.
63. Thus, there is no escape from the conclusion
that, right from the date of the grant of lease to the
th
sister concern of the appellant-company on 14
December, 2001 till the events leading to cancellation
th
of the lease deed on 25 August, 2008, the appellant-
company failed to demonstrate any convincing effort
or intent to establish a full-scale industrial
bona fide
manufacturing unit on the plot in question.
64. Shri Dave tried to draw much water out of the
fact that in the year 2008, UPSIDA itself invited the
appellant-company to apply for an extension by
depositing an extension fee to the tune of
Rs.35,93,963.60/- (Rupees Thirty Five Lakh Ninety
Three Thousand Nine Hundred Sixty Three and Sixty
31
Paise Only), which the appellant-company claims to
have timely paid. However, the said submission of
Shri Dave is also without any merit. In this regard,
th
we may refer to the letters dated 26 September
st th
2007, 31 January 2008, and 17 April 2008 issued
by UPSIDA, which clearly convey that any
consideration for extension was strictly conditional
upon the timely payment of fee and submission of an
affidavit in a prescribed format, a condition which the
appellant-company admittedly failed to fulfil by the
date fixed for this purpose.
65. It may further be noted that possession of the
plot in question was handed over to M/s. Piaggio
th
(India) Pvt. Ltd., the erstwhile entity, on 4 April,
2002, at which time construction raised by M/s.
Stallion Shox Limited pre-existed over 7.68% of the
plot area. Pursuant to the amalgamation of the two
companies, i.e., M/s. Piaggio (India) Pvt. Ltd. and
M/s. Piaggio Vehicles Pvt. Ltd., UPSIDA granted
permission for change of name of the lessee, with a
specific stipulation that all terms and conditions of
th
the allotment letter dated 16 May, 1985; transfer
th
letter dated 14 December, 2001; and original lease
th
deed dated 19 March, 2002; shall remain unaltered.
32
th
The fresh lease deed dated 10 July, 2007, was
executed merely to reflect this change in name of the
lessee, and the fundamental conditions of the original
th
lease dated 19 March, 2002 remained unaltered.
Hence, the inviolable conditions contained in the
lease deed requiring the appellant-company to raise
construction on the subject plot within the period
stipulated were never modified, altered or extended.
66. Ignoring all violations by the appellant-
th
company, UPSIDA issued a letter dated 26
September, 2007, informing the appellant-company
that it was in breach of Clauses 3(e) and 3(o) of the
th
lease deed dated 19 March, 2002. In its response
th
dated 15 October, 2007, the appellant-company
admitted that it was under pressure for scaling up
manpower and facilities at its unit at Baramati,
Maharashtra and hence, it had been unable to
commence full-fledged operations at Surajpur, Uttar
Pradesh. However, even in said letter, the appellant-
company did not indicate that any meaningful
industrial activity, including the so called testing
activities, had ever been undertaken on the subject
plot during the preceding six years.
33
67. By the very same letter, the appellant-company
had also sought extension of two years to enable it to
operate at peak level on the plot in question. In
st
response, UPSIDA forwarded a letter dated 31
January, 2008, asserting, inter alia , that as per
condition No.7 of the transfer letter, construction was
to be completed within two years. UPSIDA also noted
that although the lease deed had been executed on
th
19 March, 2002, even by 2008, the appellant-
company had failed to obtain sanction of the site
plan, let alone commence operations. By dint of this
letter, the appellant-company was granted thirty
days’ time to furnish an affidavit in the prescribed
format and to deposit a sum of Rs.35,93,963.60/-
(Rupees Thirty Five Lakh Ninety Three Thousand
Nine Hundred Sixty Three and Sixty Paise Only), so
that one-year’s extension could be considered.
Admittedly, the appellant-company failed to deposit
the extension fee within stipulated period of thirty
days, as the fee came to be deposited only after the
th
cancellation letter dated 25 August, 2008 was
issued by UPSIDA and in addition thereto, the
affidavit was also not submitted in time or in the
requisite format.
34
68. The prescribed format of the affidavit has a
material bearing on the present controversy, and
hence the same is reproduced hereinbelow for the
sake of ready reference:-
“AFFIDAVIT ON RS. 10 STAMP PAPER DULY
NOTRISED
1 That within three months of extension of time of
plot No. A-1, Site B, Surajpur Industrial Area,
Greater Noida, G.B Nagar, UP, the construction
shall start and within nine months the production
on the unit shall start.
2. That if within nine months of extension, the unit
does not start production, the corporation shall
cancel the plot and the allottee /transferee shall
not raise any dispute against the cancellation of the
plot and within thirty days of the cancellation the
physical possession of the plot shall be
surrendered.
3. That the time extension fee be paid during
extended period according to rules.
4. That during extended period, the transfer of the
plot in favour of any other industrial house shall
not be valid.
5. That above facts are true to my knowledge and
belief.”
69. Condition No. 1 of the prescribed format
required that the construction of the unit must start
within three months of extension and production
must commence within nine months thereof.
Condition No.2 of the prescribed format explicitly
provides that if the unit fails to commence production
within the stipulated period from grant of extension,
35
UPSIDA shall cancel the allotment of the plot, and the
allottee/transferee shall not be allowed to raise any
dispute against such cancellation and must
surrender physical possession of the plot within the
thirty days of the cancellation.
70. Three affidavits were executed and furnished by
the appellant-company on different dates in response
to the notice for cancellation issued by UPSIDA. The
th
first affidavit sworn on 20 June, 2008, submitted
st
vide letter dated 1 July, 2008, was executed by Shri
Ashok Medankar and reads as follows:-
“ 01 July 2008
To
The Regional Manager
Up State Industrial Development Corpn. Ltd.
Site-V, Kasna Surajpur
Greater Noida (UP)
Ref: Lease extension of Plot No.A-1 industrial
Area, Site-B, Surajpur.
Dear Sir
Please find enclosed herewith the Affidavit as
desired by you, for the purpose of the extension
of the Lease of our plot at A-1 Industrial Area,
Site-B, Surajpur.
Thanking you
For Piaggio Vehicles Pvt. Ltd.
ANIL KUMAR
Head-Administration
36
Encl. Affidavit
AFFIDAVIT
I, Ashok Medankar S/o Mr. D.R. Medankar,
Company Secretary of Mis Piaggio Vehiclas Pvt.
Ltd. having its registered office at E-2, MIDC
Area, Baramati, Pune, do hereby solemnly affirm
and declare as under: -
1. I say that I am working as Company Secretary
with Mis Piaggio Vehicles Pvt. Ltd.
2. I say that the company has established a state
of art testing plant and machinery at A.1,
Industrial Area, Surajpur, Side-B, Greater
Noida, Gautam Budh Nagar and the research
and development work is in progress at the said
site.
3. I say that the Chairman and Managing
Director had already announced several projects
viz. manufacturing of diesel engines for home.
consumption and for export.
4. The company would generate revenue to the
State as well as Central Government in the form
of sales tax excise tax, service tax, VAT etc.
5. I say that the company has already
established its huge plant at Baramati,
Maharashtra having the annual turnover of more
than Rs. 1400 Crores.
6. I say that the company would comply with the
terms and conditions of the lease dead and pay
all the leviable tax/fee.
DEPONENT
VERIFICATION:-
I, the above named deponent, do hereby verify
that the contents of the above Affidavit are true
and correct to the best of my knowledge and
nothing material has been concealed there from.
37
Verified at Pune on this 20th day of June 2008.
DEPONENT”
71. A bare perusal of the aforesaid affidavit clearly
indicates that there is no reference whatsoever to
7
mandatory condition Nos. 1 and 2 of the prescribed
format forwarded by UPSIDA to the appellant-
company. This omission was calculated and
intentional, as furnishing the affidavit in the
prescribed format would have legally bound the
appellant-company to those specific terms, i.e., to
undertake the construction within three months of
grant of extension and to commence the production
within nine months thereof. The appellant-company
was undeniably aware that the production could not
start within the stipulated period of nine months,
because, as noted above, it had not even sought
approval of any site plan to raise construction on the
plot in question.
72. The appellant-company has admitted that the
th
subsequent affidavit dated 11 August, 2008, sworn
by its Chairman and Managing Director, could not be
submitted in time due to the requirement of a Hindi
translation. In addition, the fact remains that even
7
Supra , para No. 68.
38
th
the prescribed affidavit dated 20 August, 2008,
sworn by Company Secretary, Shri Ashok Medankar,
along with the application for further extension and
demand draft, was received only after the
th
cancellation letter dated 25 August, 2008 had
already been issued by UPSIDA.
73. Otherwise also, the lackadaisical conduct of the
appellant-company in failing to adhere to the terms
and conditions of the lease deed, and thereby
delaying development of the industrial plot by almost
six to seven years, as against the mandatory period
of six months prescribed under the lease deed, would
equally disentitle it to discretionary relief. Equities
cannot work in favour of the litigants whose conduct
is callous, laconic and in clear violation of the
applicable rules and regulations.
74. The fervent endeavour made by Shri Dave to
convince the Court that the appellant-company
should be considered for allotment of the plot under
the Electric Vehicle Policy of the Government of Uttar
Pradesh, also does not persuade us for a moment.
Upon perusing the pleadings of the writ petition filed
before the High Court and so also the appeal by
special leave, we find no averment which can even
39
remotely or vaguely indicate the details of the persons
or entities in whose favour such discretion has been
exercised by UPSIDA. It may be noted that though the
Government may have devised a policy for liberal
licensing in favour of Electric Vehicle manufacturers,
but there is no material on record to suggest that,
should the appellant-company fail to establish the
unit, there would be no other takers for the plot.
75. Shri Nadkarni, emphatically, refuted such
contention and urged that UPSIDA, in its own
wisdom, does not possess the jurisdiction to renew or
restore a lease deed which has already been cancelled
for valid reasons. He further submitted that such
discretion, if at all, could in all probability have been
exercised by the State Government.
76. Shri Nadkarni also urged that plots of similar
measurement in the same industrial area i.e.,
Surajpur, Uttar Pradesh, have been auctioned for
nearly Rs. 300 crores.
77. In addition thereto, we feel that it is absolutely
in the domain of the State Government to consider
the case of a particular applicant for grant of an
industrial plot at concessional rate, and this Court,
in exercise of its extraordinary jurisdiction under
40
Article 136 of the Constitution of India, would be
loath to substitute its own discretion for that of the
State Government in such commercial decisions.
78. In this background, we are of the firm opinion
that the appellant-company has failed to make out a
case for grant of equitable relief in exercise of the
extraordinary jurisdiction of this Court under Article
136 of the Constitution of India.
CONCLUSION
79. In wake of the above discussion, we find no
reason to interfere with the impugned judgment
which does not suffer from any error or infirmity
warranting interference.
80. Consequently, the appeal being devoid of merit
is rejected.
81. The appellant-company shall forthwith and not
later than a period of thirty days from today
handover the vacant and peaceful possession of the
subject plot to UPSIDA, which would be at liberty to
deal with the plot as per law. The amount of
Rs.10,95,52,825/- (Rupees Ten Crore Ninety Five
Lakh Fifty Two Thousand Eight Hundred Twenty Five
Only), deposited by the appellant–company in this
41
Court, shall be refunded to the appellant–company,
along with the accrued interest thereon.
82. Pending application(s), if any, shall stand
disposed of.
….……………………J.
(VIKRAM NATH)
...…………………….J.
(SANDEEP MEHTA)
...…………………….J.
(N.V. ANJARIA)
NEW DELHI;
APRIL 06, 2026.
42
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S).1944 OF 2011
M/S. PIAGGIO VEHICLES
PVT. LTD. ….APPELLANT(S)
VERSUS
STATE OF U.P. & ORS. ….RESPONDENT(S)
J U D G M E N T
Mehta, J.
1. Heard.
2. This appeal is preferred by the appellant, M/s.
1
Piaggio Vehicles Pvt. Ltd. , for assailing the judgment
th
and order dated 15 October, 2009 passed by the
2
Division Bench of the Allahabad High Court in Civil
Miscellaneous Writ Petition No.47482 of 2008
whereby, the aforesaid petition under Article 226 of
the Constitution of India preferred by the appellant-
company was dismissed, thereby affirming the order
th
dated 25 August, 2008 passed by the Joint
1
Formerly known as M/s. Piaggio (India) Pvt. Ltd. Hereinafter, referred to
as “appellant-company”.
2
Hereinafter, referred to as “High Court”.
Signature Not Verified
Digitally signed by
SHIPRA NARANG
Date: 2026.04.06
17:21:30 IST
Reason:
1
Managing Director of the Uttar Pradesh State
Industrial Development Corporation (now Uttar
3
Pradesh State Industrial Development Authority) .
th
3. By order dated 25 August, 2008, UPSIDA
forfeited the lease of Plot No. A-1, Site-B,
admeasuring 33 acres at Surajpur Industrial Area,
District Gautam Budh Nagar, Uttar Pradesh which
th
had been granted under lease deeds dated 19
th
March, 2002 and 10 July, 2007. The former lease
deed was executed in favour of M/s. Piaggio India (P)
Ltd., while the latter was executed in the name of the
amalgamated entity, M/s. Piaggio Vehicles Pvt. Ltd.
i.e., the appellant-company. The forfeiture was on
account of breach of terms and conditions stipulated
under sub-clauses (e) and (o) of Clause 3 read with
Clause 5 of the lease deed i.e., for failing to complete
construction of the factory building within the
stipulated period or the extended time permitted
thereunder. By the very same order, UPSIDA also
3
UPSIDA was formerly known as the Uttar Pradesh State Industrial
Development Corporation (UPSIDC). UPSIDC was merged into and
reconstituted as UPSIDA pursuant to the Uttar Pradesh State Industrial
Development Corporation Limited (Transfer of Assets and Liabilities)
Ordinance, 2018 (promulgated on 27.06.2018), and the subsequent
UPSIDC Limited (Transfer of Assets and Liabilities) Act, 2018 (enacted on
10.09.2018). Hereinafter, referred to as “UPSIDA”.
2
notified its intent to re-enter the plot and to forfeit the
premium paid by the appellant-company.
4. Before we delve into the factual and legal
aspects of the matter, it would be apposite to refer to
the proceedings which transpired after the order of
forfeiture.
th
5. The High Court, vide order dated 12
September, 2008 passed in the captioned writ
petition, directed the parties to maintain status quo,
which continued till the dismissal of the writ petition.
6. Being aggrieved by the dismissal of the writ
petition, the appellant-company approached this
Court by way of this appeal by special leave, and the
th
interim protection was extended vide order dated 27
October, 2009. The stay order was further modified
th
on 6 November, 2009, restraining the respondents
from taking possession of the subject plot. Leave in
th
the matter was granted on 8 February, 2011.
7. During the pendency of the civil appeal, the
appellant-company approached the concerned
authorities for a settlement but the same did not
th
fructify. Again, on 17 January, 2017, this Court
directed the Managing Director, UPSIDA, to
deliberate upon the possibility of an amicable
3
settlement. The appellant-company was granted
liberty to make a representation to the Managing
Director, UPSIDA, for attempting a settlement which
ultimately did not materialise.
th
8. On 6 March, 2024, considering the
submissions advanced by the learned Counsel
representing the appellant-company, this Court
passed the following order:-
“Mr. Tarun Gulati, learned senior counsel
appearing for the appellant, makes the following
submissions:
(1) That the total outstanding dues as
communicated by the Regional Manager of Uttar
Pradesh State Industrial Development Authority
(for short, “UPSIDA”) was Rs.10,95,52,825/-,
which amount the appellant is ready and willing to
deposit with the respondent-UPSIDA and they have
a draft ready for the same.
(2) The second submission is that considering the
demand, promotion and government policies of
encouraging e-vehicles, the appellant-company has
submitted a proposal, according to which within six
months the unit at Surajpur Industrial Area will
start manufacturing only e-vehicles. Such proposal
has been placed along with an application (IA
No.47583 of 2024), which application, learned
senior counsel submits, may be considered
favourably.
(3) That the appellant may approach the State of
Uttar Pradesh with their proposal as contained in
Clause-2, above.
In response to above, Mr. A.N.S. Nadkarni, learned
senior counsel appearing for the UPSIDA submits
that according to him the instructions are that the
4
amount of dues indicated were by the Regional
Manager without approval of the competent
authority, as such they are not willing to accept the
said amount and their stand relating to the
cancellation of the allotment still stands.
With respect to the second and third submissions,
he prays that some time may be granted to seek
response to the application annexing proposal for
manufacturing of e-vehicles.
Considering the submissions, we direct the
appellant to deposit the bank draft(s) with the
Registry of this Court to be kept in a safe custody.
However, such deposit would be without prejudice
to the rights of the respondent-UPSIDA.
Further, the respondents may file response to the
application (IA No.47583 of 2024) within four
weeks.
In the meantime, the appellant may submit its
proposal to the State Government which may be
considered on its own merits in accordance to law.”
9. By the aforesaid order, liberty was granted to
the appellant-company to try and negotiate with the
State Government for acceptance of their new
proposal for manufacturing e-vehicles at Surajpur
Industrial Area, Uttar Pradesh. However, the said
proposal was ultimately turned down by the State
rd
Government, as recorded in the order dated 23
January, 2025. Accordingly, the matter was posted
for hearing, and detailed arguments were advanced
on behalf of the parties.
5
BRIEF FACTS
10. Having taken note of the intervening
developments and the abortive attempts at
settlement, now, we shall briefly advert to the facts
relevant and essential for the disposal of the present
appeal.
11. The industrial plot in question was originally
th
allotted on 16 May, 1985 to an entity named, M/s.
Stallion Shox Limited. The said entity transferred its
rights and interests to the appellant-company’s
predecessor, M/s. Piaggio (India) Pvt. Ltd., and said
th
transfer was ratified and approved by UPSIDA on 14
December, 2001. A formal lease deed was
subsequently executed between M/s. Piaggio (India)
th
Pvt. Ltd. and UPSIDA on 19 March, 2002.
12. A No-Objection Certificate was issued by the
U.P. Pollution Control Board, Gomati Nagar,
Lucknow to M/s. Piaggio (India) Pvt. Ltd. for setting
th
up the new unit vide letter dated 4 July, 2002.
Other necessary permissions, including the requisite
licenses, were obtained from the Department of
Explosives, Ministry of Commerce & Industry,
Government of India and the office of Senior
Superintendent of Police, Gautam Budh Nagar.
6
13. Pursuant to grant of such permissions, M/s.
Piaggio (India) Pvt. Ltd. claims to have established a
state-of-the-art testing facility within the existing
constructions on the subject plot. It is further the
case of the appellant-company that a significant
investment of approximately Rs. 27.89 crores was
made for this purpose, and a workforce consisting of
more than 300 workmen was employed to operate the
testing plant and laboratory.
14. M/s. Piaggio (India) Pvt. Ltd. and M/s. Piaggio
Vehicles Ltd. were amalgamated under orders of the
High Courts of Mumbai and Delhi pursuant to an
application filed under the Companies Act, 1956. The
official scheme of amalgamation was sanctioned
vide
th th
orders dated 24 September, 2003 and 26
September, 2003. The allotting authority, namely,
UPSIDA, granted permission for change of name of
the lessee, and the lease of the industrial plot was
accordingly ordered to be transferred to M/s. Piaggio
Vehicles Pvt. Ltd., i.e. the appellant-company,
, vide
th
approval letter dated 8 November, 2004.
Maintenance charges and lease rent for the
intervening period were duly paid by the appellant-
company, and consequently, a fresh lease deed dated
7
th
10 July, 2007 was executed by UPSIDA in the name
of the appellant-company.
15. The appellant-company claims that, by virtue of
execution of the aforesaid lease deed, the
requirement to raise construction within the original
two-year period stipulated under the original lease
deed was rendered otiose, as that timeframe had long
since expired and was impliedly waived by UPSIDA.
16. In preparation for full operations, the appellant-
company acquired an electric connection with
requisite load, obtained an Import-Export Code for
the premises, and registered itself with the provident
fund and the sales tax authorities.
17. However, the appellant-company has admitted
that, owing to compelling circumstances, to be
specific, the pressure to rapidly scale up manpower
and facilities at its alternate facility at Baramati,
Maharashtra, the entire industrial set-up could not
be installed at the location in question.
th
18. A letter dated 26 September, 2007 was issued
by the Regional Manager, UPSIDA to the appellant-
company raising a concern that construction of the
industrial unit had neither been
commenced/completed nor production had been
8
started within the period mandated under the lease,
and thus, the appellant-company had committed a
breach of the covenants as mentioned in sub-clauses
th
(e) and (o) of Clause 3 of the lease deed dated 19
March, 2002.
19. In response, the appellant-company addressed
th
a letter dated 15 October, 2007, to the Regional
Manager, UPSIDA, supported by documents and
reasons explaining why maximum utilisation of the
industrial plot could not be undertaken. In this
communication, the appellant-company sought a
two-year extension for raising construction and
setting up the industry.
st
20. Subsequently, a letter dated 31 January, 2008
was issued by the Regional Manager, UPSIDA,
apprising the appellant-company that, if it was
interested in seeking an extension of time, it must
deposit a sum of Rs. 35,93,963.60/- (Rupees Thirty
Five Lakh Ninety Three Thousand Nine Hundred
Sixty Three and Sixty Paise Only), and furnish an
affidavit in the annexed format, so that a request for
one-year extension could be considered.
21. The appellant-company responded to aforesaid
th
communication of UPSIDA vide letter dated 25
9
February, 2008, praying that an extension of two
years was necessary to make the unit fully
functional. This request was reiterated vide letter
th
dated 6 March, 2008.
th
22. On 17 April, 2008, the Joint Managing
Director, UPSIDA informed the appellant-company
that a two-year extension was not permissible under
the extant policy and called upon the appellant-
company to show cause as to why the allotment
should not be cancelled for failure to fully utilise the
plot. The appellant-company responded to the said
nd
notice on 22 April, 2008, conveying that it was not
practically feasible to comply with the terms and
conditions of the lease deed in totality and repeated
the request for grant of two years’ extension for
bringing the unit into full operation.
th
23. On 19 May, 2008, the appellant-company
deposited a cheque bearing No. 012833 for a sum of
Rs.35,93,964/- (Rupees Thirty Five Lakh Ninety
Three Thousand Nine Hundred Sixty Four Only),
towards the time extension fee, as per the demand
raised by UPSIDA. The appellant-company claims
that upon contacting the office of UPSIDA, it was
informed that the cheque would not be accepted and
10
that a demand draft must be deposited instead.
Accordingly, the appellant-company deposited a
th
demand draft dated 20 June, 2008, drawn on the
State Bank of India, Greater Noida, towards the Time
Extension Fee.
th
24. On 25 June, 2008, the Regional Manager,
UPSIDA returned the cheque deposited earlier and
directed the appellant-company to furnish an
affidavit in the requisite format. Pursuant to the
aforesaid direction, the appellant-company, vide
st
letter dated 1 July, 2008, furnished an affidavit
th
dated 20 June, 2008 executed by its Company
Secretary, Shri Ashok Medankar. However, UPSIDA
th
returned the demand draft vide letter dated 28 July,
2008, noting that the affidavit was not in the
prescribed format and directed its re-submission in
the proper form.
25. The appellant-company claims that the said
letter was received by it at its operational unit at
th
Baramati, Maharashtra, on 6 August, 2008,
th
whereupon a fresh affidavit dated 11 August, 2008
was executed by its Chairman and Managing
Director, Shri Ravi Chopra. Notably, the appellant-
company contends that the contents of the
11
prescribed format were neither relevant nor germane
to the peculiar circumstances.
26. Thereafter, the appellant-company’s
representative approached the office of Regional
th
Manager, UPSIDA, at Surajpur, Uttar Pradesh on 18
August, 2008, for depositing the demand draft along
with the affidavit referred to supra . Allegedly, the
respondent authorities refused to accept the said
affidavit on the premise that it had been executed in
English and was required to be furnished in Hindi
language only.
27. Accordingly, the appellant-company got a fresh
affidavit prepared in Hindi, duly sworn by its
Company Secretary, Shri Ashok Medankar, and
attempted to submit the same along with the demand
th
draft on 20 August, 2008. Although the affidavit and
the draft were eventually accepted by an official of
UPSIDA, the appellant-company claims that the
officials desisted from issuing a formal
acknowledgment, allegedly upon specific directions of
respondent No. 3. E-converso, UPSIDA contends that
said demand draft was deposited directly into its
rd
account, which stood automatically credited on 23
12
August, 2008, two days prior to the formal issuance
of the cancellation letter.
28. The efforts of the appellant-company to retain
the plot and seek a further extension were finally
th
rejected by UPSIDA vide order dated 25 August,
2008, whereby the lease was cancelled and the
premium was forfeited, with the UPSIDA notifying its
intention to re-enter the plot.
29. Compelled by these punitive actions, the
appellant-company made several representations to
UPSIDA for seeking justice and an extension of time.
However, upon receiving no relief, the appellant-
company proceeded to prefer the captioned writ
petition, which stands rejected by the High Court
th
vide judgment and order dated 15 October, 2009
which is the subject matter of challenge in this
appeal.
SUBMISSIONS ON BEHALF OF THE APPELLANT-
COMPANY
30. Shri Amar Dave, learned senior counsel
appearing for the appellant-company, advanced the
following submissions to urge that the determination
of the lease and the refusal of the authorities to
extend the period for setting up the industrial unit, is
13
highly arbitrary, unjustified, and contrary to the
applicable rules and provisions.
31. He submitted that the appellant-company, from
the very inception, sincerely and faithfully intended
to set up an industrial unit on the subject plot.
However, it was prevented from doing so within the
stipulated time frame because, in the very same
period, the appellant-company was required to
rapidly scale up its manufacturing facility at
Baramati, Maharashtra. Hence, the appellant-
company was bona fide prevented from commencing
full-scale industrial activities on the plot in question.
32. It was submitted that the appellant-company
regularly pursued the matter with the concerned
authorities, repeatedly praying for an extension of
time so that the construction of the industrial unit
could be completed. However, the authorities acted
with closed minds and refused to acknowledge the
genuine request of the appellant-company.
33. An extension fee to the tune of Rs. 35,93,964/-
(Rupees Thirty Five Lakh Ninety Three Thousand
Nine Hundred Sixty Four Only), was deposited by the
appellant-company with the respondent authorities
in furtherance of the communication received from
14
st
UPSIDA on 31 January, 2008. Hence, as per Shri
Dave, UPSIDA is estopped from taking a contrary
stand and denying the benefit of extension of time to
the appellant-company.
34. Shri Dave submitted that now, the erstwhile
provision of the Uttar Pradesh Industrial Area
4
Development Act, 1976 has been amended in the
following terms:-
“ 2. Amendment of Section 7 of U.P. Act no. 6
of 1976 .-In Section 7 of the Uttar Pradesh
Industrial Area Development Act, 1976 the
following proviso shall be inserted , namely:-
“Provided that where any land so allotted
is not utilized for the purpose for which it
was allotted within the period of five years
from the date of possession or within the
period fixed for such utilisation in the
conditions of allotment, whichever is
longer, the lease deed will stand cancelled
and the land shall vest with the
Authority.
Provided further where the aforesaid
period has already lapsed before the
commencement of this Act, the Authority
shall give a notice to the allottee to use
the land for the purpose for which it was
allotted within a period of one year and if
within the above period of one year the
allottee does not use the land, then the
allotment and lease deed shall stand
automatically cancelled.”
4
Uttar Pradesh Industrial Area Development (Amendment) Act, 2020.
15
35. Shri Dave contended that the aforesaid
provision gives liberty to UPSIDA to grant extension
of a further period of one year before the drastic
action of cancellation of the lease is taken. He further
submitted that the respondents have renewed the
leases of various allottees placed at par with the
appellant-company.
36. Shri Dave further submitted that the allotment
rate of land by UPSIDA in the Surajpur area is
Rs.10,320/- per sq. meter, whereas the circle rate
determined by the District Magistrate is only
Rs.6,500/- per sq. meter. The total value of land,
calculated as per the allotment rate of UPSIDA, works
out to Rs. 138 crores. The appellant-company has
already deposited a sum of Rs.10,95,52,825/-
(Rupees Ten Crore Ninety Five Lakh Fifty Two
Thousand Eight Hundred Twenty Five Only) in the
Registry of this Court, which, including accrued
interest in the fixed deposit receipt, currently totals
Rs. 11,73,75,386/- (Rupees Eleven Crore Seventy
Three Lakh Seventy Five Thousand Three Hundred
Eighty Six Only) and is ready to deposit the balance
16
5
amount in terms of the allotment rate of UPSIDA so
as to seek restoration of the lease. He, therefore,
submitted that it is a fit case where, this Court
should feel persuaded to exercise its extraordinary
jurisdiction so as to balance the equities by extending
the period and directing restoration of allotment in
favour of the appellant-company.
37. He also urged that, under the Electric Vehicle
Policy of the Government of India, UPSIDA is now
allotting plots to genuine parties on a walk-in basis,
and hence it is a fit case wherein this Court should
exercise its jurisdiction in favour of restoration by
setting aside cancellation, particularly as the
appellant-company, being a premier manufacturer in
the electric vehicle segment, is keen to establish its
unit at the subject location for manufacture of
electric vehicles.
38. On these grounds, learned counsel for the
appellant-company, sought reversal of the impugned
judgment and prayed that the appeal be allowed.
5
Supra.
17
SUBMISSIONS ON BEHALF OF THE
RESPONDENTS
39. Per contra , Shri Atmaram N.S. Nadkarni,
learned senior counsel representing UPSIDA, urged
that the appellant-company has acted in gross
violation of the requirements of the lease deed right
from the inception. The plot in question, which was
originally allotted to M/s. Stallion Shox Limited, was
transferred to the appellant-company’s sister
concern M/s. Piaggio (India) Pvt. Ltd., way back on
th
14 December, 2001. Shri Nadkarni referred to the
original transfer letter, which contains the following
stipulation:-
“7. The transferee will submit definite time
bound programme for completion of the
construction and/or implementation of the
project on the aforesaid plot not exceeding
two years .”
(Emphasis supplied)
th
40. He also referred to a letter dated 30 April, 2002
forwarded by UPSIDA to the appellant-company and
relied upon condition No. 11 of the said letter which
reads as below:-
“11. The applicant will submit Fire NOC & Pollution
NOC within one month from the date of dispatch of
this sanction memo otherwise the approval will be
assumed cancelled without information.”
18
41. Shri Nadkarni submitted that the sub-clause (o)
of Clause 3 of the lease deed executed between the
th
parties on 19 March, 2002, unequivocally
mandated that the lessee shall raise construction on
the demised land and put the same to use within six
calendar months from the date of possession, or
within such extended period, as the lessor may allow
in writing. Furthermore, Clause 5 of the lease deed
stipulated that the lessee shall put up whole of the
demised property to industrial use to the satisfaction
of the lessor, who reserved the right to determine the
lease in respect of such portion of the plot as had not
been put to use within a reasonable time.
42. Shri Nadkarni pointed out that when
possession of the plot was handed over to M/s.
Piaggio (India) Pvt. Ltd., construction covering 7.68%
of the area pre-existed on the said plot, having being
completed by the original allottee, M/s. Stallion Shox
Limited. He urged that the appellant-company did
not put up a single brick on the subject land over and
above what already existed.
43. Pursuant to the amalgamation, the appellant-
th
company issued a letter dated 24 November, 2003,
19
in which it expressly agreed and undertook to abide
by the terms and conditions of the original lease deed.
Consequently, permission for change of name of the
th
lessee was granted by UPSIDA vide letter dated 8
November, 2004, subject to the conditions set out
below:-
“1. You will have to pay our dues time to time as
demanded.
2. All the terms and conditions of allotment letter
dated 16.05.1985, transfer letter dated 14.12.2001
and lease deed executed on 19.03.2002 shall all
remain unchanged.”
44. The fresh lease deed executed between the
th
parties on 10 July, 2007 was only a formal
document, executed solely to reflect the change of
name following the amalgamation of companies. In
that view of the matter, the substantive stipulations
contained in the original lease deed remain
unaltered.
45. It is the specific case of UPSIDA that even after
lapse of six years since the execution of the lease deed
th
dated 19 March, 2002, no construction was raised
on the demised land, and no effort whatsoever was
made by the appellant-company for commencing the
industrial activities. Thus, learned counsel for the
20
respondents urged that the appellant-company was
in clear breach of sub-clauses (e) and (o) of Clause 3
th
of the lease deed dated 19 March, 2002. A notice
th
dated 26 September, 2007 was accordingly issued
to the appellant-company setting out the concerns
regarding breach of the lease conditions. In its
th
response dated 15 October, 2007, the appellant-
company admitted the breach and offered an
unconvincing justification for the delay stating that it
had been under pressure to scale up manpower and
facilities at its unit in Baramati, Maharashtra which
caused a slight set back at the Surajpur site, Uttar
Pradesh and requested a two-year extension to
achieve peak operations.
st
46. Shri Nadkarni referred to a letter dated 31
January, 2008 issued by the Regional Manager,
UPSIDA requiring the appellant-company to deposit
a sum of Rs.35,93,963.60/- (Rupees Thirty Five
Lakh Ninety Three Thousand Nine Hundred Sixty
Three and Sixty Paise Only), and submission of an
affidavit in the prescribed format, so that the prayer
for extension of one-year could be considered. He
urged that as late as January, 2008, the appellant-
company had not shown any intent to set up the
21
manufacturing unit, as even the approved site plan
was not in existence till that date.
st
47. In spite of the intimation dated 31 January,
2008, neither the time extension fee was paid nor was
the required affidavit furnished. A belated letter dated
th
6 March, 2008 was thereafter forwarded by the
appellant-company informing that, due to the
compelling circumstances and lack of resources, the
unit could not be made fully functional, once again
highlighting the appellant-company’s focus on
expanding its three-wheeler manufacturing facility in
Baramati, Maharashtra.
48. In response, the Joint Managing Director,
th
UPSIDA forwarded a letter dated 17 April, 2008
refusing the prayer for grant of extension for two
years and requiring the appellant-company to show
cause as to why the allotment of the plot should not
be cancelled. Shri Nadkarni relied upon the following
extracts from the said letter to buttress the
contention that the appellant-company never
demonstrated a bona fide intention to establish the
manufacturing unit on the subject plot:-
“Please refer to your letter dated 25.02.08 vide
which you have requested for allowing two years
22
time extension to make the unit on the plot fully
operational. It is understood that the said
application has been filed by you after receiving a
notice dated 26.9.07 & 31.1.2008 for meager
utilization of the plot admeasuring 33 acres. Your
above letter written after five months of original
notice still lacks any concrete proposal for the full
utilization of the plot. You have casually asked for
two years time extension without giving any time
bound programme etc.
As you are aware that the plot no. A-1 Industrial
Area, Surajpur side-B Distt Gautam Budh Nagar
was leased to you on 10.7.2007. The condition no.5
of the lease deed clearly state ‘Notwithstanding any
other provision herein before contained to the
contrary the lessee shall put up the whole of the
property demised under this present for the
industrial use to the satisfaction of the lessor and
the lessor shall have the right to, determine the
lease of that much area of the plot of land demised
which has not been actually so put to use within a
reasonable time at its discretion or even to
determine the lease of the whole of the land
demised under these present. The decision of the
lessor shall be binding with regard to the extent of
the user as aforesaid as to whether the whole of
demised land has been unutilised or only a portion
has been used and the lessee shall be bound by the
decision of the lessor in this regard. The lessee
hereby expressly agrees to the determination of the
lease in n part at the discretion of the lessor.
As per records available in office only 7.68% of
sanctioned building plan area has been covered by
the you and no construction or production activity
was witnessed on the plot. You will appreciate that
you have utilized very minute portion of the pot by
keeping the major portion of the plot unutilized you
are denying the opportunity to the other genuine
interested entrepreneurs to set functional unit on
23
plot, needless to say that establishment of industry
covering optimum land is the prime motive for
allotment of the plot as it would result in generation
of employment for the local populace.
Your request for further time extension for two
years is not permissible under the present policy of
corporation. You are required to show cause as to
why the allotment of the plot be not cancelled in
accordance to the condition of the lease deed as
elaborated above for fully utilize the leased to you.”
49. Shri Nadkarni further submitted that the
prescribed format of the affidavit, required to be
furnished by the appellant-company for extension of
time, contained a declaration in clear terms that if
within nine months of extension granted, the unit
does not commence production, UPSIDA shall cancel
the lease of the plot, and the appellant-company
would be precluded from raising any dispute against
such action.
50. He submitted that the affidavit in the prescribed
format was intentionally not furnished by the
appellant-company and hence, the only logical
outcome was to terminate the lease granted in favour
of the appellant-company, on account of its failure to
comply with the terms and conditions of the lease
th
deed as well as notices dated 26 September, 2007
th
and 17 April, 2008.
24
51. Shri Nadkarni further urged that a subsequent
th
letter dated 28 August 2008, along with the affidavit
in the prescribed format, was received by the
st
respondents on 1 September, 2008, i.e. , well after
th
the lease deed had been terminated on 25 August,
2008. He submitted that even in the delayed affidavit,
no clear intent to commence production was
expressed.
52. Shri Nadkarni also referred to the Authorities
Operating Manual, 2011, to contend that where an
allottee has been unsuccessful in challenging the
cancellation of a plot before any court, such allottee
would not be entitled to the benefit of the restoration
policy. This contention was raised to oppose the plea
advanced by the learned senior counsel for the
appellant-company, who had urged that the plot in
question could and ought to be restored under the
respondents’ restoration policy.
53. On the aspect of the prescribed rates referred to
by Shri Dave, Shri Nadkarni submitted that plots of
similar size at the location in question upon being
auctioned by UPSIDA, have fetched revenue of almost
Rs. 300 crores.
25
54. Shri Nadkarni concluded his submissions
urging that as the appellant-company is in clear
violation of the terms and conditions of the lease
deed, it does not deserve any degree of equitable relief
in exercise of the extraordinary jurisdiction conferred
upon this Court under Article 136 of the Constitution
of India and sought dismissal of the appeal.
ANALYSIS AND DISCUSSION
55. We have heard learned counsel for the parties
at length and have carefully considered the material
placed on record and so also the impugned judgment.
56. Since the matter pertains to cancellation of
industrial plot issued to the appellant-company, it
would be apposite to refer to the objectives behind
establishment of an industrial area/industrial
corridors as contained in the article titled “Concept
of Industrial Corridors and International Best
6
Practices” :-
“ Key features of industrial corridors
1. Integrated infrastructure: Industrial corridors
feature robust infrastructure that includes
multimodal transport systems, utilities and
6
Invest India, “Concept of Industrial Corridors and International Best
Practices” available at : https://www.investindia.gov.in/blogs/concept-
industrial-corridors-and-international-best-
practices#:~:text=This%20includes%20prebuilt%20industrial%20plots,%
2C%20investment%2Dfriendly%20smart%20cities.
26
Information and Communication Technology-
enabled (ICT-enabled) services. This infrastructure
is designed to support the operational needs of
industries and facilitate seamless movement of
goods.
2. Plug-and-play facilities: Many successful
corridors offer ready-to-use facilities that allow
businesses to start operations with minimal set-up
time. This includes prebuilt industrial plots. access
to utilities and streamlined regulatory processes.
3. Sustainability initiatives: Modern industrial
corridors incorporate sustainable practices such as
waste recycling, renewable energy utilization and
green building standards to minimize
environmental impact.
4. Skill development and employment
generation: These corridors often focus on
creating a skilled workforce through training
programs and partnerships with educational
institutions, thereby enhancing local
employment opportunities.
5. Special Economic Zones: industrial corridors
often include special economic zones that provide
tax incentives and regulatory advantages to attract
foreign investment and promote exports.
6. Public-Private Partnerships: Successful
industrial corridors are often developed through
collaborations between government bodies and
private enterprises, ensuring efficient resource
allocation and management.
7. Walk-to-work culture: It reduces traffic and
pollution, promotes healthier lifestyles and boosts
productivity by minimizing commuting time.
Supported by pedestrian-friendly infrastructure,
green spaces and efficient public transport, it
enhances work-life balance and creates appealing
Investment-friendly smart cities.”(Emphasis
supplied)
27
57. Seen in light of the above objectives, it is
apparent that the primary purposes behind
establishment of an industrial area are to generate
revenue, create employment opportunities and foster
overall economic development of the area in question.
The allottees, in turn, are granted large tracts of land
at subsidised rates, supported by infrastructural
developments intended to transform the area into a
wholesome productive industrial hub.
58. To achieve these salutary objectives, the
allottees are mandated to strictly comply with the
terms and conditions of allotment, including time-
bound schedules for project implementation. The
lease deed executed between the parties is the
inter se
governing instrument of this relationship, and the
parties are legally bound by its covenants.
59. In the present matter, UPSIDA contends that
the obligations regarding construction and
commencement of production remained binding and
unchanged even after execution of the subsequent
lease deed in 2007. It is therefore apposite to
reproduce the relevant clauses of the lease deed
th
dated 19 March, 2002, as they are directly relevant
28
and germane to the present controversy regarding the
alleged breach of industrial use:-
“ 3. AND THE LESSEE DOTH HEREBY
COVENANT WITH THE LESSOR AS UNDER:
(e) That the Lessee will keep the demised
premises and the buildings thereon at all
times in a state of good and substantial
repairs and in sanitary condition at its own
costs.
…
(o) That the Lessee shall put the demised
premises with the buildings constructed
thereon to the use hereinbefore mentioned
within 06 calendar month from the date of
possession of the said land is handed over to
him and in any case within six (6) calendar
month from the date of this deed or such
extended period of time as may be allowed by
the lessor in writing in its discretion provided
that the extension of time for putting the
premises to use under this clause shall not be
admissible except wherein the opinion of the
lessor the delay is caused for reasons beyond
the control of the Lessee.
5. Notwithstanding any other provisions
hereinbefore contained to the contrary the Lessee
shall put up the whole of the property demised
under this presents for the Industrial use to the
satisfaction of the Lessor and the lessor shall have
the right to determine the Lease of that much area
of the plot of land demised which has not been
actually so put to use within a reasonable time at
its discretion or even to determine the lease of the
whole of the land demised under these presents.
The decision of the Lessor shall be binding with
regard to the extent of the user as aforesaid as to
whether the whole of demised land has been
utilized or only a portion has been used and the
29
Lessee shall be bound by the decision of the lessor
in this regard. The Lessee hereby expressly agrees
to the determination of the lease in part of the
discretion of the same.”
60. Clauses 3(e) and 3(o) of the lease deed make it
abundantly clear that the lessee, upon execution of
the lease deed and handing over of possession, would
be under an obligation to raise construction of the
industrial unit within the stipulated period of six
months, or within such extended period as may be
allowed.
61. It is a matter of record, and a focal contention
raised by Shri Nadkarni, learned senior counsel
representing UPSIDA, that no construction was ever
raised by the appellant-company on the leased
industrial plot. Rather, the appellant-company
claims to have operated a testing facility within the
pre-existing constructions that had been raised by
the erstwhile allottee, M/s. Stallion Shox Limited.
62. During the course of submissions, a pertinent
query was posed to learned senior counsel Shri Amar
Dave as to whether the appellant-company had ever
submitted any proposal for approval of a layout plan.
In response whereto, Shri Dave candidly conceded
that such approved layout plan is not available with
30
the appellant-company. However, his contention was
that the layout plan must have been submitted at the
time of obtaining other approvals, viz., pollution
control clearance, electricity connection, etc. and
that the respondents would be in possession of the
approved plan in their records. We, prima facie , find
the said submission to be fallacious and untenable.
The appellant-company, being a well-established
corporate entity, cannot be allowed to take refuge
behind the veil of ignorance.
63. Thus, there is no escape from the conclusion
that, right from the date of the grant of lease to the
th
sister concern of the appellant-company on 14
December, 2001 till the events leading to cancellation
th
of the lease deed on 25 August, 2008, the appellant-
company failed to demonstrate any convincing effort
or intent to establish a full-scale industrial
bona fide
manufacturing unit on the plot in question.
64. Shri Dave tried to draw much water out of the
fact that in the year 2008, UPSIDA itself invited the
appellant-company to apply for an extension by
depositing an extension fee to the tune of
Rs.35,93,963.60/- (Rupees Thirty Five Lakh Ninety
Three Thousand Nine Hundred Sixty Three and Sixty
31
Paise Only), which the appellant-company claims to
have timely paid. However, the said submission of
Shri Dave is also without any merit. In this regard,
th
we may refer to the letters dated 26 September
st th
2007, 31 January 2008, and 17 April 2008 issued
by UPSIDA, which clearly convey that any
consideration for extension was strictly conditional
upon the timely payment of fee and submission of an
affidavit in a prescribed format, a condition which the
appellant-company admittedly failed to fulfil by the
date fixed for this purpose.
65. It may further be noted that possession of the
plot in question was handed over to M/s. Piaggio
th
(India) Pvt. Ltd., the erstwhile entity, on 4 April,
2002, at which time construction raised by M/s.
Stallion Shox Limited pre-existed over 7.68% of the
plot area. Pursuant to the amalgamation of the two
companies, i.e., M/s. Piaggio (India) Pvt. Ltd. and
M/s. Piaggio Vehicles Pvt. Ltd., UPSIDA granted
permission for change of name of the lessee, with a
specific stipulation that all terms and conditions of
th
the allotment letter dated 16 May, 1985; transfer
th
letter dated 14 December, 2001; and original lease
th
deed dated 19 March, 2002; shall remain unaltered.
32
th
The fresh lease deed dated 10 July, 2007, was
executed merely to reflect this change in name of the
lessee, and the fundamental conditions of the original
th
lease dated 19 March, 2002 remained unaltered.
Hence, the inviolable conditions contained in the
lease deed requiring the appellant-company to raise
construction on the subject plot within the period
stipulated were never modified, altered or extended.
66. Ignoring all violations by the appellant-
th
company, UPSIDA issued a letter dated 26
September, 2007, informing the appellant-company
that it was in breach of Clauses 3(e) and 3(o) of the
th
lease deed dated 19 March, 2002. In its response
th
dated 15 October, 2007, the appellant-company
admitted that it was under pressure for scaling up
manpower and facilities at its unit at Baramati,
Maharashtra and hence, it had been unable to
commence full-fledged operations at Surajpur, Uttar
Pradesh. However, even in said letter, the appellant-
company did not indicate that any meaningful
industrial activity, including the so called testing
activities, had ever been undertaken on the subject
plot during the preceding six years.
33
67. By the very same letter, the appellant-company
had also sought extension of two years to enable it to
operate at peak level on the plot in question. In
st
response, UPSIDA forwarded a letter dated 31
January, 2008, asserting, inter alia , that as per
condition No.7 of the transfer letter, construction was
to be completed within two years. UPSIDA also noted
that although the lease deed had been executed on
th
19 March, 2002, even by 2008, the appellant-
company had failed to obtain sanction of the site
plan, let alone commence operations. By dint of this
letter, the appellant-company was granted thirty
days’ time to furnish an affidavit in the prescribed
format and to deposit a sum of Rs.35,93,963.60/-
(Rupees Thirty Five Lakh Ninety Three Thousand
Nine Hundred Sixty Three and Sixty Paise Only), so
that one-year’s extension could be considered.
Admittedly, the appellant-company failed to deposit
the extension fee within stipulated period of thirty
days, as the fee came to be deposited only after the
th
cancellation letter dated 25 August, 2008 was
issued by UPSIDA and in addition thereto, the
affidavit was also not submitted in time or in the
requisite format.
34
68. The prescribed format of the affidavit has a
material bearing on the present controversy, and
hence the same is reproduced hereinbelow for the
sake of ready reference:-
“AFFIDAVIT ON RS. 10 STAMP PAPER DULY
NOTRISED
1 That within three months of extension of time of
plot No. A-1, Site B, Surajpur Industrial Area,
Greater Noida, G.B Nagar, UP, the construction
shall start and within nine months the production
on the unit shall start.
2. That if within nine months of extension, the unit
does not start production, the corporation shall
cancel the plot and the allottee /transferee shall
not raise any dispute against the cancellation of the
plot and within thirty days of the cancellation the
physical possession of the plot shall be
surrendered.
3. That the time extension fee be paid during
extended period according to rules.
4. That during extended period, the transfer of the
plot in favour of any other industrial house shall
not be valid.
5. That above facts are true to my knowledge and
belief.”
69. Condition No. 1 of the prescribed format
required that the construction of the unit must start
within three months of extension and production
must commence within nine months thereof.
Condition No.2 of the prescribed format explicitly
provides that if the unit fails to commence production
within the stipulated period from grant of extension,
35
UPSIDA shall cancel the allotment of the plot, and the
allottee/transferee shall not be allowed to raise any
dispute against such cancellation and must
surrender physical possession of the plot within the
thirty days of the cancellation.
70. Three affidavits were executed and furnished by
the appellant-company on different dates in response
to the notice for cancellation issued by UPSIDA. The
th
first affidavit sworn on 20 June, 2008, submitted
st
vide letter dated 1 July, 2008, was executed by Shri
Ashok Medankar and reads as follows:-
“ 01 July 2008
To
The Regional Manager
Up State Industrial Development Corpn. Ltd.
Site-V, Kasna Surajpur
Greater Noida (UP)
Ref: Lease extension of Plot No.A-1 industrial
Area, Site-B, Surajpur.
Dear Sir
Please find enclosed herewith the Affidavit as
desired by you, for the purpose of the extension
of the Lease of our plot at A-1 Industrial Area,
Site-B, Surajpur.
Thanking you
For Piaggio Vehicles Pvt. Ltd.
ANIL KUMAR
Head-Administration
36
Encl. Affidavit
AFFIDAVIT
I, Ashok Medankar S/o Mr. D.R. Medankar,
Company Secretary of Mis Piaggio Vehiclas Pvt.
Ltd. having its registered office at E-2, MIDC
Area, Baramati, Pune, do hereby solemnly affirm
and declare as under: -
1. I say that I am working as Company Secretary
with Mis Piaggio Vehicles Pvt. Ltd.
2. I say that the company has established a state
of art testing plant and machinery at A.1,
Industrial Area, Surajpur, Side-B, Greater
Noida, Gautam Budh Nagar and the research
and development work is in progress at the said
site.
3. I say that the Chairman and Managing
Director had already announced several projects
viz. manufacturing of diesel engines for home.
consumption and for export.
4. The company would generate revenue to the
State as well as Central Government in the form
of sales tax excise tax, service tax, VAT etc.
5. I say that the company has already
established its huge plant at Baramati,
Maharashtra having the annual turnover of more
than Rs. 1400 Crores.
6. I say that the company would comply with the
terms and conditions of the lease dead and pay
all the leviable tax/fee.
DEPONENT
VERIFICATION:-
I, the above named deponent, do hereby verify
that the contents of the above Affidavit are true
and correct to the best of my knowledge and
nothing material has been concealed there from.
37
Verified at Pune on this 20th day of June 2008.
DEPONENT”
71. A bare perusal of the aforesaid affidavit clearly
indicates that there is no reference whatsoever to
7
mandatory condition Nos. 1 and 2 of the prescribed
format forwarded by UPSIDA to the appellant-
company. This omission was calculated and
intentional, as furnishing the affidavit in the
prescribed format would have legally bound the
appellant-company to those specific terms, i.e., to
undertake the construction within three months of
grant of extension and to commence the production
within nine months thereof. The appellant-company
was undeniably aware that the production could not
start within the stipulated period of nine months,
because, as noted above, it had not even sought
approval of any site plan to raise construction on the
plot in question.
72. The appellant-company has admitted that the
th
subsequent affidavit dated 11 August, 2008, sworn
by its Chairman and Managing Director, could not be
submitted in time due to the requirement of a Hindi
translation. In addition, the fact remains that even
7
Supra , para No. 68.
38
th
the prescribed affidavit dated 20 August, 2008,
sworn by Company Secretary, Shri Ashok Medankar,
along with the application for further extension and
demand draft, was received only after the
th
cancellation letter dated 25 August, 2008 had
already been issued by UPSIDA.
73. Otherwise also, the lackadaisical conduct of the
appellant-company in failing to adhere to the terms
and conditions of the lease deed, and thereby
delaying development of the industrial plot by almost
six to seven years, as against the mandatory period
of six months prescribed under the lease deed, would
equally disentitle it to discretionary relief. Equities
cannot work in favour of the litigants whose conduct
is callous, laconic and in clear violation of the
applicable rules and regulations.
74. The fervent endeavour made by Shri Dave to
convince the Court that the appellant-company
should be considered for allotment of the plot under
the Electric Vehicle Policy of the Government of Uttar
Pradesh, also does not persuade us for a moment.
Upon perusing the pleadings of the writ petition filed
before the High Court and so also the appeal by
special leave, we find no averment which can even
39
remotely or vaguely indicate the details of the persons
or entities in whose favour such discretion has been
exercised by UPSIDA. It may be noted that though the
Government may have devised a policy for liberal
licensing in favour of Electric Vehicle manufacturers,
but there is no material on record to suggest that,
should the appellant-company fail to establish the
unit, there would be no other takers for the plot.
75. Shri Nadkarni, emphatically, refuted such
contention and urged that UPSIDA, in its own
wisdom, does not possess the jurisdiction to renew or
restore a lease deed which has already been cancelled
for valid reasons. He further submitted that such
discretion, if at all, could in all probability have been
exercised by the State Government.
76. Shri Nadkarni also urged that plots of similar
measurement in the same industrial area i.e.,
Surajpur, Uttar Pradesh, have been auctioned for
nearly Rs. 300 crores.
77. In addition thereto, we feel that it is absolutely
in the domain of the State Government to consider
the case of a particular applicant for grant of an
industrial plot at concessional rate, and this Court,
in exercise of its extraordinary jurisdiction under
40
Article 136 of the Constitution of India, would be
loath to substitute its own discretion for that of the
State Government in such commercial decisions.
78. In this background, we are of the firm opinion
that the appellant-company has failed to make out a
case for grant of equitable relief in exercise of the
extraordinary jurisdiction of this Court under Article
136 of the Constitution of India.
CONCLUSION
79. In wake of the above discussion, we find no
reason to interfere with the impugned judgment
which does not suffer from any error or infirmity
warranting interference.
80. Consequently, the appeal being devoid of merit
is rejected.
81. The appellant-company shall forthwith and not
later than a period of thirty days from today
handover the vacant and peaceful possession of the
subject plot to UPSIDA, which would be at liberty to
deal with the plot as per law. The amount of
Rs.10,95,52,825/- (Rupees Ten Crore Ninety Five
Lakh Fifty Two Thousand Eight Hundred Twenty Five
Only), deposited by the appellant–company in this
41
Court, shall be refunded to the appellant–company,
along with the accrued interest thereon.
82. Pending application(s), if any, shall stand
disposed of.
….……………………J.
(VIKRAM NATH)
...…………………….J.
(SANDEEP MEHTA)
...…………………….J.
(N.V. ANJARIA)
NEW DELHI;
APRIL 06, 2026.
42