Failure to adhere to time-bound industrial development covenants justifies lease termination and precludes discretionary equitable relief.

The appellant acquired rights to an industrial plot (33 acres) in Surajpur, Uttar Pradesh, via a transfer approved by the Uttar Pradesh State Industrial Development Authority (UPSIDA) in 2001.

The lease deed dated March 19, 2002, required the lessee to construct a factory and commence production within six months of possession.

Despite an amalgamation in 2003 and a fresh lease deed in 2007 to reflect a name change, the core conditions of the 2002 deed remained unchanged.

By 2008, the appellant had failed to raise any new construction beyond the 7.68% area built by the previous allottee, citing pressure to scale up its Maharashtra facility instead.

UPSIDA issued notices for breach of sub-clauses (e) and (o) of Clause 3 and Clause 5 of the lease deed.

Although UPSIDA offered a conditional one-year extension upon payment of fees and submission of a specific affidavit, the appellant failed to comply with the prescribed format or timelines.

Consequently, UPSIDA cancelled the lease and forfeited the premium on August 25, 2008.

The Allahabad High Court dismissed the appellant’s writ petition in 2009.

The Court applied the contractual obligations found in Clauses 3(e), 3(o), and 5 of the Lease Deed, which mandate the industrial use of the entire demised property and empower the lessor to determine the lease for non-utilization.

It referenced Section 7 of the U.P. Industrial Area Development Act, 1976 (as amended in 2020), which mandates cancellation if land is not utilized within five years.

The Court also highlighted the socio-economic objectives of industrial corridors, which include employment generation and revenue creation, necessitating strict adherence to project implementation schedules.

Finally, the Court exercised its discretionary power under Article 136 of the Constitution, emphasizing that equitable relief is unavailable to parties whose conduct is callous or in clear violation of rules.

The Court observed that the appellant failed to show any bona fide intent to develop the plot, as it had not even sought approval for a layout plan in over six years.

The 2007 lease deed was merely a formal update following amalgamation and did not reset the construction timelines.

The Court found the appellant’s failure to submit the prescribed affidavit—which would have waived its right to dispute future cancellations—to be a calculated move to avoid legal bindingness.

It rejected the plea for parity under the Electric Vehicle Policy, noting that such commercial and policy decisions fall within the State's domain, not the Court’s.

Furthermore, given that similar plots were valued at approximately Rs. 300 crores, the Court held that restoring the plot for the appellant’s significantly lower deposit would be inequitable to the State.

The Court held that the appellant's long-term failure to utilize the land for industrial purposes constituted a clear breach of the lease.

The appellant was directed to hand over vacant and peaceful possession of the plot to UPSIDA within thirty days.

The Court ordered the refund of the Rs. 10,95,52,825/- deposited by the appellant in the Registry, along with accrued interest.