‘Zero Period’ relief cannot be denied when promised access roads prevent development, Supreme Court rules

NOIDA allotted Commercial Plot No. 5-A, Sector 94, Noida, to M/s Sunshine Trade Tower Pvt. Ltd. under a Lease Deed dated 11 January 2012 for development of a commercial complex.

The sanctioned site plan contemplated a 45-metre front road and a 24-metre side road adjoining the plot.

Construction was affected by an NGT restraint order between 2013 and 2015 and, thereafter, by the non-availability of the access roads.

The 45-metre road remained encroached upon and lay on unacquired “Abadi” land, while the 24-metre road was completed only on 18 February 2020.

NOIDA’s Zero Period Policy dated 28 March 2016 permitted rescheduling of instalments and waiver of penal interest where construction was impossible because of, inter alia, the absence of an access road to the allotted land.

NOIDA granted relief for the period covered by the NGT restraint order but rejected the Developer’s claim based on the unavailable access roads.

The State Government, in revision, found that the 45-metre road had not been provided and that its absence affected the project’s layout and commercial viability.

It granted partial relief, including waiver of penal interest and a COVID-19 extension, and directed NOIDA to issue a revised requisition and consider a revised plan.

The Developer sought approval of a revised site plan treating the 24-metre road as the frontage.

NOIDA rejected the plan and subsequently raised a demand for approximately ₹100.39 crores.

The Allahabad High Court held that the Developer had been denied adequate access and was entitled to the Zero Period benefit.

It directed NOIDA to recalculate the dues, raise a fresh demand, and approve the revised plan subject to compliance with the applicable formalities.

NOIDA appealed to the Supreme Court.

Whether Clause 5 of NOIDA’s Zero Period Policy applies where some physical access to the allotted plot existed, but the access roads contemplated by the sanctioned plan were not adequately available and construction could not proceed effectively?

Whether NOIDA’s failure to provide the 45-metre front road, and its refusal to approve a revised site plan necessitated by that failure, entitled the Developer to Zero Period relief?

Whether the Allahabad High Court was justified in directing NOIDA to recalculate the dues under the Zero Period Policy and approve the revised building plan?

The Court applied the Uttar Pradesh Industrial Area Development Act, 1976, read with Section 41(3) of the Uttar Pradesh Urban Planning and Development Act, 1973, as the statutory framework governing NOIDA and the revisional proceedings.

It interpreted NOIDA’s Zero Period Policy dated 28 March 2016, particularly Clause 5, which provides relief where, despite possession and execution of the lease deed, the absence of an access road makes construction or development impossible.

The Court held that such an administrative policy must be interpreted purposively, in light of its object and broader scheme, rather than with the strictness applicable to statutory provisions.

The relevant standard is whether the developer had easy, effective and legitimate access enabling construction, not whether it could obtain some limited or makeshift physical access.

The Court also recognised that frontage, visibility and access are material components of the commercial viability and planning of a real-estate project.

The Court found, on the basis of the Tehsildar’s report, UPRERA’s order, NOIDA’s inspection report, the State Government’s revisional order and the Deputy Collector’s report, that the 45-metre front road had never been made available because the land was unacquired, encroached upon and inhabited.

NOIDA had no concrete plan to provide it in the future.

The fact that the Developer could obtain some access, undertake preliminary excavation or use a partially available road did not defeat its claim, because Clause 5 was intended to address the absence of effective access necessary for carrying out the sanctioned commercial project.

The Court further held that the missing 45-metre road was not merely an additional convenience.

The sanctioned plan treated it as the principal frontage, and its non-availability required reconsideration of the building’s orientation, setbacks, entry and exit points, configuration and frontage.

The 24-metre road therefore had to be treated as the new frontage, materially affecting the project’s planning and commercial attractiveness.

Since the need for a revised plan arose from NOIDA’s failure to provide the promised road, the Developer could not be compelled to proceed under the original plan or penalised for the resulting delay.

NOIDA’s denial of Zero Period relief and refusal to approve the revised plan were consequently held unreasonable and untenable.

It held that the Developer was entitled to the benefit of the Zero Period Policy because NOIDA had failed to provide adequate access through the 45-metre front road, thereby preventing development in accordance with the sanctioned plan.

NOIDA was directed to issue a fresh calculation and demand after granting the Zero Period benefit, and thereafter to approve the revised site plan in accordance with law and applicable formalities.

The Court recorded the Developer’s undertaking to complete the project within four years from approval of the revised plan and to pay the outstanding amounts in eight instalments.

There was no order as to costs.