Allahabad High Court Denies Jaypee’s Interim Plea To Sell Land For Clearing Dues When Allotment Stands Cancelled By Yamuna Expressway Authority

The Allahabad High Court has declined the proposal of M/s Jai Prakash Associates (Jaypee) to sell off certain portion of the 1,000 hectares land earlier allotted to it under the Special Development Zone Project in the Yamuna Expressway Development Area, for clearing the dues of YEIDA (Yamuna Expressway Industrial Development Authority).

The bench comprising Chief Justice Pritinker Diwaker and Saumitra Dayal Singh noted that allotment already stands cancelled and hence it cannot permit such sale as it would amount to an interim relief in the nature of final relief.

The Court was hearing Jaypee's challenge to the cancellation of allotment. The question before the Court is whether the cancellation of the allotment was within the jurisdiction of YEIDA or otherwise legal. An interim order of status quo is already in operation. Court observed,

"In face of the order of cancellation of allotment and during its continuance, we cannot grant an interim protection to allow the petitioner to deal with or sell any part of the disputed property. To do that would be to set aside the cancellation of allotment, at least to the extent petitioner would have been permitted to deal with and sell the land over which its allotment has been cancelled by YEIDA. Though that relief is not prohibited in law, by very nature of the relief claimed, it may be granted at the stage of final hearing and not by way of interim protection."

Court said it would have been different had the parties arrived at a settlement.

Since Jaypee defaulted in payments of leased rent, premium and interest on the allotted land, lease deeds for the entire 1000 Hectare were cancelled by YEIDA in 2019. At the initial stage of hearing, the Counsel for Petitioner had submitted that amount of Rs.2,379.74 crores had already been paid to YEIDA. Only Rs. 359.81 crores was outstanding on 31.07.2017. Further, since substantial development had been done over the land, cancellation of the entire lease deed was arbitrary and disproportionate.

An interim order was granted in subject to the terms below:

“(i) Petitioner-M/S Jai Prakash Associates Ltd. shall deposit Rs.100 crores with respondent-2 within one month but in two parts. Rs.50 crores shall be paid by 10th of March, 2020 and another Rs.50 crores shall be paid by 25th of March, 2020.

(ii) Subject to payment of aforesaid amount, parties shall maintain status quo as on the date, in respect of property in dispute.

(iii) We make it clear that in case petitioner fails to deposit Rs.50 crores by 10th of March, 2020, this interim protection shall automatically stand vacated and respondents shall be free to proceed further.

(iv) Similarly, if first instalment of Rs.50 crores is paid but default is committed in compliance of direction with respect of payment Rs.50 crores payable upto 25th of March, 2020, in that case also interim protection granted by this Court shall stand automatically vacated and respondents shall be free to proceed further.”

At the present stage, Counsel for Petitioner presented a composite settlement proposal before the Court. It was suggested that during the pendency of the petition, 150 Hectare of the land be given back to Jaypee to sell and the money from such sale would be transferred to YEIDA to pay its dues. The remaining amount would be placed in an escrow amount pending the final decision by the Court. The consortium of banks who had provided loans to the Petitioner had consented to the settlement offer.

Further, Counsel for Petitioner alleged that YEIDA was wrongly trying to recover the interest on additional compensation to be paid to the farmers, when YEIDA had not paid any interest to the farmers (original landowners). To this, the Counsel for YEIDA submitted that no interest on additional compensation has been paid to the farmers till date. However, they may be required to do so in future, since litigation is pending before the Supreme Court.

Counsel for YEIDA refused to accept any settlement offered by Jaypee. Instead, a demand for 10% of Rs. 3621,50,48,489/- (pending dues) has been raised for restoration of the lease deeds.

While observing that the parties could not reach any settlement, the Court held that for the last three years Jaypee has been protected by the order of ‘status quo’ and thus needs no further protection.

“Though that relief is not prohibited in law, by very nature of the relief claimed, it may be granted at the stage of final hearing and not by way of interim protection. It is for that reason that we had allowed the petitioner to negotiate with YEIDA so that a consented order may arise, if terms of settlement could have been agreed to. Settlement having failed, we do not find any good ground to interfere at this stage and pass an interim order as may be in the nature of final relief,” said the Court.

Further, the Court noted that concerns of the home buyers regarding the completion of the projects cannot be dealt with at this stage in the present petition, as it only relates to the validity and legality of cancellation of lease deeds by YEIDA.

Jaypee has deposited Rs. 200 crores pursuant to various interim orders passed by the Court from time to time.

Case Title: M/S Jai Prakash Associates Ltd vs. State of U.P. and Another [Writ C No. 6049/2020]

Case Citation: 2023 LiveLaw (AB) 222

Appearance: Senior Advocate Jayant Bhushan assisted by Advocates Vishal Gupta, Rohan Gupta and Amartya Bhushan- counsel for the petitioner; Senior Advocate Manish Goyal assisted by Advocates Syed Imran Ibrahim, Praveen Kumar, Pranav Tanwar, Gaurav Tripathi- counsel for YEIDA; Advocate Rahul Agrawal- counsel on behalf of intervener-banks; Senior Advocate Anoop Trivedi assisted by Advocate Abhinav Gaur for Home Buyers Association; Advocate Anuj Bhandari- counsel for individual home buyers.

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