Mumbai: In a setback to the Mumbai Metropolitan Region Development Authority (MMRDA), Bombay high court has directed it to refund Rs 646 crore levied on Reliance Industries Limited (RIL) as penalty for an alleged seven-year delay in completion of a convention and exhibition centre and commercial complex in Bandra Kurla Complex (BKC) in Mumbai.The HC set aside as legally unsustainable two demand notices for penalty issued by MMRDA in 2017, for Rs 646 crore, and in 2019 for an additional Rs 1,116 crore. The 2019 notice was stayed by the HC in 2020.The HC observed that MMRDA took the Rs 646 crore from RIL in February 2019 in a “most arbitrary, high-handed, unfair, and unreasonable manner” subjecting the company to “undue pressure and threat of termination of lease, thus putting its business interest in peril.”In Dec 2005, MMRDA as owner of the BKC plot had invited bids for leasing out 75,000 sq metres for construction of the convention centre. RIL was declared the successful bidder in 2006. MMRDA approved the lease, seeking construction in four years of 1,15,000 sq m for a total premium of Rs 1,104 crore. The plot was leased out for 80 years.Chief justice Shree Chandrashekhar and justice Suman Shyam, in an April 8 judgment, said “no additional premium or penalty was either payable or recoverable from RIL” as MMRDA was duty-bound to apply a six-year extension clause to the project, on parity with other projects.MMRDA, represented by senior counsel Birendra Saraf, said it had rightly invoked conditions under a 2006 lease deed which sought construction in four years. In 2007, additional built-up area was approved for a premium of Rs 696 crore.Senior counsel Vikram Nankani for RIL argued there was no time-limit set when granting additional construction area for the project, hence rendering the four-year completion deadline inapplicable.The HC agreed that the conditions did not attract a penalty. The HC directed MMRDA to refund the amount in 90 days to RIL, failing which it would attract interest. HC observed that a six-year extension that MMRDA granted as a policy to lease deeds executed after 2015 was “highly arbitrary and discriminatory” and said that its benefit should extend to RIL and three other cases, where similar penalty demands were challenged.
