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of <h1>Court Affirms Writ Petition, Grants Compensatory Refund to Unitech</h1> <h3>Unitech Limited & Ors. Versus Telangana State Industrial Infrastructure Corporation (TSIIC) & Anr.</h3> Unitech Limited & Ors. Versus Telangana State Industrial Infrastructure Corporation (TSIIC) & Anr. - TMI Issues Involved:1. Maintainability of the writ petition under Article 226.2. Contractual right to compensatory payment.3. Apportionment of the liabilities between the instrumentalities of the state of Andhra Pradesh and Telangana.Issue-wise Detailed Analysis:E.1. Maintainability of the writ petition under Article 226The court affirmed that recourse to jurisdiction under Article 226 of the Constitution is not excluded in contractual matters. The judgment in ABL International Ltd. v. Export Credit Guarantee Corporation of India [(2004) 3 SCC 553] was cited to support the position that writs under Article 226 are maintainable for asserting contractual rights against the state or its instrumentalities. The court emphasized that the jurisdiction under Article 226 is a valuable constitutional safeguard against arbitrary exercise of state power. The presence of an arbitration clause does not oust the jurisdiction under Article 226 in all cases, especially where the state instrumentality has violated its constitutional mandate under Article 14 to act fairly and reasonably. The court held that the writ petition was rightly invoked by the Single Judge and the Division Bench of the Andhra Pradesh High Court in this case.E.2. Contractual right to compensatory paymentThe court analyzed the terms of the Development Agreement between APIIC and Unitech, which contained specific representations that APIIC was authorized to transfer and deliver the project site. The agreement mandated that APIIC was to sell and transfer the land free from all encumbrances upon payment of the last installment of the purchase price by Unitech. The failure of title in the erstwhile APIIC and the Government of Andhra Pradesh was confirmed by the judgment of this Court in State of Andhra Pradesh Through Principal Secretary v. Pratap Karan [(2016) 2 SCC 82]. The court held that the failure of title entitles Unitech to claim a full refund together with compensatory payment as contractually defined. The court found that the Division Bench of the High Court erred in restricting the liability of paying interest from 14 October 2015. The liability must date back, in terms of the Development Agreement, from the date on which the respective payments were made by Unitech. However, the court found that the interest rate stipulated in the Development Agreement, compounded annually, was excessive and held that interest is payable without compounding.E.3. Apportionment of the liabilities between the instrumentalities of the state of Andhra Pradesh and TelanganaThe court examined the provisions of the Andhra Pradesh Reorganization Act, 2014, particularly Sections 68, 53, 65, 66, and 71. It noted that the assets and liabilities of APIIC were to be apportioned between the successor states of Andhra Pradesh and Telangana. The court referred to a certificate issued by the Managing Directors of TSIIC and APIIC, which recorded the auditing of assets and liabilities as on 1 June 2014. The Scheme for apportionment/demerger indicated that the liability in respect of the dues payable to Unitech was to be borne by TSIIC. The court clarified that it was not adjudicating finally upon the rights inter se between TSIIC and APIIC. TSIIC was directed to refund the amounts due and payable to Unitech, and it would be at liberty to pursue its rights and remedies in accordance with law over its claim for apportionment.F. SummationThe court addressed the issue of the Development Agreement not being registered or assessed to stamp duty. It held that Unitech’s claim to compensatory payment could not be defeated on the sole ground of the payment of stamp duty. The Development Agreement was to be impounded and presented to the Chief Controlling Revenue Authority in the State of Telangana for assessment of stamp duty and registration. The appropriate stamp duty and registration charges were to be paid by TSIIC and deducted from the refund due to Unitech.Final Orders:1. The Development Agreement was impounded and was to be forwarded by TSIIC for registration and assessment of stamp duty.2. The appeal by Unitech was allowed in part, setting aside the Division Bench's direction that confined the liability to pay interest from 14 October 2015.3. Unitech was entitled to a refund of Rs. 165 crores with interest at the SBI-PLR from the respective dates of payment, computed without compounding.4. The amount deposited in the Registry of the Court was to be disbursed to Unitech, and the balance was to be refunded by TSIIC within two months.5. TSIIC was at liberty to pursue its remedies for apportionment in relation to APIIC in accordance with law.The appeals arising out of the Special Leave Petitions filed by the State of Telangana and TSIIC were disposed of in terms of the present judgment, with no order as to costs. Pending applications were also disposed of.
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