2016 (12) TMI 1907 - HC - Indian Laws

Developer must pay infrastructure costs including EDC despite PAPRA exemption under 2006 agreement terms

M/s Sukhm Infrastructures Pvt. Ltd. Versus State of Punjab & Ors.

M/s Sukhm Infrastructures Pvt. Ltd. Versus State of Punjab & Ors. - TMI Issues Involved:1. Exemption from External Development Charges (EDC) under the Industrial Policy, 2003.2. Legitimacy of demands for EDC, licence fee, and Change of Land Use (CLU) charges.3. Compliance with the terms of the Agreement dated 11.10.2006.4. Application of principles of legitimate expectation and promissory estoppel.5. Allegations of discrimination in levying charges.Issue-wise Detailed Analysis:1. Exemption from External Development Charges (EDC) under the Industrial Policy, 2003:The petitioner claimed exemption from EDC under the Industrial Policy, 2003. The court found that while the policy and subsequent agreements did exempt the petitioner from PAPRA, 1995, they also included a specific clause obligating the petitioner to pay the proportionate cost of infrastructure development. The court held that 'infrastructure development' includes 'external development works' and thus, the petitioner is liable to pay these charges as per the binding contract and Section 5 of PAPRA, 1995.2. Legitimacy of demands for EDC, licence fee, and Change of Land Use (CLU) charges:The court examined the demands for EDC, licence fee, and CLU charges. It concluded that the petitioner is liable to pay EDC and infrastructure development costs but exempted from CLU charges as per the Agreement dated 11.10.2006. The court directed that any payments made towards CLU charges should be adjusted against the infrastructure development costs. The court also found that the demand for the 'Social Infrastructure Fund' was without legal backing and should be adjusted similarly.3. Compliance with the terms of the Agreement dated 11.10.2006:The court noted that the petitioner failed to complete the project within the initially agreed period and the extended period. However, it rejected GMADA's argument that the time is the essence of the contract, noting that the State Government itself extended the time limit multiple times. The court directed the State Government to consider granting further extension and rescheduling the payment of instalments to enable the project's completion.4. Application of principles of legitimate expectation and promissory estoppel:The court dismissed the petitioner's arguments based on legitimate expectation and promissory estoppel. It held that the petitioner was aware of its liability to pay the proportionate cost of infrastructure development when it entered into the Agreement dated 11.10.2006. The court found no merit in the contention that the respondents acted contrary to their promise.5. Allegations of discrimination in levying charges:The court addressed the petitioner's claim of discrimination by comparing its case with those of M/s Janta Land Promoters and M/s Chandigarh Overseas Pvt. Ltd. The court found that the agreements with these companies did not include a clause for the proportionate cost of infrastructure development, unlike the petitioner's agreement. Thus, the court held that the petitioner cannot claim parity with these cases. However, it directed that the petitioner should not be liable for the 'Social Infrastructure Fund' and that any payments made towards it should be adjusted against other permissible liabilities.Conclusion:The court concluded that the petitioner is liable to pay the proportionate cost of infrastructure development, which includes EDC, as per the Agreement dated 11.10.2006. It exempted the petitioner from CLU charges and the 'Social Infrastructure Fund' and directed adjustments for any payments made towards these charges. The court also directed the State Government to consider granting further extension and rescheduling the payment of instalments to facilitate the project's completion. The writ petition was disposed of accordingly.