Penalty demand for plot misuse failed where production had already commenced and prior penalty had been paid.

An additional penalty demand for 5% of the prevailing plot cost was unsustainable where the allottee had already paid the earlier penalty and the evidence showed production had commenced within the stipulated period. The court treated the first sale invoice as non-determinative because invoicing came after goods had already been produced, packed and despatched. It also noted substantial plot utilisation, which supported compliance with the allotment condition. On that basis, the further demand was quashed and the project implementation was to be treated as recognised.

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Issues: Whether the petitioner had commenced production within the stipulated period and, if so, whether the impugned demand of an additional 5% penalty on the prevailing plot cost after payment of the earlier penalty could be sustained.

Analysis: The relevant allotment condition required existing allottees to achieve minimum plot utilization and contemplated a 5% penalty where production was not commenced or utilization remained below the prescribed level. The materials showed that the first sale invoice was raised only after the goods had already been produced, packed and despatched, and that the date of invoice could not be equated with the date of commencement of production. The petitioner had already paid the penalty amount directed earlier, and the record also showed substantial plot utilization. In these circumstances, the further demand of 5% of the prevailing plot cost was found to be unsupported and unsustainable.

Conclusion: The additional penalty demand was held to be unsustainable and was quashed, in favour of the petitioner.

Final Conclusion: The writ petition succeeded, the impugned demand was set aside, and the respondents were directed to treat the project implementation as recognised.

Ratio Decidendi: A later penalty demand cannot be sustained where the allottee has already complied with the earlier imposed penalty and the evidence shows that production commenced within the stipulated period, the invoice date not being decisive of commencement of production.

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