Synopsis

Reliance Industries Ltd (the lessee) was allotted a large plot in Bandra-Kurla Complex (BKC) for construction of a Convention & Exhibition Centre and Commercial Complex. The original lease deed (2006) required completion within four years, failing which additional premium/penalty was payable. Subsequently, due to increase in FSI, the authority allotted substantial additional built‑up area (totalling 3,12,500 sq. mtrs.) through supplementary lease deeds. The project was delayed due to: (i) an interim order of the High Court restraining use of part of the additional area (which remained in force for over 4 years); (ii) time consumed in obtaining multiple statutory approvals (environment clearance, height clearance, etc.); and (iii) the need to revise plans for the integrated composite development. The authority demanded penalty of over Rs. 646 crores (and later another Rs. 1,116 crores). The petitioner paid under protest and challenged the demands. The High Court allowed the writ petition, holding that: (i) the authority had itself promised to exclude the period of the court’s interim order and had stated that there would be “no time limit” for additional built‑up area; (ii) the doctrine of promissory estoppel and prevention barred the authority from claiming penalty; (iii) the policy of granting six years’ time only to post‑August 2015 leases was arbitrary and discriminatory; (iv) the demands were vague and violated natural justice; and (v) the amounts paid under duress were refundable under Section 72 of the Contract Act.

Court: High Court of Judicature at Bombay (Ordinary Original Civil Jurisdiction)
Coram: Shree Chandrashekhar, CJ & Suman Shyam, J.
Date: April 8, 2026
Citation: 2026:BHC-OS:8906-DB
Core Law: Constitutional Law (Article 14), Contract Law, Transfer of Property Act, 1882 (Section 108), Indian Contract Act, 1872 (Section 72), Principles of Natural Justice, Doctrine of Promissory Estoppel, Doctrine of Prevention.

2. Legal Framework

• Constitution of India: Article 14 (arbitrariness, equality), Article 226 (writ jurisdiction).

• Transfer of Property Act, 1882: Section 108 – rights and liabilities of lessor and lessee (disclosure of defects).

• Indian Contract Act, 1872: Section 72 – refund of money paid under coercion; doctrine of promissory estoppel.

• Mumbai Metropolitan Region Development Authority Act, 1974: Section 44 (alternative remedy – held not efficacious).

• Mumbai Metropolitan Region Development Authority (Disposal of Land) Regulations, 1977: Rule 11(A) – requirement of prior notice before determining lease.

• Principles of Natural Justice: Requirement of show cause notice before imposing penalty.

• Doctrine of Prevention: A party cannot enforce a penalty if it has itself prevented

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