Noida billed lease rent on a plot it never handed over: Allahabad HC strikes the demands down
A division bench set aside restoration charges, penal interest, the full premium and lease rent demanded by the Noida Authority from Aloft Solutions, and ordered possession within two weeks with a zero period running from the allotment of 27 July 2007.
The New Okhla Industrial Development Authority allotted a commercial builder plot in Sector 43, Noida, on 27 July 2007. Nineteen years later the allottee still has no physical possession, and on 12 November 2026 the Allahabad High Court held that the Authority cannot charge it lease rent, restoration charges or penal interest for land it never got.
Justice Siddhartha Varma and Justice Kunal Ravi Singh allowed the writ petition of Aloft Solutions Private Limited. Justice Varma authored the judgment. The court ordered possession within two weeks and counted the zero period from the day of allotment, not from 2009 as the Authority had decided.
A plot sold under a status quo order
The Authority advertised plots in Sectors 42 and 43 under scheme 2007-08. Aloft’s bid was accepted on 26 July 2007, and on 27 July it was allotted commercial builder plot A-146/2, Block-A, Sector 43, measuring 782.42 square metres, at a premium of Rs 9,31,07,197.58.
It paid Rs 35 lakh as earnest money and the allotment money of 25 per cent, Rs 2,32,76,799.40. The balance of Rs 6,98,30,400 was payable in 16 equal instalments, from 27 January 2008 to 7 July 2015. Annual lease rent was fixed at 2.5 per cent of the premium, Rs 23,27,679.94.
The lease deed was executed on 4 January 2008. Aloft got possession only on paper on 20 February 2008, the judgment records, and never received the land.
The reason was litigation over the same sectors. A housing society, the Kendriya Karamchari Sahkari Greh Nirman Samiti, had sued the Authority in Original Suit No. 273 of 2006 after its own allotment was cancelled.
On 10 November 2006, in the Samiti’s First Appeal From Order No. 1850 of 2006, the High Court directed the parties to maintain status quo.
That was eight months before Aloft’s allotment. The suit was decreed on 10 September 2008, and the Authority appealed in First Appeal No. 790 of 2008. On 29 January 2009 the High Court again ordered status quo as on the date of the decree.
Only on 22 July 2016 did the High Court modify that order, limiting status quo to 3,24,000 square metres, being 40 per cent of the Samiti’s land.
Cancellation, a demand and a revision
Aloft stopped paying instalments, saying it had no possession. The Authority issued a show-cause notice on 31 July 2013 claiming dues of Rs 12,72,31,705, and cancelled the allotment on 14 October 2013, forfeiting the deposit and ending the lease.
On 22 July 2014 the Authority said it would restore the lease if Aloft paid, within 30 days, Rs 93,10,720 as restoration charge, Rs 3,49,15,199 as non-functioning charge, Rs 15,00,36,158 as instalments and interest, and Rs 85,62,718 as lease rent.
Aloft kept asking for a waiver and for possession once the 2016 modification came. A site note of 8 December 2023 by a junior engineer, reproduced in the judgment, records that the plot had been inspected and cleaned after encroachments were removed.
Aloft also went to the State Government under Section 41(3) of the U.P. Urban Planning and Development Act, 1973, read with Section 12 of the U.P. Industrial Area Development Act, 1976. On 8 July 2024 the revision was allowed.
The revisional order set aside the cancellation of 14 October 2013 and the order of 8 April 2022 that had refused restoration without charges. It said the Authority had never considered the status quo order, and told it to pass a speaking order under its zero-period policy. The Authority did not challenge it.
Three fresh orders, same charges
The Authority then passed three orders. The first, dated 23 April 2025, restored the lease but with restoration charges. On 7 May 2025 it accepted a committee’s recommendations: restoration charges would apply, penal interest would be levied on three instalments that fell due before 29 January 2009, and zero period would run from that date.
The committee also gave Aloft two years for construction, because no amenities existed. The third order, a demand of 19 August 2025, asked for the premium, simple interest, penal interest, lease rent from 4 January 2008, interest on that rent and the restoration charge.
Aloft said the demand included penal interest of Rs 57,82,697, lease rent of Rs 4,42,25,920 with penal interest on it of Rs 8,02,35,973, and restoration charge of Rs 1,63,60,868. It asked the court to quash all three orders, restore the allotment without restoration charges, count zero period from 27 July 2007 and direct delivery of possession.
Both sides in court
Senior Advocate Anurag Khanna appeared for Aloft with Ms Himadri Batra and Ms Radhika Bansal. He said the Authority knew of the November 2006 status quo order when it allotted the plot, and that it still executed a lease and then cancelled it in 2013 while the order stood.
The premium would have to be paid, he accepted, but in the 16 instalments the lease gave. Interest and penal interest could not be charged where no possession was given, and zero period should start from 10 November 2006.
Mr Shivam Yadav appeared for the Authority and opposed the petition. A lessee, he said, must come with open eyes and is bound by the lease. Zero period had been given from 29 January 2009, so earlier instalments were payable and penal interest of Rs 57,82,697 was justified, and lease rent was due because the land had lain unoccupied.
The Standing Counsel for the State said the revision had already granted relief and that no revision was filed against the impugned orders. The orders, he said, had to be tested against the revisional order.
A set-aside cancellation leaves a restored plot
The court began from facts it called unrefuted. Physical possession was never handed over, the revision was final, and the zero-period policy was in force when the status quo order was modified. The Authority’s own 2023 report, it said, shows it could not hand over possession.
It found the Authority had again ignored the revisional order. That order had set aside the cancellation and asked the Authority to examine the effect of the status quo order. Instead, the Authority imposed restoration charges and penal interest.
The court held that once the cancellation was set aside, no question of restoration remained:
“by necessary legal fiction, the plot stood restored” (para 26)
Restoration charges, it reasoned, apply while a cancellation is in operation. The charge in the order of 7 May 2025 and the Rs 1,63,60,868 quantified on 19 August 2025 were called patently illegal and arbitrary and were set aside.
Zero period from the day of allotment
Point II before the court was how far back the zero period should run:
“Whether the petitioner is entitled to be granted zero period from the date of allotment i.e. 27.07.2007 or from the date the High Court granted status quo order in First Appeal No. 790 of 2008 i.e. 29.01.2009?” (para 20)
The court left the Authority’s grant of zero period up to 7 May 2025 undisturbed, saying it was rightly given. The gap was the earlier stretch, from allotment to actual possession, which neither the revisional authority nor the Authority had considered.
The Authority knew of the suit and of the first status quo order on the day it allotted the plot, the court said. It still executed a lease without disclosing where the allotted plot lay.
The judges held that the Authority could not gain from that. In the court’s words, interest of justice required zero period from the date of allotment, as otherwise “the Authority would benefit from its own wrong” (para 31).
Penal interest and the full premium
The penal interest of Rs 57,82,697 on three defaulted instalments fell with the new zero period. The revisional authority had already said that if zero period was granted, the liability to pay instalments with interest would shift to a time after it expired.
The court then turned to the demand of 19 August 2025. It found that the whole premium of Rs 6,98,30,400 had been demanded in one go, although the payment schedule attached to the same order ran to 23 April 2031.
The Authority’s counter affidavit was silent on this. The court held the demand unjustified, since Aloft had not denied its liability to pay the premium but was entitled to 16 instalments. The interest on the premium also went.
No possession, no lease rent
On lease rent the court said the question was no longer open. It referred to Vision Town Planners Private Limited v. State of U.P. (2026(1) ADJ 574), which held that no lease rent is payable where possession has not been given.
It also relied on a coordinate bench in M/S Silverline Furnishing and Furnitures Private Limited v. State of U.P. (2023:AHC:207677), which reached the same result. The judges saw no reason to differ from either.
The lease rent demand and the interest on it were set aside. Such a demand, the court said, can be made only after actual physical possession is given. The order of 23 April 2025, which it called a mere intimation of restoration with charges, was also set aside.
Order
The court answered the first two points in Aloft’s favour: the orders of 23 April, 7 May and 19 August 2025 are set aside, and zero period runs from 27 July 2007. It then issued six directions.
Zero period runs from 27 July 2007 until actual physical possession. Aloft is to get possession within two weeks of production of a certified copy of the order. The lease premium is to be recalculated in 16 equal instalments as per the lease deed, and default under the revised schedule carries the consequences set out in the lease deed.
Lease rent starts from the date of actual possession, and Aloft may pay yearly or in one sum under clause I(b) of the lease deed. No non-development or time-extension charges may be imposed because possession was not given. From possession, Aloft has two years to complete construction, and default will have legal consequences.
The writ petition was allowed with no order as to costs.