Supreme Court Upholds UPSIDA Lease Cancellation for Non-Utilisation of Industrial Plot; Refuses Equitable Relief Despite EV Proposal

Held: The Supreme Court held that cancellation of an industrial plot lease by UPSIDA for prolonged non-utilisation and failure to comply with time-bound construction obligations was valid, and that a defaulting allottee which failed to demonstrate bona fide industrial use or timely compliance with extension conditions is not entitled to equitable relief merely by offering subsequent proposals such as setting up an electric vehicle unit.

Summary: The dispute arose from forfeiture of a 33-acre industrial plot at Surajpur, Gautam Budh Nagar, leased to the appellant-company, on the ground that it failed to raise construction and commence industrial activity within the period stipulated under the lease deed. The appellant contended that it had established a testing facility, invested substantial sums, obtained several regulatory approvals, and had sought extension of time due to operational pressures at its Baramati unit, but UPSIDA acted arbitrarily in refusing extension and cancelling the lease. The Supreme Court examined the lease conditions and found that the obligation to construct and put the entire plot to industrial use remained binding throughout, including after the subsequent lease deed executed following amalgamation of companies. The Court noted that the appellant had not raised any fresh construction beyond the pre-existing structure left by the original allottee, had not obtained an approved site layout plan, and had failed to commence full-fledged industrial operations for nearly six to seven years despite the lease requiring utilisation within six months. It further found that UPSIDA’s offer to consider one year’s extension was conditional upon timely payment of extension fee and submission of an affidavit in a prescribed format, and that the appellant deliberately failed to furnish the requisite affidavit in time and in proper form because it could not honestly commit to commencing construction and production within the stipulated extension period. The Court also rejected the plea for restoration on the basis of the State’s electric vehicle policy, holding that such commercial and policy decisions fall within the executive domain and cannot be judicially substituted under Article 136, especially where the allottee’s conduct was lethargic and non-compliant.

Decision: The Supreme Court dismissed the appeal, upheld the lease cancellation and forfeiture decision of UPSIDA, directed the appellant-company to hand over vacant and peaceful possession of the plot within thirty days, and ordered refund of the amount of INR 10,95,52,825 deposited in this Court along with accrued interest, while disposing of all pending applications.