The Allahabad High Court has set aside the demand of ₹5.28 crore raised by the Greater Noida Industrial Development Authority (GNIDA) from an industrial unit, holding the recovery to be illegal. The Court categorically observed that a lease deed is a binding contract and any enhancement of lease rent, without adhering to the conditions stipulated therein, is unconstitutional and unlawful. It held that unilateral and retrospective enhancement of lease rent, in the absence of a supplementary lease deed, is not legally sustainable. The Court further clarified that neither can lease rent be increased retrospectively in violation of lease conditions nor can vested rights be taken away on the basis of subsequent Board resolutions.
The Court also emphasized that,
“the respondent Authority could not have questioned the correctness of therevisional order by passing a fresh order on the same issues, nor could it have relied upon subsequent Board Resolutions to dilute or nullify the effect of the revisional directions.”
It was further made clear that,
“Once the revisional authority exercised its statutory jurisdiction and granted relief to the petitioner, the respondent Authority was functus officio insofar as those issues were concerned.”
The Division Bench of Justice Ajit Kumar and Justice Swarupama Chaturvedi allowed the writ petition filed by M/s KCI Ltd, formerly known as M/s Khemka Containers Ltd.
During the hearing, on behalf of the petitioner, Advocate Prashant Mishra and Tarun Agrwal argued, while the State was represented by C.S.C.
As per the facts of the case, the company was allotted an industrial plot in Greater Noida in the year 2001, and a 90-year lease deed was executed on 26 February 2002. The lease deed expressly provided that enhancement of lease rent after every ten years could be made only through execution of a supplementary lease deed. The company completed construction within the stipulated time and commenced production in 2002. In March 2003, the company sought an early production incentive of ₹9.02 lakh, but the application remained pending for several years.
Thereafter, GNIDA raised a major demand by Post-facto enhancing the lease rent without executing any supplementary lease deed, and further imposed interest and penal charges. Even after the State Government extended relief to the company and directed the dues to be recalculated via its revisional order dated 27 July 2023, GNIDA, disregarding the said order, raised a fresh demand of ₹5.28 crore on 12 December 2024, citing a Board resolution dated 15 June 2024.After examining the facts, the High Court held that the Board resolution dated 15 June 2024 has prospective effect only and cannot be applied retrospectively.
The Court further held that the revisional order dated 27 July 2023 issued by the State Government is final and binding, and cannot be disregarded or bypassed by any subordinate authority. The Court further observed that Administrative inaction or delay cannot be a ground to deny an industry its legitimate incentives. Since the company had commenced production within the prescribed period, It was adjudged to have the right to the early production incentive. The Court also found the denial of waiver of penal/compound interest, despite deposit of advance lease rent under the office order dated 5 December 2013, to be arbitrary.
In light of the Supreme Court’s judgment in Union of India v. Kamlakshi Finance Corporation Ltd., the High Court repeated that orders passed by higher statutory authorities are binding on subordinate authorities and must be enforced in letter and spirit. Any attempt to sidestep or diminish such orders strikes at the very foundation of administrative discipline and a subordinate authority can’t pass a fresh order on the same issues under the Under the cover of re-decision.
In conclusion, the High Court quashed the impugned orders/notices dated 12.12.2024, 23.12.2024 and 15.05.2025 and directed GNIDA to recalculate the dues strictly in accordance with the State Government’s revisional order dated 27.07.2023. Further, in the order the Court extend the benefit of early production incentive and waiver of penal/compound interest to the company and directed to adjust or refund the excess amount deposited pursuant to the illegal demand within eight weeks.
Case: M/S Kci Ltd Formerly M/S Khemka Containers Ltd vs State Of U.P. And 3 Others
Date of Order: 18.12.2025
See Order: M/S Kci Ltd Formerly M/S Khemka Containers Ltd vs State Of U.P. And 3 Others
