# M/S Jai Prakash Asso. Ltd v. State of U.P. & Anr

- **Citation:** (2025) 3 ILRA 654
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-03-10
- **Case number:** Writ C No. 6049 of 2020
- **Bench:** Manoj Kumar Gupta, Kshitij Shailendra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-jai-prakash-asso-ltd-v-state-of-u-p-anr-53231
- **Pages:** 103

## Headnote

Abhinav Gaur, Ami Tandon, Arvind Srivastava,
Ashish Kumar Singh, C.S.C., Gaurav Tripathi,
Kartikeya Saran, Rahul Agarwal, Rohit Nandan
Pandey, Sandeep Arora, Shreesh Srivastava,
Sujan Singh, Syed Imran Ibrahim

A. Civil Law - Constitution of India,1950 -
Article
226,
Maintainability
of
Writ
Petition - Contractual Matters -Scope of
Judicial Review - Public Law Element -
Existing Legal Right - Held: There is no
absolute bar to the maintainability of a
writ petition under Article 226 of the
Constitution even in matters arising out of
contractual obligations involving the State
or its instrumentalities. However, judicial
review in such cases is confined to
examining whether the impugned action
has a public law element and violates
Article 14 by being arbitrary, unfair, or
unreasonable. Relief under Article 226
may
be
granted
where
there
is
infringement of an existing legal right and
the action impugned has public law
character, but writ would not lie where
only
a
contractual
right
is
to
be
established or where the disputes require
adjudication of serious disputed questions
of fact. The power under Article 226 is
plenary and discretionary, and should be
exercised with circumspection where the
dispute falls purely in the realm of private
law.

On
facts,
cancellation
order
challenged was alleged to be illegal,
arbitrary and disproportionate executive
fiat affecting public interest and existing
rights under allotment. Held, writ petition
maintainable. (Para 68 - 76)

B. Civil Law - Constitution of India,1950 -
Article 14, Principles of Proportionality -
Scope and Test - Following principles
emerge while applying the doctrine of
proportionality: the administrative action
must have a lawful objective; the action
taken must be appropriate to achieve the
intended
goal;
the
doctrine
of
proportionality is applied to test an
administrative action to find out whether
it
is
just
and
reasonable
and
not
excessive; it ensures that discretionary
powers are not exercised arbitrarily but
reasonably
and
do
not
infringe
on
fundamental rights disproportionately; the
measure adopted must be least restrictive
or least burdensome for achieving the
purpose; and the test of reasonableness is
to be examined from the standpoint of the
interest of the general public and not from
the point of view of the person against
whom action is taken (Para 130)

C. Construction/Interpretation of Contract
- Consensus ad idem - Conduct of parties
and correspondence - Binding effect - The
essential feature of any binding contract is
the meeting of minds i.e., consensus ad
idem. How the parties acted pursuant to
the contract is a significant indicia to their
common understanding of the contract
and thus constitutes an important tool in
interpretation of the terms of the contract.
The real intendment of the parties has to
be gathered from the manner in which
they understood the same, and for that
purpose, the correspondence exchanged
between
them
could
be
taken
into
consideration. If parties t

## Text

_Characters 0–39,778 of 309,052. This is a partial read: ask again with offset=39778 for what follows._

654 INDIAN LAW REPORTS ALLAHABAD SERIES
185/2024 pending before CJ(SD),
Ghazipur, indicate that the lease
deed has not been executed by all
the co-owners who inherited the
land from a common ancestor. No
partition of the offered Gata No.
485 and 488 had been made at the
time
of
executing
the
lease.
Furthermore, the said suit is
pending for the cancellation of the
lease deed. Hence, the allegations
of the complaint are substantiated.
7.
Based
on
the
investigation and due verification
of the documents, and as per the
details mentioned above, it is
established that the applicant did
not register the offered land with
all the co-owners at the time of
submitting the application. The
complaint has been substantiated.
Considering
the
above
points, your candidature for the
Retail Outlet Dealership at the
specified
location
is
hereby
cancelled. This decision is made in
adherence
to
the
dealership
selection guidelines and based on
the findings of the investigation and
legal advice obtained."

5. From the perusal of Khatauni
(Annexure No. 2 to the writ petition), it
is apparent that apart from Raj Narayan
and late Lal Bahadur Singh there are six
other co-owners of the said property,
whereas, the lease deed was executed
only by Raj Narayan and legal heirs of
late Lal Bahadur Singh. Other co-owners
have not signed the lease deed and since
partition had not taken place, the
decision of respondent authority in
rejecting
the
candidature
of
the
petitioner cannot be said to be arbitrary
and malafide.
6. It is also apparent from the
record that the land owners who leased the
land to the petitioner had applied for
partition before SDM, Sadar, Ghazipur on
15.12.2023
and
as
per
order
dated
28.06.2024 (Annexure No. 6 to the writ
petition), the land had not yet been
partitioned.

7. Upon perusal of the record, it is
very much clear that on the date of
application, the offered land being Gata
Nos. 485 & 488 had not been partitioned
and the lease deed was not executed by all
the co-owners.

8. The reasons recorded by the
respondent authority in rejecting the
candidature of petitioner for retail outlet
dealership is based on evidence and there is
no illegality in any manner. Learned
counsel for the petitioner has failed to
establish that there was any partition
between the co-owners or that the lease
deed was executed by all the co-owners.

9. No ground for interference is
made out.

10. The writ petition is devoid of
merit and is accordingly, dismissed.
----------
(2025) 3 ILRA 654
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 10.03.2025

BEFORE

THE HON'BLE MANOJ KUMAR GUPTA, J.
THE HON'BLE KSHITIJ SHAILENDRA, J.

Writ C No. 6049 of 2020

M/S Jai Prakash Asso. Ltd. ...Petitioner
Versus
State of U.P. & Anr. ...Respondents
3 All. M/S Jai Prakash Asso. Ltd. Vs. State of U.P. & Anr.
655
Counsel for the Petitioner:
Navin Sinha (Sr. Adv.), Rahul Agarwal, Rohan
Gupta

Counsel for the Respondents:
Abhinav Gaur, Ami Tandon, Arvind Srivastava,
Ashish Kumar Singh, C.S.C., Gaurav Tripathi,
Kartikeya Saran, Rahul Agarwal, Rohit Nandan
Pandey, Sandeep Arora, Shreesh Srivastava,
Sujan Singh, Syed Imran Ibrahim

A. Civil Law - Constitution of India,1950 -
Article
226,
Maintainability
of
Writ
Petition - Contractual Matters -Scope of
Judicial Review - Public Law Element -
Existing Legal Right - Held: There is no
absolute bar to the maintainability of a
writ petition under Article 226 of the
Constitution even in matters arising out of
contractual obligations involving the State
or its instrumentalities. However, judicial
review in such cases is confined to
examining whether the impugned action
has a public law element and violates
Article 14 by being arbitrary, unfair, or
unreasonable. Relief under Article 226
may
be
granted
where
there
is
infringement of an existing legal right and
the action impugned has public law
character, but writ would not lie where
only
a
contractual
right
is
to
be
established or where the disputes require
adjudication of serious disputed questions
of fact. The power under Article 226 is
plenary and discretionary, and should be
exercised with circumspection where the
dispute falls purely in the realm of private
law.

On
facts,
cancellation
order
challenged was alleged to be illegal,
arbitrary and disproportionate executive
fiat affecting public interest and existing
rights under allotment. Held, writ petition
maintainable. (Para 68 - 76)

B. Civil Law - Constitution of India,1950 -
Article 14, Principles of Proportionality -
Scope and Test - Following principles
emerge while applying the doctrine of
proportionality: the administrative action
must have a lawful objective; the action
taken must be appropriate to achieve the
intended
goal;
the
doctrine
of
proportionality is applied to test an
administrative action to find out whether
it
is
just
and
reasonable
and
not
excessive; it ensures that discretionary
powers are not exercised arbitrarily but
reasonably
and
do
not
infringe
on
fundamental rights disproportionately; the
measure adopted must be least restrictive
or least burdensome for achieving the
purpose; and the test of reasonableness is
to be examined from the standpoint of the
interest of the general public and not from
the point of view of the person against
whom action is taken (Para 130)

C. Construction/Interpretation of Contract
- Consensus ad idem - Conduct of parties
and correspondence - Binding effect - The
essential feature of any binding contract is
the meeting of minds i.e., consensus ad
idem. How the parties acted pursuant to
the contract is a significant indicia to their
common understanding of the contract
and thus constitutes an important tool in
interpretation of the terms of the contract.
The real intendment of the parties has to
be gathered from the manner in which
they understood the same, and for that
purpose, the correspondence exchanged
between
them
could
be
taken
into
consideration. If parties to a contract, by
their course of dealing, put a particular
interpretation on the terms of it-on the
faith of which each of them, to the
knowledge of the other, acts and conducts
their mutual affairs-they are bound by
that interpretation just as much as if they
had written it down as a variation of the
contract. There is no need to inquire
whether that interpretation is correct,
mistaken, or consistent with the original
terms. The conduct of the parties would
also be a relevant factor in the matter of
construction
of
a
contract.
Correspondences exchanged are required
to
be
taken
into
consideration
for
construction of the contract. (Para 100,
101)

D. U.P. Industrial Area Development Act,
1976 - Sections. 7 &14 - Resumption of
lease - Nature of power - Distinction from
general contract law and Transfer of
Property Act - Held, the power conferred
656 INDIAN LAW REPORTS ALLAHABAD SERIES
under Section 14 of the Act is a special
power to cancel allotment/lease and
resume
possession
for
breach
of
conditions or non-payment of dues - The
provision empowers the Chief Executive
Officer to resume the property and forfeit
the whole or part of money paid - Further,
the Collector may take possession on
requisition
-
The
lease
deed
itself
reiterates the overriding effect of this
statutory power - There is no requirement
to follow the detailed procedure under the
Transfer of Property Act - It is sufficient
that the order states resumption is due to
breach of express conditions - The Act
being a special statute overrides the
general law under the Transfer of Property
Act. (Para 111, 113)

E. Developer-petitioner had recovered
nearly
80%
of
receivables
from
homebuyers but failed to complete the
housing
projects,
and
repeatedly
defaulted on its obligations under the
Special Development Zone (SDZ) Policy,
including non-payment of dues to the
Development Authority, cancellation of
allotment was held to be lawful and not
hit by the doctrine of proportionality.
The Authority rightly considered factors
such as non-development, insolvency,
and protection of homebuyers' interests
in furtherance of planned development.
Insolvency
proceedings
initiated
against
the
petitioner
under
the
Insolvency and Bankruptcy Code, 2016,
further justified the action. Held :
Cancellation of entire allotment was not
hit by doctrine of proportionality nor
was illegal for any other reason. While
passing the cancellation order, the
Authority
had
considered
several
factors
including
default
in
development/construction
but
the
cancellation was primarily on ground of
non-payment
of
the
dues
of
the
Authority. (Para 166, 167)

Dismissed. (E-5)

(Delivered by Hon'ble Manoj Kumar
Gupta, J. & Hon'ble Kshitij Shailendra, J.)

1. For ease of discussion, the
judgment has been structured according to
the following table of contents: -

Sl.
No.
TABLE
OF
CONTENTS
Page
No.
1.
INTRODUCTION
3
onwards
(i)
Case
of
the
petitioner
5-13
(ii) Case of YEA
13-15
(iii)
Events
taking
place during pendency
of writ petitions
15-16
(iv) Spot inspection
16-18
(v) Proceedings under
IBC
18-19
(vi) Parties heard
19
2.
ISSUES
20-21
3.
CONTENTIONSPETITIONER'S
COUNSEL
21-31
4.
CONTENTIONS
-
YEA's COUNSEL
31-56

ANALYSIS
56
onwards
5.
ISSUE NO.1
Writ
Petitions'
Maintainability
56-65
6.
ISSUE NO.2
Whether
terms
of
allotment survive after
execution of lease

ISSUE NO.3.
Whether cancellation
of allotment results in
cancellation of lease
65
onwards
(A) Salient features of
allotment, lease and
SDZ Policy
65-90
(B) How the parties
understood
the
90-94
3 All. M/S Jai Prakash Asso. Ltd. Vs. State of U.P. & Anr.
657
contract
(C)
Independent
statutory power under
Section 14 of the Act,
1976
94-108
(D) Findings
108
7.
ISSUE NO.4
Effect of petitioner's
earlier Writ Petition
No.47262/2017 on the
present petition.
108-109
8.
ISSUE NO. 5
Whether
action
of
cancellation of entire
allotment - Hit by
Doctrine
of
Proportionality.

ISSUE NO. 6
Whether non-payment
of dues sole ground to
cancel or also because
of non-development

ISSUE NO. 7
If on ground of nondevelopment - order
of cancellation illegal.
109
onwards
A-
PROPORTIONALITY
113
onwards
i. Precedents
113-117
ii. Key principles
117-118
iii.
Restrictive
measures
taken
in
terms
of
allotment
letter and lease deeds
118-120
iv.
other
restrictive
measures taken
121-122
v. Factors considered
123
onwards
• Default in payment
123-125
•
Assessment
of
financial health of JAL
and
obligations
125-136
towards home buyers.
•
Tests
to
decide
proportionality: Larger
Public Interest
137-138
• Teri Oats
138-140
vi.
Attempts
made
towards
amicable
settlement
140-142
vii.
Insolvency
established
142-145
B- FINDINGS
146
9.
FATE OF MONEY
PAID BY JAL TO
YEA
146-150
10.
ISSUE NO.8
Whether Home buyers
and
sub-lease
can
subsist without valid
lease.
150
onwards
(i) Interest of Home
buyers
151-157
(ii) Interest of Sublessees
157-158
(iii)
Interest
of
financial institutions
159-166
(iv) Further Directions
166-167
11.
CONCLUSION
167-171

2. Writ - C No. 6049 of 2020 has
been treated to be leading petition and the
facts narrated in the judgment, except
where stated explicitly, would be from the
pleadings of the parties in the leading
petition.

INTRODUCTION:

3. M/S Jai Prakash Associates
Limited (in short 'JAL' or 'the petitioner'),
is a Company incorporated under the
provisions
of
Companies Act,
1956.
Initially, the writ petition was filed against
two respondents, i.e. the State of U.P. and
Yamuna
Expressway
Industrial
658 INDIAN LAW REPORTS ALLAHABAD SERIES
Development Authority (in short 'YEA' or
'Authority'), later on, around 258 homebuyers were impleaded pursuant to order
dated 19.09.2023 passed by this Court. The
petitioner-company was facing winding up
proceedings in the form of CP (IB)
No.330/ALD/2018 (ICICI Bank Vs. Jai
Prakash Associates Limited) and one Mr.
Bhuvan Madan was appointed as Interim
Resolution Professional (in short 'IRP').
For this subsequent development, the
petitioner was permitted to be represented
through the said IRP and, consequently, the
cause title was amended pursuant to the
order dated 26.07.2024.

4. The prayer made in the writ
petition is to quash the order dated
12.02.2020 passed by respondent no.2
(YEA) whereby the allotment of land made
by the said respondent in favour of the
petitioner has been cancelled. Further, a
mandamus has been sought restraining the
respondents from interfering with the
peaceful possession of the petitioner over
the land in question and from taking any
other coercive action pursuant to the order
impugned; further direction to respondent
no.2 to provide requisite amenities such as
water, sewer and drainage and to take all
other
requisite
steps
for
effective
implementation of the Escrow Agreement
dated 24.09.2018. The writ petition was
amended and further prayers were added to
quash the resolution dated 28.6.2021
(Annexure No.37-B) passed by the Board
of YEA in its 70th Board Meeting in so far
as YEA sought to levy restoration charges
upon the petitioner and limited the
proposed
re-schedulement
and
recomputation of the dues to the year 2023.
Another relief claimed is for quashing the
consequential
letter
dated
05.07.2021
(Annexure No.37-C) whereby the decision
taken by the Board in its 70th Meeting
along
with
other
decisions
was
communicated to the petitioner. A prayer
commanding YEA to re-schedule and recompute the balance dues and to decide the
representation dated 02.03.2021 has also
been made.

CASE OF THE PETITIONER
(JAL) :

5. The Government of Uttar
Pradesh constituted Taj Express Industrial
Development Authority (in short 'TEA')
vide notification dated 24.04.2001 under
the U.P. Industrial Area Development Act,
1976 (in short 'the Act, 1976') for
implementing the Yamuna Expressway
Project and allied developments in the
region. The responsibilities of the erstwhile
TEA, inter alia, include execution of
Yamuna Expressway, acquisition of land
for construction of the expressway area,
development and preparation of zonal plan/
master plan for planned development along
the expressway, development of drainage,
feeder roads, electrification etc. In exercise
of powers conferred upon TEA under the
Act of 1976 and in furtherance of discharge
of its essential functions, YEA brought a
policy of Special Development Zone (in
short 'SDZ') contemplating setting up of
SDZs with a particular core activity chosen
by the entrepreneur out of the options
specified. On 29.02.2008, YEA invited
applications from the interested parties by
widely publishing the SDZ policy through
circulation
of
a
detailed
brochure
containing various terms and conditions.
The petitioner applied in response to the
notice for setting up of the SDZ with
"sports" as its core activity. At the time of
applying, it was JPSK Sports Pvt Ltd which
was, later on, named as Jaypee Sports
International
Ltd
(JPSI)
which
subsequently merged into the petitioner-
3 All. M/S Jai Prakash Asso. Ltd. Vs. State of U.P. & Anr.
659
company in the year 2014 pursuant to a
scheme of merger. YEA, vide letter dated
11.06.2008, issued an allocation letter to
the petitioner communicating the latter that
YEA had decided to allocate an area of
1000 hectares of land for setting up SDZ
with "Sports" as the core activity.

6. On 28.08.2008, YEA informed
the petitioner that it had reserved land
measuring approximately 1000 hectares in
Sector 25, Noida for the petitioner to
develop SDZ with sports as the core
activity. It was informed that the land had
been reserved in anticipation of respondent
no.2 taking possession over the land for
which acquisition proceedings were in
progress. In between years 2009 and 2011,
YEA issued six allotment letters dated
24.02.2009,
20.03.2009,
10.08.2009,
27.01.2010, 23.06.2010 and 07.12.2010 to
the petitioner and the land measuring
1085.3327 hectares, inclusive of 98.9862
hectares for village development and abadi
extension, and 14.6673 hectares was
allotted to it. All the allotment letters, being
similar in nature, contained a payment
schedule, the area of the land allotted and
installments fixed for payment of the
premium .

7. In between the same period of
time, subsequent to the six allotment letters
and payment of 20% advance allotment
money by the petitioner, 32 lease deeds
were executed by which approximately
965.7390 hectares of land was leased. All
the lease deeds contained detailed terms
and conditions under which right in the
land was transferred to the petitioner,
specifying the mode of recovery of any
amounts payable by the petitioner, as
arrears of land revenue. Various clauses
contained in the allotment letters which
were contemplated to be a part of the lease
deeds, were expressly incorporated therein
without adopting the allotment letters as a
whole. Lease deeds do not contain any
clause which may enable the respondents to
cancel/
terminate
the
lease
deeds.
According to the terms and conditions
contained in the lease deeds, YEA was to
extend full cooperation and render such
assistance to the petitioner as might be
necessary, such as obtaining requisite
permits, sanctions, approvals, clearances
etc for achievement of the objectives under
the SDZ Scheme, however, according to
the petitioner, YEA continuously acted in a
lackadaisical manner and did not approve
drawings of Real Estate Development
under process. This conduct was not only
detrimental to the interest of the allottees of
such residential areas but also caused
undue loss to the petitioner.

8. After having applied for the
aforementioned approvals, the petitioner
began construction of such buildings as
was permitted by the Regulations and had
constructed
a
good
portion
of
the
structures. The petitioner had started the
housing projects over the demised land, but
the projects were not given the requisite
sanctions causing grave financial hardship
to the petitioner. The projects were stuck up
on account of failure on the part of YEA to
grant requisite approvals, without any
explanation, which constitutes a breach of
the terms of the lease deeds.

9. According to the petitioner, it
completed the core activities as required
and
applied
for
being
granted
the
completion certificate after depositing fees
in that regard in the year 2011 and 2012,
but the same rermained pending before the
Authority without any explanation or just
cause. Due to huge delays beyond the
petitioner's control and due to subdued
660 INDIAN LAW REPORTS ALLAHABAD SERIES
economic environment, the petitioner was
unable to follow the payment mechanism
agreed as per the lease deeds. It is
submitted that a payment of Rs.2,379.74
crores had been duly made by the petitioner
till 31.07.2017 to YEA and the total
outstanding amount aggregated to only a
sum of Rs.359.81 crores. YEA duly
recognized such hardships faced by various
builders and hence, vide its office order
dated 16.06.2017, proposed a scheme that
permitted all YEA's allottees to seek reschedulement of the defaulted amount
(premium and lease rent) under their
respective leases by filing a written
application
(the
"Re-Schedulement
Scheme").
Further,
as
per
the
Reschedulement Scheme, the applicant was to
deposit 5% of the defaulted amount by
31.07.2017 and 10% defaulted amount
within a period of 30 days from the date of
Re-schedulement Demand Letter to be
issued by YEA. The balance was to be
deposited in installments fixed through the
Re-schedulement Demand Letter.

10. The petitioner applied for reschedulement scheme vide letter dated
24.07.2017 and the matter was discussed
with the Chief Executive Officer of YEA
on 24.07.2017 and he assured the petitioner
that on payment of Rs.300 Three hundred)
crores, the matter would be taken up with
Board for considering reduction of the rate
of interest and re-schedulement of the
balance amount. After discussion between
the parties, the petitioner requested ICICI
bank to release Rs.300 (Three hundred)
crores from the Escrow Account on
31.07.2017 and deposited the said amount
through Bank Draft No.551184 issued by
ICICI bank. According to the petitioner, the
sum so deposited amounts to more than
50% of the amount overdue that was
further more than the required 15% amount
contemplated under the Re-schedulement
Scheme. YEA, instead of approving the
petitioner's application under the Reschedulement
Schement,
as
per
the
petitioner, threatened it to cancel the
allotment which led the petitioner to file
Writ-C No.47262 of 2017 seeking quashing
of the letter dated 04.08.2017 with a writ of
mandamus commanding the YEA to
forthwith issue a re-schedulement demand
letter specified in the scheme. The said writ
petition was connected with the leading
petition by order dated 02.08.2017. YEA,
vide letter dated 16.02.2018, directed the
petitioner to deposit Rs.170.78 crores by
31.03.2018
for
availing
the
Reschedulement of the overdue amounts. In
reply thereto, the petitioner, vide its letter
dated 08.03.2018, duly clarified that it had
already paid Rs.410 (four hundred and ten)
crores during 29.03.2017 to 31.07.2017 to
YEA which amounts to 83% of the
principal amount of installments towards
land dues and to consider re-schedulement
of total amount due as on 31.03.2018 in
twelve half yearly installments.

11. Pursuant to approval of the reschedulement
plan,
the
payment
mechanism was altered from the payment
terms stipulated under the six allotment
letters and the balance payments were to be
made in twelve half yearly installments,
starting from 30.09.2018 till 31.12.2023.
However,
the
petitioner
found
some
discrepancy and unmatched figures and
noticed
arbitrarily
imposed
additional
penalty of 1% to 3% while preparing the
re-schedulement letter more than the
prescribed penal interest which was 3%
over and above the prime lending rate fixed
by SBI. The petitioner made request to
correct
the
mistake
by
letter
dated
04.07.2018. It is further pleaded that in
Writ-C No.744 of 2017 (Chitra Sharma Vs.
3 All. M/S Jai Prakash Asso. Ltd. Vs. State of U.P. & Anr.
661
Union of India) regarding the corporate
insolvency resolution process of Jaypee
Infratech Ltd, a subsidiary of the petitionercompany, the Supreme Court, vide order
dated 09.08.2018, directed the petitioner to
deposit requisite amount from time to time
and in compliance of such directions, the
petitioner deposited Rs.750 crores before
the Supreme Court. The said amount was,
later on, transferred to the National
Company Law Tribunal, Allahabad (NCLT)
vide order dated 09.08.2019 passed by the
Supreme Court and the amount lies in the
custody of NCLT.

12. The petitioner was facing
financial crisis due to deposit of Rs.750
crores and for making interest payment to
YEA at a very high rate since financial year
2011, varying between 14% to 14.75%
along with the penal interest at the rate of
3% against the average bank interest rate of
about 12%. Therefore, it requested the YEA
to rectify the additional penal interest,
reduce the rate of interest and defer first
two installments, which were due on
30.09.2018 and 30.03.2019 to 31.12.2018
and
20.06.2019
respectively.
YEA,
however, continued to hammer upon
making deposit of the balance amount and
repeated requests made by the petitioner
went in vain. Due to subdued economic
environment and the fact that even after
payment of land dues to the extent of 87%,
the building drawings were not approved
by YEA resulting into Real Estate Projects
becoming unviable and causing huge losses
to the petitioner. However, despite such
repeated requests, YEA did not take
bonafide action and even threatened the
petitioner, inter alia, with cancellation/
termination of the lease deeds.

13. The petitioner presented a
cheque of rupees 10 (ten) crores towards
the overdue installments and promised to
deposit the balance amount by 15.02.2019
and submitted letters requesting YEA to
grant further extension of time to deposit
the balance amount of first installment,
reduction in rate of interest and sought
rectification in respect of additional penal
interest. YEA, vide
its
letter
dated
04.06.2019, informed the petitioner that in
65th Board Meeting, it had been decided
that change in payment mechanism to
Escrow Account might be considered only
after the petitioner would make the default
good in pursuance of re-schedulement letter
dated 28.05.2018. It directed the petitioner
to deposit rupees ninety eight crores for
execution of proposed Escrow Agreement
for the balance amount. The petitioner, vide
letter dated 18.06.2019, inter alia, advised
YEA to invoke the performance bank
guarantee of rupees hundred crores issued
by Punjab and Sindh Bank, which was duly
invoked by YEA vide its letter dated
02.07.2019 issued to the said bank and,
accordingly, rupees hundred crores were
transferred to YEA's account held with said
bank on 03.07.2019; pursuant whereof, the
petitioner, vide its letter dated 13.08.2019,
submitted the Escrow Agreement for
getting the same executed by the authorized
signatories of the authority and to facilitate
implementation of the same by ICICI Bank.

14. Later on, the petitioner, vide
letter dated 21.12.2019, informed YEA that
bank guarantee of rupees hundred crores
was to be maintained for a period of 10
years which period had already expired and
that drawings of core activity area,
submitted long back, had not been
approved.
Accordingly,
the
petitioner
requested the YEA to dispense with the
requirement of bank guarantee in view of
completion of core area and also asked for
approval
of
pending
real
estate
662 INDIAN LAW REPORTS ALLAHABAD SERIES
development as proceeds from sale of said
projects was a must for the petitioner to
ensure payment of balance dues in respect
of land. Despite compliance of the terms as
agreed between the parties, YEA passed the
order
impugned
dated
12.02.2020
cancelling the allotment of entire land in
Sector-25 on the pretext that the petitioner
had defaulted in making payment of
installments in accordance with the reschedulement
plan
dated
28.05.2018
without considering that the same stood
superseded by the Escrow Agreement dated
24.09.2019. The petitioner contends that
YEA's actions are illegal, arbitrary, and
financially oppressive. Despite substantial
compliance
and
investments,
YEA's
unjustified demands and failure to approve
crucial infrastructure had jeopardized the
SDZ project. The petitioner seeks judicial
intervention to rectify these issues and
prevent undue financial burdens.

CASE OF YEA :

15. The petitioner entered a
commercial agreement to develop SDZ
Project but defaulted on payments and
failed
to
complete
the
required
development.
The
cancellation
order
followed
due
process
and
was
in
accordance
with
contractual
clauses
governing non-payment. Clause 5.2 of the
allotment letter allowed three default
notices, beyond which the Authority had
the right to terminate the lease. The
petitioner was required to develop 35% of
the total area for core activities, but failed
to do so.

16. The dispute is contractual,
arising from allotment letters and lease
deeds, making a writ petition under Article
226 inappropriate. The Supreme Court has
consistently ruled that judicial review in
contractual matters is limited and should
not be done unless arbitrariness or violation
of fundamental rights is involved. The
cancellation was effected as per Clause 4.2
of the allotment letters, and the petitioner
has not disputed its payment defaults.

17. The lease deed is not a
standalone document; it is directly linked to
the allotment letters. Since the allotment
letter was canceled, the lease deed also
ceases to exist.

18. Despite multiple opportunities
for restructuring payments, the petitioner
failed to adhere to the new schedules. The
Authority granted multiple extensions but
still did not receive timely payments. The
Escrow Agreement of 24.09.2019 was
meant to facilitate payments, yet the
petitioner deposited only ₹47.09 lakh,
while the due amount was significantly
higher.

19. A survey conducted in year
2024 found that the petitioner developed
only 5.46% of the required 40% covered
area.
Several
essential
sports
and
infrastructure
projects
(e.g.,
stadiums,
training institutes, gymnasiums, hostels,
etc.) were not developed. The petitioner
also failed to complete housing projects,
causing severe hardship to homebuyers.

20. The doctrine of proportionality
does not apply to contractual agreements.
The cancellation order was issued after
multiple warnings, making it a last resort,
not a disproportionate response.

21. The cancellation was necessary
to protect homebuyers, who suffered due to
project delays. The Authority has plans to
ensure homebuyers are not impacted, either
by re-auctioning the project with the
3 All. M/S Jai Prakash Asso. Ltd. Vs. State of U.P. & Anr.
663
condition that the new developer completes
it, or the Authority undertaking the
development itself.

22. The petitioner was admitted
into insolvency on 03.06.2024, proving
financial mismanagement. Over ₹64,552
crores in claims were filed against the
petitioner, with ₹51,512 crores admitted.
The insolvency proceedings show that the
petitioner's financial troubles were not
caused by the cancellation but by years of
defaults.

EVENTS
TAKING
PLACE
DURING
PENDENCY
OF
THE
PETITIONS :

23. An interim order was passed in
the leading writ petition on 25.02.2020
directing the parties to maintain status quo
provided the petitioner deposits rupees
hundred crores with YEA within one
month, but in two parts, i.e. Rs. 50 crores
by 10.03.2020 and another Rs. 50 crores by
25.03.2020. The petitioner complied with
the first direction/ part of the order dated
25.02.2020 by depositing Rs. 50 crores in
the account of YEA on 09.03.2020 and
made further deposit of Rs. 5 crores on
16.03.2020. However, the petitioner failed
to deposit the remaining amount of Rs. 45
crores.
Petitioner's
application
dated
04.01.2021 seeking extension of time to
comply with the order was disposed of on
08.02.2021 granting a week's time to the
petitioner. The Court, by order dated
08.02.2021,
(corrected/
modified
on
01.03.2021) permitted the petitioner to
deposit Rs.52,50,26,551/- within a week
with a further direction to YEA to consider
re-structuring and re-computing of the dues
after the petitioner makes compliance of
the order. Thereafter, by order dated
29.09.2022, the petitioner was directed to
deposit a sum of Rs.100 crores. This
amount was deposited by the petitioner and
an affidavit dated 02.11.2022 was filed to
that effect. Accordingly, the petitioner has
deposited Rs.50 crores + Rs.5 crores +
Rs.52,50,26,551/- + Rs.100 crores (Total
Rs.207,50,26,551/-).

24. The Board of YEA, considered
the proposal of the petitioner company for
restructuring
and
vide
letter
dated
05.07.2021,
demanded
a
lump
sum
payment of Rs.425.10 crores towards
"restoration charges" as a pre-condition.
The petitioner challenged the aforesaid
demand of YEA by filing Writ-C No.17785
of 2021 which was dismissed as withdrawn
with liberty to the petitioner to seek
amendment in the present writ petition.
Accordingly, amendment was sought and
was allowed.

SPOT INSPECTION DURING
COURSE OF HEARING:

25. During the course of hearing,
the Court, vide order dated 09.05.2024,
directed for survey of the site by YEA in
presence of representative of the petitioner.
Site survey was, accordingly, conducted on
different dates. The inspection report and
photographs of the site have been filed.

26. Whereas the emphasis of the
respondent-Authority has throughout been
to the effect that the petitioner failed to
carry out construction activity as per the
stipulations contained in the allotment
letters, the stand of the petitioner has been
that in the core and non-core areas of the
subject land, adequate constructions have
been raised and whatever could not be
raised, it was on account of lapses on the
part
of
the
respondent-Authority.
A
tabulated depiction of the construction
664 INDIAN LAW REPORTS ALLAHABAD SERIES
raised is contained in 7th supplementary
affidavit
as
well
as
affidavit
dated
25.07.2024 filed after joint survey was
carried out. According to the petitioner,
following is the position with regard to
constructions done on the spot:-

S
l.
N
o
.
CORE
ARE
A
TO
TA
L
LA
N
D
A
RE
A
LAN
D
ARE
A D
EVE
LOP
ED
LAND
AREA
UNDE
R
DEVE
LOPM
ENT
LAND
AREA
FOR
FUTU
RE
DEVE
LOPM
ENT
(H
EC
T.)
(HE
CT.)
(HECT
.)
(HECT
.)
1
FI
RACE
TRAC
K
+
SERV
ICES
(STP,
WTP,
ESS
&PO
NDS
FOR
RAIN
WATE
R
HAR
VEST
ING
80.
61
80.6
1
0.00
0.00
2
CRIC
KET
STAD
IUM
&ASS
OCIA
TES
FACI
14.
66
9.57
0.00
5.09
LITIE
S
3
HOC
KEY
&MU
LTIPURP
OSE
SPOR
TS
HALL
11.
09
0.00
0.00
11.09
4
ROA
D
55.
45
44.3
6
0.00
11.09
5
GREE
NS
57.
34
54.7
9
0.00
2.55
6
OTHE
R
SERV
ICES
(LAK
E
FOR
RAIN
WATE
R
HAR
VEST
ING)
10.
21
0.00
0.00
10.21
7
OTHE
RS
SPOR
TS
&SUP
PORT
ACTI
VITIE
S
12
1.7
6
0.00
11.33
110.43
A TOTA
L
35
1.1
2
189.
33
11.33
150.46

Total=200.66

S
l.
N
NON
CORE
AREA
T
OT
AL
LA
ND
AR
LAND
AREA
UNDE
LAND
AREA
FOR
3 All. M/S Jai Prakash Asso. Ltd. Vs. State of U.P. & Anr.
665
o
.
L
A
N
D
A
RE
A
EA
D
EVE
LOP
ED
R
DEVE
LOPM
ENT
FUTU
RE
DEVE
LOPM
ENT
(H
EC
T.)
(HE
CT.)
(HEC
T.)
(HEC
T.)
1 SUBLEASE
(INCL
UDING
ROAD
&GRE
ENS)
64.
07
0.00
64.07
0.00
2 PROJE
CTS
13
8.6
1
115.
30
23.31
0.00
3 OTHE
R
LAND
(RESID
ENTIA
L,
COMM
ERCIA
L
&INST
ITUTI
ONAL)
28
4.2
9
0.00
2.82
281.47
4 OTHE
R
ROAD
S
85.
03
29.7
6
38.26
17.01
5 OTHE
R
GREE
NS
76.
88
26.9
1
34.60
15.38
B TOTA
L
64
8.8
8
171.
96
163.06 313.86

Total= 335.02

A+
B
GRA
ND
TOTA
L
1000.
00
361.
29
174.
39
464.
32

Total=
535.68

Proceedings
under
Insolvency
and Bankruptcy Code, 2016 :

27. By order of NCLT dated
3.6.2024, the application of ICICI Bank
filed in the year 2018 under Section 7 of
the Insolvency and Bankruptcy Code was
admitted
by
NCLT.
The
petitioner
challenged the order dated 3.6.2024 before
NCLAT
vide
Company Appeal
(80)
(Insolvency) No. 1185 - 1162 of 2024. The
NCLAT dismissed the appeal by judgment
dated 6.12.2024. Thereafter, Civil Appeals
bearing number 98 - 102 of 2025 and 2011
- 2012 of 2025, along with various
intervention applications, were filed before
the Supreme Court assailing the aforesaid
orders. The same were dismissed by the
Supreme Court by order dated 10.1.2025.
We are informed that at present, the
resolution professional is functioning and
so far there is no approved resolution plan.

PARTIES HEARD :

28. We have heard Mr. Jayant
Bhushan, learned Senior Advocate, assisted
by advocates Mr. Vishal Gupta, Mr. Rohan
Gupta, Mr. Amartya Bhushan, Mr. Aditya
Marwah, Mr. Anoop Rawat, Mr. Sagar
Dhawan, Mr. Ahkam Khan, Ms. Shikha
Gupta, Ms. Kirti Gupta, Mr. Pranay Kumar,
Mr. Jatin Kumar Mishra for the petitioner
(JAL), Mr. Bhuvan Madan, Resolution
professional (in person), Mr. Manish
Goyal, learned Senior Advocate, assisted
by Mr. Praveen Kumar, Mr. Syed Imran
Ibrahim and Mr. Pranav Tanwar for
666 INDIAN LAW REPORTS ALLAHABAD SERIES
respondent no. 2 (YEA), Mr. Amit Saxena,
learned
Senior Advocate,
Mr.
Rahul
Agarwal, Advocate, Ms. Upasana Agarwal,
Advocate and Ms. Aishwarya Gupta,
Advocate on behalf of lenders/financial
creditors, mortagees and sub-lessees and
Mr.
Anoop
Trivedi,
learned
Senior
Advocate assisted by Mr. Abhinav Gaur,
Advocate for the homebuyers.

ISSUES:

29. The submissions made by
learned counsel for the parties range from
issues pertaining to maintainability of the
writ petition; challenge to the impugned
cancellation order on various grounds;
interest of various stakeholders, sublessees,
homebuyers
and
financial
institutions and ancillary issues pertaining
to quantification of the amount payable by
the petitioner, in case the challenge to the
cancellation succeeds and the remedies
open to YEA to realize the same. The main
issues which would arise are: -

1. Whether the writ petition
is maintainable?
2. Whether the terms of the
allotment
letter,
except
those,
specifically
referred
to
and
incorporated by reference in the
lease
dead,
survive
after
the
execution of the lease deed?
3. Whether the impugned
cancellation of the allotment letter
by letter dated 12.02.2020 has the
consequent effect of cancelling the
lease deed, in absence of specific
reference to the lease deed?
4. Whether the petitioner's
earlier Writ C- No. 47262/2017
challenging the decision taken by
the respondent in its meeting dated
04.09.2017
for
cancelling
proportionate land would disentitle
the petitioner from challenging
present cancellation on the ground
of proportionality?
5. Whether the cancellation
of the entire allotment for nonpayment of some dues is excessive
administrative action and hit by the
doctrine of proportionality?
6. Whether the cancellation
of the entire allotment was only on
account of non-payment of dues or
also on the account of purported
defaults
in
development/construction?
7.
Whether,
if
the
cancellation of allotment was on
account of purported defaults in
development/
constructions,
the
cancellation is illegal?
8. Whether
homebuyers
and banks' sub-leases can subsist
without validity of lease?

30. The ancillary issues which may
arise for consideration in the event the
impugned cancellation order is quashed are
as follows: -

A. Whether the fact that the
company
is
in
Corporate
Insolvency
Resolution
Process
(CIRP)
should
deprive
the
company of relief even if it is
found that the cancellation was
illegal where the Insolvency and
Bankruptcy
Code
(IBC)
specifically envisages continuation
of the operations of the company as
a going concern?
B. What could be the broad
principles
to
be
applied
in
determining
the
legality/
appropriateness of YEA's demands
i.e. as regards its dues?
3 All. M/S Jai Prakash Asso. Ltd. Vs. State of U.P. & Anr.
667
C. Whether the purported
dues of YEA are now required to be
resolved as per the provisions of
the IBC in light of the statutory
provisions
of
IBC
and YEA
submitting its claim with the
resolution
professional
of
the
company?
D. Whether YEA's claims
are protected under IBC in view of
fact that a claim under Section 13
and Section 13A of the UP
Industrial Area Development Act,
1976 would make YEA a secured
creditor and at par with entitlement
of secured financial creditors under
Section 30(2)(b) read with Section
53 of the IBC?

31. We proceed to note the
submissions of learned counsel for the
parties in relation to the main issues and if
the cancellation order is held to be illegal,
we will also deal in detail the submissions
made by them on the ancillary issues.

Contentions raised on behalf of
the petitioner

ISSUE NO. 1:

32. It is contented by Shri Jayant
Bhushan, learned senior counsel for the
petitioner, that although the counsel for the
respondent argued that the Writ Petition is
not maintainable, in the counter affidavit
filed by YEA, no such objection has been
taken. The only objection taken is that the
scope of judicial review while dealing with
the policy decision is narrow. In fact, the
respondent admits that an executive order
is not beyond the scope of judicial review,
but only states that the scope of challenge
to policy decision is limited. Reliance has
been placed on the judgment of the
Supreme Court in ABL International v.
Export Credit Guarantee Corporation:
(2004) 3 SCC 553; Rajasthan Industrial
Development
and
Investment
Corporation vs. Diamond and Gem
Development Corporation: (2013) 5 SCC
470 and Teri Oats Estates Pvt. Ltd. vs.
U.T. Chandigarh & Others: (2004) 2
SCC 130 in contending that even writ
petition
against
the
State
or
an
instrumentality of the State arising out of
the contractual obligations is maintainable.

ISSUE NO. 2:

33.