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The Bombay High Court has recently cleared the way for the construction of a long-delayed hotel project in Sector-15, CBD-Belapur Road, Navi Mumbai. A division bench comprising Justice Ajey Gadkari and Justice Shyam Chandak was hearing a petition filed by PVP Star Hotels Private Limited, which challenged CIDCO's demand for an additional lease premium. The project, initially tendered by the City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO) in 2006, had faced significant delays due to the non-development of the proposed Navi Mumbai International Airport. Although the court agreed that lease termination would not serve CIDCO's objectives, it held the hotelier responsible for the additional payment.
After a delay spanning two decades, the Bombay High Court cleared the way for the construction of a hotel situated in Sector-15, CBD-Belapur Road, Navi Mumbai. The project had initially been tendered by the City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO) back in 2006 but remained stalled due to the failure to develop the proposed Navi Mumbai International Airport. Advertisement
The division bench, consisting of Justice Ajey Gadkari and Justice Shyam Chandak, was addressing a petition lodged by Mumbai-based PVP Star Hotels Private Limited. The petitioner had sought to nullify a show-cause notice issued by CIDCO, which demanded an additional lease premium. The hotelier argued that the demand was arbitrary since similar benefits extended to other licensees had not been offered to them.
As per the hotelier, CIDCO had invited bids during December 2006 for the development of a hotel in Navi Mumbai, marketing the area as a 'city of the future' in light of the anticipated infrastructure initiatives, including an international airport and water-based transport facilities. The plot was subsequently allotted to PVP Star Hotels following the payment of a lease premium amounting to INR 82 crore. The agreement stipulated that construction works were to commence within 12 months and be concluded within five years.
Nevertheless, the international airport was delayed for a long time. Consequently, the hotelier repeatedly appealed for extensions to complete the project, citing the absence of the airport and requesting exemption from further financial obligations.
Despite these requests, CIDCO terminated the lease agreement in April 2018, repossessed the plot, and proceeded to demand an additional lease premium of INR 12 crore. The hotelier maintained that other licensees had been granted lease extensions without the imposition of such penalties, rendering CIDCO's stance inequitable. While the court recognised that cancelling the lease would contradict CIDCO's broader objectives, it nonetheless ruled that the hotelier remained liable for the additional lease premium due to delays in project execution.
This judgement appears to strike a balance between supporting urban development and maintaining contractual accountability. It marks a significant step forward in revitalising a project that has remained in limbo for nearly twenty years.
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