Allahabad HC Bars NOIDA from Charging Lease Rent

• Lease rent of ₹168.37 crore set aside due to missing possession certificate

• ₹7.38 crore CIC charges declared illegal; refund ordered with 9% interest

• Court says authority cannot impose conditions and later ignore them

Allahabad HC has ruled that the NOIDA cannot demand lease rent unless it formally hands over possession through a separate possession certificate.

The ruling, delivered on December 19, 2025, came in a dispute involving a commercial plot in Sector 94, Noida. The Court made it clear: if a mandatory possession certificate is not issued for a sub-divided plot, the period will be treated as a “zero period” — meaning no lease rent can be charged.

How the Dispute Began

The case traces back to a large commercial plot measuring 3.80 lakh sq. metres allotted to BPTP International Trade Centre in Sector 94. The total premium was ₹4,957.82 crore.

After paying ₹1,115.51 crore, the company requested a proportionate reduction in plot size. The area was revised to 85,672.17 sq. metres, and a lease deed was executed in February 2009. Annual lease rent was fixed at 2.5% of the premium.

Later, NOIDA permitted the sub-division of the plot into two parts — Plot 2A and Plot 2B — through a letter dated February 16, 2010. However, this approval came with a crucial condition:

“Separate site plans, sub-lease deeds, and possession certificates had to be issued for each sub-divided plot.”

This condition became the core issue in the case.

What Went Wrong

While NOIDA allowed the subdivision, it never issued a separate possession certificate for Plot 2A. Instead of executing a fresh lease deed as required, only a correction deed was made.

Subsequently, Plot 2A was transferred to Vision Town Planners after a change in shareholding. NOIDA treated this as a “change in constitution” and demanded ₹7.38 crore as CIC (Change in Constitution) charges. The company paid the amount.

Later, NOIDA raised a massive demand of ₹168.37 crore as unpaid lease rent and cancelled the allotment in 2020.

The company challenged the demand, arguing that without a separate possession certificate, lawful possession had not been granted — and therefore lease rent could not be charged.

What the Court Said

The High Court sided with the plot buyer and observed:

• NOIDA itself had imposed a mandatory condition requiring separate possession certificates.

• The authority failed to issue such a certificate for Plot 2A.

• Without formal possession, only “symbolic possession” existed.

• Lease rent cannot be charged unless lawful possession is handed over.

The Court stated that the government authority cannot “speak in two voices” — meaning it cannot impose a condition and later ignore it.

As a result:

✔ The ₹168.37 crore lease rent demand was set aside.
✔ The period before issuance of a proper possession certificate will be treated as a “zero period.”
✔ Lease rent can only be calculated from the date the possession certificate is actually issued.

CIC Charges Also Declared Illegal

The Court further ruled that NOIDA’s demand of ₹7.38 crore as CIC charges was unlawful. Previous Division Bench judgments had already held that a mere change in shareholding does not alter a company’s legal identity.

The Court ordered NOIDA to refund ₹7,38,21,900 along with 9% annual interest, stating that the authority had no justification for retaining the amount.

Is Ownership at Risk?

Legal experts clarified that the absence of a possession certificate does not affect ownership or leasehold rights. Instead, it protects the plot holder from financial liability during the period when lawful possession was not granted.

The Court directed NOIDA to:

• Recalculate lease rent from the date a proper possession certificate is issued.

• Refund excess amounts after adjustment.

• Comply within two months.

Why This Judgment Matters

This ruling could have wider implications for developers and commercial plot buyers in Noida. Many allottees face disputes related to possession dates, lease rent calculations, and additional charges.

The judgment reinforces three key principles:

1. Authorities must follow their own conditions.

2. Lease rent cannot be charged without lawful possession.

3. Illegal levies such as CIC charges cannot be sustained.

For investors and developers, the message is clear — documentation and possession certificates are not mere formalities but critical legal safeguards.

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