Bombay High Court rules in favour of RIL: Directs MMRDA to refund Rs 646 crore

The Bombay High Court has recently quashed a Rs 1,116 crore demand against Reliance Industries for allegedly delaying the construction of its BKC convention-cum-commercial complex, providing significant relief to the company.

The division bench of Chief Justice Shree Chandrashekar and Justice Suman Shyam termed the entire process ‘arbitrary’ and directed the state authorities to refund Rs 646 crore, which Mukesh Ambani-promoted Reliance Industries deposited as an additional premium penalty for the alleged construction delay.

“The petitioner (RIL) was made to deposit the amount of the penalty under coercion. The imposition of the penalty was also not preceded by a proper Show Cause notice, thus acting in clear contravention of the principle of natural justice. Therefore, consequences under the law on such counts must follow,” observed the court while ruling in favour of RIL.


The court ordered MMRDA to refund this amount to RIL within 90 days of receiving the Certified Copy of the order. If MMRDA fails to comply, the amount will accrue interest at the same rate RIL would have owed under the Lease Agreement for delayed premium payments, calculated from the date of the order until the refund date.

In similar orders, the court also directed MMRDA to refund Suntech Realty (Rs 52.8 crore), Shree Naman Hotels Pvt Ltd (Rs 8.9 crore) and Indian Newspaper Society (Rs 22.6 crore).

Before the court’s ruling, Senior Counsel Vikram Nankarni, appearing for RIL, argued that the demand proceeded on an erroneous interpretation of Clauses of the Lease Deed dated September 1, 2006, inasmuch as under Clause 2(c), no construction work could commence until the plans and specifications were approved by the planning authority. It is therefore submitted that the timeline for completion of construction cannot be computed independently of such approvals.

“The project required several statutory approvals from various authorities, including environmental clearance, aviation height clearance, approval of the High-Rise Committee and permissions from the Municipal Corporation of Greater Mumbai,” argued the company. “These approvals were obtained over a period of time, and the commencement certificate for the integrated project was eventually issued only in the year 2014,” added the counsel for RIL.

The genesis of the dispute lies in the agreement between RIL and MMRDA, where the state authority leased a BKC plot to Reliance Industries in 2006 for 80 years to build a convention and commercial complex.

According to the lease, construction had to be finished within four years. But in a notice dated September 12, 2017, MMRDA claimed a delay of more than seven years and sought a penalty covering the entire period.

However, RIL moved the Bombay High Court, which, in December 2017, granted protection from coercive action.

In February 2019, RIL paid Rs 646.77 crore to MMRDA, backed by a bank guarantee of Rs 1,312 crore, to cover delays claimed from September 2010 to February 2019. After that, the authority gave a partial Occupation Certificate (OC) for 44,621 sq m.

In June 2019, MMRDA made a new demand of nearly Rs 1,116 crore as an additional charge for delays in completing the additional built-up area under a supplementary lease.

Due to the new demand, the authority refused to process RIL’s application for another OC for 1.24 lakh sq m until the dues were paid. But in 2020, the High Court ordered MMRDA to process the application without requiring payment of the extra amount.