PAULMECH INFRASTRUCTURE PVT. LTD. Vs. STATE OF ORISSA

JUDGEMENT

(1.) M/s. Utkal Ashok Hotel Corporation Ltd. (UAHCL) was, on 24.01.1989, granted a lease of certain area of land in Puri by the Orissa Government for 99 years. The Corporation was running 'Hotel Nilachal Ashok' in the said premises at Puri. In the year 2004, the hotel was closed down with the approval of Board of Directors, as operation of the same was found unviable. The UAHCL, thereafter, decided to lease out the said property for a period of 40 years, for which proceedings had been initiated in the year 2005-06, but there were no bidders. Then in the year 2009, it was again re-tendered, in which the petitioner, as well as two others participated. The petitioner, being the highest bidder, was issued a Letter of Intent (LOI) on 19.01.2010, according to which, besides several other conditions, the petitioner was to deposit a sum of Rs. 9.34 crores within 30 days. Out of the said amount, Rs. 8.82 crores was towards non-refundable upfront payment, and a sum of Rs. 26.00 lakhs towards security deposit, and another amount of Rs. 26.00 lakhs towards advance minimum guaranteed annual lease premium for the first year.

(2.) The lease deed was to be executed as per the said LOI and a lease amount of Rs. 26.00 lakhs per year was to be paid for first two years, with a minimum increase of 11 % per annum every year thereafter. The said LOI was accepted by the petitioner vide Letter of Acceptance (LOA) dated 002010, with a request that petitioner be permitted to deposit an amount of Rs. 4.41 crores by 19.02010, and the balance amount by 15.04.2010. The said offer of the petitioner for deferred payment was accepted by the opposite party- UAHCL vide communication dated 102010, wherein it was specifically stated that the terms in respect of payment in two instalments up to 15.04.2010 was being accepted as a special case.

(3.) In terms of such Letter of Acceptance (LOA), the petitioner deposited the initial amount of Rs. 4.41 crores on 18.02.2010 but defaulted in depositing the balance amount by the extended date granted, which was 15.04.2010. The lease agreement, of course, could thus not be executed. The matter remained pending, and ultimately on 25.11.2010, the opposite party-UAHCL allowed extension of time for payment of the balance bid amount by 15.12.2010. Admittedly, this was the last extension for payment of the balance amount which was granted by the opposite party-UAHCL to the petitioner. Even then, the petitioner did not deposit the balance amount within such extended time.