After 18 Years, You Can’t Wake Up and Demand Dues You Waived: Allahabad High Court Quashes ₹2 Crore Lease Rent Demand

“Doctrine of Promissory Estoppel Isn’t a Mere Slogan – State Can’t Resile from No-Dues Certificates It Issued Decade Ago”:  In a major relief to Jakson Engineers Ltd., the Allahabad High Court quashed a sudden demand of ₹2,08,40,858/- raised by the Greater Noida Industrial Development Authority (GNIDA) on the ground that it was “arbitrary, violative of natural justice, and against the doctrine of promissory estoppel.” The Division Bench comprising Justice Mahesh Chandra Tripathi and Justice Kunal Ravi Singh held that once GNIDA had accepted one-time lease rent and issued No Objection Certificates twice, it could not, after a gap of 18 years, claim that lease rent remained unpaid.

“Having accepted the payment of one-time lease rent, and having issued repeated No Dues Certificates, the Authority is now estopped from taking a contrary stand. The demand is legally untenable and is quashed,” the Court ruled in Writ-C No. 29625 of 2025, titled Jakson Engineers Ltd. v. State of U.P. & Others.

“Payment Made on 08.01.2007 Was Within Time – No Default at All”: Court Rejects GNIDA’s Core Premise

GNIDA’s case revolved around the claim that Jakson Engineers Ltd. had defaulted in lease rent payment by depositing a one-time lump sum (equivalent to 11 instalments) two days after the due date, i.e., on 08.01.2007. However, the Court took note that:

“The lease rent was payable within 10 days from execution of lease deed, i.e., by 16.01.2007. The payment made on 08.01.2007 was well within this period. There was, thus, no default attracting the penalty clause.”

Referring to Clause 1 of the Lease Deed, the Court clarified that lease rent was not due on 06 January, but within 10 days of the date of execution (06.01.2006), and thus, the entire premise of delay collapses.

“Respondent No.2 could have issued a demand for interest under Clause 1 had there been any delay. But no such demand was ever raised for 18 years. Acceptance of payment without protest amounts to waiver.”

“You Can’t Issue No-Dues Certificate, Then Claim Huge Arrears Later”: Promissory Estoppel and Legitimate Expectation Squarely Apply

The Court observed that GNIDA had not once, but twice issued No Objection Certificates, in 2010 and 2020, affirming that no dues remained pending from the petitioner with respect to the lease rent. Moreover, the Authority had also granted permission to mortgage in February 2024. The Court held that these acts created an enforceable legitimate expectation, and any reversal after such a long period violated Article 14 of the Constitution.

“The Government authority, after having acknowledged full compliance by issuing No Objection Certificates and mortgage permission, cannot be allowed to somersault in 2025.”

Quoting from Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., the Court reiterated:

“The doctrine of promissory estoppel is not a mere slogan. It binds the State to act fairly and prevents it from going back on solemn representations.”

“No Prior Notice, No Calculation, No Explanation – How Can You Raise a ₹2 Crore Demand Like This?”

The impugned demand letter dated 10.07.2025 was set aside also on the ground that no show-cause notice, no explanation, and no calculation of how the dues were computed was ever shared with the petitioner.

“There is nothing in the record to show any notice was issued before passing the impugned demand letter. No details of principal amount or interest calculation have been supplied. The demand is arbitrary and violative of natural justice.”

Relying on the Supreme Court’s decision in State of Orissa v. Binapani Dei, the Bench held that administrative orders involving civil consequences must follow rules of natural justice, and a post-facto demand of this nature, issued silently after 18 years, offends basic constitutional principles.

“Your Own Policy Allowed One-Time Lease Rent – You Can’t Now Say It Was Invalid”

The Court further rejected GNIDA’s plea that one-time lease rent was accepted only subject to full prior payments. Since the amount of ₹1,48,53,960/- (equivalent to 11 annual instalments) had been deposited under the then-existing policy, and was accepted without demur, the Authority could not later argue that some instalment was unpaid.

“Having accepted the one-time payment without any objection and having remained silent for 18 years, GNIDA is now bound by its conduct.”

The Bench added that consistency and predictability in administrative action is an essential facet of Article 14:

“GNIDA’s sudden reversal of its own past certifications defeats the basic tenets of fairness, predictability, and non-arbitrariness in administrative functioning.”

Demand Letter Quashed, GNIDA Directed to Process Mortgage Applications

The writ petition was accordingly allowed, with the demand letter dated 10.07.2025 quashed. The Court directed GNIDA to process the petitioner’s pending applications for permission to mortgage dated 08.10.2024 and 02.01.2025 within six weeks.

“This Court also finds that the petitioner has fully complied with the terms and conditions of the lease deed and is not in default of any lease amount.”

Date of Decision: 11 November 2025