Are the provisions of a governmental policy interpreted like the provisions of a statute?

The present Civil Appeals arise out of the final judgment and order dated 19.07.2024 passed by the Allahabad High Court in Writ-C Nos. 9348 and 21276 of 2023, and 7223 of 2024 (‘Impugned Judgment’). The facts necessary for the disposal of the Civil Appeals are discussed as follows. Facts

The New Okhla Industrial Development Authority (‘NOIDA’/Appellant No. 1) launched a scheme dated 22.09.2011 for the allotment of commercial plots to builders/developers in Noida, Uttar Pradesh as part of its policy for infrastructural development. The last date for the submission of a tender was 14.10.2011. M/s Sunshine Trade Tower Pvt. Ltd. (‘the Developer’/Respondent No. 1) was selected as the successful developer. Consequently, a Lease Deed dated 11.01.2012 was executed by NOIDA, in favour of the Developer, for Plot No. 5-A, Sector 94, Noida, U.P. (‘Subject Plot’) for a total sale consideration of ₹1,33,86,63,730/-.¹ Possession was handed over on the same day. According to the site plan, as approved by NOIDA on 06.03.2012, the Subject Plot has a 45-metre-wide Front Road and a 24-metre-wide Side Road. Under the terms of the Lease Deed, the Developer was to develop a commercial complex on the Subject Plot for “commercial activities such as shopping malls, showrooms, retail outlets, hotels, restaurants, offices and such other commercial uses”. It has been the Developer’s case that it could not begin proper construction activities as the 45-metre Front Road was encroached and the 24-metre Side Road was sandy, unpaved, and non-motorable.

In the intervening period, on 17.09.2013, the National Green Tribunal (‘NGT’), Principal Bench at New Delhi passed an interim order directing that construction activities within 10 kilometres of the Okhla Bird Sanctuary be stopped.² In pursuance of the said interim order, the Superintendent of Police, Gautam Buddha Nagar issued a notice to the Developer to stop construction work given that the Subject Plot was within 600 metres from the boundary of the Okhla Bird Sanctuary. The Developer complied and construction activities came to a halt.

The injunction order passed by the NGT was removed only on 19.08.2015, when the Government of India issued a notification stipulating 19.08.2015 as the cut-off date from which project proponents would not be permitted to undertake construction over land falling within 100 metres from the eastern, western, and southern boundaries, and 1.27 kilometres from the northern boundary of the Bird Sanctuary. Despite the removal of the bar on construction activities by the Central Government, the Developer could not proceed with full-fledged construction activities as the 45-metre Front Road continued to be encroached and the 24-metre Side Road was still not constructed.

Taking into consideration the several issues confronting developers and projects being stalled for various reasons, NOIDA formulated a policy, referred to as the ‘Zero Period Policy’,³ on 28.03.2016. The relevant portions of this Policy read as:

Following the promulgation of the Zero Period Policy, the Developer made two representations before NOIDA: one on 12.04.2016, requesting that the payment schedule be modified; and the second on 29.09.2016, informing NOIDA about the unavailability of access to the Subject Plot either through the 45-metre Front Road or the 24-metre Side Road. In a third letter, on 15.10.2016, the Developer requested NOIDA, for the first time, to extend the Zero Period Policy’s benefit on two grounds: first, the NGT restraint order; and second, the lack of access roads to the Subject Plot.

On 05.06.2017, NOIDA issued a letter to the Developer granting Zero Period Policy benefit for the period from 14.08.2013 to 28.10.2013 and an exemption from penal interest from 29.10.2013 to 19.08.2015. This benefit was granted on account of NGT’s restraint order. With respect to the question of unavailability of access to the Subject Plot via the 45-metre Front and 24-metre Side Roads, NOIDA asked the Tehsildar to submit a report after due verification.

On 14.02.2019, the Tehsildar submitted his report, recording that the land that had been earmarked for the 45-metre Front Road is ‘Abadi’ land, has never been acquired, and is encroached upon. The relevant portions of the Tehsildar’s report read as follows:

On 09.01.2020, a committee of NOIDA convened in a meeting to consider the Developer’s request for Zero Period Policy benefit under Clause 5 of the Zero Period Policy. Notwithstanding the Tehsildar’s report’s factual findings, the committee rejected the request for grant of Zero Period Policy benefit vis-à-vis the lack of adequate access to the Subject Plot. Consequently, on 14.02.2020, NOIDA’s Chief Executive Officer (‘CEO’) passed an order rejecting the Developer’s request for Zero Period Policy benefit, reasoning that the Developer had sufficient access to the Subject Plot. The relevant portions of the CEO’s order are extracted hereinbelow for ready reference:

Aggrieved by the CEO’s order, the Developer filed a revision application before the State Government under Section 41(3) of the Uttar Pradesh Urban Planning and Development Act, 1973 (‘1973 Act’) read with Section 12 of the Uttar Pradesh Industrial Area Development Act, 1976 (‘1976 Act’).

During the pendency of the first revisional proceedings, the Developer also filed a complaint against NOIDA before the Uttar Pradesh Real Estate Regulatory Authority (‘UPRERA’), praying for possession of the Subject Plot free from encumbrances, compensation for delayed possession with compound interest, and construction of the 45-metre Front and 24-metre Side Roads. It may be mentioned, at this stage, that pending disposal of the proceedings before UPRERA, NOIDA managed to complete and open-up the 24-metre Side Road on 18.02.2020.

On 22.10.2020, UPRERA passed an order rejecting the Developer’s complaint as not maintainable, asking it to pursue alternative statutory remedies under the 1973 and 1976 Acts. However, in its order, UPRERA recorded that: (i) a site inspection had been conducted by UPRERA’s technical team to inspect the actual condition of the Subject Plot and access roads; and (ii) from the Inspection Report, it was clear that while NOIDA had completed the 24-metre Side Road in 2020, it had not provided the 45-metre Front Road to the Developer and that there was existing habitation on that road. The relevant portions of the UPRERA’s order are reproduced hereinbelow:

When the State Government took up the pending first revisional proceedings on 24.12.2020, it took into account the observations of UPRERA and directed NOIDA to reconsider its decision on extending the Zero Period Policy’s benefits to the Developer after a fresh verification of the facts (‘First Revisional Order’). Thus, on the CEO’s directions, the Additional CEO conducted a physical inspection of the site on 01.02.2021 and filed an Inspection Report on 04.03.2021. It is noteworthy that the Inspection Report recorded that the 45-metre Front Road had not been constructed due to acquisition issues and inhabitation of the same. However, regardless of these observations, the Inspection Report recommended against the grant of Zero Period Policy benefit. The relevant portions of the Inspection Report, insofar as they relate to the issue of accessing the Subject Plot via the 45-metre and 24-metre Roads, are extracted hereinbelow for ready reference:

Based on the Inspection Report dated 04.03.2021, NOIDA’s Special Officer (Commercial) passed an order rejecting, for the second time, the grant of Zero Period Policy benefit, under Clause 5, to the Developer. Aggrieved, the Developer filed a fresh revision application, under Section 41(3) of the 1973 Act read with Section 12 of the 1976 Act, before the State Government.

Pending consideration of the second revisional proceedings, another development took place. On 14.06.2022, NOIDA passed an order cancelling the Lease Deed dated 11.01.2012 on the ground that it had defaulted in the payment of the lease rental. Aggrieved, the Developer filed a writ petition before the Allahabad High Court challenging the cancellation order.⁴ By its interim order dated 21.06.2022, the High Court stayed the cancellation order pending the disposal of the second revisional proceedings by the State Government.⁵

On 14.09.2022, State Government passed an order in the second revisional proceedings, partly allowing the Developer’s revision application (‘Second Revisional Order’). The State Government made factual findings that the 45-metre Front Road was blocked on account of encroachment and that such a blockage would result in a modification of the site plan, affecting the project’s commercial viability. The State Government held that the Developer was, thus, entitled to: (i) waiver of penal interest on pending dues; and (ii) a one-year Covid-19-related extension. The State Government further directed NOIDA to issue a revised requisition, within one month, to the Developer. The relevant portions of the Second Revisional Order are reproduced hereinbelow for ready reference:

Following the State Government’s Second Revisional Order, NOIDA, vide a letter dated 19.01.2023, called for a report from the Revenue Department regarding the status of the 45-metre Front Road. In pursuance thereto, the Deputy Collector filed a report on 20.02.2023. In his report, the Deputy Collector noted that the 45-metre Front Road falls in Khasra No. 684 of Village Chhalera Bangar, which is recorded as inhabited land in revenue records and has not been acquired. The Deputy Collector further stated that its purchase/acquisition did not appear feasible without the consent of the landowners. The relevant portion of the Deputy Collector’s report is extracted hereinbelow for ready reference:

In view of the certainty that the 45-metre Front Road would not be made available as the frontage for the building in question, the Developer made an application to NOIDA, on 03.03.2023, seeking modification of the site plan to the extent that 24-metre Side Road be the frontage. NOIDA raised certain technical objections to the application which, we are informed, the Developer cured by 17.05.2023.

In the meanwhile, aggrieved by the partial grant of Zero Period Policy benefit under the Second Revisional Order and on account of NOIDA’s continued inaction despite the Deputy Collector’s report dated 20.02.2023 making it clear that the 45-metre Front Road was encumbered and unavailable, the Developer had no other option except to approach the Allahabad High Court by way of a writ petition.⁶ The High Court passed an interim order dated 10.04.2023 directing NOIDA to sanction the revised plan without insisting on payment of time extension charges. Following the interim directions, the Developer requested NOIDA to approve the revised site plan. However, by its order dated 01.06.2023, NOIDA rejected the revised plan on the ground that objections raised by the Authority remained unanswered. Challenging the said order, the Developer filed yet another writ petition. ⁷

Pending the disposal of the aforementioned writ petition, NOIDA proceeded to issue a Demand Notice dated 23.02.2024 for the payment of the balance amount of ₹100.39 crores towards the principal and premium (without interest). The Developer challenged this order in a fresh writ petition. ⁸

The three pending writ petitions were taken up together and disposed of by the Allahabad High Court by the judgment and final order impugned before us. Impugned Judgment

The High Court took note of the fact that the 45-metre Front Road was encroached. The Court also noted that this fact is not disputed as the official reports themselves indicated that there are encroachments on the said road and that it is not possible to acquire the concerned land. Further, the High Court also noted that the 24-metre Side Road was not completed till February 2020. The accumulative effect of the situation, as it existed, disabled the Developer from having adequate access to the Subject Plot and proceeding with construction activities. The relevant observations of the High Court are extracted hereinbelow:

Rejecting NOIDA’s contention that the 24-metre Side Road was inaccessible because of the Developer’s own fault as the Developer had excavated the said road, the High Court held that the Developer had a legitimate expectation that NOIDA would provide two access roads which it had failed to do. The relevant observations of the High Court are reproduced hereinbelow for ready reference:

Taking the totality of the facts and NOIDA’s Zero Period Policy into consideration, the High Court concluded that the benefit of this policy could not be denied to Respondent No. 1 and issued the following directions:

Challenging the decision and consequent directions of the High Court, NOIDA approached this Court by filing the present appeals. It is necessary to mention that when the appeals were taken up for hearing by this Bench, we suggested that the parties ought to try and resolve the dispute amicably as the project in question has been stalled, for no justifiable reason, for a long time. Unfortunately, the parties could not arrive at any settlement. As such, we now proceed to adjudicate the dispute on merits Submissions of the Parties

We have heard Mr. Atmaram N.S. Nadkarni, learned Senior Advocate for the Appellants, and Mr. Mukul Rohatgi, Mr. Maninder Singh, Mr. Jayant Muth Raj, and Mr. Gaurav Agarwal, learned Senior Advocates for the Respondents.

On behalf of the Appellants, Mr. Nadkarni has submitted that: 27.1. Clause 5 of NOIDA’s Zero Period Policy dated 28.03.2016 ought to be strictly construed and applied only where there is no physical access to the allotted land, thereby making construction or development impossible. The mere absence of a preferred or additional entry, or the incomplete metalling of an otherwise functional road, would not satisfy this requirement. 27.2. The Developer had continuous access to the Subject Plot through the 45-metre Front and 24-metre Side Roads and had, in fact, undertaken substantial construction, including the double basement and upper floors. The possession letter, site plan, satellite images, and inspection report establish the availability of access. The delay in completing the road was partly attributable to the excavation undertaken by the Developer itself and entry-and-exit through the 24-metre Side Road was sufficient for the completion of the project. 27.3. Construction was discontinued because of the Developer’s financial difficulties and defaults, as reflected in its letters seeking rescheduling of instalments and admitting inadequate cash flow. The plea concerning non-availability of an access road was raised for the first time only after the Zero Period Policy was notified and was, therefore, an afterthought intended to avoid obligations under the lease deed. The Developer breached the stipulated five-year construction period and made no payment after the first instalment, leaving substantial amounts outstanding. 27.4. The Zero Period relief granted to AVP Buildtech, a comparator developer, cannot be used as precedent in the current case as access, in that case, was genuinely obstructed by a land dispute and a judicial restraint order. Furthermore, the comparison with the subsequent allotment to Purvanchal Projects too is untenable considering the differences in location, date, pricing, and the ‘as is where is’ terms of that allotment.

On the other hand, on behalf of the Developer, Mr. Rohatgi and Mr. Singh have submitted that: 28.1. The High Court correctly granted the benefit of the Zero Period Policy and directed reconsideration of the revised building plan. The lease deed, site plan, and sanctioned building plan contemplated the 45-metre Front Road as the principal frontage of the Subject Plot, with the 24-metre Side Road merely serving as a side road. The promised 45-metre Front Road was never provided, while the 24-metre Side Road was only completed in February 2020. Successive factual findings of the Tehsildar, UPRERA, NOIDA’s Additional CEO, the State Government, and the Deputy Collector establish that the land required for the 45-metre Front Road was (and continues to be) unacquired ‘Abadi’ land under habitation and encroachment, and that its future acquisition is impracticable without the landowners’ consent. 28.2. The key question is not whether the Subject Plot could physically be reached from one corner but whether the project could be developed in accordance with the sanctioned plan. The unavailability of the contemplated 45-metre Front Road required the building to be reoriented and necessitated changes to its frontage, setbacks, building line, and configuration, besides materially affecting its visibility and commercial viability. A revised plan treating the 24-metre Side Road as the frontage was submitted to NOIDA on 03.03.2023 but was rejected by it on 01.06.2023; it remains unsanctioned till date. Preliminary excavation and basement work do not establish that the sanctioned project as a whole could lawfully or practically be completed. Moreover, NOIDA’s assertion that any upper floors had been constructed is not true. 28.3. Clause 5 of the Zero Period Policy applies squarely because the requisite access contemplated by the allotment and sanctioned plan was unavailable, thereby preventing development. Consequently, the Zero Period benefit should run from the execution of the lease deed on 11.01.2012 until the sanction of the revised building plan, with the intervening instalments shifted in accordance with the Zero Period Policy and without penal interest or additional charges. Further, the Developer’s prior representations did not admit insolvency; they merely spoke to temporary, project-specific hardships. The instant dispute is about the amount legally payable under the Zero Period Policy, not about the Developer’s willingness to pay. 28.4. There is a plausible argument on the principle of parity with respect to AVP Buildtech (which was granted Zero Period Policy benefit) and the subsequent Purvanchal Projects allotment (where both the 45-metre-wide and 24-metre-wide roads were provided, together with more favourable ground-coverage and interest terms). Furthermore, the repeated unsuccessful auctions of other plots having only 24-metre-wide access demonstrates the commercial importance of the missing 45-metre-wide frontage. Analysis

We will first deal with NOIDA’s Zero Period Policy and then proceed to examine whether the material on the record is sufficient to come to a conclusion that there was no access to the Subject Plot in accordance with the originally sanctioned plan, thereby triggering the Zero Period Policy. We will also consider the consequences flowing from NOIDA’s failure to make available the 45-metre Front Road and its persistent refusal to sanction a revised site plan. Zero Period Policy

The key question for consideration before us, with respect to NOIDA’s Zero Period Policy, is not its legality or validity; it is its true understanding and applicability. At the outset, the policy must be understood in the context of the purpose and object behind the Uttar Pradesh Legislature’s enactment of the Uttar Pradesh Industrial Area Development Act, 1976 and the State Government’s subsequent constitution of NOIDA as an authority for the development of industrial infrastructure as well as the creation of urban townships.

The scheme launched by NOIDA in 2011 contemplated the allotment of plots to builders/developers for creating necessary infrastructure and commercial spaces. The present project must be viewed in the context of NOIDA’s larger scheme to create the infrastructure necessary for the development of commercial activities, which, in turn, have the positive effect of employment and wealth generation. It is trite that developing commercial plots, such as the Subject Plot, requires large amounts of financial investment. With the advent of Liberalisation, the policy of enabling private enterprise to participate in nation-building is well-entrenched. If private enterprise is to participate in infrastructure development by undertaking major financial investments, then it is necessary for public authorities, such as NOIDA, to create a conducive environment in which there is security as well as certainty visà-vis the investment that private enterprise risks and undertakes.

Policies such as the Zero Period Policy here are formulated to account for circumstances which are beyond the control of either private enterprise or developmental authorities. The present policy was issued to tide over the serious consequences of paying large rental instalments and accrued interest in a situation where construction activity is stalled due to unforeseen circumstances. The policy was evolved and applied taking into consideration certain realities, coupled with the institutional experience that NOIDA has gained over time.

The purport of Clause 5 of the Zero Period Policy is to grant relief to developers in cases where the possession of the allotted land has already been given to a developer, pursuant to the execution of a lease deed, but due to certain circumstances, the Developer is unable to gain an access road to the allotted plot and, as a consequence, development/construction is not possible. With respect to its interpretation, NOIDA’s stance has been that Clause 5 ought to be construed strictly and literally — given that the Developer could gain some measure of access to the Subject Plot and undertake limited development, NOIDA submits that the benefit of Clause 5 cannot be extended.

Having considered the matter in detail, we are of the opinion that the provisions of a policy, such as the Zero Period Policy, are not to be interpreted like the provisions of a statute. When interpreting the provisions of a policy, it is necessary for courts to consider both a micro and a macro perspective of the matter. A court must consider the purpose and object of the clause being interpreted and, at the same time, ensure that any interpretation reached sub-serves the broader goals and purposes of the policy as a whole. In this perspective, we are of the opinion that Clause 5 of the Zero Period Policy is intended to ensure that a developer has easy, effective, and legitimate access to the allotted plot and is able to proceed with construction. This Clause is not to be interpreted so as to disapply the benefit of the Zero Period Policy in a situation where a developer struggles to gain access to the allotted plot and barely manages to keep construction ongoing. The circumstances in which a developer has to race against time, keeping in mind contractual and financial obligations, are well-known to everyone in the real estate industry.

Therefore, the argument that the Developer could have some access cannot be a ground to exempt NOIDA from its obligation to provide easy, efficient, and legitimate access to the Subject Plot. If adequate access was not provided for reasons attributable to NOIDA, then the benefit of the Zero Period Policy cannot be denied, least of all on the ground that some access was available. Availability of Adequate Access via the 45-metre Front Road to the Subject Plot

We now come to the second, narrower issue of whether NOIDA had provided adequate access, via the 45-metre Front Road, to the Developer vis-à-vis the Subject Plot.

The reality of the facts that have unfolded after the site plan was sanctioned in 2012 is well-established by the official documents that have been brought on record. We have had the opportunity to peruse five key official documents: (i) the Tehsildar’s report dated 14.02.2019, (ii) the order dated 22.10.2020 passed by UPRERA, (iii) the Inspection Report dated 04.03.2021 filed by NOIDA’s Additional CEO, (iv) the Second Revisional Order dated 14.09.2022 passed by the State Government, and (v) the report dated 20.02.2023 filed by the Deputy Collector. The cumulative effect of the aforementioned official documents and reports is clear. There is, therefore, no doubt about the fact that the 45-metre Front Road was not made available to the Developer by NOIDA. NOIDA, as the statutory developmental authority, had the wherewithal to remove the encroachments and open-up the access road for the Developer. However, it has not done so. Consequences of the Unavailability of the 45-metre Front Road and NOIDA’s Refusal to Sanction the Revised Site Plan

In real estate, elevation and frontage are not merely matters of architectural aesthetics; they are important determinants of commercial value and marketability. A building’s elevation creates its first impression while its frontage determines how prominently it presents itself to the street, customers, and the surrounding urban environment. For a developer, clarity about the permissible and proposed elevation and frontage at the planning stage is of considerable importance. A welldesigned façade, adequate frontage, appropriate visibility, and an attractive street presence can significantly enhance the desirability of the property. This is particularly important for commercial developers, where visibility and accessibility directly influence footfall, branding, and business prospects.

Uncertainty or frequent changes in the planning relating to the frontage of a commercial property can affect the viability of the project, investor confidence, and the expectations of purchasers and commercial occupants. It is necessary for developers to treat elevation and frontage as core elements of a planned project and not keep them uncertain. Clear, predictable, and commercially viable parameters provide the foundations of sound investment, effective development, and sustained real estate value generation.

Coming to the facts of the present case, it is the case of the Developer that the non-availability of the 45-metre Front Road has fundamentally affected the sanctioned building plan. The original plan envisaged the 45-metre Front Road as the principal frontage of the Subject Plot. It is now clear that, given the circumstances, the project has to be reconsidered, including aspects as to the location and extent of setbacks, the positioning and orientation of the building, entry-and-exit points, the permissible building configuration, and the treatment of the frontage. By necessary implication, the 24-metre Side Road is now required to be treated as the frontage for any form of redevelopment of the project.

It goes without saying that the change from a 45-metre frontage to a 24-metre frontage has a direct effect on the development potential and commercial attractiveness of the Subject Plot. Moreover, the revised planning requirements that such a change implicates are not capable of being addressed by internal modifications to the site plan — the building’s positionality has to be re-oriented, and the setbacks and other planning parameters have to be suitably modified.

It is for these aforementioned reasons that the Developer has been compelled to request NOIDA to sanction a revised site plan. We are of the opinion that the Developer can neither be expected to proceed with the project in terms of the original site plan nor can it be fastened with any liability for NOIDA’s failure to discharge its obligation to provide the 45- metre Front Road. Consequently, NOIDA’s denial of Zero Period Policy benefit to the Developer and its persistent refusal to sanction the revised site plan so that the project may finally go ahead are unreasonable and untenable in law. Conclusion

In conclusion, given our aforementioned findings on the correct construction of the Zero Period Policy (particularly Clause 5), unavailability of the 45-metre Front Road, and on the consequences flowing from NOIDA’s actions, we are of the opinion that the Impugned Judgment warrants no interference. The Allahabad High Court has not committed any error in allowing the Developer’s writ petitions. Given our conclusion, we need not examine the Developer’s additional pleas or contentions with respect to discrimination or comparison with other similarly situated developers.

In view of the above discussion, we dismiss the Civil Appeals and uphold the judgment and final order of the Allahabad High Court impugned before us.

Before parting with this case, we also record the statement of Mr. Rohatgi, on behalf of the Developer, that the project will be completed within a period of four years from the approval of the revised site plan and that the amounts due will be paid by the Developer in eight instalments. NOIDA will take note of this statement and issue necessary directions for commencement of the project with revised schedules, as already envisaged in paragraph 42 of the Impugned Judgment.

Pending application(s), if any, are disposed of. There shall be no order as to costs. ………………………………....J. [PAMIDIGHANTAM SRI NARASIMHA] ………………………………....J. [ALOK ARADHE] NEW DELHI; SEPTEMBER 8, 2026.