The Bombay High Court (HC) has rejected a penalty demand of INR 22.80 crore by the Brihanmumbai Municipal Corporation (BMC) from the owners of commercial and industrial tenements in Kamla Industrial Park at Charkop, Kandivali.
Justices Gautam Patel and Kamal Khata dismissed the BMC's petition, criticising it for its inactivity and unfair demand for compensation through penalties.
The case began when Kamla Industrial Park Limited (KIPL), a business established by tenement owners, filed a petition. The development of the land was given to the Jitendra Jain-owned Kamla Group, which started construction in 2008.
Despite BMC approving only five levels, the developer built eight floors and sold all 374 tenements in 2010 and 2011. The civic body issued a stop-work notice in 2013 when they realised the construction exceeded the approved levels.
After that, KIPL acquired Metallica's assets through the Corporate Insolvency Resolution Process (CIRP). Later, it was asked by BMC in 2022 to pay a penalty of INR 22.80 crore to regularise the three additional levels.
KIPL agreed to pay other fees but contested the penalty, leading them to approach the high court.
The court supported the tenement owners' argument that the BMC should have pursued the penalty payment before NCLT and that the claim was unworkable after CIRP was completed.
The court said, “One of the most distressing aspects of this case has been the conduct of MCGM (Municipal Corporation of Greater Mumbai) and its officers and how this has gone completely unexplained as if it is perfectly alright for municipal officers to stand by, watch illegalities being committed, do nothing at all to stop that, knowing that those illegalities will definitely affect third-party purchasers, and then to demand large amounts in penalty as if to suggest that payment to MCGM will wash away or efface all the sins of municipal inaction."
Share
Tweet
