Summary
The Supreme Court held Unitech entitled to refund of Rs 165 crores after the State infrastructure corporation’s inability to convey title defeated a development project. Interest at SBI prime lending rates ran from the respective payment dates, but without contractual annual compounding. Writ relief was justified by the undisputed entitlement and arbitrary retention despite the contractual setting and arbitration clause. TSIIC had to pay, with inter-corporation apportionment left open. Stamp duty, penalty if any, and registration formalities were to be completed and adjusted against the refund.
Issues
- Whether writ relief was available for the undisputed refund claim despite the contractual dispute and arbitration clause.
- From what dates and on what basis interest was payable.
- Whether payment could await apportionment between successor corporations or completion of fiscal formalities.
Provisions considered
- Articles 14 and 226, Constitution of IndiaThe State instrumentality remained bound to act fairly in contractual dealings. The admitted refund entitlement and arbitrary retention justified exercise of writ jurisdiction on these facts. (¶¶ 32-33, 37)
- Sections 53 and 68, Andhra Pradesh Reorganisation Act, 2014The statutory apportionment framework was considered, but final allocation between the corporations was left open while TSIIC was required to refund Unitech. (¶¶ 39-43, 45)
Held
- Contractual subject matter or an arbitration clause does not automatically exclude Article 226. Relief remains discretionary and fact-sensitive; here no evidentiary trial was needed to establish the admitted refund entitlement after failure of the foundational title representation. (¶ 32-37)
- The contract entitled Unitech to interest from the respective payment dates. Its knowledge of pending title litigation did not justify postponing interest until the 2015 demand, but in the circumstances the Court excluded annual compounding and retained the SBI-PLR basis. (¶¶ 34-38, 45)
- TSIIC was directed to pay the refund and interest without awaiting a final apportionment determination. Its rights against APIIC remained open, with no final opinion on the merits of that claim. (¶¶ 39-43, 45)
- The development agreement was impounded for assessment and registration. TSIIC was to pay the assessed stamp duty, penalty if any, and registration charges initially and deduct them from Unitech’s refund; those deficiencies did not defeat the refund claim. (¶ 44-45)
- Deposits in the Supreme Court Registry were to be released to Unitech with accrued interest. TSIIC was to pay the balance within two months of receiving the certified judgment. (¶ 45)
Result
Unitech’s appeal partly allowed; interest restored from the respective payment dates at SBI-PLR without compounding. Refund, fiscal-compliance and adjustment directions issued; apportionment remedies preserved. Other appeals disposed of without costs.