No Leasehold Rights in SEZ Land After LOA Expiry | NCLT
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Case Details: Venka Reddy Bathina vs. Metropolitan Commissioner - [2026] 186 taxmann.com 128 (NCLT-Hyd.)
Judiciary and Counsel Details
- Rajeev Bhardwaj, Judicial Member & Sanjay Puri, Technical Member
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M. Maharshi Viswaraj, Ld. Adv. for the Applicant.
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A. Sudharshan Reddy & G. Sumathi, Ld. Advs. for the Respondent.
Facts of the Case
In the instant case, the corporate Debtor had obtained a lease of land situated at Plot No. 9 from the respondent-development authority for a period of 33 years. In the meantime, vide order dated 20.12.2023, the NCLT ordered the liquidation of the Corporate Debtor and appointed a Liquidator.
In this regard, the record indicated that a show-cause notice dated 19.08.2024 was issued by the Office of the Development Commissioner, Ministry of Commerce and Industry, Government of India, calling upon the Corporate Debtor to explain why the Letter of Approval (LOA) should not be cancelled for failure to seek extension of its validity, which had expired on 09.05.2011.
The Cancellation order demonstrated that Corporate Debtor neither commenced operations nor sought extension of LOA, and no reply was submitted to the show-cause notice. Pursuant thereto, the competent authority, vide communication dated 30.09.2024, cancelled the Letter of Approval granted to the Corporate Debtor in terms of Section 16(1) of the Special Economic Zones Act, 2005.
It was noted that, since the Letter of Approval expired on 09.05.2011, the leasehold rights of the Corporate Debtor were extinguished upon such expiry, and the subsequent cancellation merely affirms that position.
NCLT Held
The NCLT held that in the absence of a valid Letter of Approval, the very purpose of allotment stood frustrated. Consequently, no subsisting or enforceable right over the subject property could be recognised in favour of the Corporate Debtor. Accordingly, the relief sought by the Applicant, seeking a declaration of continuing leasehold rights, was devoid of merit and could not be granted.
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