JAMMU, Feb 27: In a significant legal victory for the Citizens Cooperative Bank Ltd, Jammu, a Sole Arbitrator has set aside the Jammu Development Authority’s attempt to cancel a long-standing lease for a prime office plot at Railhead Complex, Jammu.
Besides setting aside the cancellation order and effectively restoring the lease rights to the Bank, the Arbitral Award has also imposed costs of Rs 3,91, 288 on JDA, which shall be paid to the CCBL along with 12 percent per annum interest from the date of the Award until realization.
The Arbitrator, Kartar Singh (former District Judge), delivered the Final Award, ruling that the JDA’s cancellation order appeared to be “backdated” and issued in violation of a court-mandated status quo.
The dispute traces back to November 10, 1995, when the JDA executed a lease deed for an 18,900 sq ft plot (measuring 90’x210′) at Railhead Complex in favour of the Citizens Cooperative Bank for an initial period of 40 years.
The bank paid a premium of Rs 43.75 lakhs and committed to constructing its office building within three years. While the bank paid annual ground rent consistently, construction was delayed due to financial constraints and changes in management.
In 2007, the JDA granted building permission after accepting a fee of Rs 7.86 lakhs, and the foundation stone was laid by the then Chief Minister. However, construction halted again, and the bank’s 2011 request for revalidation of the permission remained pending with the JDA for years without a formal rejection.
In June 2020, after nearly 20 years of silence, the JDA issued a notice seeking to cancel the lease for non-construction. The bank argued that it was regularly paying rent (which the JDA accepted through March 2026) and that its revalidation request was still pending.
On February 22, court issued an interim order maintaining the “status quo” on the property. Despite being served this order on February 24, the JDA issued backdated Order No. 19 JDA of 2022, purportedly dated February 22, cancelling the lease.
The Arbitrator highlighted critical discrepancies in the JDA’s timeline and observed that although the cancellation order was dated February 22, postal records showed it was only dispatched on March 11, 2022-15 days after the alleged date of issuance.
The Arbitrator noted that the order appeared to be “backdated” to circumvent the court’s interim stay. Further, by continuing to accept ground rent even after issuing the initial notice, the JDA was found to have waived the right to forfeiture under the Transfer of Property Act, reads the Award.
Ruling that the JDA’s actions were legally untenable, the Arbitrator set aside the cancellation order, effectively restoring the lease rights to the Citizens Cooperative Bank. Court added that, If, as on the date of this Award, the Respondent is in physical possession of the leased property solely by virtue of the impugned cancellation, the Respondent shall restore peaceful physical possession to the Claimant within 30 days from the date of receipt of a signed copy of this Award.
Dismissing the JDA’s counter-claim for 50,00,000 for having failed to establish any contractual or legal basis or proof of pleading reputational loss and obstruction to development, the Final Award ruled that the respondents shall pay costs of Rs 3,91, 288 to the Claimant.
This includes Arbitrator’s fee (Rs 2,59,288), Misc expenses & Transport charges ( Rs 50,000) Administrative charges (Rs 7000) , Counsel’s fee and drafting charges ( Rs 75,000). The Respondents shall further pay interest on costs @ 12% per annum from the date of the Award until realization,” reads the order.
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