Bombay High Court
Registered Office At Building No. ... vs State Of Maharashtra on 19 December, 2011
Bench: S.A. Bobde, V.K. Tahilramani
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 3258 OF 2011
M/s. Shree Ambica Developers ]
A sole proprietory concern of ]
Mr. Madeva Patel, having its ]
Registered Office at Building No. F2, ]
Shop No. 5, Sector - 3 ]
Navi Mumbai 400 706 ] ..Petitioners
versus
1. State of Maharashtra,
ig ]
Through the Urban Development ]
Department, Mantralaya, Mumbai ]
2. Shri Tanaji V. Satre ]
Vice-Chairman & Managing Director, ]
CIDCO Maharashtra Ltd., ]
Having its Head Office at CIDCO Bhavan ]
CBD Belapur, Navi Mumbai 400 614 ]
And having its Registered Office at ]
"NIRMAL", 2nd floor, Nariman Point, ]
Mumbai 400 021 ]
3. CIDCO Maharashtra Ltd. ]
having its Head Office at CIDCO Bhavan, ]
CBD Belapur, Navi Mumbai 400 614 ]
And having its Registered Office at ]
"NIRMAL", 2nd floor, Nariman Point, ]
Mumbai 400 021 ]..Respondents
Mr. J. P. Cama - Sr. Advocate and Mr. Rohan Cama with Mr. Sanjay Udeshi
i/b. M/s. Sanjay Udeshi & Co. for Petitioners.
Mrs. M. P. Thakur, Assistant Government Pleader for Respondent No. 1.
Mr. V. A. Thorat - Sr. Advocate with Mr. G. S. Hegde and Ms. P. M.
Bhansali i/b. G. S. Hegde & Associates for Respondent Nos. 2 and 3.
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2
CORAM : S. A. BOBDE AND
SMT. V. K. TAHILRAMANI, JJ.
Date of Reserving the Judgment : 18.11.2011
Date of Pronouncing the Judgment : 19.12.2011
JUDGMENT : (Per : S. A. Bobde, J.)
1. The petitioners have approached this Court against the order dated
17.3.2011 passed by the Vice Chairman and Managing Director, CIDCO
revoking the permission granted to the petitioners for change of user of Plot
No. 1 in Sector 1, Kharghar from commercial to commercial cum
residential and directing restoration of the user of the plot for commercial
purposes. The only question that arises is whether the respondents - CIDCO
is entitled to cancel the permission granted earlier for change of user of Plot
no. 1 at Kharghar from commercial to commercial cum residential use after
the CIDCO having granted such permission and the petitioners having acted
on it.
2. Respondents - CIDCO allotted plot no.1 to the petitioners for
commercial use in pursuance of a tender in which the petitioners were the
highest bidders. The petitioners were allotted plot after their bid of Rs.
40,00,00,000/- (Rupees Forty Crores) was accepted. The petitioners having
obtained the allotment duly applied for and was granted a change of user of
the plot from commercial use to commercial cum residential use by the
respondents - CIDCO on payment of necessary charges. The petitioners
acted upon allotment and permission for change of user by making
construction upto the plinth level and by entering into agreements to sell
residential flats. The respondents - CIDCO issued a stop work notice to the
petitioners on 14.9.2010. CIDCO issued show cause notice and after
considering reply filed by the petitioners cancelled the permission and
directed restoration of the user for commercial purposes interalia on the
ground that the permission granted earlier was illegal and CIDCO had no
power to grant such permission. The said revocation order has been
challenged by the petitioners.
3. Intending to develop the property, the petitioners on 20.11.2009
applied for plot of land held by CIDCO in pursuance of a tender for
allotment of plots floated by CIDCO in respect of plots at Navi Mumbai.
They invited sealed offers for acquisition of commercial plots on lease
under the General Terms and Conditions prescribed for Disposal of Plots.
The offerers were to make offer in the prescribed form. The said Terms and
Conditions for commercial plots stipulated that the building shall be
constructed for the business, Mercantile / Commercial use only. Clause 17
of the General Terms and Conditions inviting offers however clearly
contemplated that any change in the use of the land shall not be made
automatically but the intending lessee, if he so desires, may apply for the
application to be modified and that the Corporation may at its sole
discretion, apply the modification of such regulation on payment of
development charges, additional premium and other charges as may be
decided from time to time.
4. On 20.11.2009 the petitioners submitted its bid for allotment of plot
No. 1 in Sector 1 admeasuring 5296.92 square meters at the rate of Rs.
75,515.61 per square meter and paid an amount of Rs.1,35,16,000/- by way
of earnest money deposit. The petitioners bid at Rs.40,00,00,000/- was the
highest bid and CIDCO allotted the plot to the petitioners by a Letter of
Allotment dated 15.12.2009. Clause 18 of the Letter of Allotment reads as
follows:
"18. LAND USE :
The plot of land will be used for commercial purpose only and for no
other purpose."
The above clause restricted the user of the land for commercial purpose
only. However clause 20 contained the power to relax and make
modification of various aspects including the change of user of land. Clause
20 provided that the allotment of land would be governed by the General
Development Control Regulation for Navi Mumbai 1975, however,
permitting the Corporation to exercise its own discretion and apply the
modification of such Regulations on payment of certain charges or recovery
of such additional lease premium as may be prescribed. Clause 20 reads as
follows:
"20. Application of General Development Control
Regulations for Navi Mumbai, 1975.
The allotment of land will be governed by the prevailing
provision contained in the General Development Control
Regulation for Navi Mumbai, 1975. Any modification to
the said Regulation and in particular to the Floor Space
Index and change of use of the land shall not be made
automatically applicable but the intending lessee, if he so
desires, may apply for the application of modified
regulation of the General Development Control
Regulation for Navi Mumbai, 1975 to the Corporation.
The Corporation may at its sole discretion, apply the
modification of such regulation on payment of (1)
Development charges (2) Additional premium and (3)
other charges if any as may be decided by the
Corporation from time to time.
Sub-division of plot shall not be permitted."
It may be noted at this stage that the General Development Control
Regulations for Navi Mumbai issued under the Maharashtra Regional and
Town Planning Act 1966 had been amended by the Notification dated
31.8.2009 i.e. before the allotment in the petitioners favour and even before
the tender was floated and the petitioners had made any application.
5. Under the amendment a new clause 16.3 was inserted, which reads as
follows:
"16.3(1a) I change of use :
Corporation may allow change of use on plots allotted
exclusively for Residential use, Residential cum
commercial use or commercial use on the following
conditions:-
a. From Residential use (FSI 1.0) to
Residential cum business / mercantile use or
business or mercantile use wholly (FSI 1.5) subject
to the condition that all such business / mercantile
plots wholly or in combination with residential
shall not exceed the limits specified in clause 16.3
(1a) B of the G D C R.
b. From business or mercantile use (FSI 1.5) to
Residential cum business / mercantile use (FSI 1.5)
and vice versa.
c. To allow such change uses only for plots
having a minimum area of 1000 sq. mt. and
deriving access from road of 15.0 mt. width or
more. Further the corporation may levy additional
less premium for allowing such change of use
and/or grant of additional FSI. With due
consideration of other provisions laid down under
GDCR.
d. After grant of change of use the allottee shall
comply with all provisions of GDCR including the
passing standards without seeking relaxation of any
kind in GDCR provisions.
e. Business / Mercantile use other than
residential use allotted shall not be more than 30%
subject to further condition that the principal land
use should be segregated by separate entrance.
f. Conversion from Residential to Residential
cum business / Mercantile use shall not be
permitted on the lands for educational institutional
and public amenity purpose."
6. Apparently looking to the slump in the real estate industry and a
lower demand for commercial spaces, the petitioners made an application to
the CIDCO for a change of use of the plot from commercial user to
commercial cum residential use citing similar permissions given in the cases
of other plots in other Sectors such as Sector Nos. 2, 4, 11 and 14 at
Kharghar. The CIDCO granted this permission by letter dated 25.2.2010
and issued a letter in respect of the petitioners plot. The letter stated that the
request for change of user of the plot from commercial to commercial cum
residential has been accepted by the Corporation subject to interalia keeping
the commercial component upto 30% and asking for payment of sum of Rs.
10,000/- as administrative charges; which was apparently paid on the same
day.
7. Acting upon the permission of change of user, the petitioners applied
to The Cosmos Co-operative Bank Ltd. Pune for finance. The bank wrote to
the CIDCO stating that the petitioners appear to have paid a sum of Rs.
19,32,420,73.00 towards premium and therefore requested CIDCO for a no
objection to mortgage the said plot in favour of the Bank. The petitioners
also made the same request to CIDCO. In turn, the CIDCO granted no
objection for creation of a mortgage against the property subject to the
condition that the lien of the Cosmos Co-operative Bank will be recorded
with the CIDCO only after receiving the entire payment of lease premium
etc. Cosmos Bank thus sanctioned the credit facilities for the petitioners
project which is estimated at Rs.30,000 lacs for the construction of
residential cum commercial complex at the rate of interest of 16.50%/ per
annum.
8. CIDCO thereupon executed on 12.3.2010 an Agreement to Lease the
plot specifically for residential cum commercial purposes. The recitals and
the clauses of the said Agreement clearly stipulate that the petitioner shall
have a licence to enter the land for the purpose of erecting a building for a
residential purpose except that the ground floor will be permitted to be used
for shopping and for no other purpose. Clause 14 of the Agreement to Lease
stipulated as follows:
"14. LAND USE
The plot of land will be used for commercial cum
residential purpose only and for no other
purpose."
9. On 12.3.2010 the petitioners executed a Possession Receipt for
having received possession of the said plot earmarked for residential cum
commercial purposes.
10. Acting on the licence and having obtained possession, the petitioners
have apparently executed Agreements to sell to several persons for
consideration. We are informed that the total value of the Agreements to
Sale entered into by the petitioner are in the region of :
Total Sale Value Rs.30,14,34,200/-
Received payment Rs.11,50,75,325/-
Balance payment Rs.18,63,57,875/-
Till 10.12.2010
The petitioners have stated that they have entered into agreement to sell
flats in the said premises to about 55 persons and have received amounts as
above.
11. On 15.12.2010 the Vice Chairman and Managing Director of CIDCO
issued a show cause notice stating interalia that the Principal Secretary in
the Urban Development Department of the Government of Maharashtra has
in an enquiry recorded findings about the illegality in the change of user of
the plot and recommended revocation of the change of user and restoration
of the residential use of the plot. The notice further stated that it was
specified in the general terms and conditions of the letter of allotment that
the land will be used only for commercial purpose and for no other purpose;
the petitioners though aware of this have deliberately and intentionally
applied for change of user which was approved by the then Managing
Director and therefore called upon the petitioners as to why permission for
change of user should not be revoked. The petitioners submitted reply
pointing out that they had applied for change of user from commercial to
commercial cum residential purposes even though the rates for commercial
premises in the vicinity were higher than those of residential premises and
that their application had been duly granted; after the grant they had
obtained project finance to the tune of Rs.30 Crores; that the
commencement certificate permitted construction of 100 residential units,
28 commercial and 8 office units; that third party rights had been created by
registered sale agreements and in pursuance of which they have received
part payments in the sum of Rs.11,50,75,325/-. They claimed that they were
not aware of any enquiry report submitted by the Principal Secretary, Urban
Development Department of the State of Maharashtra; in these
circumstances the stop work notice and show cause notice were illegal.
After hearing the petitioners, the respondents passed the impugned order on
17.3.2011.
12.
The said order is mainly based on the fact that the invitation to offer
referred to plot no. 1 Kharghar as a commercial plot; that its use was meant
to be for commercial purposes; the petitioners made an application for
change of user though they were aware that the plot was for a commercial
purpose. The CIDCO was prohibited from granting change of user of this
plot from commercial to commercial cum residential. The permission
granted to the petitioners therefore was without considering the express
terms and conditions of the concluded agreement; the permission was ultra
vires and contrary to public interest. The petitioners submission that they
were protected by the principle of promissory estoppel was rejected on the
ground that there was no valid representation made by the respondents -
CIDCO and that the petitioners ought to have established that the
subordinate officer who made the representation is competent to make a
binding promise on behalf of the public authority or government and the act
of the subordinate officer is ultra vires. The order finally stated that the
agreement to lease itself is vitiated since it is made with a malafide
intention.
13. Mr. Cama, the learned counsel for the petitioners submitted that after
the respondents allotted the plot to the petitioners for commercial purpose,
the petitioners looking to the slump in the market and economic viability of
the project, applied for change of user from commercial to commercial cum
residential purposes in accordance with the general terms and conditions
which specifically permitted such a change of user; that this permission was
duly considered and granted by the appropriate authority of the respondents
- CIDCO i.e. Vice Chairman and Managing Director, that after such change
of user the CIDCO approved the execution of a mortgage of the plot to the
bank on the basis that it is a commercial cum residential plot; agreement to
lease was executed on the basis that the plot was for a residential cum
commercial use and the licence was also for commercial cum residential
purpose. The CIDCO took residential development charges separately for
commercial component and the residential component and granted a
commencement certificate specifically for the work of the proposed
residential cum commercial building. It was submitted on behalf of the
petitioners that apart from spending a sum of Rs.42 Crores on land costs and
duty, the petitioners have spent about Rs.10 Crores in constructing the same
upto the plinth level. They have sold 35 residential units and 20 commercial
units. The petitioners have taken a loan from the Cosmos Bank which is
repayable between April 2011 to March 2012 in monthly installments of Rs.
250 lacs plus interest. In the circumstances the action of the respondents -
CIDCO is highly prejudicial to the petitioners besides being illegal. The
submission on behalf of the petitioners is that the CIDCO permitted the
change of user upon an application made to it under the terms and
conditions of allotment and granted it in exercise of the powers it has for
allowing change of user. According to the petitioners there was nothing
illegal about the change of user. Even otherwise the respondents are not
entitled to the principles of promissory estoppel to revoke such change
especially after the petitioners have acted on the permission, made
construction upto the plinth level and also entered into agreements to sell
residential flats to people. According to the petitioners they are not aware of
any departmental enquiry which may have been conducted by the
government on the basis of which the respondents - CIDCO appear to have
initiated the action.
14. Mr. Thorat, the learned counsel for the respondents - CIDCO
submitted that the petitioners could not have applied for change of user
since general terms specifically stipulate that the plot was for commercial
purpose. The CIDCO as a planning authority under the Maharashtra
Regional and Town Planning Act, 1966 had intended the area to be
developed for commercial purposes only and the Vice Chairman and
Managing Director had no authority to grant change of user from
commercial to commercial cum residential. According to the learned
counsel the grant of permission for change of user is vitiated by the
illegality and malafides which were discovered by the government in a
general enquiry relating to illegalities committed by the CIDCO in granting
change of user in the area and that the petitioners ought not to get any
relief from this court because of illegal permission obtained by them.
According to the learned counsel the permissions have been revoked in
larger public interest and it would be inequitable to hold the public authority
to the promise or representation made by it. In any case the act of the
officers of the respondents are ultra vires and do not bind the CIDCO.
15. Upon hearing the parties, it seems that the main contention raised on
behalf of the CIDCO is that the plot was meant specifically for commercial
purposes and the permission to change the user to commercial cum
residential purpose is illegal; there being no power to do so. This
submission cannot be accepted. On 31.8.2009 the General Development
Control Regulations (GDCR) for Navi Mumbai were specifically amended
in regard to change of user. By notification issued under the Maharashtra
Regional and Town Planning Act a new clause, 16.3 (1a) was introduced as
reproduced in para 5 above. This clause specifically permitted a change in
user. The tender for allotment of the plot was floated in November 2009
after the aforesaid amendment. Thus clause 20 reproduced in para 4 supra
and the new clause 16.3 (1a) reproduced in para 5 above clearly informed
the CIDCO to permit a change of user. We thus find that the CIDCO was in
fact vested with the power to permit change of user and there is no basis for
the reasons stated in the impugned order that no permission for change of
user could have been granted since there was no provision for allowing such
change. The CIDCO as a planning authority was undoubtedly vested with
the power to permit change of user of the land even though the land was
allotted for commercial purposes. The power having been clearly
contemplated by the invitation to offer itself. There is thus no merit in the
contention that the CIDCO officials were prohibited from granting
permission in change of user of the plot and the change was granted in
contravention of the terms and conditions of the concluded agreement. At
this juncture it may be noted that it was argued on behalf of the petitioners
that the petitioners did not gain any financial advantage by having the user
changed from commercial to commercial cum residential user since the rate
at which residential accommodation was being sold in the vicinity was
lower than the rate at which the commercial accommodation was being sold.
There is no material to accept this contention nor is it germane to the point
raised.
16. Equally there is no merit in the contention that the subordinate officer
of CIDCO had no authority to make a representation on its behalf that the
user can be and is being permitted to be changed from commercial to
commercial cum residential. It is not possible to accept the description of
the Vice Chairman and Managing Director of CIDCO as a subordinate
officer and a subordinate officer who was not entitled to make any
representation. We have noted above that the rules permitted such change of
user and the act of converting the change of user cannot be called ultra
vires.
17. Mr. Thorat, the learned counsel for the respondents - CIDCO has
fairly accepted that it is not the case of the CIDCO that the act of permitting
change of user by the Vice Chairman and Managing Director is vitiated by
fraud but that according to the respondents it is only illegal. It is thus not
necessary for us to decide whether in the present case on the principle that
fraud does not bind the Corporation and vitiates everything. According to
Mr. Thorat the earlier permission was granted by the Vice Chairman and
Managing Director who was an IAS Officer and by the Marketing Manager
who signed the documents. According to Mr. Thorat the officers who
granted permission earlier i.e. Vice Chairman and Marketing Manager who
signed the permission misconducted themselves and some action has been
taken against the said officers. We however find that there is no mention of
this in the impugned order and, as we have noted, it is not their case that the
permission is vitiated by fraud.
18. We are thus of the view that it is not permissible for CIDCO on the
principle of promissory estoppel to revoke the permission either on the
ground of public interest which is not shown to have been attracted having
regard to various actions which the petitioners have taken on the basis of the
representation and the considerable investment and indebtedness which they
have incurred. The said actions are referred to earlier and there is no dispute
on behalf of the CIDCO that the petitioners have in fact made the aforesaid
investments and taken the aforesaid loans.
19. It was at this stage urged on behalf of CIDCO by Mr. Hegde that no
prejudice can be said to be caused by the CIDCO merely because
permission to the change of user has been revoked when the allotment itself
has not been cancelled. According to the learned counsel the construction
has only reached the plinth level and no prejudice would be caused to the
petitioners. It is not possible to accept this contention particularly since the
aforesaid investments etc. made by the petitioners have not been effectively
controverted by CIDCO. Moreover a similar argument has been rejected by
a Division Bench of this Court in an earlier case considered in Popcorn
Entertainment Corporation & Anr. vs. The City Industrial
Development Corporation [2009(6) ALL MR 133] where it was observed
as follows:
"31. But there is one distinguishing factor on which
CIDCO has laid stress. In Banthia's case (supra)
considerable construction was made on the allotted plots
and, therefore, the Supreme Court observed that having
acted and held out assurances to the appellants, which
caused the appellants to alter their position to their
prejudice, it was not open to CIDCO to take a unilateral
decision to cancel the allotment on the ground that it had
acted without jurisdiction. On behalf of CIDCO, it is
argued that since the petitioners have not made any
construction on the said lands, it cannot be said that they
have altered their position to their prejudice on account
of assurances held out by CIDCO.
32. We are unable to accept this submission. Though it
is true that the petitioners have not made any construction
on the said lands, it is their case that they have expended
large sums on preparation of building plans by engaging
architects. Moreover, the entire lease premium is paid by
them in the year 1986 and the money is lying with
CIDCO since then. In such a situation, it is not possible
to say that there is no prejudice caused to the petitioners.
Therefore, in our opinion, judgment in Banthia's case
(supra) is squarely applicable to the present case. The
impugned order cancelling allotment orders will have to
be, therefore, set aside."
20. Mr. Thorat, the learned counsel appearing for the respondents -
CIDCO submitted that the CIDCO as a planning authority is empowered to
revoke and modify the permission for development granted to a citizen in
exercise of powers under section 51(b) of the Maharashtra Regional and
Town Planning Act, 1966 which reads as follows:
"51. Power of revocation and modification of
permission to development.- (1) If it appears to a
Planning Authority that it is expedient, having regard to
the Development plan prepared or under preparation
that any permission to develop land granted [or deemed
to be granted] under this Act or any other law, should be
revoked or modified, the Planning Authority may, after
giving the person concerned an opportunity of being
heard against such revocation or modification, by order,
revoke or modify the permission to such extent as
appears to it to be necessary.
Provided that -
(a) where the ............
(b) where the development relates to a change of
use of land, no such order shall be passed at any
time after change has taken place."
The power conferred by section 51, in terms can, be exercised if the
planning authority is of the opinion that the permission must be revoked or
modified having regard to a development plan. No such ground is stated by
the respondents in the impugned order to the effect that the change of user
was permitted contrary to the development plan. Hence this contention is
rejected.
21. In Sunil Pannalal Banthia & Ors. vs. City & Industrial
Development Corporation of Maharashtra ltd. & Anr. [(2007)10 SCC
674)] illegality and propriety of an order of CIDCO terminating the
agreement to lease and demanding return of possession of the allotted plot
after the lessee had considerably altered its position, came for consideration.
After allotment of the land and the appellant having commenced
construction work and proceeded upto the first floor, the CIDCO had issued
a show cause notice as to why the agreement to lease could not be
terminated as being void under section 23 of the Contract Act. The CIDCO
had apparently taken the view that it had earlier acted arbitrarily and in
contravention of its own rules by making the allotment. The Supreme Court
found that CIDCO was fully entitled to dispose of the plot of land by
considering individual applications and it was not entitled to contend that
the allotment made to it was void on account of the fact that no public
auction had been held in connection with such allotment. On questioning of
the stand by the CIDCO that its earlier action was opposed to public policy,
the Supreme Court observed as follows:
"On the question of the allotment being opposed to
public policy, we failed to see how CIDCO can raise
such an issue. On the other hand, the stand taken by
CIDCO is, in our view, opposed to public policy since
CIDCO was not entitled to take a unilateral decision to
cancel the allotment after the appellants had acted on
the basis thereof and had expended large sums of money
towards the construction which was progressed to some
extent. The Regulations allowed CIDCO to entertain
individual applications for allotment, as has been done in
the instant case. Merely by indicating that the law
declared by this Court was universally binding under
Article 141 of the Constitution, it could not contend that
such allotment was contrary to public policy on a fresh
consideration made by the Board of Directors of the
Corporation upon considering the recommendations
made by Dr. D. K. Shankaran, the then Addl. Secretary
(Planning) of the State of Maharashtra.
We find that in the present case the stand of the CIDCO that its earlier
action was illegal is not tenable, since there was a provision for permitting
change of user and that CIDCO is not entitled to invoke public interest
particularly after the petitioners had invested large sum of monies in the
project. The contention of Mr. Thorat that Banthia's case (supra) is
distinguishable because the lease itself was sought to be terminated by
CIDCO and here only the permission to change the user is being revoked, is
not acceptable. We are of the view that the ratio in Banthia's case applies to
the present case.
22. In this view of the matter, the petition must succeed. The impugned
order dated 17.3.2011 is liable to be set aside and is accordingly quashed
and set aside.
23. At this stage learned counsel for the respondent nos. 1 and 2 prays for
stay of this judgment. We see no reason to grant the prayer. Prayer for stay
is rejected.
(S. A. BOBDE, J.)
(SMT. V. K. TAHILRAMANI, J.)
