This case originates from the High Court of Judicature at Allahabad (Lucknow Bench). The High Court deemed the construction of an underground shopping complex in a historically significant park illegal ...
No Acts & Articles mentioned in this case
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PETITIONER:
M.I. BUILDERS PVT. LTD.
Vs.
RESPONDENT:
RADHEY SHYAM SAHU AND OTHERS
DATE OF JUDGMENT: 26/07/1999
BENCH:
S.B.Majmudar, D.P.Wadhwa
JUDGMENT:
D.P. Wadhwa, J.
These appeals are directed against the judgment dated
August 23, 1994 of a Division Bench of the High Court of
Judicature at Allahabad, (Lucknow Bench). By a common
judgment in three writ petitions, High Court speaking
through Shobha Dixit, J. held that the decision of the
Lucknow Nagar Mahapalika ('Mahapalika' for short), also now
called Nagar Nigam or Corporation, permitting M.I. Builders
Pvt. Ltd. (the appellant herein) to construct underground
shopping complex in the Jhandewala Park (also known as
Aminuddaula Park) situated at Aminabad Market, Lucknow, was
illegal, arbitrary and unconstitutional. High Court set
aside and quashed the relevant resolutions of the Mahapalika
permitting such construction and also the agreement dated
November 4, 1993 entered into between the Mahapalika and the
appellant for the purpose. Writ of mandamus was issued to
the Mahapalika to restore back the park in its original
position within a period of three months from the date of
the judgment and till that was done, to take adequate safety
measures and to provide necessary safeguard and protection
to the public, users of the park. High Court had noticed
that the fact that the park was of historical importance was
not denied by the Mahapalika and also the fact that
perseverance or maintenance of the park was necessary from
the environmental angle and that the only reason advanced by
the Mahapalika for construction of the underground
commercial complex was to ease the congestion in area. High
Court, however, took judicial notice of the conditions
prevailing at the Aminabad market. It said it was so
crowded that it was bursting from all its seams.
Construction of the underground shopping complex in question
would only complicate the situation and that the present
scheme would further congest the area. It said that the
public purpose, which is alleged to be served by
construction of the underground commercial complex, seemed
totally illusory.
Aggrieved by the impugned judgment of the High Court,
appellant has come to this Court. Mahapalika also felt
aggrieved and filed appeals (Civil Appeal Nos. 9326-28 of
1994) but these appeals by the Mahapalika were subsequently
allowed to be withdrawn by order dated February 6, 1997.
There is controversy as to how the Mahapalika which had
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earlier justified its action later turned round and sought
to withdraw the appeals. The order allowing withdrawal of
the appeals by the Mahapalika is as under: -
"I.A. Nos. 10 TO 12 IN
CIVIL APPEAL NOS. 9326-28 OF 1994
Nagar Mahapalika Appellants
Versus
Radhey Shyam Sahu & others Respondents
O R D E R
Taken on board.
The learned counsel for the appellant seeks leave to
withdraw the appeals and states that Mr. S.V. Deshpande
who appears for the other side has no objection to the
withdrawal. The appeals will, therefore, stand disposed of
as withdrawn with no order as to costs.
Sd/- .......CJI
New Delhi, Sd/- February 6, 1997 ......,J."
Mahapalika also cancelled the building plans. This
action of the Mahapalika was subject matter of criticism by
the appellant as to how a duly sanctioned plan could be
revoked without any notice to the appellant. We may, at
this stage, itself reproduce the relevant portion of the
resolution dated August 6, 1996 of the Mahapalika for
withdrawal of its appeals which is as under:-
"The Lucknow Bench of Hon'ble High Court of Allahabad
has declared the agreement dated 4.11.1993 executed between
the Nagar Mahapalika, Lucknow and M.I. Builders, Karamat
Market Lucknow in respect of construction of underground
Palika Bazar and Multistoreyal parking on Jhandewala Park
Aminabad, Lucknow as invalid and not in the public interest
vide their judgment dated 23.8.1994.
The Hon'ble High Court rendered the above said
Judgment by accepting the writ petitions preferred by
several elected sabhasad of the then Nagar Mahapalika and
the citizens.
On the directions of the then Nagar Pramukh Shri
Akhilesh Das, who wanted to cause undue profit to M.I.
Builders against the interest of Nagar Mahapalika now Nagar
Nigam Lucknow, the citizens of Lucknow, the Nagar Nigam
Lucknow filed Special Leave Petition No. 17223-25 of 1994
in the Hon'ble Supreme Court against the Judgment of the
Hon'ble High Court.
It is proposed that in the interest of the citizen of
Lucknow and the Lucknow Nagar Nigam and pending Special
Leave Petition No. 17223-25 of 1994 in the Hon'ble Supreme
Court be withdrawn and the Nagar Nigam Lucknow be further
directed to oppose the Special Leave Petition filed by M/s.
M.I. Builders in the Hon'ble Supreme Court against the
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Judgment dated 23.8.1994 of Lucknow Bench of Hon'ble High
Court of Allahabad.
Unanimously decided that the aforesaid resolution be
passed and accordingly the action may be taken."
The letter revoking the sanctioned building plans is
dated April 17, 1997 and is as under:-
"To
M/s M.I. Builders (P) Ltd. Karamat Market,
Nishatganj, Lucknow
Sir,
Vide this office letter No. 223/Sa.Sa.A./95 dtd.
23.1.1995 the building plans for construction of underground
shopping and parking complex at Jhandewala Park, Ameenabad
were sanctioned.
After taking legal advice by the Hon'ble Nagar Pramukh
from the standing counsel of the Nagar Nigam and Add.
Advocate General the earlier sanctioned building plans has
been revoked vide order dated 17.4.97. As such these have
no legal sanctity.
Please be informed.
Yours faithfully, Sd/- S.K. Gupta Mukhya Nagar
Adhikari 17.4.97 Copy to: The Vice Chairman, Lucknow
Development Authority, for information.
Sd/- S.K. Gupta Mukhya Nagar Adhikari"
There were three writ petitions before the High Court
and during the course of hearing of those petitions High
Court had directed maintenance of status quo. At that time,
it would appear only digging in some part of the park had
been done and there was no construction. When the matter
came before this Court, by order dated December 14, 1994 the
Court passed the following order:-
"Exemption from filing official translation is
allowed.
Liberty to add the omitted parties in the cause title.
Leave granted.
We have heard counsel on the question of grant of
interim relief.
Printing dispensed with.
The operation of the impugned order of the High Court
is stayed on the following conditions:
Taking all the facts and circumstances into
consideration and having regard to the fact that it may not
be possible for this Court to hear the appeal within a short
time having regard to the pressure of work and pendency of
old cases, we direct that the appellant shall be permitted
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to construct an under ground shopping complex by raising its
own funds without collecting any additional funds from
individuals or concerns to whom the promise of allotment of
shop is made. To clarify the matter, we say that the funds
can be raised from agencies other than those to whom the
shops are ultimately allotted. It will be made clear to the
agencies from whom the funds are raised that they will not
be entitled to allotment of shops. The appellant will
maintain accounts and file an undertaking to the above
effect in this Court within two weeks from today. In
addition the undertaking will contain a statement to the
effect that in the event the appeals fail, the appellant
will not raise questions as to equity or the ground on its
having invested a huge amount and will be totally amenable
to such directions and orders that this Court may make in
regard to the maintenance or otherwise of the shopping
complex. In other words, if the Court directs removal of
the shopping complex in the event of failure of the appeals,
the shopping complex will have to be removed at the
appellant's cost without claiming anything in return. The
construction will be so carried out that the open space will
remain available for the public and the entire complex will
be so constructed that it will be an underground one except
for the ingress and egress portions to the complex. The
total area to be constructed on the surface of the plot
shall not exceed 10% of the plot.
SLP (C) Nos. 17223-25/94
Exemption from filing official translation is allowed.
Leave granted.
Tag on with appeals arising from S.L.P. (C) Nos.
16907-09 of 1994 in which interim orders have already been
made."
It is contended by the appellant that after the
aforesaid interim order, it got necessary building plans
sanctioned by the Mahapalika and started construction.
Respondents, however, filed an application complaining that
construction was in violation of the building plans and was
also against the provisions of the U.P. Urban Planning and
Development Act, 1973 (for short, the 'Development Act').
To ascertain the nature of construction being carried out at
that time this Court appointed a Local Commissioner. These
applications were then disposed of by passing the following
order:-
"I.A. Nos. 10-12
The Commissioner, Mr. Justice Loomba, a retired Judge
of the High Court of Allahabad, has pursuant to this Court's
order, submitted his Report dated February 15, 1996. In
paragraph 3 of the Report he identifies the points on which
the Report was required and then proceeds to indicate the
actual physical condition in regard to the construction of
the market and states that the entire market is being
constructed underground and not above the ground and that
the total area on the surface of the market for the ingress
and egress (with Chabutras) and light purposes etc. does
not exceed 10 per cent of the plot and is about 9.74 per
cent of the area in which the market is being constructed.
He, however, notes that the level of the park at the
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periphery appears to be higher than the estimated average
level of the original park by about 3.21 feet = 3 feet 2.5
inches as worked out on the basis of available old signs and
that the same does not appear to be in any manner offensive
and is of no consequence. He also points out that the park
made on the market area is and will be available for the
public in the form of park less the structures made on the
surface, which as pointed out above; does not exceed the
permissible limit of 10 per cent of the total plot area. He
also states that the Chabutras constructed on the back of
the structures will also be available to the public and may
serve as benches in the park. In view of this Report which
precisely indicates the actual physical condition existing
on the date of the Report and the plan appended thereto
which shows beyond any manner of doubt that the entire
construction is underground, the total surface area does not
exceed the permissible limit of 10 per cent and the raising
of the height on the periphery is of no consequence because
it does not in any manner affect the surface area. We,
therefore, accept the Report of the learned Judge and see no
merit in these I.As."
The Court, however, did not go into other issues
raised in the applications. By a subsequent order dated May
7, 1997 the Court stopped further construction.
Before we consider the details of the case we may note
in brief the contentions of the parties.
Petitioners (now the respondents) in the writ
petitions submitted that the park was not only of great
historical significance but its maintenance was necessary
from the environmental point of view as mandated by law.
Admittedly, the park is the only open space in the Aminabad
market, which is an over-crowded commercial and residential
area of the city. Possession of the park was handed over to
the appellant (M.I. Builders) in violation of the
provisions of law to construct an underground shopping
complex and underground parking with the ostensible purpose
of decongesting the area. It is not that the encroachers
would be removed from the area as the underground shops were
not allotted to any one of them. They would nevertheless
remain at the places occupied by them. Challenge to the
action of Mahapalika in allowing construction was on the
grounds: -
1. It was against the public purpose to construct an
underground market in the garb of the decongesting area of
the encroachers to destroy a park of historical importance
and of environmental necessity. It would be in breach of
Articles 21, 49, 51-A(g) of the Constitution as the existing
park which is the only open space in the busiest commercial
area in the heart of the city of Lucknow can be destroyed
and the citizens particularly the residents of the area
would be deprived of the quality of life to which they are
entitled under the law and to maintain ecology of the area.
2. It is in violation of the statutory provisions as
contained in the U.P. Nagar Mahapalika Adhiniyam, 1959 (now
called Uttar Pradesh Municipal Corporation Adhiniyam, 1959 -
by Amending Act 12 of 1994) (for short the Act), U.P.
Regulation of Buildings Operations Act, 1958 (for short the
'Building Act'), Uttar Pradesh Urban Planning and
Development Act, 1973 (for short the 'Development Act') and
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also Uttar Pradesh Parks, Playgrounds and Open Spaces
(Preservation and Regulation) Act, 1975 (for short the
'Parks Act').
3. No tenders were invited by the Mahapalika before
entering into the agreement with the builder. This was
against the established procedure and thus it acted
arbitrarily in the matter of disposing and dealing with its
immovable property which was of immense value. The
agreement is wholly one sided and gives undue advantage to
the builder at the cost of the Mahapalika.
4. The agreement between Mahapalika and the builder
smacks of arbitrariness, is unfair and gives undue favour to
the builder and this was done with mala fide motives of
personal gain by the authorities of the Mahapalika
particularly the Mukhya Nagar Adhikari (Chief Executive
Officer) and the Adhyaksh (the Mayor).
5. The resolution of the Mahapalika by which it has
agreed to enter into the agreement with the builder was
against the provisions of the Act which were mandatory.
6. The whole action of the Mahapalika was against
public interest. Lucknow Development Authority (for short
LDA) which was constituted under the Development Act and was
responsible for development in the area which would mean
construction of the underground shopping complex and
underground parking lot was side-lined and no sanction was
obtained from the Vice Chairman in accordance with the
provisions of the Development Act.
The builder as well as the Mahapalika filed their
respective counter affidavits in the High Court opposing the
writ petitions. No counter affidavit was filed either by
the State or by LDA though they were parties in the writ
petitions. Chief Executive Officer and the Mayor were
impleaded by name as respondents in the writ petitions and
allegations of mala fides and favourtism made against them
but none of them choose to file any counter affidavit
controverting those allegations. In the High Court a very
strange scenario emerged and that was that though the stand
of Mahapalika and LDA as spelled out from documents was at
variation with each other, yet both were represented by one
counsel. Builder was represented by the Advocate General of
the State while State was represented by its standing
counsel. Before us though Mahapalika earlier supported the
builder as noted above and also filed appeals against the
impugned judgment but subsequently it reversed its stand,
withdrew its appeals and filed an affidavit supporting the
impugned judgment of the High Court. The State Government
and the LDA also filed their affidavits supporting the
judgment of the High Court with full vigour though as seen
earlier before the High Court they were just mute
spectators. We may also note that in reply to the
applications IA Nos. 10 and 11 in this Court the Mahapalika
lent its support to the builder. This action of the
Mahapalika changing its stand midstream was subjected to
severe criticism by the appellant and it was stated that
there was estoppel by deed in the case and Mahapalika could
not go back on its earlier stand.
The impugned judgment has been challenged by the
builder on the following grounds: -
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a) There was no disposal of the property by Mahapalika
in favour of the builder and therefore provisions of Section
128 of the Act were inapplicable. Even assuming it was so,
provisions of Sections 129 and 132 of the Act stood
complied.
b) There was no arbitrariness or unreasonableness
vitiating the agreement between Mahapalika and the builder
particularly in view of the express finding of the High
Court that there was no lack of bona fides and that it was
not disputed that the builder was competent to execute the
job. This was having regard to special features of the
construction and further on account of the fact that no
party had come forward at any time to execute the project.
In such a situation omission to invite tenders would not
vitiate the agreement particularly when the proposal for
construction of the project by the builder was widely known.
c) In view of its stand before the High Court and in
the Special Leave Petition of the builder and its own
appeals filed in this Court it is not open to Mahapalika to
advance any contention or take a stand contrary to what had
been taken earlier.
d) High Court exceeded its jurisdiction as it did not
apply correct parameters of its power of judicial review as
laid by this Court in Tata Cellular vs. Union of India
(1994 (6) SCC 651) and other cases and the High Court went
wrong in going into the question of expediency and wisdom of
the proposed project.
e) Mahapalika could not revoke the building plan
without notice to the builder and without hearing it in the
matter.
This last submission we need not go into the question
if cancellation of the sanctioned building plans by the
Mahapalika was valid as that was not the issue before the
High Court.
Mahapalika is a body corporate constituted under the
Act. The Act provides for various functions of the
Mahapalika and how these are to be performed. Its various
authorities are described in Section 5 which is as under: -
"5. Corporation Authorities.- The Corporation
authorities charged with carrying out the provisions of this
Act for each city shall be -
(a) the Corporation; (aa) the Ward Committees; (b)
an Executive Committee of the Corporation; (bb) the Nagar
Pramukh; (c) a Development Committee of the Corporation;
(d) A Mukhya Nagar Adhikari and an Apar Mukhya Nagar
Adhikari appointed for the Corporation under this Act; and
(e) in the event of the corporation establishing or
acquiring electricity supply or public transport undertaking
or other public utility services, such other committee or
committees of the Corporation as the Corporation may with
the previous sanction of the State Government establish with
respect thereto."
Chapter II provides for constitution of various
committees and Chapter III for proceedings of the
Mahapalika, Executive Committee, Development Committee and
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other Committees. In view of the applicability of the
Development Act, 1973, the Executive Committee of Mahapalika
has ceased to be in operation to that extent. Under Section
91 falling in this Chapter, a list of the business to be
transacted at every meeting except an adjourned meeting,
shall be sent to each member of the Mahapalika or of other
Committees at least ninety-six hours in the case of a
meeting of the Corporation before the date fixed for the
meeting and seventy two hours in the case of a meeting of
any such Committee and "no business, except as provided in
sub- section (2), shall be brought or transacted at any
meeting other than a business of which notice has been
given". Sub-section (2) is as under: -
"(2) Any member of the Corporation or of a Committee
referred to in sub- section (1), as the case may be, may
send or deliver to the Mukhya Nagar Adhikari notice of any
resolution with a copy thereof proposed to be moved by him
at any meeting of which notice has been sent under
sub-section (1). The notice shall be sent or delivered at
least forty-eight hours in the case of a meeting of the
Corporation and twenty four hours in the case of a meeting
of any committee before the date fixed for the meeting and
thereupon the Mukhya Nagar Adhikari shall with all possible
despatch cause to be circulated such resolution to every
member in such manner as he may think fit. Any resolution
so circulated may, unless the meeting otherwise decides, be
considered and disposed of thereat."
Under Section 95 of the Act, the Mahapalika may from
time to time by special resolution constitute a special
committee to enquire into and report upon any matter
connected with its powers, duties or functions. Every such
special committee shall conform to any instruction that may
be given to it by the Mahapalika. The report of the special
committee shall, as soon as may be practicable, be laid
before the Mahapalika which may thereupon take such action
as it thinks fit or may refer back the matter to the special
committee for such further investigation and report as it
may direct. Section 97 provides for constitution of
sub-committees by the Executive Committee or any committee
appointed under clause (e) of Section 5 and any such sub-
committee shall possess such powers and perform such duties
and functions as the committee appointing it may from time
to time delegate or confer. Section 105 of the Act provides
that no act done or proceeding taken under this Act shall be
called in question in any court on the ground merely of any
defect or irregularity in procedure not affecting the
substance. Under Section 119 of the Act falling under
Chapter V which prescribes duties and powers of the
Mahapalika and its authorities, there is provision for
delegation of functions which we reproduce, in relevant
part, as under: -
"119. Delegation of functions, - (1) Subject to the
other provisions of this Act and the rules thereunder and
subject to such conditions and restrictions as may be
specified by the Corporation -
(a) the Corporation may delegate to the Executive
Committee or to the Mukhya Nagar Adhikari any of its
functions under this Act other than those specified in Part
A of Schedule I."
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It is not necessary to refer to Part A of Schedule I
mentioned in Section 119 as none of the functions of
Corporation on which there is prohibition has been
delegated. Under Section 119, reproduced above, delegation
can only be to the Executive Committee or to the Mukhya
Nagar Adhikari and to no other person or authority or
Committee. Sections 421, 422 and 423 of the Act were
referred to contend that it is only for the Mahapalika
itself to establish private markets. These sections fall in
Chapter XVI dealing with regulation of markets,
slaughter-houses, certain trades and acts, etc.
Chapter VI of the Act deals with property and
contracts. Under Section 125 falling in this Chapter,
Mahapalika has power to acquire, hold and dispose of
property or any interest therein whether within or without
the limits of the city. Under sub-section (3) of Section
125 any immovable property which may be transferred to the
Corporation by the Government shall be held by it, subject
to such conditions including resumption by the Government on
the occurrence of a specified contingency and shall apply to
such purpose as the Government may impose or specify while
making the transfer. Section 128 deals with power of the
Mahapalika to dispose of the property. As to what are the
provisions governing disposal of property these are
mentioned in Section 129. Sections 128 and 129, in relevant
part, are as under: -
"128. Power to dispose of property. - (1) The
Corporation shall, for the purpose of this Act, and subject
to the provisions thereof and rules made thereunder, have
power to sell, let on hire, lease, exchange, mortgage, grant
or otherwise dispose of any property or any interest therein
acquired by or vested in the Corporation under this Act.
Provided that no property transferred to the
Corporation by the Government shall be sold, let on hire,
exchange or mortgaged or otherwise conveyed in any manner
contrary to the terms of the transfer except with the prior
sanction of the State Government.
129. Provision governing disposal of property. -
With respect to the disposal of property belonging to the
Corporation the following provisions shall have effect,
namely:
(1) Every disposal of property belonging to the
Corporation shall be made by the Mukhya Nagar Adhikari on
behalf of the Corporation.
(2) XXX XXX XXX
(3) The Mukhya Nagar Adhikari may with the sanction of
the Executive Committee dispose of by sale, letting out on
hire or otherwise any movable property belonging to the
Corporation, of which the value does not exceed five
thousand rupees; and may with the like sanction grant a
lease of any immovable property belonging to the
Corporation, including any such right as aforesaid, for any
period exceeding one year or sell or grant a lease in
perpetuity of any immovable property belonging to the
Corporation the value of premium whereof does not exceed
fifty thousand rupees or the annual rental whereof does not
exceed three thousand rupees.
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(4) the Mukhya Nagar Adhikari may with the sanction of
the Corporation lease, sell, let out on hire or otherwise
convey any property, movable or immovable, belonging to the
Corporation.
(5) xxx xxx xxx
(6) the sanction of the Executive Committee or of the
Corporation under sub-section (3) or sub-section (4) may be
given either generally or any in class of cases or specially
in any particular case.
(7) the aforesaid provisions of this section and the
provisions of the rules shall apply to every disposal of
property belonging to the Corporation made under or for any
purposes of this Act."
Sections 131, 132 (in relevant part) and 133 prescribe
the manner of execution of Contract and these are as under:
-
"131. Powers of Corporation to the making of
contracts. Subject to the provisions of this Act, the
Corporation shall have power to enter into contracts which
may be necessary or expedient under or for any purposes of
this Act.
"132. Certain provisions relating to the execution of
the contracts. (1) All contracts referred to in Section
131 including contracts relating to the acquisition and
disposal of immovable property or any interest therein made
in connection with the affairs of the Corporation under this
Act, shall be expressed to be made, for and on behalf of the
Corporation, and all such contracts and all assurances of
property made in exercise of that power shall be executed,
for and on behalf of the Corporation, by the Mukhya Nagar
Adhikari or by such other officer of the Corporation as may
be authorised in writing by the Mukhya Nagar Adhikari either
generally or for any particular case or class of cases.
(2) ............
(3) ............
(4) No contract involving an expenditure exceeding
five lakh rupees shall be made by Mukhya Nagar Adhikari
unless it has been sanctioned by the Corporation."
"133. Manner of execution. - (1) Every contract
entered into by the Mukhya Nagar Adhikari on behalf of the
Corporation shall be entered into in such manner and form as
would bind him if it were made on his own behalf and may in
like manner and form be varied or discharged :
Provided that : -
(a) the common seal of the Corporation shall be
affixed to every contract which, if made between private
persons, would require to be under seal, and
(b) every contract for the execution of any work or
the supply of any materials or goods which will involve an
expenditure exceeding two thousand and five hundred rupees
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shall be in writing, shall be sealed with the seal of the
Corporation and shall specify-
(i) the work to be done or the materials or goods to
be supplied as the case may be;
(ii) the price to be paid for such work, materials or
goods; and
(iii)the time or times within which the contract or
specified portion thereof shall be carried out.
(2) The common seal of the Corporation shall remain in
the custody of the Mukhya Nagar Adhikari and shall not be
affixed to any contract or other instrument except in the
presence of a Sabhasad, who shall attach his signature to
the contract or instrument in token that the same was sealed
in his presence.
(3) The signature of the said Sabhasad shall be
distinct from the signature of any witness to the execution
of such contract or instrument.
(4) No contract executed otherwise than as provided in
the section shall be binding on the Corporation."
Relevant part of Section 136 on which some arguments
addressed, is reproduced hereunder: -
"136. Estimates exceeding rupees fifty thousand - (1)
Where a project is framed for the execution of any work or
series of works the entire estimated cost of which exceeds
fifty thousand rupees-
(a) the Mukhya Nagar Adhikari shall cause a detailed
report to be prepared including such estimates and drawings
as may be requisite and forward the same to the Executive
Committee who shall submit the same before the Mahapalika
with its suggestions, if any;
(b) the Mahapalika shall consider the report and the
suggestions and may reject the project or may approve it
either in its entirety or subject to modifications."
(By the amending Act 12 of 1994 w.e.f. 30.5.1994 the
amounts in sub-sections (1) and (2) of Section 136 are now
respectively 5 lakhs and 10 lakhs of rupees.)
Part IX of the Constitution was inserted by the
Constitution (74th) Amendment Act, 1992. Article 243W under
this part prescribes the powers, authorities and
responsibilities of Municipalities etc. It provides, in
relevant part, that the legislature of a State may, by law,
endow the Committee or the Municipality such powers and
authority with respect to performance of functions and the
implementation of schemes as may be entrusted to it
including those matters listed in the Twelfth Schedule. If
we refer to the Twelfth Schedule, Entries 8, 12 and 17 would
be relevant and are as under: -
"8. Urban forestry, protection of the environment and
promotion of ecological aspects.
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12. Provision of urban amenities and facilities such
as parks, gardens, play-grounds.
17. Public amenities including street lighting,
parking lots, bus stops and public conveniences."
Keeping this aspect in view, the Act was amended and
some of the relevant duties of Mahapalika, which are
obligatory as given in Section 114, are as under:
"114.Obligatory duties of the Corporation.- It shall
be incumbent on the Corporation to make reasonable and
adequate provision, by any means or measures which it is
lawfully competent to it to use or to take, for each of the
following matters, namely: -
(viii) guarding from pollution water used for human
consumption and preventing polluted water from being so
used;
(ix) the lighting of public streets, Corporation
markets and public buildings and other public places vested
in the Corporation;
(ix-a) the construction and maintenance of parking
lots, bus stops and public conveniences;
(xxx) planting and maintaining trees on road sides and
other public places.
(xxxiii-a) promoting urban forestry and ecological
aspects and protection of the environment;
(xli) providing urban amenities and facilities such as
parks, gardens and play-grounds."
The Development Act is in force and it is not disputed
that whole of the city of Lucknow has been declared as
development area within the meaning of Section 3 of this
Act. "Development" is defined in clause (e) of Section 2 of
the Act and it is as under:-
"(e) "development", with its grammatical variations,
means the carrying out of building, engineering, mining or
other operations in, on, over or under land, or the making
of any material change in any building or land, and includes
re-development."
Lucknow Development Authority (LDA) has been
constituted under Section 4 of the Development Act. Chapter
III of the Development Act provides for preparation of
Master Plan and zonal development plan for the development
area. Section 13 provides for the procedure for amendment
of the Master Plan or zonal development plan. Section 14
provides for development of land in development area and
this section is as under:-
"14. Development of land in the developed area. -
(1) After the declaration of any area as development area
under Section 3, no development of land shall be undertaken
or carried out or continued in that area by any person or
body (including a department of Government) unless
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permission for such development has been obtained in writing
from the Vice-Chairman in accordance with the provisions of
this Act.
(2) After the coming into operation of any of the
plans in any development area no development shall be
undertaken or carried out or continued in that area unless
such development is also in accordance with such plans.
(3) Notwithstanding anything contained in sub-sections
(1) and (2), the following provisions shall apply in
relation to development of land by any department of any
State Government or the Central Government or any local
authority --
(a) when any such department or local authority
intends to carry out any development of land it shall inform
the Vice Chairman in writing of its intention to do so,
giving full particulars thereof, including any plans and
documents, at least 30 days before undertaking such
development;
(b) in the case of a department of any State
Government or the Central Government, if the Vice-Chairman
has no objection it should inform such department of the
same within three weeks from the date of receipt by it under
clause (a) of the department's intention, and if the Vice
Chairman does not make any objection within the said period
the department shall be free to carry out the proposed
development;
(c) where the Vice Chairman raises any objection to
the proposed development on the ground that the development
is not in conformity with any Master Plan or zonal
development plan prepared or intended to be prepared by it,
or on any other ground, such department or the local
authority, as the case may be, shall -
(i) either make necessary modifications in the
proposal for development to meet the objections raised by
the Vice- Chairman; or
(ii) submit the proposals for development together
with the objections raised by the Vice- Chairman to the
State Government for decision under clause (d);
(d) the State Government, on receipt of proposals for
development together with the objections of the Vice-
Chairman, may either approve the proposals with or without
modifications or direct the department or the local
authority, as the case may be, to make such modifications as
proposed by the Government and the decision of the State
Government shall be final;
(e) the development of any land begun by any such
department or subject to the provisions of Section 59 by any
such local authority before the declaration referred to in
sub- section (1) may be completed by that department or
local authority with compliance with the requirement of
sub-sections (1) and (2)."
The Development Act also contains provision for
penalties and power of the LDA to demolish buildings and to
stop development in case of contravention of the provisions
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of this Act. When the Development Act is in operation, then
under Section 59 of this Act, certain functions of the U.P.
Municipal Corporation Adhiniyam, 1959 become inoperative so
far as these are relevant for the purpose :
"59. Repeal etc., and Savings. - (1)(a) The
operation of clause (c) of Section 5, Sections 54, 55 and
56, clause (xxxiii) of Section 114, sub- section (3) of
Section 117, clause (c) of sub-section (1) of Section
119..."
The provisions of the U.P. Regulation of Buildings
Operation Act, 1958 also become inoperative by virtue of
Section 59 of the Development Act.
The Parks Act provides for preservation and regulation
of parks, play-grounds and open spaces in the State of Uttar
Pradesh. The Parks Act applies to an area included in every
Nagar Mahapalika under the Uttar Pradesh Nagar Mahapalika
Adhiniyam, 1959. It is not disputed that this Act is now in
force (w.e.f. February 1, 1995). Park has been defined in
clause (b) of Section 2 of the Act to mean a piece of land
on which there are no buildings or of which not more than
one-twentieth part is covered with buildings, and the whole
or the remainder of which is laid out as a garden with
trees, plants or flower-beds or as a lawn or as a meadow and
maintained as a place for the resort of the public for
recreation, air or light. The Act provides for maintenance
of parks and prohibits construction of building, except with
the previous sanction of the concerned authority, which is
likely to affect the utility of the park.
As to how the impugned agreement dated November 4,
1993 came to be executed between the Mahapalika and the
builder we now consider the proceedings of the Mahapalika,
the Executive Committee and its sub- committee called the
High Power Committee.
On July 6, 1993 notice was issued for meeting of the
Mahapalika for July 12, 1993 with following agenda:
"1.Discussions on the accepted proposals passed by the
Executive Committee on 27.5.1993, and 27.6.1993.
2. Discussions on the various proposals.
3. Other subjects, subject to the permission of
Presiding Officer."
There were no details regarding agenda item No. 3,
which, it is said, pertained to Palika Bazaar, i.e., the
underground shopping complex. On that day following
resolution constituting the High Power Committee for
disposal of the properties of the Mahapalika was passed
under aforesaid agenda item No.3:-
"The full details, maps, conditions of allotment in
respect of Shri Rafi Ahmad Kidwai Nagar Yojna and Rajaji
Puram Vistar Yojna may be prepared at the earliest. And for
this act a committee may be constituted under the
chairmanship of the Nagar Pramukh in which two Honble
Sabhasad and three officers be appointed. For nominating
the members, the Nagar Pramukh may be authorised. The
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powers of disposing of the entire land, allotment and
transfer in respect of both the schemes shall be vested in
the above committee.
It was also decided that the Committee constituted
under the Chairmanship of the Nagar Pramukh shall have the
rights of disposing of all the properties, allotment,
transfer etc. situated within the limits of the Nagar
Mahapalika and the above committee shall have the right to
give the final shape to the conditions of allotment and
agreement etc. In this manner this sub Committee is
authorised to exercise the aforementioned rights of the
Mahapalika conditions of allotment and agreement etc. In
this manner this Sub Committee is authorised to exercise the
aforementioned rights of the Mahapalika."
Meeting of the High Power Committee so constituted
under the aforesaid resolution of the Mahapalika, was held
on October 13, 1993 and was adjourned to October 19, 1993.
In the meeting of the High Power Committee held on October
19, 1993, presided over by Mr. Akhilesh Das, Nagar Pramukh
as Chairman, there is discussion regarding construction of
the underground air conditioned Palika Bazar at Aminabad
Jhandewala Park on the lines of Palika Bazar in New Delhi.
It was recorded that the Vice-Chairman, Lucknow Development
Authority by his letter No.279/Architect dated October 16,
1993 intimated that as per the Master Plan, the land use of
the Aminabad, Jhandewala park is commercial. The draft of
the contract to be entered into between the Mahapalika and
the MI Builders was approved. The minutes ended with the
recording as under: "Amended and final draft of the
contract was read by the Advocate before the Committee on
this, the opinion of the members was asked for by the
Chairman on which all the members were unanimous that all
the members after discussing over the suggestions and
conditions set out by the Mahapalika Advocate took this
decision that the prescribed project may got executed by
M.I. Builders Pvt. Ltd. And the Mukhya Nagar Adhikari
should be authorised for conducting all the forthcoming
actions and formalities.
The Honble Chairman also directed that the entire
proceedings may be presented for information in the meeting
of the Executive Committee dated 20.10.93 and meeting of the
Mahapalika house held on 21.10.93.
Sd/- Sd/- B.K. Singh yadav Sushil Dubey Sabhasad
Member. Mukhya Nagar Adhikari Member.
Sd/- G.C. Goyal Architect Sd/-D.K. Doal, Member
Member, UP Nagar Adhikari.
Sd/- Akhilesh Dass Sd/- Laxmi Narain Nagar Pramukh
Sabhasad, Chairman of the Committee Member."
In view of the directions of the High Power Committee
the matter was placed before the Executive Committee on
October 20, 1993 which passed the following resolution: -
"Resolution No. (85) As per the decision taken in the
meeting dated 12.7.1993 of the Mahapalika, Sub- Committee
constituted under the Chairmanship of the Honble Nagar
Pramukh was entrusted with the powers of developing, leasing
and to transfer the immovable property of the Mahapalika.
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In exercise of these powers, the Sub- Committee, keeping in
view the grave problem of encroachment and parking in
Aminabad Submitted the proposal of the Honble Members
namely Sh. Kalraj Mishra (President Bhartiya Janta Party
U.P.) and Shri Ejaj Rijvi, Ex. Minister for the
construction of an Air Conditioned Palika Bazar and parking
place in the Jandewala park (Aminabad Park) on the pattern
of the Delhi Bazar, with a parking place for about 1000
vehicles through M/s. M.I. Builders Pvt. Ltd. Presented
before the Executive Committee for information which was
welcomed by all and the proposal was approved."
Thereafter, the matter came to be placed before the
Mahapalika in its meeting dated October 21, 1993 and the
following minutes were recorded: -
"In view of the decision taken by the General House of
Mahapalika dated 12.07.93, a subcommittee under the
Chairmanship of Mayor was entrusted to transfer, to develop
and to give on lease of immovable properties of Mahapalika.
In exercise of these powers, the Sub-Committee, keeping in
view the grave problem of encroachment and parking in
Aminabad submitted the proposal of Sh. Kalraj Misra
(President) Bhartiya Janta Party U.P. and Sh. Eagaz Risvi
(Ex-Minister) for construction of an air-conditioned Palika
Bazar and parking place in the Jhandewala Park (Aminuddaula
Park) on the pattern of Delhi (Air-conditioned) Palika Bazar
and a parking in which there should be a provision for
parking of about 1000 vehicles through M.I. Builders Pvt.
Ltd. presented before the House for information which was
welcomed and a unanimous resolution was passed and the Nagar
Pramukh was congratulated for this important work."
It will be advantageous to reproduce the impugned
agreement dated November 4, 1993, which is executed between
the Mahapalika and the builder: -
"WHEREAS, the party No.1 is an absolute owner of the
plot of land situated at Aminabad popularly known as
Jhandewala Park measuring about 2,45,000 sq.ft. and bounded
as below :
NORTH Chhedilal Dharamshala Road
SOUTH Ganga Prasad Road
EAST Road locating Central Bank of India
WEST Road locating Hyder Husain building.
More specifically mentioned in the site- plan attached
herewith.
WHEREAS, the party No.1 is a body constituted under
the UP Nagar Mahapalika Adhiniyam (Act II 1959), managing
the parks, roads street lights and other such maintenance of
amenities in the city.
WHEREAS, owing to high increase in urban population
(according to 1991 Census, Lucknow Urban agglomeration has a
population of 16,69,204) because of the migratory character
of Rural Population to Urban Areas which is too congested
due to overflow of population, the city is also being faced
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overwhelmingly with day to day problem of encroachment
causing much of acrimony perpetrating high guilts and
discrete errors.
WHEREAS, the party No.1 remained ever conscious to
keep the city hygienically sound free from all adverse
effects but the problem of encroachment is no less than a
headache for the Lucknow Nagar Mahapalika which has emerged
like a growing nightmare and becoming unmanageable by the
Lucknow Nagar Mahapalika owing to its limited and scanty
resources and flow of supplementary income. The eagerness
of Nagar Mahapalika to maintain proper road, construction of
new roads with street lighting and the cleanliness derive
during monsoon for removing sand and silt from the nallahs
is too often inadequately met by the Local Bodies Department
of the Government as the Schedule of New Demands for
providing requisite funds are not available timely as well
as sufficiently. This is one of the major hindrances in
keeping the functioning of the Lucknow Nagar Mahapalika at
low ebb.
WHEREAS, considering the above points M/s. M.I.
Builders Private Limited had prepared a viable and
constructive proposal keeping in view the interest of
Lucknow Nagar Mahapalika in all respects and, the same was
submitted to Lucknow Nagar Mahapalika as it dealt
exhaustively the benefits that will be oriented after its
implementation to the Lucknow Nagar Mahapalika as well as to
the Lucknow Populace. The proposal was found beneficial to
the Nagar Mahapalika Lucknow as well as to the general
public. The proposal which will be known as PALIKA BAZAR if
given affect will be a source of control over the traffic
and will reduce the congestion in the vicinity.
WHEREAS, the aforesaid proposal was accepted by the
Lucknow Nagar Mahapalika in its Meeting thereby procuring a
No Objection Certificate from the Lucknow Development
authority under Section 14 of Urban Building Planning and
Development Act, 1973 for constructing the PALIKA BAZAR on
the land mentioned above 279/vastuvid dated 16.10.1993.
NOW this agreement witnesseth as under :-
1. That party no.2 shall construct the said PALIKA
BAZAR according to the plan (attached herewith) with respect
to which No Objection Certificate has been obtained by party
no.1 from the prescribed authority.
2. That the PALIKA BAZAR shall be constructed by
party no.2 at his own cost and party no.2 shall be entitled
to realise the cost of construction with reasonable profit
which in any case shall not be more than 10% with respect to
each shop as may fixed by party no.2 in lieu of construction
and when the project of Palika Bazar is completed and cost
of construction has been realised the PALIKA BAZAR shall
be handed over to the Lucknow Nagar Mahapalika as its owner.
3. That the party no.2 shall also provide
air-conditioning facility in the PALIKA BAZAR at his own
cost as well as the installation of the plant and
construction of the infrastructure in this regard.
4. That the party no.2 shall have the right to fix
the amount of cost of construction while the rent of the
shops shall be at the rate of Rs.2.50 p. only per sq. ft.
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and 50 p. will be charged as lease rent as 1/5th of the
rent of covered area and Rs.300/- per shop for maintenance
subject to enhancement of the air Conditioning plant,
maintenance of the complex as well as the electric charges.
5. That party no.2 shall be at liberty to lease out
the shops as per its own terms and conditions to the persons
of their choice on behalf of party no.1 which shall be
binding on party no.1 but the conditions as mentioned in
para 4 as aforesaid in this agreement regarding rent shall
remain in force.
6. That the party no.2 shall also have the right to
sign the agreement if necessary on behalf of party no.1 as
person authorised by party no.1 on the terms and conditions
which the party no.2 may deem fit and proper and the copy of
the agreement shall be given to party no.1 after its
execution and the terms of the deed shall be binding upon
both the parties of this deed provided the party no.2
executes only that much of agreement which number of shops
are available in Palika Bazar and in any case shall not
exceed the same but the rent of the shops shall remain the
same as mentioned above.
7. That the construction of PALIKA BAZAR shall start
within three months from the date of registration of this
agreement and, shall be completed within three years from
the date of its start.
8. That party no.2 shall have the right to publicise
the project and take advances from the buyers and to give
them proper allotment receipts.
9. That party no.1 shall co-operate in all manners in
the constructional work activities of party no.2 and shall
extend all its co-operation and help as and when needed by
party no.2 from time to time.
10. That the party no.1 shall be responsible to help
and assist party no.2 in completing the project and party
no.1 shall also be exclusively responsible for getting the
electric sewer and water connection from concerned
department for the above project at the cost of party no.2.
11. That party no.1 shall help the party no.2 in
getting the Project completed and meeting all the needs and
requirements in completing the project.
12. That in case there is in any obstruction from
Mahapalika or legal proceedings resulting in the non-
completion or carrying out the constructional work of the
project resulting in the non-completion stoppage of the
work, the party no.1 shall be responsible for all the losses
and damages that may accrue to party no.2.
13. That party no.2 shall not allot the 5% shops
before completion of parking and other services of the
complex to ensure the proper compliance of the agreement and
further ensure the quality of construction.
14. That party no.2 shall give the bank guarantee of
Rs.25,00,000/- (Rs. twenty five lacs) for its performance
within 3 months from the date of registration of this
agreement but this clause is subject to all necessary
co-operation of party no.1.
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15. That party no.1 shall charge Rs.5,000/- per shop
for every second and subsequent transfer of the shops.
16. That after the completion of the project the
party no.2 shall hand over the entire documents in original
to the party no.1 for keeping the final records.
17. That in case of any disputes or differences
arising out of the project between the parties to the
agreement, the same shall be referred for arbitration to the
mutually appointed arbitrator who shall in all cases be the
retired justice of Honble High Court or its equivalent and
his award shall be binding upon both the parties.
18. That the agreement between the party no.2 and the
shop keeper shall be duly approved by the Nagar Mahapalika
Lucknow and the party no.2 has made that agreement available
to the party no.1 and the party no.1 has approved the said
agreement.
19. That all the legal expenses in executing this
agreement shall be borne only by the party no.2.
IN WITNESS WHEREOF, the parties of this deed have
signed the deed on the day and the year mentioned herein
below in presence of the following witnesses and the terms
of this agreement shall be binding upon the legal heirs,
successors, assignees and legal representatives. Sd/-
Lucknow : dated Party No.1 November 4, 1993. For M.I.
Builders Pvt. Ltd.
WITNESSES Sd/- Managing Director Party No. 2 1. Sd/-
Drafted by: Sd/- 2. Sd/- (Arvind Razdan) Advocate. Civil
Court, Lucknow"
Mr. Soli Sorabjee, learned counsel for the builder,
submitted that the agreement was not against public interest
and could not have been revoked by the Mahapalika. He said
the petitioners in the writ petitions did not bring forward
any contractor who could say that he was more competent than
M.I. Builders to execute the job and at a cost less than
that to be incurred by M.I. Builders. He said case of the
builder was covered by a judgment of this Court in M/s.
Kasturi Lal Lakshmi Reddy and others vs. State of Jammu and
Kashmir and another (1980 (4) SCC 1). In this case the
State of J & K awarded a contract to the second respondent
for tapping of 10 to 12 lakhs blazes annually for extraction
of resin from the inaccessible chir forests in the State for
a period of 10 years. This was in accordance with the
policy of the State Government and it was agreed upon that a
part of resin so extracted would be delivered to the State
for running the State-owned industry and the rest would be
retained by the second respondent for establishing and
running its own factory in the State. The petitioners in
the writ petition assailed the order of the State Government
on the following main three grounds:-
"(A) That the order is arbitrary, mala fide and not in
public interest, inasmuch as a huge benefit has been
conferred on the 2nd respondents at the cost of the State.
(B) The order creates monopoly in favour of the 2nd
respondents who are a private party and constitutes
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unreasonable restriction on the right of the petitioners to
carry on tapping contract business under Article 19(1)(g) of
the Constitution.
(C) The State has acted arbitrarily in selecting the
2nd respondents for awarding tapping contract, without
affording any opportunity to others to complete for
obtaining such contract and this action of the State is not
based on any rational or relevant principle and is,
therefore, violative of Article 14 of the Constitution as
also of the rule of administrative law which inhibits
arbitrary action by the State."
This Court, after examining the whole facts of the
case and applying the parameters laid in Ramana Dayaram
Shetty vs. International Airport Authority of India (1979
(3) SCC 489) negatived all the pleas raised by the
petitioners. Referring to its earlier decision in
International Airport Authority of India case this Court had
observed that there are two limitations imposed by law which
structure and control the discretion of the Government in
giving largess. The first is in regard to the terms on
which largess may be granted and the other in regard to the
persons who may be recipients of such largess. Then the
Court said as under: -
"So far as the first limitation is concerned, it flows
directly from the thesis that, unlike a private individual,
the State cannot act as it pleases in the matter of giving
largess. Though ordinarily a private individual would be
guided by economic considerations of self-gain in any action
taken by him, it is always open to him under the law to act
contrary to his self-interest or to oblige another in
entering into a contract or dealing with his property. But
the government is not free to act as it likes in granting
largess such as awarding a contract or selling or leasing
out its property. Whatever be its activity, the government
is still the government and is, subject to restraints
inherent in its position in a democratic society. The
constitutional power conferred on the government cannot be
exercised by it arbitrarily or capriciously or in an
unprincipled manner; it has to be exercised for the public
good. Every activity of the government has a public element
in it and it must therefore, be informed with reason and
guided by public interest. Every action taken by the
government must be in public interest; the government
cannot act arbitrarily and without reason and if it does,
its action would be liable to be invalidated. If the
government awards a contract or leases out or otherwise
deals with its property or grants any other largess, it
would be liable to be tested for its validity on the
touchstone of reasonableness and public interest and if it
fails to satisfy either test, it would be unconstitutional
and invalid."
The Court said that the State of J & K, in view of its
policy of industrialization, was interested in the setting
up of the factory by the second respondents, particularly
since the second respondents had two factories for
manufacture of resin, turpentine oil and other derivatives
and they possessed large experience in the processing of
resin and reprocessing of resin, turpentine oil and other
derivatives. The Court considered the nature of the
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contract and observed that it was obvious that, in view of
the policy of the State Government, no resin would be
auctioned in the open market and in this situation, it would
be totally irrelevant to import the concept of market price
with reference to which the adequacy of the price charged by
the State to the second respondents could be judged. If the
State were simply selling resin, there could be no doubt
that the State must endeavour to obtain the highest price
subject, of course, to any other overriding considerations
of public interest and in that event, its action in giving
resin to a private individual at a lesser price would be
arbitrary and contrary to public interest. But, where the
State has, as a matter of policy, stopped selling resin to
outsiders and decided to allot it only to industries set up
within the State for the purpose of encouraging
industrialization, there could be no scope for complaint
that the State was giving resin at a lesser price than that
which could be obtained in the open market. The yardstick
of price in the open market would be wholly inept because in
view of the State policy, there would be no question of any
resin being sold in the open market.
After examining this judgment it is difficult to
appreciate the argument of Mr. Sorabjee as to how the
principles laid in this case can be applicable to the
present case.
To substantiate his argument that there was "estoppel
by pleading" against the Mahapalika Mr. Sorabjee referred
to the stand of the Mahapalika as reflected in the
proceedings before the High Court as well as in this Court.
It was also pointed out that in the counter affidavit filed
by the State Government in the High Court it supported the
builder. There was no disposal of property by the
Mahapalika within the meaning of Section 128 of the Act.
Resolution of Mahapalika to enter into the agreement with
the builder was validly passed. The project was the
brainchild of M.I. Builders and the nature of the
transaction was such that it was unconventional and there is
no universal rule that tender be invited in every case.
There was no secrecy. Everything was done in open and
discussed freely at various stages. In the affidavit dated
January 8, 1994 of Mr. B.K. Singh, Chief Executive Officer
of the Mahapalika filed in the High Court he had explained
why it was necessary to have the project executed in order
to avoid congestion in Aminabad commercial area. In the
affidavit dated October 19, 1995 of Mr. T.K. Doval,
Upnagar Adhikari which was filed in answer to IAs 10-12/95,
complaining breach of this Court's order dated December 14,
1994, again the earlier stand of Mahapalika was re-affirmed.
Mr. Sorabjee criticised the action of the Mahapalika in
withdrawing its appeals in this Court on February 6, 1997 on
mere mentioning in the Court. He said plan, which had been
sanctioned by order dated January 23, 1995, was revoked
illegally on April 17, 1997 without any notice to the
builder. There is, however, resolution of the Mahapalika
dated August 6, 1996 filed by Mr. S.K. Gupta, Mukhya Nagar
Adhikari of the Mahapalika opposing the present appeals by
the builder. Mahapalika took a summersault and gave a
complete go- bye to its earlier stand. That there could be
estoppel by pleadings reference was made to a decision of
this Court in Union of India vs. M/s Indo-Afghan Agencies
Ltd. (1968 (2) SCR 366) approving the earlier decision of
the Calcutta High Court in The Ganges Manufacturing Co. vs.
Sourujmull and others (1880 ILR Calcutta 669 at 678). Mr.
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Sorabjee said a party could not change its stand even if it
was legally wrong in its earlier stand as otherwise it could
be a negation of everything.
In the Ganges Manufacturing Co. vs. Sourujmull &
Ors. [(1880) 5 ILR Cal 669] a Division Bench of the
Calcutta High Court held that "a man may be estopped not
only from giving particular evidence, but from doing any act
or relying upon any particular argument or contention, which
the rules of equity and good conscience prevent him from
using as against his opponent".
In Union of India and others vs. M/s. Indo-Afghan
Agencies Ltd. [(1968) 2 SCR 366] in a certain scheme called
the Export Promotion Scheme incentives were provided to the
exporters for woolen goods. M/s. Indo- Afghan Agencies
Ltd. Exported woolen goods to Afghanistan of F.O.B. value
of over Rs.5 crores. The Deputy Director in the office of
the Textile Commissioner, Bombay, issued to them an Import
Entitlement Certificate for about Rs.2 crores only. When
the representations made to the Government for grant of
Import Entitlement Certificate for full F.O.B. value, it
produced no response and writ petition under Article 226 of
the Constitution was filed in the High Court. High Court
allowed the writ petition. In the appeal filed by Union of
India to this Court various contentions were raised. This
Court said: -
"Under our jurisprudence the Government is not exempt
from liability to carry out the representation made by it as
to its future conduct and it cannot on some undefined and
undisclosed ground of necessity or expediency fail to carry
out the promise solemnly made by it, nor claim to be the
judge of its own obligation to the citizen on an ex parte
appraisement of the circumstances in which the obligation
has arisen."
And further: -
"The defence of executive necessity was not relied
upon in the present case in the affidavit filed on behalf of
the Union of India. It was also not pleaded that the
representation in the Scheme was subject to an implied term
that the Union of India will not be bound to grant the
import certificate for the full value of the goods exported
if they deem it inexpedient to grant the certificate. We
are unable to accede to the contention that the executive
necessity releases the Government from honouring its solemn
promises relying on which citizens have acted to their
detriment. Under our constitutional set-up no person may be
deprived of his right or liberty except in due course of and
by authority of law: if a member of the executive seeks to
deprive a citizen of his right or liberty otherwise than in
exercise of power derived from the law -- common or statute
-- the Courts will be competent to and indeed would be bound
to, protect the rights of the aggrieved citizen."
It was also held: -
"We hold that the claim of the respondents is
appropriately founded upon the equity which arises in their
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favour as a result of the representation made on behalf of
the Union of India in the Export Promotion Scheme, and the
action taken by the respondents acting upon that
representation under the belief that the Government would
carry out the representation made by it. On the facts
proved in this case, no ground has been suggested before the
Court for exempting the Government from the equity arising
out of the acts done by the exporters to their prejudice
relying upon the representation."
Mr. Sorabjee then referred to Section 128 of the Act
and to the expression "disposal" and also to Sections
129(4), 131 and 132 of the Act. According to him there was
no disposal of any property and no interest in the land had
been transferred by the Mahapalika to the builder. In this
connection reference was made to the agreement dated
November 4, 1993. Reference was also made to the counter
affidavit filed earlier by Mr. B.K. Singh, Mukhya Nagar
Adhikari, wherein he had stated that the property vested in
Mahapalika and that there was no disposal or transfer of any
interest in the property to the builder. As to what is
meant by the expression "disposed of" reference was made to
another decision of this Court in Deputy Commissioner of
Sales Tax (Law), Board of Revenue (Taxes), Ernakulam vs.
M/s. Thomas Stephen and Co. Ltd. (1988 (2) SCC 264 at
266). This judgment was of course in context of sale of
goods. Reference was also made to a decision of House of
Lords (1959 (1) WLR 465 at 472) to contend that "disposal"
means disposal absolutely.
If it was necessary to call tender reference was made
to a decision of this Court in G.B. Mahajan and others vs.
Jalgaon Municipal Council and others (1991 (3) SCC 91) where
tender was invited to construct the building but authority
was given to the developer to grant occupancy rights. In
this case, this Court considered the scope of judicial
review in the case of contractual transaction of Government,
its policy decision and right of the Government on its
instrumentality to evolve any method for execution of the
project. In this case respondent Jalagaon Municipal Council
entered into a contract with a private developer/builder for
construction of a commercial complex. The project
contemplated its execution by the developer on
self-financing basis subject to handing over the
administrative building of the complex to the Municipal
Council free of cost and allotting some shops at a fixed
rate/free of cost to certain specified persons while having
right to dispose of the remaining accommodation at its own
discretion and to retain the premia received by way of
reimbursement of its financial outlays plus profits. The
execution of the project was challenged on the ground that
it was unconventional and thus untenable. This Court said
that the Government or its instrumentality policy option to
adopt any method or technique for management of the project
provided the same is within the constitutional and legal
limits. This Court held that the project was not ultra
vires the powers of Municipal Council and such a case was
not open to judicial review. The following main contentions
were raised apprising the project: -
"a) That the scheme of financing of the project was
unconventional and was not one that was, as a matter of
policy, open and permissible to a governmental authority.
The municipal authority could either have put up the
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construction itself departmentally or awarded the execution
of the whole project to a building contractor. The method
of financing and execution of the project are ultra vires
the powers of the Municipal authority under the Act.
b) That the terms of the agreement with the developer
that the latter be at liberty to dispose of the occupancy
rights in the commercial complex in such manner and on such
terms as it may choose would amount to an impermissible
delegation of the statutory functions of the Municipal
Council under Section 272 of the Act to the developer.
c) That the project, in effect, amounted to and
involved the disposal of municipal property by way of a long
term lease with rights of sub-letting in favour of the
developer violative of Section 92 of the 'Act'.
d) That the scheme is arbitrary and unreasonable and
is violative of Article 14 of the Constitution. The project
is patently one intended to and does provide for an unjust
enrichment of respondent 6 at public expense."
This Court negatived all these contentions. It said
that the project, otherwise legal, does not become any the
less permissible by reason alone that the local authority,
instead of executing the project itself, had entered into an
agreement with a developer for its financing and execution.
This Court did not find any violation of any provisions of
the Maharashtra Municipalities Act, 1965 governing the
Municipal Council. On the question of reasonableness this
Court said that a thing is not unreasonable in the legal
sense merely because the court thinks it is unwise. Then
this Court said: -
"The contention regarding impermissible delegation is
not tenable. The developer to the extent he is authorised
to induct occupiers in respect of the area earmarked for him
merely exercises, with the consent of the Municipal Council,
a power to substitute an occupier in his own place. This is
not impermissible when it is with the express consent of the
Municipal Council. It would be unduly restrictive of the
statutory powers of the local authority if a provision
enabling the establishment of markets and disposal of
occupancy rights therein are hedged in by restrictions not
found in the statute."
Reference was then made to a decision of this Court in
Tata Cellular vs. Union of India (1994 (6) SCC 651) where
this Court considered the scope of judicial review and
adduced the following principles: -
"(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but
merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct
the administrative decision. If a review of the
administrative decision is permitted it will be substituting
its own decision, without the necessary expertise which
itself may be fallible.
(4) The terms of the invitation to tender cannot be
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open to judicial scrutiny because the invitation to tender
is in the realm of contract. Normally speaking, the
decision to accept the tender or award the contract is
reached by process of negotiations through several tiers.
More often than not, such decisions are made qualitatively
by experts.
(5) The Government must have freedom of contract. In
other words, a fair play in the joints is a necessary
concomitant for an administrative body functioning in an
administrative sphere or quasi-administrative sphere.
However, the decision must not only be tested by the
application of Wednesbury principle of reasonableness
(including its other facts pointed out above) but must be
free from arbitrariness not affected by bias or actuated by
mala fides.
(6) Quashing decisions may impose heavy administrative
burden on the administration and lead to increased and
unbudgeted expenditure."
Lastly, Mr. Sorabjee said that after this Court
allowed builder to construct, in upholding the judgment of
the High Court, equities would have to be balanced. Of
course, it would be different matter if the appeals were to
be allowed, he said.
Fifty prospective allottees of the shops, who had made
payment to M.I. Builders for allotment of shops before High
Court granted order of stay, filed an application in this
Court seeking permission to intervene in these appeals. We
heard Mr. Salve, learned senior counsel, who appeared for
them. We record his submissions as under: -
1. It is not in public interest to dismantle the
shops if the court ultimately upholds the judgment of the
High Court.
2. Advertisement was made by the builder on December
24, 1993 offering to allot the shops and required each of
the prospective allottee to pay Rs.25,000/- with application
for allotment. 500 such applications were received out of
which 380 applications were accompanied with cheque of
Rs.25,000/- each. Remaining 120 prospective allottees
deposited the amount of Rs.25,000/- each by mean of cash.
When, however, possession of the area was handed over to the
builder it was found that it was less than that agreed
earlier and that the total number of shops to be constructed
would be now in 263 in number. Shops were of two sizes of
10 x 15 ft. and 10 x 20 ft.
3. Question raised now is: if by putting in
possession any interest in land was created in favour of the
builder? Could it be said that there was charge created in
favour of the builder on the property including the land and
the structure built upon it till the builder got whole of
the amount invested by it plus 10% of the profit over and
above that? No interest in the land was created in favour
of the builder. The agreement was something like a lien on
a property of an unpaid creditor as understood in law.
Builder in that situation would have right to possession
till it was paid its dues. As per the terms of the contract
builder would retain the property by way of security till it
was paid but it could not claim to have any interest in the
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property. It is like an unpaid creditor. When the term
"disposed of" is used it means that full title had passed
but when we say any interest in the property is passed then
we mean a slice of that title has passed.
4. Agreement though is silent as to what is the legal
right of the builder on the land, it grants merely a right
to the builder to enter upon the land and to build upon as
per its terms. Provisions of Section 128 of the Act are not
attracted.
5. It is a moot point if in a Public Interest
Litigation the petitioner can tell the court to consider a
document whether it is favourable or not. Court cannot use
a magnified glass to see whether any interest had been
created and then to strike down the agreement being
violative of Section 128 of the Act. Ultimately it boils
down to the intention of the parties otherwise it will be
straining the point too far which is not permissible.
6. If this Court decides to uphold the judgment of
the High Court the applicants would request that the relief
be moulded. In Public Law relief can be moulded even where
the court found irregularity or illegality to deny relief.
That can be done under Article 142 of the Constitution.
After all what the High Court has found was that the
resolution was not properly considered before passing the
same; that requirements of the provisions of Sections 128
and 129 of the Act were not adhered to; and that tenders
were not invited in order to favour the builder.
7. It is not the case of the writ petitioners that
any extraordinary advantage was conferred on the builder or
that funds of the taxpayers have been drained out. If it
was a hospital or an industry or a dangerous building it
would be imperative that the building be pulled down but
here construction is underground made to remove congestion
and the only complaint of the petitioners was that it would
create more congestion. Therefore, a mere irregularity or
even illegality would not result in destroying the
construction, particularly, when there is no clear finding
of any mala fide by the High Court. It is not that any
other builder has been aggrieved by the action of the
Mahapalika and had come forward to complain. In fact one of
the persons who himself is a party to the resolution was one
of the petitioners. In the Administrative Law there is an
authority that relief could be moulded. There is no
affidavit of the Lucknow Development Authority that building
was in any way dangerous. Shopping complex and the parking
lot, which has been built upon, is for public good and an
order of demolition would not be in general public interest.
Discretion should be used not to invalidate the whole
process even if provision of Sections 128 and 129 were
violated. Some mechanism could be evolved so that fair
price for the shops and use of parking lot is fixed and the
case of every prospective allottee could be examined and so
also perhaps the terms of the agreement between the builder
and the Mahapalika. It would be an extraordinary order if
demolition is ordered.
Reference was made to Wade on Administrative Law, 7th
Edition, page 720 and to De Smith on Judicial Review of
Administrative Action, 5th Edition, page 271 to support the
contention that relief could be moulded in law. In Wade's
treatise the following part is relevant: -
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"The freedom with which the court can use its
discretion to mould its remedies to suit special situations
is shown by two decisions already encountered. One was the
case where the House of Lords refused mandamus to a police
probationer wrongly induced to resign, although he made out
a good case for that remedy, in order not to usurp the
powers of the chief constable, and instead granted him an
unusual form of declaration to the effect that he was
entitled to the remedies of unlawful removal from office
except for reinstatement. The other was the case of the
Take-over Panel, where in fact no relief was granted but the
Court of Appeal explained the novel way in which remedies
should be employed in future cases, with the emphasis on
declaration rather than certiorari and on 'historic rather
than contemporaneous' relief. The same freedom to mould
remedies exists in European Community law, where the
European Court of Justice may declare non-retroactivity when
holding some act or regulation to be void."
In De Smith it is as under: -
"The principle that failure to observe formal or
procedural rules in the administrative process may be venial
if no substantial prejudice has been caused to those
immediately affected now appears in a number of statutory
contexts, but it is too early to say that it has established
itself as a general principle of law in contexts where the
enabling Act is silent on the point, though some of the
cases on the effect of disregarding statutory time limits
point vaguely in this direction.
Administrative inconvenience
Is administrative inconvenience a proper reason for
rebutting the presumption that a decision which violates a
statutory provision is unlawful (and therefore that the
provision is, in the circumstances not "mandatory")?
Administrative inconvenience is an accepted criterion in
relation to remedies provided by the courts in judicial
review. For example, where a series of commercial
transactions have been undertaken in reliance upon the
impugned decision the court may, in its discretion, fail to
quash that decision in view of the administrative chaos that
would result from such a remedy. Judicial discretion is
employed here to balance fairness to the individual against
the general public interest. The task, however, of deciding
the force of a statutory provision does not involve judicial
discretion. It involves the faithful construction of the
objects and purposes of an act of Parliament in the context
of the particular decision. Although aspects of public
policy may play a part in this exercise, it would be wrong
of the courts to impute any general implication that
Parliament may intend administrative inconvenience to excuse
in advance the violation of its statutes. Such an
implication invites careless administration and assumes that
the legislature would too easily excuse a breach of its
statutes. It is suggested, therefore, that administrative
inconvenience is not normally a proper criterion to guide
the question of whether a statutory provision is
"mandatory"."
Mr. Sorabjee and Mr. Salve were opposed by a
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formidable cohort of lawyers. Mr. N.M. Ghatate appeared
for the corporators who filed writ petition in the High
Court and were present themselves in the meetings of the
Mahapalika on July 12, 1993 and October 21, 1993; Mr. G.L.
Sanghi appeared for the Mahapalika; Mr. Adarsh Goel for
the State of U.P.; Mr. Arun Jaitley for the LDA; and Mr.
Dushyant Dave for Amrit Puri, who had separately filed the
writ petition. Their submissions can be summarised as
under: -
1. There was no proper convening of the meetings of
the Executive Committee and the Mahapalika, which granted
approval to the construction of underground shopping
complex. There was also no such agenda in the meeting of
the Mahapalika. Constitution of the High Power Committee by
the Mahapalika was itself not legal. Regulations had been
framed under the Act for conduct of the meetings. Under
Section 91 of the Act the requirement is four days notice
for the general body meeting of the Mahapalika and three
days notice for the meeting of the Executive Committee.
Regulation 7 prescribes as to how the business of the
meeting is to be conducted, as to which item is to be taken
up first and rest in seriatim. Regulation 7(f) requires
that resolution of the Executive Committee should be
separately circulated to the members and the business
respecting that should not be transacted in the heading "any
other business with permission of the chair". Under
Regulation 30 it is necessary for a resolution to be valid
that there should be a proposer and a seconder.
2. The impugned agreement was not executed as per the
requirement of Section 133 of the Act and on that account it
is not binding on the Mahapalika. Reliance was placed on a
decision of this Court in Dr. H.S. Rikhy & Ors. vs. The
New Delhi Municipal Committee [AIR 1962 SC 554]. In this
case the question for consideration before this Court was
whether the provisions of Section 8 of the Delhi and Ajmer
Rent Control Act, 1952 (the Rent Act) applied to the
transactions between the appellants and the New Delhi
Municipal Committee (the Committee) constituted under the
Punjab Municipal Act, 1911. The Committee had constructed a
market and allotted the shops and flats by inviting tenders
in pursuance to an advertisement. On an application filed
under Section 8 of the Rent Act by an allottee, an objection
was raised by the Committee that there was no relationship
of landlord and tenant between the parties. High Court held
that there was no relationship of landlord and tenant
between the parties inasmuch as there was no 'letting',
there being no properly executed lease. In coming to the
conclusion that there was no valid lease between the
parties, High Court relied upon the provisions of Section 47
of the Punjab Municipal Act. High Court negatived the
contention that the Committee was estopped from questioning
the status of the applicants as tenants, having all along
admittedly accepted rent from them. On an appeal against
the judgment of the High Court to this Court, it was held
that use of the term 'rent' cannot preclude the landlord
from pleading that there was no relationship of landlord and
tenant. The question must, therefore, depend upon whether
or not there was a relationship of landlord and tenant in
the sense that there was a transfer of interest by the
landlord in favour of the tenant. This Court said that in
its opinion the Rent Act applied only that species of
'letting' by which the relationship of landlord and tenant
is created, that is to say, by which an interest in the
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property, however, limited in duration is created. This
Court referred to the provisions of Section 47 of the Punjab
Municipal Act which is as under :
"47. (1) Every contract made by or on behalf of the
Committee of any municipality of the first class whereof the
value or amount exceeds one hundred rupees, and made by or
on behalf of the Committee of any municipality of the second
and third class whereof the value or amount exceeds fifty
rupees shall be in writing, and must be signed by two
members, of whom the president or a vice-president shall be
one, and countersigned by the secretary :
Provided that, when the power of entering into any
contract on behalf of the committee has been delegated under
the last foregoing section, the signature or signatures of
the member or members to whom the power has been delegated
shall be sufficient.
(2) Every transfer of immovable property belonging to
any committee must be made by an instrument in writing,
executed by the president or vice-president and by at least
two other members of committee, whose execution thereof
shall be attested by the secretary.
(3) No contract or transfer of the description
mentioned in this section executed otherwise than in
conformity with the provisions of this section shall be
binding on the committee."
This Court said that in order that the transfer of the
property in question should be binding on the Committee, it
was essential that it should have been made by an instrument
in writing, executed by the President or the Vice-President
and at least two other members of the Committee, and the
execution by them should have been attested by the Secretary
and If these conditions are not fulfilled, the contract of
transfer shall not be binding on the Committee. It was
observed that provisions of Section 47(3) are mandatory and
not merely directory. Finally considering the argument that
the Committee is estopped by its conduct from challenging
the enforceability of the contract this Court said :
"The answer to the argument is that where a statute
makes a specific provision that a body corporate has to act
in a particular manner, and in no other, that provision of
law being mandatory and not directory, has to be strictly
followed."
3. It was the appellant, the builder, who was
building the underground shopping complex. It was not
undertaking the construction as an agent of the Mahapalika.
In this connection reference was made to a decisions of this
Court in Akadasi Padhan vs. State of Orissa (1963 (2) Supp.
SCR 691 at 722). It was, therefore, mandatory that the
building plan be approved by the LDA.
In Akadast Padhan vs. State of Orissa (1963 Supp.
(2) SCR 691) the State of Orissa acquired a monopoly in the
trade of Kendu leaves. Prior to this the petitioner used to
carry on extensive trade in the sale of Kendu leaves. He
filed a petition under Article 32 of the Constitution
complaining restrictions put on his fundamental rights. In
the course of discussion this Court said:-
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"When the State carries on any trade, business or
industry it must inevitably carry it on either
departmentally or through its officers appointed for that
purpose. In the very nature of things, the State cannot
function without the help of its servants or employees and
that inevitably introduces the concept of agency in a narrow
and limited sense. There are some trades or businesses in
which it may be inexpedient to undertake the work of trade
or business departmentally or with the assistance of State
servants. In such cases, it is open to the State to employ
the services of agents, provided the agents work on behalf
of the State and not for themselves."
The Court then said: -
"It is true that an agent is entitled to commission in
commercial transactions, and so, the fact that a person
earns commission in transactions carried on by him on behalf
of another would not destroy his character as that other
persons agent. Cases of Delcredere agents are not unknown
to commercial law. But we must not forget that we are
dealing with agency which is permissible under Art. 19(6)
(ii), and as we have already observed, agency which can be
legitimately allowed under Art. 19(6)(ii) is agency in the
strict and narrow sense of the term; it includes only
agents who can be said to carry on the monopoly at every
stage on behalf of the State for its benefit and not for
their own benefit at all. All that such agents would be
entitled to would be remuneration for their work as agents.
That being so, the extended meaning of the word agent in a
commercial sense on which the learned Attorney-General
relies is wholly inapplicable in the context of Art.
19(6)(ii)."
4. Mahapalika had disposed of the land in favour of
the builder in contravention of the provisions relating to
disposal of property under Sections 128 and 129 of the Act.
If the substance of the impugned agreement is looked into it
is the transfer of interest in land by the Mahapalika to the
builder.
5. Even Section 128 of the Act was not applicable as
the land was a park which could not be disposed by the
Mahapalika. As a matter of fact Mahapalika was the trustee
of the park and the doctrine of public trust, which was
applicable in India as held by this Court in M.C. Mehta vs.
Kamal Nath and others (known as Span case) (1997 (1) SCC
388), was applicable to the park in question. Mahapalika,
therefore, could only manage the park and could not alienate
it or convert it something different from the park. Park
was held by the Mahapalika on trust for the citizens of
Lucknow.
In M.C. Mehta vs. Kamal Nath and others (1997 (1)
SCC 388) the case, which is also known as that of 'Span
Resorts case', owned by Span Motels Pvt. Ltd., this Court
observed, that public trust doctrine, as discussed in the
judgment, is a part of the law of land. The Court gave
various directions even cancelling the lease granted in
favour of the Motel and directing the Motel to pay
compensation by way of cost for restitution of the
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environment and ecology of the area. The judgment was cited
to reaffirm the argument for preservation of ecology, which
is an important factor in preserving the Jhandewala Park.
6. Section 114 of the Act provides for obligatory
duties of the Mahapalika and one such obligatory functions
is to maintain public places, parks and to plant trees.
This cannot now be done as the park has been dug and
construction made underground. By allowing underground
construction Mahapalika has deprived itself to its
obligatory duties which cannot be permitted. Irreversible
changes have been made. Qualitatively it may still be a
park but it is a park of different nature inasmuch as trees
cannot be planted. Now it is like a terrace park. Though
the Park Act came into operation w.e.f. February 1, 1995
and the construction of the underground shopping complex had
started in January, 1995 after the interim order of this
Court but since the construction was made subject to the
final order of this Court the provisions of the Park Act
will have to be considered while deciding the matter.
7. Contract of such a magnitude could not have been
awarded to the builder without calling for tenders. There
was no ground to depart from the settled norms. Decision of
this Court in Sachidanand Pandey & Anr. vs. State of West
Bengal and others (1987 (2) SCC 295), is no authority for
the proposition that it was not necessary to invite tenders.
That was a case relating to development of tourism industry
in the State of West Bengal. The case did not lay any rule
but was an exception thereto. In that case a lease was
granted by the State Government to Taj Group of Hotels for
construction of a Five Star Hotel. This was challenged on
various grounds in a writ petition filed under the banner of
PIL. The writ petition was dismissed by the learned single
judge of the High Court. On appeal, the Division Bench
confirmed the judgment of the learned single Judge. The
matter then came to this Court under Article 136 of the
Constitution and leave was granted. One of the questions
raised was that lease which was granted by the State
Government without inviting tenders or holding a public
auction. This Court posed the question if in pursuing the
socio-economic objective, the State is bound to invite
tenders or hold a public auction. The Court referred to
various judgments of this Court in Rashbihari Panda vs.
State of orissa [(1969) 1 SCC 414; R.D. Shetty vs.
International Airport Authority of India & Ors. [(1979) 3
SCC 489]; Kasturi Lal Lakshmi Reddy vs. State of J. & K.
[(1980) 4 SCC 1]; State of Haryana vs. Jage Ram [(1983) 4
SCC 556]; Ram and Shyam Co. vs. State of Haryana & Ors.
[(1985) 3 SCC 267]; and Chenchu Rami Reddy & Anr. vs.
Government of A.P. & Ors. [(1986) 3 SCC 391]. Then this
Court observed as under :
"On a consideration of the relevant cases cited at the
bar the following propositions may be taken as well
established: State-owned or public- owned property is not
to be dealt with at the absolute discretion of the
executive. Certain precepts and principles have to be
observed. Public interest is the paramount consideration.
One of the methods of securing the public interest, when it
is considered necessary to dispose of a property, is to sell
the property by public auction or by inviting tenders.
Though that is the ordinary rule, it is not an invariable
rule. There may be situations where there are compelling
reasons necessitating departure from the rule but then the
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reasons for the departure must be rational and should not be
suggestive of discrimination. Appearance of public justice
is as important as doing justice. Nothing should be done
which gives an appearance of bias, jobbery or nepotism.
Applying these tests, we find it is impossible to hold
that the Government of West Bengal did not act with probity
in not inviting tenders or in not holding a public auction
but negotiating straightway at arms length with the Taj
Group of Hotels."
This Court also found that on the commercial and
financial aspect of the lease even on a prima facie view,
there appears to be nothing wrong or objectionable in the
'net sales' method. The 'net sales' method is a fairly well
known method adopted in similar situations. It is a profit-
oriented and appears to be in the best interest of the
Government of West Bengal.
8. There was collusion among certain members of the
Mahapalika, its officers and the builder. Even the conduct
of the lawyer of the Mahapalika was commented upon
adversely. It was not necessary for the Mahapalika to file
a separate appeal against the impugned judgment of the High
Court. These members of the Mahapalika equated themselves
with the builder. The lawyer of the Mahapalika drafted the
agreement dated November 4, 1993 between the Mahapalika and
the builder. He also filed special leave petitions on
behalf of the Mahapalika which had since been withdrawn.
All the fees of the lawyer of the Mahapalika for attending
the meetings of the Mahapalika, drafting the agreement,
preparing special leave petitions, etc. were paid by the
builder though that was shown to be done at the instance of
the Mahapalika. There is on the record of the Mahapalika a
letter of the builder that there was a collusion among the
Mahapalika, builder, the lawyers and the officers of the
Mahapalika, the architect of the Mahapalika, who approved
the lay out plan, was also the architect of the LDA. After
the lay out plan was submitted to the LDA the architect of
the Mahapalika himself okays the lay out plan as architect
of the LDA, which is then approved by the Vice-Chairman of
the LDA.
9. A body corporate cannot be made to remain bound by
its earlier decision if that decision is found to be
contrary to law. There could not be any estoppel against
the statute particularly when the whole project is against
public interest. The State Government was right in changing
its stand. State Government considered the whole matter and
on the representations received from the public decided to
accept the judgment of the High Court.
10. The agreement is a fraud on the power of the
Mahapalika. Prime land has been given to the builder for a
song. The fact that the scheme was so lucrative could be
seen that all shops to be constructed less 5% were booked
within six days of the advertisement appearing in December,
1993. Public interest and public exchequer have been
sacrificed. Mahapalika divested itself of its control over
the project. The agreement is wholly one sided favouring
the builder. It is unjust, unreasonable and irrational.
11. Builder had already collected Rs.25,000/- from
each of the prospective allottees at the time of
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registration when it was originally planned to construct 500
shops. There were no building plan in existence.
Collecting of this amount by the builder is of no
consequence in deciding the present appeals. It is now
stated that 263 shops had been constructed though the
builder collected earnest money for 500 shops. In spite of
the judgment of the High Court the builder did not care to
refund the earnest money so collected. Its conduct does not
entitle it to any consideration. No proper study was
undertaken before the Mahapalika granted its approval for
construction of the underground shopping complex. There
were no building plans when the agreement was entered into.
12. Narrow consideration that a few crores of rupees
have been spent on the construction cannot come into
consideration when the construction is in clear violation of
the Act, the Development Act and Article 21 of the
Constitution. That crores of rupees have been spent is an
argument which is advanced in every other case of
unauthorised construction.
13. There is no alternative to the construction which
is unauthorised and illegal to be dismantled. The whole
structure built is in contravention of the provisions of law
as contained in the Development Act. The decision to award
contract and the agreement itself was unreasonable. The
construction of the underground shopping complex, if allowed
to stand, would perpetuate an illegality. Mahapalika could
not be allowed to benefit from the illegality. A decision
of this Court in Seth Badri Prasad and others vs. Seth
Nagarmal and others (1959 (1) Supp. SCR 769 at 774) was
referred to, to contend that the court could not exclude
from its consideration a public statute and since the
construction of the underground shopping complex was wholly
illegal it had to be dismantled. No question of moulding a
relief can arise as the builder made construction on the
basis of the interim order of this Court and at its own
risk. Various decisions of this Court in support of these
contentions where demolition of unauthorised construction
was ordered, were referred to, these being (1) K. Ramdas
Shenoy vs. The Chief Officers, Town Municipal Council,
Udipi and others (1975 (1) SCR 680 at 685), (2) Virender
Gaur and others vs. State of Haryana and others (1995 (2)
SCC 577 at 582), (3) Pleasant Stay Hotel and another vs.
Palani Hills Conservation Council and others (1995 (6) SCC
127 at 139), (4) Cantonment Board, Jabalpur and others vs.
S.N. Awasthi and others (1995 Supp. (4) SCC 595 at 596),
(5) Pratibha Cooperative Housing Society Ltd. And another
vs. State of Maharashtra and others (1991 (3) SCC 341), (6)
Dr. G.N. Khajuria and others vs. Delhi Development
Authority and others (1995 (5) SCC 762), (7) Mrs. Manju
Bhatia and another vs. New Delhi Municipal Council and
another (JT 1997 (5) SC 574) and (8) an unreported decision
of this Court in Ram Awatar Agarwal vs. Corporation of
Calcutta (Civil Appeal 6416 of 1981) decided on August 20,
1996.
In K. Ramadas Shenoy vs. The Chief Officers, Town
Municipal Council, Udipi and others (1975 (1) SCR 680)
respondent was granted by resolution of the Municipal
Committee to construct a cinema theatre at a place where
earlier respondent was granted licence for the construction
of Kalyan Mantap-cum-Lecture Hall. In a petition under
Article 226 of the Constitution the High Court held that the
cinema theatre could not be constructed in a place other
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than specified localities without proper sanction but since
the third respondent had spent a large sum of money it did
not quash the impeached resolution of the Municipal
Committee. The appellant contended before this Court that
the Town Planning Scheme forbade in cinema building at the
place asked for and, therefore, the resolution of the
Municipal Committee was invalid. This Court observed as
under: -
"An illegal construction of a cinema building
materially affects the right to or enjoyment of the property
by persons residing in the residential area. The Municipal
Authorities owe a duty and obligation under the statute to
see that the residential area is not spoilt by unauthorised
construction. The scheme is for the benefit of the
residents of the locality. The Municipality acts in aid of
the schemed. The rights of the residents in the area are
invaded by an illegal construction of a cinema building. It
has to be remembered that a scheme in a residential area
means planned orderliness in accordance with the
requirements of the residents. If the scheme is nullified
by arbitrary acts in excess and derogation of the powers of
the Municipality the courts will quash orders passed by
Municipalities in such cases.
The Court enforces the performance of statutory duty
by public bodies as obligation to rate payers who have a
legal right to demand compliance by a local authority with
its duty to observe statutory rights alone. The scheme here
is for the benefit of the public. There is special interest
in the performance of the duty. All the residents in the
area have their personal interest in the performance of the
duty. The special and substantial interest of the residents
in the area is injured by the illegal construction."
In Virender Gaur and others vs. State of Haryana and
others (1995 (2) SCC 577), the Municipal Committee,
Thanesar, District Kurukshetra in the State of Haryana
framed Town Planning Scheme, which was sanctioned by the
Government. In the Scheme certain land vested in the
municipality. State Government sanctioned allotment of that
land to Punjab Samaj Sabha on payment of a price at the
rates specified therein. When the Punjab Samaj Sabha after
getting sanction started construction the appellants filed
writ petition in the Punjab and Haryana High Court, which
was, however, dismissed. It was submitted before this Court
that the purpose of the Scheme was to reserve the land in
question for open spaces for the better sanitation,
environment and the recreational purposes of the residents
in the locality and that the Government had no power to
lease out the land to Punjab Samaj Sabha. Reversing the
judgment of the High Court this Court said that after the
writ petition was filed by the appellants Punjab Samaj Sabha
instead of awaiting the decision on merits proceeded with
the construction in post-haste and expended the money on the
construction. Therefore, the Court said, "we do not think
that it would be a case to validate the actions deliberately
chosen, as a premium, in not granting the necessary relief.
It was open to the Punjab Samaj Sabha to await the decision
and then proceed with the construction. Since the writ
petition was pending, it was not open to them to proceed
with the construction and then to plead equity in their
favour. Under these circumstances, we will not be justified
in upholding the action of the State Government or the
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Municipality in allotting the land to Punjab Samaj Sabha to
the detriment of the people in the locality and in gross
violation of requirements of the Scheme. Any construction
made by Punjab Samaj Sabha should be pulled down and it must
be brought back to the condition in which it existed prior
to allotment. The Municipality is directed to pull down the
construction within four weeks from today. They should
place the report on the file of the Registry of the action
taken in the matter."
In Pleasant Stay Hotel and another etc. etc. vs.
Palani Hills Conservation Council and others (1995 (6) SCC
127) the question was whether the impugned Government Orders
were lawfully and validly made and, if so, whether they
could regularise the unauthorized construction. High Court
quashed the impugned Government orders and issued certain
directions. This Court observed as under and then referred
the matter to the High Court for certain clarifications: -
"In our considered opinion the most eloquent and
patent fact that must tilt the scale in this dispute in
favour of the Council is that the Hotel has admittedly made
a residential construction of seven floors even though their
sanctioned plan was only for two floors. That necessarily
means that five floors of the building have been constructed
illegally and unauthorisedly. It is not surprising
therefore that the entire endeavour of the Hotel now is to
protect the two floors constructed above the road level and
to yield to any workable formula. It is in that context
that the Hotel, without prejudice to its rights and
contentions, had suggested that the entire structure of
seven floors might be allowed to remain and, for that
purpose it was prepared to give an undertaking that they
would not use the five floors below the road level for any
residential purpose but utilise it only the for keeping air-
conditioning plant and other attendant purposes for running
the Hotel on the two floors above the road level. The
Council, however, vehemently opposed the above suggestion on
the ground that acceptance thereof would mean giving
judicial imprimatur to utter and flagrant breach of
statutory provisions to which the Hotel resorted to in spite
of repeated opportunities given and reminders issued to
retrace their steps and any sympathy shown to the Hotel
would be wholly misplaced. We need not, However, dilate on
this aspect of the matter as it appears to us that there is
some confusion as to the nature of the above-quoted
direction, given by the High Court and it requires to be
clarified."
In Cantonment Board, Jabalpur and others vs. S.N.
Avasthi and others (1995 Supp. (4) SCC 595) this Court
observed that construction made in contravention of law
would not be a premium to extend equity so as to facilitate
violation of the mandatory requirements of law. Here the
Cantonment Board had granted permission for construction of
a building which was later on cancelled as the resolution of
the Board granting permission was suspended by the
GOC-in-Chief.
In Pratibha Cooperative Housing Society Ltd. And
another vs. State of Maharashtra and others (1991 (3) SCC
341) this Court came down heavily on the housing society
which made construction in violation of Floor Space Index.
This Court said that such unlawful construction was made by
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the Housing Board in clear and flagrant violation and
disregard of FSI and upheld the order of demolition of eight
floors as ordered by the Bombay Municipal Corporation.
While dismissing the special leave petition this Court
observed as under: -
"Before parting with the case we would like to observe
that this case should be a pointer to all the builders that
making of unauthorised constructions never pays and is
against the interest of the society at large. The rules,
regulations and by-laws are made by the Corporations or
development authorities taking in view the larger public
interest of the society and it is the bounden duty of the
citizens to obey and follow such rules which are made for
their own benefits."
In Dr. G.N. Khajuria and others vs. Delhi
Development Authority and others (1995 (5) SCC 762),
appellants were some of the residents of Sarita Vihar
colony, developed by the Delhi Development Authority (DDA).
It was contended that the DDA permitted a nursery school to
be opened in a certain park in complete violation of the
provisions of the Delhi Development Act, 1957. After
considering the provisions of the Delhi Development Act
Master and Zonal Development Plans this Court said that the
site at which the school was allowed to be opened was a
park. It further held that it was not open to the DDA to
carve out any space meant for park for a nursery school.
This Court said that the allotment for opening the nursery
school was misuse of power and it cancelled the allotment.
This Court observed that the construction put up by the
allottee, even though permanent, was of no relevance as the
same has been done on a plot of land allotted to it in
contravention of law. As to the submission that dislocation
from the present site would cause difficulty to the tiny
tots, this Court said that the same has been advanced only
to get sympathy from the court inasmuch as children, for
whom the nursery school is meant, would travel to any other
nearby place where such a school would be set up by the
allottee or by any other person. Six months time was
granted to the allottee to make alternative arrangements as
it thinks fit to shift the school so that the children are
not put to any disadvantageous position. Then, this Court
observed as under:-
"Before parting, we have an observation to make. The
same is that a feeling is gathering ground that where
unauthorised constructions are demolished on the force of
the order of courts, the illegality is not taken care of
fully inasmuch as the officer of the statutory body who had
allowed the unauthorised construction to be made or make
illegal allotments go scot free. This should not, however,
have happened for two reasons. First, it is the illegal
action/order of the officer which lies at the root of the
unlawful act of the citizen concerned, because of which the
officer is more to be blamed than the recipient of the
illegal benefit. It is thus imperative, according to us,
that while undoing the mischief which would require the
demolition of the unauthorised construction, the delinquent
officer has also to be punished in accordance with law.
This, however, seldom happens. Secondly, to take care of
the injustice completely, the officer who had misused his
power has also to be properly punished. Otherwise, what
happens is that the officer, who made the hay when the sun
shined, retains the hay, which tempts others to do the same.
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This really gives fillip to the commission of tainted acts,
whereas the aim should be opposite."
In Mrs. Manju Bhatia and another vs. New Delhi
Municipal Committee and another (JT 1997 (5) SC 574), the
builder, after obtaining requisite sanction to build 8
floors, constructed more floors, sold the flats and gave
possession to the respective buyers. Subsequently it was
found that the builder constructed the building in violation
of the building regulations and consequently flats on the
top four floors were ordered to be demolished. The
demolition was challenged in the High Court by way of a writ
petition, which was dismissed. Special leave to appeal to
this Court was also dismissed. The question before this
Court was whether the appellants, who had purchased the
flats without the builder informing them of the illegal
construction, should be compensated for the loss suffered by
them. High Court in the impugned judgment directed the
return of the amount plus the escalation charges. All this
was on a suit brought by the appellants. This Court noticed
that the escalated price as on the date was around Rs.1.5
crores per flat. Taking into consideration the totality of
the circumstances this Court directed the builder to pay
Rs.60 lacs including the amount paid by the allottees.
In an unreported decision of this Court in Ram Awatar
Agarwal & ors. Vs. The Corporation of Calcutta & ors.
[C.A. No. 6416 of 1981] decided on August 20, 1996, an
unauthorised construction in the city of Calcutta was
allowed to be demolished by the Corporation of Calcutta. It
was a multistory building. The Court observed as under:-
"We share the feeling of the Deputy City Architect
when he states in paragraph 18 of his affidavit that this is
a case in which an unscrupulous builder took advantage of
the courts order upto a point of time and after he failed
in the legal process upto this court the tenants were set up
to delay the inevitable and thus in this matter the
unauthorised structure hazardous and unsafe has stood all
these years. We have, therefore, no manner of doubt that
this is a case in which exemplary costs should be awarded."
At the conclusion of the arguments and in order to
decide the matter fully and finally but without prejudice to
the respective contentions of the parties, we wanted to know
the nature of construction so far as carried out; the cost
thereof; the area meant for shopping and parking
separately; and if the plans were in accordance with the
Development Act and Rules. This was particularly so when by
an interim order of this Court construction was allowed
though with certain clear stipulations.
Prof. T.S. Narayanaswami, Ex-Head of Department of
Building Engineering and Management, School of Planning and
Management, New Delhi was appointed as Local Commissioner
for the purpose. He was asked to report on the following
aspects of the construction :
"1. What is the extent of construction put up by the
appellant under ground the aforesaid part?
2. What is the nature of said construction?
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3. What cost can be said to have been incurred by the
appellant in the construction uptil now?
4. What further costs, if any, are required to be
incurred for completion of the project with parking
provisions?
5. What will be the extent of the cost required to be
incurred if the structures existing on spot are required to
be demolished and the land is to be restored to its original
position?
6. Whether the present structures are put up by the
appellant in accordance with the building plans sanctioned
by the Nagar Nigam?
7. Whether the present structures comply with the
building requirements as per the provisions governing the
Lucknow Development Authority?
8. Whether the structures existing on spot are safe
and sound and not likely to create any health hazard, if
they are allowed to be retained on spot?
9. Whether the existing structures with suitable
alterations can be used for parking of vehicles and/or for
putting up other amenities like public convenience etc?
10. If the land earmarked for parking in the building
plans submitted to the Nagar Nigam by the appellant, and
which land is dug up at present, if restored to its original
position, is it feasible to use the existing structures for
parking of vehicles and for putting up other amenities?
11. What are the existing general conditions of the
locality and the area around the park?"
It is not necessary to examine the report of the Local
Commissioner in detail except to note that :
1. extent of work carried out is approximately 80% of
the civil and structural work, about 30% of the finishing
work and 20% of the services support work;
2. it is a First Class permanent construction;
3. cost of construction of the work so far executed
is approximately Rs.3.52 crore and the cost of work still to
be done is approximately 2.97 crore;
4. dismantling of the construction so far made and
restoration of the park would cost Rs.98,10,181/- less
Rs.22,19,550/- salvage value;
5. though there is a letter of approval of
confirmation having been given, there are no sanctioned
drawings (Chief Architect of the Mahapalika said that
sanctioned drawings were "missing" from his files).
6. Lucknow Development Authority (LDA) did not play
any role in sanctioning the project except the Layout Plan.
(Layout Plan was forwarded to the LDA by the Chief Architect
of the Mahapalika who was also officiating as Chief
Architect of LDA at that time. In other words, the approval
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of the Layout at the LDA level was recommended by the same
person who forwarded it from the Mahapalika);
7. Master Plan could not have envisaged the park as a
site available for commercial exploitation, given the
density and congestion of the surrounding area;
8. structure as designed is safe from the structural
engineering view point;
9. air pollution levels of the park and the
surrounding areas would go up by substantial amount as a
result of underground shopping complex-cum-parking; and
10. there is a lot of crowding during day hours (9.00
a.m to 6.00 p.m.) leading to generally slow movement of
traffic and occasional traffic hold ups. A high decibel
level thanks to vehicles and moving people and vendors. A
lot of solid waste collection at the end of the day and
generally high level of pollution as a result.
By and large the Report of Prof. Narayanaswamy has
found acceptance by all the parties.
Mr. M.L. Verma, learned senior advocate, who
appeared for M.I. Builders after the report of Prof.
Narayanaswamy, submitted that the Report of the Local
Commissioner insofar as it gives cost incurred on the
constructions is not correct and so also the cost required
to be incurred for completion of the project. His argument
was that cost so far incurred was in fact more than what the
Local Commissioner said and that cost required for
completion of the project was less than that arrived at by
the Local Commissioner. We, however, do not find merit in
his submission as we find that the Local Commissioner has
applied the same principles while arriving at the cost so
far incurred and the cost to be incurred for completion of
the project. We, therefore, accept the Report of the Local
Commissioner in its entirety. But to what effect we shall
presently see.
Jhandewala Park, the park in question, has been in
existence for a great number of years. It is situated in
the heart of Aminabad, a bustling commercial-cum-
residential locality in the city of Lucknow. The park is of
historical importance. Because of the construction of
underground shopping complex and parking it may still have
the appearance of a park with grass grown and path laid but
it has lost the ingredients of a park inasmuch as no
plantation now can be grown. Trees cannot be planted and
rather while making underground construction many trees have
been cut. Now it is more like a terrace park.
Qualitatively it may still be a park but it is certainly a
park of different nature. By construction of underground
shopping complex irreversible changes have been made. It
was submitted that the park was acquired by the State
Government in the year 1913 and was given to the Mahapalika
for its management. This has not been controverted. Under
Section 114 of the Act it is the obligatory duty of the
Mahapalika to maintain public places, parks and plant trees.
By allowing underground construction Mahapalika has deprived
itself of its obligatory duties to maintain the park which
cannot be permitted. But then one of the obligatory
functions of the Mahapalika under Section 114 is also to
construct and maintain parking lots. To that extent some
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area of the park could be used for the purpose of
constructing underground parking lot. But that can only be
done after proper study has been made of the locality,
including density of the population living in the area, the
floating population and other certain relevant
considerations. This study was never done. Mahapalika is
the trustee for the proper management of the park. When
true nature of the park, as it existed, is destroyed it
would be violative of the doctrine of public trust as
expounded by this Court in Span Resort Case (1997 (1) SCC
388). Public Trust doctrine is part of Indian law. In that
case the respondent who had constructed a motel located at
the bank of river Beas interfered with the natural flow of
the river. This Court said that the issue presented in that
case illustrated "the classic struggle between those members
of the public who would preserve our rivers, forests, parks
and open lands in their pristine purity and those charged
with administrative responsibilities who, under the
pressures of the changing needs of an increasingly complex
society, find it necessary to encroach to some extent upon
open lands heretofore considered inviolate to change".
In the treatise "Environmental Law and Policy :
Nature, Law, and Society" by Plater Abrams Goldfarb
(American Casebook series - 1992) under the Chapter on
Fundamental Environmental Rights, in Section 1 (The Modern
Rediscovery of the Public Trust Doctrine) it has been
noticed that "long ago there developed in the law of the
Roman Empire a legal theory known as the Doctrine of the
public trust." In America Public Trust doctrine was applied
to public properties, such as shore-lands and parks. As to
how doctrine works it was stated: "The scattered evidence,
taken together, suggests that the idea of a public
trusteeship rests upon three related principles. First,
that certain interests - like the air and the sea - have
such importance to the citizenry as a whole that it would be
unwise to make them the subject of private ownership.
Second, that they partake so much of the bounty of nature,
rather than of individual enterprise, that they should be
made freely available to the entire citizenry without regard
to economic status. And, finally, that it is a principle
purpose of government to promote the interests of the
general public rather than to redistribute public goods from
broad public uses to restricted private benefit... With
reference to a decision in Illinois Central Railroad Company
v. Illinois (146 U.S. 387 [1892]), it was stated that the
court articulated in that case the principle that has become
the central substantive thought in public trust litigation.
When a state holds a resource which is available for the
free use of the general public, a court will look with
considerable skepticism upon any governmental conduct which
is calculated either to reallocate the resource to more
restricted uses or to subject public uses to the
self-interest of private parties. This public trust
doctrine in our country, it would appear, has grown from
Article 21 of the Constitution.
Thus by allowing construction of underground shopping
complex in the park Mahapalika has violated not only Section
114 of the Act but also the public trust doctrine.
If we now refer to the provisions of law relating to
notice of meetings and business of the Mahapalika and its
committees it is apparent that these provisions were not
adhered to. There is no authority with the Mahapalika to
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constitute High Power Committee and to delegate its
functions to that High Power Committee. There was no agenda
at any time in any of the meetings of the Mahapalika for
consideration of the underground shopping complex. There
were no proposals, no documents, no plan, no study, no
project report or feasibility report on the basis of which
Mahapalika could have given a green signal for construction
of the underground shopping complex. There was no
discussion and no informed decision. Mahapalika completely
abdicated its functions. Mahapalika delegated its functions
to the High Power Committee in contravention of the Act.
Constitution of the High Power Committee itself was wholly
illegal. High Power Committee took decision to hand over
the park to the builder for construction of the underground
shopping complex and also approved the terms of the
agreement dated November 4, 1993. Decision of the High
Power Committee was put before the Executive Committee and
the general body of the Mahapalika for the purpose of
"information and both these bodies stamped their approval.
As noted above there was no agenda for consideration of
these resolutions of the Executive Committee of the
Mahapalika. Corporators had no time to apply their minds.
Such an important matter, where the cost of the project was
likely to run in crores of rupees, could not have been
considered under the topic "other subjects, subject to the
permission of the Presiding Officer". Section 105 of the
Act protects any act done or proceeding taken on account of
any defect or irregularity in procedure not affecting the
substance. In the present case it is not mere irregularity
or defect in the procedure but the whole procedure is in
clear breach of Sections 91 and 119 of the Act which are
mandatory.
The law mandates that not only the notice of the date
and the time of the meeting but the notice of the business
to be transacted at such meeting should be given at least 4
clear days before the date of the meeting for the Mahapalika
and 3 days for the Executive Committee. When the agenda did
not include the subject of construction of underground
shopping complex nor was there any material to support the
discussion the subject of construction of underground
shopping complex it could not have been considered in the
meetings of the Mahapalika and the Executive Committee.
In Myurdhwaj Cooperative Group Housing Society Ltd.
vs. Presiding Officer, Delhi Cooperative Tribunal and Ors.
[(1998) 6 SCC 39), the appellant was a Housing Co-operative
Society registered under the Delhi Co- operative Societies
Act, 1972 and Delhi Co-operative Societies Rules, 1973. In
the meeting of the general body of the society, it was
decided that only those who have deposited minimum amount
specified by the general meeting would be allotted flats and
others would be accommodated on the flats to be constructed
on the additional land in Phase-II construction. Respondent
No.3 who was one of the original members of the society
challenged the decision of the general meeting. One of the
contention raised was that decision of the general body
which relegated her and other such members to Phase-II was
not on the agenda. This Court said a general body can
always with the approval of the house in the meeting of its
members take up any other matter not covered by the agenda
on that account, no illegality could be held. This Court
also observed that Section 28 of the Delhi Co-operative
Societies Act, 1972 vests final authority in the general
body of a cooperative society. It has wide powers including
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residuary power except those not delegated to any other
authority under the Act, the rules and its bye-laws. In
other words, its power, if any, is only restricted by the
Act, the rules, the bye-laws and any order having force of
law. This decision is of no help to the appellant as in the
present case we are considering the statutory provisions for
holding of the meetings of the Mahapalika and the Executive
Committee which have been violated.
Agreement dated November 4, 1993 has not been executed
as required under Section 133 of the Act. Resolution of the
High Power Committee, which was placed before the Mahapalika
and the Executive Committee for information, required that
the prescribed project may be got executed by M.I.
Builders Pvt. Ltd. and the Mukhya Nagar Adhikari should be
authorised for conducting all the forthcoming actions and
formalities". Now, Mahapalika has power to enter into
contracts (Sec.131). Under sub-section (1) of Section 132
contract shall be expressed to be made, for and on behalf of
Mahapalika and shall be so executed for and on behalf of the
Mahapalika. Under sub-section (4), no contract involving an
expenditure exceeding five lakh rupees shall be made by
Mukhya Nagar Adhikari (Chief Executive Officer) unless it
has been sanctioned by the Mahapalika. Proviso (a) to
Section 133(1) requires common seal of the Mahapalika to be
affixed on every contract. The common seal shall be affixed
only in the presence of a corporator (Sabhasad) who shall
attach his signatures to the contract in token that the same
was sealed in his presence. The signature of the corporator
shall be distinct from the signature of any witness to the
execution of such contract (sub-sections 2 and 3 of Section
133). Under sub-section 4 of Section 133 no contract
executed otherwise than as provided in the section shall be
binding on the Mahapalika. The impugned agreement is thus
not executed in accordance with the requirements of law.
Further, under sub- section (2) of Section 136 where the
Mahapalika approves the project and the entire estimated
cost exceeds rupees ten lakhs, the project report shall be
submitted to the State Government and it is for the State
Government to reject or sanction the project with or without
modifications. Till that is done no work shall be
commenced. No such sanction of the State Government was
obtained in the present case. It was submitted that this
provision would apply only if the project cost was to be
incurred by the Mahapalika. We do not think it is so. It
is the cost of the project that matters and not who incurs
the cost in the first instance. Agreement dated November 4,
1993 is, therefore, not a valid contract and not binding on
the Mahapalika. As held in H.S. Rikhys case (AIR 1962 SC
554) where a statute makes a specific provision that a body
corporate has to act in a particular manner and in no other,
that provision of law being mandatory and not directory has
to be strictly followed. This principle will apply both as
regards holding of meeting of the Mahapalika and execution
of contract on its behalf. This judgment is also authority
for the preposition that there is no estoppel against a
statute.
We may now examine some of the terms of the agreement
dated November 4, 1993. There are six recitals to the
agreements which cannot be co-related to any discussion in
any of the meetings of the Mahapalika, the Executive
Committee or the High Power Committee. Under clause (2) of
the agreement it is for the builder to make construction at
its own cost and then to realise the cost with profit not
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exceeding more than 10% of the investment in respect of each
shop. Nobody knows how much cost the builder is likely to
incur and how long it will continue to be in possession of
the shopping complex. Full freedom has been given to the
builder to lease out the shops as per its own terms and
conditions to persons of its choice on behalf of the
Mahapalika and Mahapalika shall be bound by these terms and
conditions. Builder has also been given the right to sign
the agreement on behalf of the Mahapalika on the terms and
conditions which the builder may deem fit and proper.
Builder is only required to give a copy of the agreement to
the Mahapalika after its execution and both the Mahapalika
and the builder shall remain bound by the terms of that
agreement. Since there is no project report nobody knows
how many shops the builder would construct and of what
sizes. Mahapalika is allowed to charge Rs.5,000/- per shop
for every second and subsequent transfer of shops by the
builder but what amount is to be charged for the first
transfer or subsequent transfers is left to the sole
discretion of the builder. A bare glance at the terms of
agreement shows that not only that the clauses of the
agreement are unreasonable for the Mahapalika but they are
atrocious. No person of ordinary prudence shall ever enter
into such an agreement. A trustee, which the Mahapalika is,
has to be more cautious in dealing with its properties.
Valuable land in the heart of commercial area has been
handed on a platter to the builder for it to exploit and to
make run away profits. As a matter of fact on examining the
terms of the agreement we find that Mahapalika has been
completely ousted from the underground shopping complex for
an indefinite period. It has completely abdicated its
functions.
To repeat, the agreement is completely one sided
favouring the builder. The land of immense value has been
handed over to it to construct underground shopping complex
in violation of the public trust doctrine and the Master
Plan for the city of Lucknow. Mahapalika has no right to
step in even if there is any violation by the builder of the
terms of the agreement or otherwise. Mahapalika, though
considered to be the owner of the land, is completely ousted
and divested of the land for a period which is not definite
and which depends wholly on the discretion of the builder.
On the question of reasonableness reference may be made to
Wade on Administrative Law, 7th Edition, page 399. The
learned author observed that "The court must strive to apply
an objective standard which leaves to the deciding authority
the full range of choices which the legislature is presumed
to have intended. Decisions which are extravagant or
capricious cannot be legitimate". Quoting Lord Hailsham LC
in Re W. (an infant) ([1971] AC 682) where he said, "two
reasonable persons can perfectly reasonably come to opposite
conclusions on the same set of facts without forfeiting
their title to be regarded as reasonable". The following
passage from the treatise would be relevant:-
"This is not therefore the standard of the man on the
Clapham omnibus. It is the standard indicated by a true
construction of the Act which distinguishes between what the
statutory authority may or may not be authorised to do. It
distinguishes between proper use and improper abuse of
power. It is often expressed by saying that the decision is
unlawful if it is one to which no reasonable authority could
have come. This is the essence of what is now commonly
called 'Wednesbury unreasonableness, after the now famous
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case in which Lord Greene MR expounded it as follows.
It is true that discretion must be exercised
reasonably. Now what does that mean? Lawyers familiar with
the phraseology used in relation to exercise of statutory
discretions often use the word unreasonable in a rather
comprehensive sense. It has frequently been used and is
frequently used as a general description of the things that
must not be done. For instance, a person entrusted with a
discretion must, so to speak, direct himself properly in
law. He must call his own attention to the matters which he
is bound to consider. He must exclude from his
consideration matters which are irrelevant to what he has to
consider. If he does not obey those rules, he may truly be
said, and often is said, to be acting unreasonably.
Similarly, there may be something so absurd that no sensible
person could ever dream that it lay within the powers of the
authority. Warrington LJ in Short v. Poole Corporation
[1926] Ch. 66. Gave the example of the red-haired teacher,
dismissed because she had red hair. This is unreasonable in
one sense. In another it is taking into consideration
extraneous matters. It is so unreasonable that it might
almost be described as being done in bad faith; and, in
fact, all these things run into one another.
This has become the most frequently cited passage
(though most commonly cited only by its nickname) in
administrative law. It explains how unreasonableness, in
its classic formulation, covers a multitude of sins. These
various errors commonly result from paying too much
attention to the mere words of the Act and too little to its
general scheme and purpose, and from the fallacy that
unrestricted language naturally confers unfettered
discretion.
Unreasonableness has thus become a generalised rubric
covering not only sheer absurdity or caprice, but merging
into illegitimate motives and purposes, a wide category or
errors commonly described as irrelevant considerations,
and mistakes and misunderstandings which can be classed as
self-misdirection, or addressing oneself to the wrong
question. But the language used in the cases shows that,
while the abuse of discretion has this variety of differing
legal facets, in practice the courts often treat them as
distinct. When several of them will fit the case, the court
is often inclined to invoke them all. The one principle
that unites them is that powers must be confined within the
true scope and policy of the Act.
Taken by itself, the standard of unreasonableness is
nominally pitched very high: so absurd that no sensible
person could ever dream that it lay within the powers of the
authority (Lord Greene MR); so wrong that no reasonable
person could sensibly take that view (Lord Denning MR);
so outrageous in its defiance of logic or of accepted moral
standards that no sensible person who had applied his mind
to the question to be decided could have arrived at it
(Lord Diplock). It might seem from such language that the
deliberate decisions of ministers and other responsible
public authorities could almost never be found wanting.
But, as may be seen in the following pages, there are
abundant instances of legally unreasonable decisions and
actions at all levels. This is not because ministers and
public authorities take leave of their senses, but because
the courts in deciding cases tend to lower the threshold of
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unreasonableness to fit their more exacting ideas of
administrative good behaviour."
When we keep in view the principles laid by this Court
in its various judgments and which we have noticed above, it
has to be held that the agreement dated November 4, 1993 is
not a valid one. The agreement defies logic. It is
outrageous. It crosses all limits of rationality.
Mahapalika has certainly acted in fatuous manner in entering
into such an agreement. It is a case where the High Court
rightly interfered in exercise of its powers of judicial
review keeping in view the principles laid by this Court in
Tata Cellular vs. Union of India (1994 (6) SCC 651). Every
decision of the authority except the judicial decision is
amenable to judicial review and reviewability of such a
decision cannot now be questioned. However, a judicial
review is permissible if the impugned action is against law
or in violation of the prescribed procedure or is
unreasonable, irrational or mala fide. On the principle of
good governance reference was made to a decision of Division
Bench of Bombay High Court in State of Bombay vs. Laxmidas
Ranchhoddas and another (AIR 1952 Bombay 468 at 475) (Para
12). It was submitted that bad governance sets a bad
example. That is what exactly happened in the present case.
In State of Bombay vs. Laxmidas Ranchhoddas & Anr.
[1952 AIR Bom. 468] a Division bench of the High Court was
considering the argument that the writ of mandamus being
discretionary, the Court should consider whether it should
not put a limitation upon its own powers and jurisdiction.
It was submitted that it was impossible for any State to
function if there was a constant interference by the High
Court in the executive acts performed by the officers of the
State. Chagla, CJ, speaking for the Court, said :
"It may be that interference by the High Court may
result in inconvenience or difficulty in administration.
But what we have to guard against is a much greater evil.
When we find in the modern State wide powers entrusted to
Government, powers which affect the property and person of
the citizen, it is the duty of the Courts to see that those
wide powers are exercised in conformity with what the
Legislature has prescribed. We are not oblivious of the
fact that in order that the modern State should function the
Government must be armed with very large powers. But the
High Court does not interfere with the exercise of those
powers. The High Court only interferes when it finds that
those powers are not exercised in accordance with the
mandate of the Legislature. Therefore, far from interfering
with the good governance of the State, the Court helps the
good governance by constantly reminding Government and its
officers that they should act within the four corners of the
statute and not contravene any of the conditions laid down
as a limitation upon their undoubtedly wide powers.
Therefore, even from a practical point of view, even from
the point of view of the good governance of the State, we
think that the High Court should not be reluctant to issue
its prerogative writ whenever it finds that the sovereign
Legislature has not been obeyed and powers have been assumed
which the Legislature never conferred upon the executive."
It cannot be said that the construction of the
underground shopping complex is by the builder as an agent
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of the Mahapalika. Concept of agency is totally missing in
the present case. Rather the deal is from principal to
principal. Reference may be made to the decision of this
Court in Akadasi Padhans case [1963 Supp.(2) SCR 691]
quoted above. When the "development" is by the builder
provisions of Section 14 of the Development Act would apply.
There is no sanction of the building plan of the underground
shopping complex by the LDA. Construction is, therefore,
per se illegal. Even after the interim order of this Court
allowing construction, plans were not got sanctioned from
the LDA, which would be authority under the Development Act.
Sanction of the building plan by the Mahapalika would,
therefore, be meaningless. Even then, there were no
sanctioned drawings. It has been pointed out that process
of sanction appeared to be ad hoc and skeletal. When
construction started LDA issued a show cause notice to the
Mahapalika but then in view of the interim order made by
this Court show cause notice was subsequently withdrawn. It
was stated that against the order withdrawing the show cause
a revision was filed by Mr. Amrit Puri, a writ petitioner
to the State Government, which was stated to be still
pending.
It is not disputed that there is a Master Plan
applicable to city of Lucknow. This Master Plan is prepared
under the Development Act. It was submitted by the builder
that the park could be exploited for commercial purposes as
Aminabad has been shown to be a commercial area. No doubt
Aminabad is a commercial area but that does not mean that
the park can be utilised for commercial purposes. Rather
using the park for commercial purposes would be against the
Master Plan. However, in letter dated October 16, 1993 by
Vice-Chairman, LDA to the Mahapalika did say :
"I am to inform you in this regard that the land use
of the Jhandewala park situated in Aminabad is commercial
one as per the Master Plan. This department has no
objection on the layout plan submitted accordingly."
How this letter came to be written one may notice the
sequence. High Power Committee meets on October 13, 1993
and is adjourned to October 19, 1993. Mr. G.C. Goyal is
the Architect of Mahapalika and he forwarded the layout plan
to LDA. Mr. Goyal is also officiating as Architect of LDA.
Approval of the layout plan by LDA is dated October 16,
1993, which is 3 days before the next meet of the High Power
Committee. This approval of the layout at LDA was
recommended by the same person who forwarded it from the
Mahapalika and in a great hurry. In the Master Plan for the
city of Lucknow, it is Aminabad area which is commercial and
that would not mean that Park can be put to commercial use.
By letter dated November 23, 1993, LDA objected to the
construction being undertaken in the Park without obtaining
permission/No objection from it and required the
construction to stop. Mahapalika in turn by its letter sent
on the following day to the builder informed it of the
objection raised by LDA and that before starting any
construction the permission/No objection of LDA as required
under Sections 14 and 15 of the Development Act was
necessary. It does appear to us that the Master Plan of the
city of Lucknow could not have envisaged the Jhandewala Park
as a site available for commercial exploitation considering
the density and congestion in the area.
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The reason for the construction of underground
shopping complex given was that it would remove the
congestion in the area. We have report of the Local
Commissioner, which says that it would rather lead to more
congestion. We think Mr. Dave is right in his submission
that a decision to construct underground shopping complex by
M.I. Builders had already been taken and that the whole
process was gone into to confer undue benefit to M.I.
Builders and the bogie of congestion was introduced to
justify the action of the Mahapalika. It is wholly illegal
and smacks of arbitrariness, unreasonableness and
irrationality.
We may also note the argument of Mr. Adarsh Goel who
said that Jhandewala Park was acquired by the State in the
year 1913 and was given to Mahapalika for its management.
He said under Section 41 of the Development Act read with
Section 5 of the U.P. Regulation of Building Operations Act
a Government order was issued on August 18, 1986 by the
State Government whereby the use of park for any other use
was prohibited. This direction of the State Government was
incorporated in the Master Plan for the city of Lucknow and
of course violated by allowing construction of underground
shopping complex.
Action of the Mahapalika in agreeing to the
construction of underground shopping complex in
contravention of the provisions of the Act and then entering
into an agreement with the builder against settled norms was
wholly illegal and has been held to be so by the High Court.
No doubt Mahapalika is a continuing body and it will be
estopped from changing its stand in the given case. But
when Mahapalika finds that its action was contrary to the
provisions of law by which it was constituted there could
certainly be no impediment in its way to change its stand.
There cannot be any estoppel operating against the
Mahapalika. Principles laid in Union of India vs. M/s.
Indo-Afgan Agencies Ltd. (1968 (2) SCR 366) and of Calcutta
High Court in The Ganges Manufacturing Co. vs. Sourujmull
and others (1880 ILR Calcutta 669) cannot apply to the facts
of the present case.
Section 128 of the Act confers powers on the
Mahapalika to sell, let of, hire, lease, exchange, mortgage,
grant otherwise dispose of any property or any interest
therein acquired by or vested in the Mahapalika. Appellant
and the intervenors said that there was no disposal of any
property and no interest in the land had been transferred by
the Mahapalika to the builder. Respondent, as noted above,
contended to the contrary. Under Section 54 of the Transfer
of Property Act, 1882 agreement to sell does not create any
interest in land. We are not concerned with this provision.
Reference may, however, be made to Sections 60(b) and 62(f)
of the Easement Act, 1882. Though the licence under Section
60(b) is irrevocable but it can be revoked after the
happening of certain event which is when the builder has
recovered whole of his investment plus 10% of the profit.
Reference may be made to a decisions of this Court in
Chawalier I.I. Iyappan and another vs. The Dharmodayam
Company [(1963) 1 SCR 85]. In this case an argument was
raised by the appellant that he had been granted a licence
and acting upon the licence he had executed a work of
permanent character and incurred expenses in the execution
thereof and, thereafter, under Section 60(b) of the Easement
Act, 1882 the licence was irrevocable. This Court said:-
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"In our opinion no case of licence really arises but
if it does what is the license which the appellant obtained
and what is the licence, which he is seeking to plead as a
bar. The licence, if it was a licence, was to construct the
building and hand it over to the respondent company as trust
property. There was no licence to create another kind of
trust which the appellant has sought to create. It cannot
be said therefore that there was an irrevocable license
which falls under s. 60(b) of the Act. Even such a license
is deemed to be revoked under s. 62(f) of that Act where
the licence is granted for a specific purpose and the
purpose is attained or abandoned or becomes impracticable.
In the present case the purpose for which the license was
granted has either been abandoned or has become
impracticable because of the action of the appellant."
[The Indian Easement Act, 1882: Sections 52, 53,
60(b0 and 62(f) :-
52. Where one person grants to another, or to a
definite number of other persons, a right to do, or continue
to do, in or upon the immovable property of the grantor,
something which would, in the absence of such right, be
unlawful, and such right does not amount to an easement or
an interest in the property, the right is called a license.
53. A license may be granted by any one in the
circumstances and to the extent in and to which he may
transfer his interests in the property affected by the
license.
60. A license may be revoked by the grantor, unless:-
(a)..........
(b) the licensee, acting upon the license, has
executed a work of a permanent character and incurred
expenses in the execution.
62. A license is deemed to be revoked -
(a) to (e) ...........
(f) where the license is granted for a specified
purpose and the purpose is attained, or abandoned, or
becomes impracticable;]
We find force in the submissions of respondents that
by granting licence to the builder to construct underground
shopping complex of permanent nature and to hold on to the
same for a period which is not definite and then under the
impugned agreement builder having been authorised to lease
out the shops on behalf of the Mahapalika, it is a dubious
method adopted to subvert the provision of Section 128 which
apply as well in the case of lease and thus the transaction
will also be covered by the expression "otherwise dispose of
any interest in the property". It is, therefore, difficult
to accept the argument of the builder that transaction is
outside Section 128 of the Act. Now, first licence has been
granted to the builder to enter upon the park and to execute
a work of permanent character and incur expenses in the
execution of the work, thus making the licence irrevocable.
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However, the licence is deemed to be revoked after the
licensee has recovered his full cost on the construction
plus 10% of the profit on the investment made by him. When
this purpose is achieved by the licensee is anybodys guess.
Not only that licensee, i.e., the builder is then authorised
to lease out the shops so constructed on behalf of the
Mahapalika. The result would be that to the builder
provisions of Section 129 of the Act, cannot be thus made
applicable. In such a situation for the builder to contend
that the transaction is not covered by Section 128 and,
therefore, Section 129 will not apply is certainly
incredulous. Provision of Section 129 of the Act has,
therefore, been flouted. Impugned agreement dated November
4, 1993 is bad having been executed also in contravention of
the requirement of Section 129 of the Act.
The facts and circumstances when examined point to
only one conclusion that the purpose of constructing the
underground shopping complex was a mere pretext and the
dominant purpose was to favour the M.I. Builders to earn
huge profits. In depriving the citizens of Lucknow of their
amenity of an old historical park in the congested area on
the spacious plea of decongesting the area Mahapalika and
its officers forgot their duty towards the citizens and
acted in a most brazen manner.
Proposition of construction of underground shopping
complex was so lucrative and the land so valuable that
Mahapalika itself could have done it by collecting earnest
money from the prospective allottees. But then nobody cared
to examine this aspect and a plea was also advanced that
Mahapalika had no finance to undertake the project. If one
refers to the agreement the builder itself devised a self-
financing scheme and it had not to spend anything from its
own pocket. On mere booking of the shops builder could
collect rupees one crore twenty five lakhs and would have
collected more money with the progress of the construction
at various stages. A public body would not sequester away
its property by devising new methods.
Thus there are two distinct areas of challenge in the
present case - (1) the agreement is fraud on power, prime
land has been given for a song by the Mahapalika. The fact
that the scheme is so lucrative could be seen from the fact
that all shops less 5% were booked within six days of the
advertisement appearing in December, 1993. Public interest
and public exchequer have been sacrificed. Mahapalika is
divested of its control over the project though notionally
not for ever but the builder, on the other hand, has control
over the project for all times to come and (2) construction
is in contravention of the provisions of law as contained in
Development Act. The project has been entrusted to the
builder in violation of the provisions of the Act. The
decision taken by the Mahapalika was not on proper
consideration and was not an informed objective decision.
Judicial review is permissible if the impugned action is
against law or in violation of the prescribed procedure or
is unreasonable, irrational or mala fide. As said earlier
High Court rightly exercised its power of judicial review in
the present case. It has examined the manner in which the
decision was made by the Mahapalika. Second principle laid
in Tata Cellular's case [(1994) 6 SCC 651] applies in all
respects. High Court held that the maintenance of the park
because of its historical importance and environmental
necessity was in itself a public purpose and, therefore, the
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construction of an underground market in the garb of
decongesting the area was wholly contrary and prejudicial to
the public purpose. By allowing the construction Mahapalika
had deprived its residents as also others of the quality of
life to which they were entitled to under the Constitution
and the Act. The agreement smacks of arbitrariness,
unfairness and favourtism. The agreement was opposed to
public policy. It was not in public interest. Whole
process of law was subverted to benefit the builder. We
agree with the findings and conclusions of the High Court.
High Court in its impugned judgment has not doubted
the capacity of M.I. Builders to undertake the project but
then that is not the issue. The question is why it was not
necessary to invite tenders for the project of such a high
cost. Why it was thought that it was only the M.I.
Builders in the country who could undertake the job? Why
project report was not obtained to know the cost of the
project? Why could it not be thought that there could be
any other person who could undertake the job at a lesser
cost and in equally competent manner? Public interest has
certainly been given a go bye. There was some undercurrent
flowing to award the contract to M.I. Builders. High Court
said "lest we are taken amiss we wish to make it clear that
we do not doubt either the bona fides of the authorities or
the competence of the respondents M/s. M.I. Builders to
enter into the impugned agreement but we are of the view
..." The competence of M/s. M.I. Builders to undertake the
project is not doubted when now it is seen that proper
construction has been made but before taking decision to
award the contract to it nobody knew its credentials. No
attempt made whatsoever to consider if there was any other
person more competent for the job or if of equal competence
could offer better terms. In these circumstances, dictum
contained in the case of Kasturi Lal Lakshmi Reddy vs.
State of J & K [(1980) 4 SCC 1] becomes inapplicable. No
advantage can be drawn by the builder from the decision of
this Court in G.B. Mahajans case [(1991) 3 SCC 91] as here
the whole process of awarding contract to M.I. Builders has
been gone through in an unabashed manner and in flagrant
violation of law with the sole purpose of conferring benefit
on it. All said and done we fail to understand the
certificate given by the High Court about the bona fides of
the authorities in awarding the contract to M/s. M.I.
Builders. The officers of the Mahapalika, who were
impleaded as respondents by name, did not file any replies
to contradict the allegations made against them. Rather it
appears that it was a fit case where High Court should have
directed an inquiry to be made as to how the project came to
be awarded to M.I. Builders including the conduct of the
lawyers.
High Court has directed dismantling of the whole
project and for restoration of the park to its original
condition. This Court in numerous decisions has held that
no consideration should be shown to the builder or any other
person where construction is unauthorised. This dicta is
now almost bordering rule of law. Stress was laid by the
appellant and the prospective allottees of the shops to
exercise judicial discretion in moulding the relief. Such
discretion cannot be exercised which encourages illegality
or perpetuates an illegality. Unauthorised construction, if
it is illegal and cannot be compounded, has to be
demolished. There is no way out. Judicial discretion
cannot be guided by expediency. Courts are not free from
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statutory fetters. Justice is to be rendered in accordance
with law. Judges are not entitled to exercise discretion
wearing robes of judicial discretion and pass orders based
solely on their personal predilections and peculiar
dispositions. Judicial discretion wherever it is required
to be exercised has to be in accordance with law and set
legal principles. As will be seen in moulding the relief in
the present case and allowing one of the blocks meant for
parking to stand we have been guided by the obligatory
duties of the Mahapalika to construct and maintain parking
lots.
In the present case we find that the builder got an
interim order from this Court and on the strength of that
order got sanction of the plan from the Mahapalika and no
objection from the LDA. It has no doubt invested
considerable amount on the construction which is 80%
complete and by any standard is a first class construction.
Why should the builder take such a risk when the interim
order was specific that the builder will make construction
at its own risk and will not claim any equity if the
decision in the appeal goes against it? When the interim
order was made by this Court Mahapalika and the State
Government were favouring the builder. As a matter of fact
Mahapalika itself filed appeals against the impugned
judgment of the High Court. Perhaps that gave hope to the
builder to go ahead with the construction and to take the
risk of getting the construction demolished and restoring
the park to its original condition at its own cost. The
builder did not foresee the change in stand not only of the
Mahapalika but also of the State Government. It also, as it
would appear, over-rated its capacity to manage with the
State Government to change the land use of the park.
Builder is not an innocent player in this murky deal when it
was able to get the resolutions of the Mahapalika in its
favour and the impugned agreement executed. Now,
construction of shops will bring in more congestion and with
that the area will get more polluted. Any commercial
activity now in this unauthorised construction will put
additional burden on the locality. Primary concern of the
Court is to eliminate the negative impact the underground
shopping complex will have on environment conditions in the
area and the congestion that will aggravate on account of
increased traffic and people visiting the complex. There is
no alternative to this except to dismantle the whole
structure and restore the park to its original condition
leaving a portion constructed for parking. We are aware
that it may not be possible to restore the park fully to its
original condition as many trees have been chopped off and
it will take years for the trees now to be planted to grow.
But beginning has to be made.
There are four blocks under construction. Services
like air-conditioning, fire-fighting, water supply, sanitary
installation, necessary pumps for drainage and sewerage,
etc. are yet to be installed and completed.
In block No. 1 there are shops at the level minus
9'6". These shops are divided by partition walls. There is
a big hall with pillars below these shops at level of minus
19'6".
In block 2 there are shops on the upper basement level
9'6". There is no lower basement level.
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Third block is currently designed to have shops at the
upper basement level and parking at the lower basement
level. The upper basement level can be converted to have
parking at that level too since the structural configuration
will permit the same. Flooring on the lower basement is yet
to be laid. There can thus be parking both on the upper
basement and the lower basement. This parking place for
vehicles would lead to decongestion of the roads surrounding
the park which are otherwise choked with the parked vehicles
in its entire periphery.
Fourth block is only partially developed with just a
separate ramp going down to the first basement level and a
few columns with their foundations standing from the lower
basement level. This fourth block, is currently dug up.
However, to facilitate the movement of the vehicles to the
two levels of parking in the third block a new ramp shall be
constructed adjacent to and contiguous to the third block.
We have noted above that under clause (ix-a) of
Section 114 of the Act, it is incumbent on the Mahapalika to
make reasonable and adequate provision by any means or
measures which it is lawfully competent to it to use or to
take for the construction and maintenance of parking lots,
bus stops and public convenience.
Number of cases coming to this Court pointing to
unauthorised constructions taking place at many places in
the country by builders in connivance with the
Corporation/Municipal officials. In the series of cases,
this Court has directed demolition of unauthorised
constructions. This does not appear to have any salutary
effect in cases of unauthorised construction coming to this
Court. While directing demolition of unauthorised
construction, court should also direct inquiry as to how the
unauthorised construction came about and to bring the
offenders to book. It is not enough to direct demolition of
unauthorised construction, where there is clear defiance of
law. In the present case, but for the observation of the
High Court, we would certainly have directed an inquiry to
be made as to how the project was conceived and how the
agreement dated November 4, 1993 came to be executed.
We direct as under :
1. Block 1, 2 and 4 of the underground shopping
complex shall be dismantled and demolished and on these
places park shall be restored to its original shape.
2. In Block 3 partition walls and if necessary
columns in the upper basement shall be removed and this
upper basement shall be converted into parking lot.
Flooring should be laid at the lower basement level built to
be used as parking lot. Ramp shall be constructed adjacent
to Block 3 to go to upper and lower basement levels for the
purpose of parking of vehicles. Further to make block 3
functional as a separate unit walls shall be constructed
between block 2 and block 3 and also block 3 and block 4.
3 Dismantling and demolishing of these structures in
Blocks 1, 2 and 4 and putting Block 3 into operation for
parking shall be done by the Mahapalika at its own cost.
Necessary services like sanitation, electricity etc. in
Block 3 shall be provided by the Mahapalika.
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4. Mahapalika shall be responsible for maintaining
the park and the Block 3 for parking purposes in proper and
efficient manner.
5. M.I. Builders Pvt. Ltd., the appellant, is
divested of any right, title or interest in the structure
built by it under or over the park. It shall have no claim
whatsoever against Mahapalika or against any other person or
authority
6. Block 3 shall vest in Mahapalika free from all
encumbrances. Licence of M.I. Builders to enter into the
park and the structure built therein is cancelled of which
possession is restored to the Mahapalika with immediate
effect. No obstruction or hindrance shall be caused to the
Mahapalika by any one in discharge of its functions as
directed by this order.
7. Restoration of the park and operation of Block 3
for parking purposes shall be completed by Mahapalika within
a period of 12 months from today and report filed in the
registry of this Court.
With the directions aforesaid, the appeals are
dismissed with costs.
In a seminal ruling that continues to shape environmental and administrative law in India, the Supreme Court's decision in MI Builders Pvt Ltd v Radhey Shyam Sahu stands as a powerful defense of public spaces against commercial exploitation. This landmark case, now authoritatively documented on CaseOn, critically examines the scope of the Public Trust Doctrine and the non-negotiable duty of municipal bodies to protect the environment. The judgment quashed a decision by the Lucknow Nagar Mahapalika that permitted a private builder to construct an underground shopping complex in a historic public park, reaffirming that public property cannot be sacrificed at the altar of private profit.
The dispute originated from a decision by the Lucknow Nagar Mahapalika (the Corporation) to permit M.I. Builders Pvt. Ltd. (the appellant) to build a sprawling underground shopping complex and parking facility in the historic Jhandewala Park at Aminabad, Lucknow. This decision was challenged by local citizens and corporators through writ petitions before the Allahabad High Court, which found the action to be illegal, arbitrary, and unconstitutional. The High Court ordered the demolition of the structure and the restoration of the park to its original state. Aggrieved, M.I. Builders appealed to the Supreme Court, which had initially allowed construction to proceed at the builder's own risk, with a clear warning that no 'equity' could be claimed later.
The Supreme Court meticulously analyzed the case through the lens of established legal principles, providing a clear and comprehensive judgment.
The Court grappled with several critical issues:
The Supreme Court's decision was anchored in several key legal provisions and doctrines:
The Supreme Court's analysis methodically dismantled the arguments of the builder and exposed the flawed actions of the Mahapalika.
The intricate web of procedural violations and substantive illegalities in this case can be complex to unravel. For legal professionals and students on the go, resources like CaseOn.in's 2-minute audio briefs offer a concise yet comprehensive way to grasp the core analysis of such detailed rulings, saving valuable time while ensuring a thorough understanding.
The Court found that the Mahapalika had completely abdicated its statutory and public duties. The decision to hand over the park was taken without any proper study, feasibility report, or transparent process. The creation of a 'High Power Committee' to approve the project was an illegal delegation of the Corporation's functions. Furthermore, the agreement was pushed through meetings without being on the formal agenda, denying corporators a chance for informed debate.
The terms of the agreement were found to be shockingly one-sided and detrimental to the public interest. The builder was given a free hand to determine the cost, lease out shops, and retain control for an indefinite period, while the Mahapalika was left with virtually no oversight. The Court described this as a classic case of a public body acting in a “fatuous manner” and termed the arrangement a “fraud on power.”
The Court held that the park was not a disposable asset but a community resource held in trust. By allowing its conversion into a shopping complex, the Mahapalika breached this sacred trust. The judgment emphasized that destroying the park’s ecological value to serve a commercial purpose was a direct violation of the right to a clean and healthy environment, an integral part of the right to life under Article 21 of the Constitution.
The Supreme Court upheld the High Court's finding that the agreement and construction were illegal. It issued a stern warning to builders and public authorities that unauthorized constructions in violation of law and public trust would not be tolerated, and no amount of investment would create equity in their favor.
However, the Court moulded the final relief. Recognizing the Mahapalika's obligatory duty to provide parking facilities and the severe congestion in the area, it directed that one of the four constructed blocks (Block 3) be converted into a permanent public parking facility. The remaining three blocks were ordered to be demolished, and the park was to be restored to its original condition. The builder was divested of all rights, and the cost of demolition and restoration was placed upon the Mahapalika.
The MI Builders case is essential reading for several reasons:
Disclaimer: This article is for informational and educational purposes only and does not constitute legal advice. For specific legal issues, please consult with a qualified legal professional.
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