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Nature and scope of Jurisprudence – Classification of Jurisprudence into Schools-Salient features of Analytical, Historical, Philosophical and Sociological Schools..

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SPECIFIC RELIEF ACT – Alternative Relief versus Main Relief

Actus Curiae Neminem Gravabit.

ACT OF THE COURT SHALL PREJUDICE NO ONE.

 

In this article, the author delves upon the issue of Alternative Relief versus Main Relief in a Suit For Specific Performance.

Question of Law: If the plaintiff has asked for alternative relief, can he be refused the principal relief of specific performance in the main suit.

Discussion

It was held in Motilal Jain v. Ramdasi Devi, 2000 (3) RCR(Civ) 545[1] that merely because plaintiff claims damages in a suit for specific performance of contract as alternative relief, it cannot be said that he is not entitled to main relief of specific performance. It was held in Ram Dass v. Ram Lubhaya, 1998 (2) RCR (Civil) 684[2] that an alternative prayer by a plaintiff in a suit cannot be construed as a waiver or abandonment of the main relief in the suit. An alternative prayer is a relief which is claimed by the party if the party is found to be not entitled to the main relief claimed in the suit. The jurisdiction vested in the Court to decline specific performance and grant alternative relief is a jurisdiction of equity and good conscience and must be exercised in consonance with the settled principles of law. A lawful agreement being proved and judicial conscience of the Court being satisfied, the equity would demand enforcement of an agreement rather than granting an alternative relief of damages to the plaintiff. It need not be reiterated that equity must give relief where equity demands. The time taken by the Courts in deciding suits or appeals would normally be not permitted to work to the disadvantage of the party to the lis. Acts of the Courts shall cause prejudice to none was so stated by the Hon ble Apex Court in Atma Ram Mittal v. Ishwar Singh Punia, 1988 (0) AIR(SC) 2031[3].

Conclusion

From the ratio of above judicial precedent, it would suffice to say that merely because the plaintiff has asked for alternative relief, he cannot be refused the principal relief of specific performance.

Author Bio

Anil hails from a Consulting Background in the area of Business, Technology and Project Management. This Article is a humble effort to disseminate Legal Research with insights from the Consulting Background. The Author may be reached via anil [at] Satyagraha [dot] com

 

 



[1] Motilal Jain v. Ramdasi Devi, 2000 (3) RCR(Civ) 545

[2] Ram Dass v. Ram Lubhaya, 1998 (2) RCR (Civil) 684

[3] Atma Ram Mittal v. Ishwar Singh Punia, 1988 (0) AIR(SC) 2031

Nagendrappa Natikar v. Neelamma, 2014 (14) SCC 452

 

2013 0 AIR(SC) 1541; 2013 0 CrLJ 2060; 2013 2 JCR(SC) 187; 2013 4 JT 120; 2013 2 RCR(Civ) 469; 2014 14 SCC 452; 2015 1 SCC(Civ) 346; 2015 1 SCC(Cri) 407; 2013 2 Supreme 424; 2013 0 Supreme(SC) 253;

 

 

 

SUPREME COURT OF INDIA

 

K. S. RADHAKRISHNAN AND DIPAK MISRA, JJ.

 

NAGENDRAPPA NATIKAR - Petitioner

 

VERSUS

 

NEELAMMA - Respondent

 

Special Leave Petition (Civil) No. 11800 of 2013 [Arising out of C.C. No. 1297 of 2012]

 

Decided on : 15-3-2013.

 

(a)Hindu Adoption And Maintenance Act, 1956 - Section 18 - Suit for maintenance - Maintainable in spite of a compromise reached between the parties u/Order XIII, r. 3, CPC. (Para 9)

(b)   Code of Criminal Procedure, 1973 - Section 125 - Intended to provide speedy remedy and not full and final determination of the status and personal rights of parties which can be done only in a civil proceeding - Hence any order u/s 125 by compromise or otherwise cannot foreclose remedy available u/s 18(2), HAMA. (Paras 10 and 11)

Facts of the case:

 

The question in this case is whether a compromise entered into by husband and wife under Order XXIII Rule 3 of the Code of Civil Procedure, agreeing for a consolidated amount towards permanent alimony, thereby giving up any future claim for maintenance, accepted by the Court in a proceeding under Section 125 of the Code of Criminal Procedure, would preclude the wife from claiming maintenance in a suit filed under Section 18 of the Hindu Adoption and Maintenance Act, 1956

Finding of the Court:

 

Any order u/s 125 by compromise or otherwise cannot foreclose remedy available u/s 18(2), HAMA.

Result : Petition dismissed.

 

 

 

 

 

CIVIL PROCEDURE CODE : O.13 R.3, O.23 R.3, O.33 R.3 HINDU ADOPTIONS AND

 

MAINTENANCE ACT : S.18, S.18(2) CRIMINAL PROCEDURE CODE : S.125, S.127

 

Compromise on permanent alimony in a proceeding u/s 125, CrPC - effect on remedy u/s 18, HAMA.

 

JUDGMENT


K. S. Radhakrishnan, J.:- Delay condoned.

 

2.  The question that is raised for consideration in this case is whether a compromise entered into by husband and wife under Order XXIII Rule 3 of the Code of Civil Procedure (CPC), agreeing for a consolidated amount towards permanent alimony, thereby giving up any future claim for maintenance, accepted by the Court in a proceeding under Section 125 of the Code of Criminal Procedure (CrPC), would preclude the wife from claiming maintenance in a suit filed under Section 18 of the Hindu Adoption and Maintenance Act, 1956 (for short “the Act’).

3.   The marriage between the petitioner (husband) and respondent (wife) took place on 24.5.1987. Alleging that the petitioner is not maintaining his wife, respondent filed an application under Section 125 CrPC for grant of maintenance before the 1st Additional JMFC at Gulbarga, being Misc. Case No. 234 of 1992. While the matter was pending, an application was preferred by the parties under Order XXIII Rule 3 CPC on 3.9.1994 stating that the parties had arrived at a compromise, by which the respondent had agreed to receive an amount of Rs.8,000/- towards permanent alimony and that she would not make any claim for maintenance in future or enhancement of maintenance. Consent letter dated 30.3.1990, which is in Kannada, the English translation of the same reads as follow:

“Consent letter: I, Neelamma W/o Nagendra Natikar, Age 23 years, R/o Old Shahabad, do hereby execute this consent letter in favour of my husband Nagendra Natikar with free will and consent without coercion and misrepresentation. After my marriage with Nagendra Natikar, I could not lead marital life happy with my husband due to my ill health as prior to my marriage I was suffering from backache, Paralysis stroke to my left hand and left leg and was also suffering from epilepsy (Fits disease) and therefore I have myself decided to withdraw from marital life. I have given my consent for mutual divorce. I have no objection if my husband would contract second marriage with someone. Prior to my marriage I was suffering from chronic disease. I had asked my father not to celebrate her marriage with anyone. My father forcibly got marriage with Nagendrappa Natikar. Henceforth I will not make any further claims and also forfeit my rights in future and I will not claim compensation or maintenance or alimony. I am satisfied with the payment of Rs.8000/- and I will not make any further claims against my husband.

I have executed this consent letter in favoaur of my husband without any force of anybody and free from misrepresentation or coercion. My father-mother or nay other family members have no

objection for executing this consent letter.

 

Signature of Executant

 

 

(Signed in Kannada))

 

Signature of witnesses:

 

1.  Tippanna (signed in Kannada)

 

2.  Devindrappa (signed in Kannada)

 

3.  Syed Zabiullah Sahab (signed scribe)”

 

The Court, on the same day, passed the following order:

 

“Parties both present. Both parties and advocates files compromise petition. The contents of the compromise petition is read over and explained to them. They admit the execution of the same before court. Respondent paid Rs.8000/- (eight thousand) before court towards full satisfaction of


the maintenance as per compromise recorded. In view of the compromise, petition dismissed.”

 

4.  Respondent wife then filed a Misc. Application no. 34 of 2003 under Section 127 Cr.P.C. before the Family Court, Gulbarga for cancellation of the earlier order and also for awarding future maintenance, which was resisted by the petitioner stating that the parties had already reached a compromise with regard to the claim for maintenance on 3.9.1994 and hence the application for cancellation of the earlier order is not maintainable. The Court accepted the plea of the husband and took the view that since such an order was still in force and not set aside by a competent Court, it would not be possible to entertain an application under Section 127 Cr.P.C. The application was, therefore, dismissed on 31.7.2006.

5.  We notice, while the application under Section 127 Cr.P.C. was pending, respondent wife filed O.S. No. 10 of 2005 before the Family Court, Gulbarga under Section 18 of the Act claiming maintenance at the rate of Rs.2,000/- per month. The claim was resisted by the petitioner husband contending that, in view of the compromise reached between the parties in Misc. Case No. 234 of 1992 filed under Section 125 CrPC, respondent could not claim any monthly maintenance and hence the suit filed under Section 18 of the Act was not maintainable. The question of maintainability was raised as a preliminary issue. The Family Court held by its order dated 15.9.2009 that the compromise entered into between the parties in a proceeding under Section 125 Cr.P.C. would not be bar in entertaining a suit under Section 18 of the Act.

6.  The suit was then finally heard on 30.9.2010 and the Family Court decreed the suit holding that the respondent is entitled to monthly maintenance of Rs.2,000/- per month from the defendant husband from the date of the filing of the suit.

7.  Aggrieved by the said order, petitioner took up the matter before the High Court by filing an appeal, being M.F.A. No. 31979 of 2010, which was dismissed by the High Court by its judgment dated 28.3.2011, against which this SLP has been preferred.

8.   Shri Raja Venkatappa Naik, learned counsel appearing for the petitioner, husband, submitted that suit filed under Section 18 of the Act is not maintainable, in view of the order dated 3.9.1994, accepting the consent terms and ordering a consolidated amount towards maintenance under Section 125 Cr.P.C.

9.  We are in complete agreement with the reasoning of the Family Court and confirmed by the High Court that the suit under Section 18 of the Act is perfectly maintainable, in spite of the

compromise reached between the parties under Order XXIII Rule 3 C.P.C. and accepted by the Court in its order dated 3.9.1994.

 

10.   Section 125 Cr.P.C. is a piece of social legislation which provides for a summary and speedy relief by way of maintenance to a wife who is unable to maintain herself and her children. Section 125 is not intended to provide for a full and final determination of the status and personal rights of parties, which is in the nature of a civil proceeding, though are governed by the provisions of the Cr.P.C. and the order made under Section 125 Cr.P.C. is tentative and is subject to final determination of the rights in a civil court.

 

11.  Section 25 of the Contract Act provides that any agreement which is opposed to public policy is not enforceable in a Court of Law and such an agreement is void, since the object is unlawful. Proceeding under Section 125 Cr.P.C. is summary in nature and intended to provide a

 

speedy remedy to the wife and any order passed under Section 125 Cr.P.C. by compromise or


otherwise cannot foreclose the remedy available to a wife under Section 18(2) of the Act.

 

12.  The above being the legal position, we find no error in the view taken by the Family Court, which has been affirmed by the High Court. The Petition is, therefore, dismissed in limine.

ALIMONY CONTRACTS AND CONSENT AGREEMENTS

Qui per fraudem agit frustra agit. A person who acts fraudulently acts in vain.

 

In this article, the author delves upon Alimony Contracts and the applicability of Section § 25 of the Indian Contract Act, 1872.  

It would be fruitful to recite Section § 25 of the Indian Contract Act, 1872, that is stated as herein under —

Indian Contract Act, 1872 [Act No. 9 of Year 1872, dated 25th. April, 1872]

§ 25. Agreement without consideration, void, unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law 
An agreement made without consideration is void, unless –

(1) it is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless 

(2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless 

(3) it is a promise, made in writing and signed by the person to be charged therewith or by his agent generally or specially authorised in that behalf, to pay wholly or in part debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract.

Explanation 1 : Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.

Explanation 2 : An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.

 

 

Caselaw

Nagendrappa Natikar v. Neelamma, 2014 (14) SCC 452................................ 1

 

 

In the matter of Nagendrappa Natikar v. Neelamma[1], the Hon'ble SUPREME COURT OF INDIA speaking through Learned K. S. RADHAKRISHNAN AND DIPAK MISRA, JJ., vide Special Leave Petition (Civil) No. 11800 of 2013 [Arising out of C.C. No. 1297 of 2012] as decided on : 15-3-2013, has held —

(Para ¶10) —     Section 125 Cr.P.C. is a piece of social legislation which provides for a summary and speedy relief by way of maintenance to a wife who is unable to maintain herself and her children. Section 125 is not intended to provide for a full and final determination of the status and personal rights of parties, which is in the nature of a civil proceeding, though are governed by the provisions of the Cr.P.C. and the order made under Section 125 Cr.P.C. is tentative and is subject to final determination of the rights in a civil court.

(Para ¶ 11) —               Section 25 of the Contract Act provides that any agreement which is opposed to public policy is not enforceable in a Court of Law and such an agreement is void, since the object is unlawful. Proceeding under Section 125 Cr.P.C. is summary in nature and intended to provide a speedy remedy to the wife and any order passed under Section 125 Cr.P.C. by compromise or otherwise cannot foreclose the remedy available to a wife under Section 18(2) of the Act.”

 

From the above judicial precedent, one may prudently infer that it is a good idea to review Alimony Consent agreements by specifically screening out scenarios that could potentially invalidate the Agreement in a Court of Law.

Author Bio

Anil hails from a Consulting Background in the area of Business, Technology and Project Management. This Article is a humble effort to disseminate Legal Research with insights from the Consulting Background. The Author may be reached via anil [at] Satyagraha [dot] com

 

 

M.I. Builders Pvt. Ltd. v. Radhey Shyam Sahu & Ors., 1999 0 AIR(SCW) 2619

 

1999 0 AIR(SCW) 2619; 1999 6 Supreme 273; 1999 0 Supreme(SC) 753;

 

 

 

1999(6) Supreme 273

 

Supreme Court of India

 

(From Allahabad High Court)

 

S.B. Majmudar & D.P. Wadhwa, JJ.

 

M.I. Builders Pvt. Ltd. —Appellant

 

versus

 

Radhey Shyam Sahu & Ors. —Respondents

 

Civil Appeal Nos. 9323-9325 of 1994

 

Decided on 26-7-1999

 

Counsel for the Parties :

 

For the Appearing Parties : M.L. Verma, Arun Jaitley, Dushyant Dave, G.L. Sanghi, Raju Ramachandran, Sr. Advocates, Ms. Nisha Bagchi, Vikas Mehta, Ms. Indu Malhotra, S.V.

Deshapande, Ashok Srivastava, Pradeep Misra, R.C. Verma, C. Sidhartha, M.K. Srivastava, (A.K. Goel) Addi-tional Advocate General for U.P., R.B. Misra, Kamlendra Misra, and Uday Umesh Lalit, Advocates.

 

(i)  Environmental Law—Park in Lucknow City—Nagar Mahapalika granting licence to a builder to construct underground shopping complex—Provi-sions of U.P Building Operations Act, Uttar Pradesh Urban Planning and Development Act and U.P. Parks, Play Grounds and Open Space (Preserva-tion and Regulation) Act violated—Ostensi-ble purpose was decongesting the area—Pur-pose of constructing under ground shopping complex was a mere pretex and dominant purpose was to favour the builder—Actions of Maha-palika deprived citizens of Lucknow of their amenity of an old historical park in the congested area—Contract with Builder itself not valid it being not in confirmity with the provisions of U.P. Nagar Mahapalika Adhiniyam —Mahapalika is trustee for management of park—When true nature of park, as it existed, is destroyed it would be violative of the doctrine of public trust—By allowing construction of underground shopping complex in the park, Mahapalika has violated not only Section 114 of U.P. Nagar Mahapalika Adhiniyam but also the public trust doctrine—Construction ordered to be demolished—Mahapali-ka ordered to restore the park to original condition.

 

Held : 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-resi-dential 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 appear-ance 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 construc-tion 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 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 manag-ement of the park. When true nature of the park, as it existed, is destroyed it would be violative of the doctrine of public trust. By allowing construction of underground shopping complex in the park Mahapalika has violated not only Section 114 of the U.P. Nagar Mahapalika Act but also the public trust doctrine. (Paras 51 & 53)

 

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. (Para 63)

The facts and circumstances when examined point to only one con-clusion 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. (Para 70)

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 Govern-ment 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 demol-ished and restoring the park to its original condition at its own cost. The builder did not foresee the change in stand not only 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 Mahapa-lika in its favour and the impugned agreement executed. Now, construc-tion 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 in-creased traffic and people visiting the complex. There is no alterna-tive to this except to dismantle the whole structure and restore the park to its original condition leaving a portion constructed for parking. (Para 75)

 

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 construc-tions. This does not appear to have any salutary effect in cases of unauthorised construction coming to this Court. While directing demo-lition 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, elec-tricity etc. in Block 3 shall be provided by the Mahapalika.

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. Li-cence 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 pur-poses shall be completed by Mahapalika within a period of 12 months from today and report filed in the registry of this Court.

(Para 78)

 

(ii)  Uttar Pradesh Municipal Cor-poration Adhiniyam, 1959—Section 119—Delegation of function—Maha-palika constituting High Power Committee and delegating its function to High Power Committee—Not valid—Delegation can only be to Executive Committee or to Mukhya Nagar Adhikari.

Held : Under Section 119, of the U.P. Munici-pal Corporation Adhiniyam 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. There is no au-thority with the Mahapalika to 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 con-sideration of the underground shopping complex. There were no proposals, no documents, no plan, no study, no project report or feasibili-ty 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 abdicat-ed 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 deci-sion to hand over the park to the builder for construction of the underground shopping complex and also approved the terms of the agree-ment dated November 4, 1993. Decision of the High Power Committee was put before the Executive Committee and the general body of the Mahapa-lika for the purpose of “infor-mation” 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 mat-ter, where the cost of the project was likely to run in crores of rupees, could not have been considered under the topic “other sub-jects, 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 pre-sent 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. (Paras 15 & 54)

 

(iii) Uttar Pradesh Municipal Corporation Adhiniyam, 1959—Sections 131, 133 and 136—Power to make contract — Manner of execu-tion—Mahapalika constituted High Power Committee to consider proposal of construction of underground shopping complex—High Power Committee passed resolution autho-rising Mukhya Nagar Adhikari to conduct all f o r t h c o m i n g a c t i o n s a n d f o r m a l i t i e s — C o n t r a c t s i g n e d b y M u k h y a N a g a r Adhikari—Com-mon seal affixed not in presence of a Corporator nor a Corporator signed the document—Execution of contract in violation of Section 133—Not binding on Mahapalika.


Held : 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 ex-pressed 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 con-tract. 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 is accordance with the requirements of law. Further, under sub-sections (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 Maha-palika. (Para 57)

 

Where a statute makes a spe-cific 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. (Para 57)

(iv)   Administrative Law—Judicial review—Every decision of an autho-rity except the judicial decision is amenable to judicial review.

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. (Para 60)

(v)  Estoppel by pleading—Muni-cipal Corporation granting permission to a builder to enter into its park and construct underground shopping complex—Writ petition challenging construction — Munici-pal Corporation supporting case of builder—Writ petition allowed—In appeal before Supreme Court Corporation opposing builder’s appeal —Plea of estoppel by pleading raised by builder—Not tenable—Contract itself was in con-travention


of provisions of Act—No estoppel against Statute. (Para 67)

 

(vi)    Uttar Pradesh Municipal Corporation Adhiniyam, 1959—Sections 125 and 129—Power to dispose of property—Legality of exercise of power—Corporation grant-ing licence and handing over park to a builder to construct underground shopping complex—Whe-ther transaction cov-ered by Section 128?—Yes—Dubious method adop-ted to subvert provi-sions of Section 128—Transaction covered by expression “otherwise dispose of any interest in the property”—Contract one sided to favour Builder—Contract not valid.

 

Held : Full freedom has been given to the builder to lease out the shops as per its own terms and condi-tions to persons of its choice on behalf of the Mahapalika and Mahapa-lika 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 Maha-palika 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 atroclous. No person of ordinary prudence shall ever enter into such an agree-ment. 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. (Paras 58 & 59)

 

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 execu-tion of the work,


thus making the licence irrevocable. 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 anybody’s 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 covered by Section 128 and, therefore, Section 129 will not apply is certainly incredulous. Provision of Section of the Act has, therefore, been flouted. Impugned agreement dated November 4, 1993 is bad having been executed also in contravention of the require-ment of Section 129 of the Act. (Para 69)

 

 

 

 

 

 

 

 

Dr. H.S. Rikhy & Ors. v. The New Delhi Municipal Committee, AIR 1962 SC 554 : Followed. (Para 39)

Cantonment Board, Jabalpur & Others v. S.N. Awasthi & Oth-ers, 1995 Supp. (4) SCC 595 at 596. (Para 39)

Pratibha Cooperative Housing Society Ltd. & Another v. State of Maharashtra & Others, 1991(3)

 

SCC 341. (Para 39)

 

Dr. G.N. Khajuria & Others v. Delhi Development Authority & Others, 1995(5) SCC 762. (Para 39)

 

Span Resort Case, 1997(1) SCC 388. (Para 51)

 

State of Bombay v. Laxmidas Ranchhoddas & Anr., AIR 1952 Bom. 468 : Approved. (Para 60)

 

Tata Cellular v. Union of India, 1994(6) SCC 651 : Relied on. (Para 10)

 

Ramana Dayaram Shetty v. International Airport Authority of India, 1979(3) SCC 489. (Para 29) Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. M/s. Thomas Stephen & Co. Ltd., 1988 (2) SCC 264 at 266. (Para 34)

G.B. Mahajan & Others v. Jalgaon Municipal Council & Others, 1991(3) SCC 91. (Para 35) M.C. Mehta v. Kamal Nath & others (known as Span case), 1997(1) SCC 388. (Para 39) Sachidanand Pandey & Anr. v. State of West Bengal & Others, 1987 (2) SCC 295. (Para 39) Virender Gaur & Others v. State of Haryana & Others, 1995(2) SCC 577 at 582. (Para 39) Pleasant Stay Hotel & Anr. v. Palani Hills Conservation Council & Ors., 1995(6) SCC 127 at 139. (Para 39)

 

Union of India v. M/s. Indo-Afghan Agencies Ltd., 1968(2) SCR 366 : Distinguished. (Para 31) The Ganges Munufacturing Co. v. Sourujmull & Ors., (1880) 5 ILR Cal. 669 : Distinguished. (Para 31)

 

1959(1) WLR 465 at 472. (Para 34)

 

Akadasi Padhan v. State of Orissa, 1963(2) Supp. SCR 691 : Relied on. (Para 39)

 

Seth Badri Prasad & Others v. Seth Nagarmal & Others, 1959(1) Supp, SCR 769 at 774. (Para 39)


 

 

K. Ramdas Shenoy v. The Chief Officers, Town Municipal Council, Udipi & Others, 1975(1) SCR


680 at 685. (Para 39)

 

Mrs. Manju Bhatia & Another v. New Delhi Municipal Council & Another, JT 1997 (5) SC 574. (Para 39)

Ram Awatar Agarwal v. Corporation of Calcutta, Civil Appeal 6416 of 1981, decided on 20.8.1996. (Para 39)

Illinois Central Railroad Company v. Illinois, 146 U.S. 387 (1892). (Para 52)

 

Chawalier I.I. Iyappan & Anr. v. The Dharmodayam Company, (1963) 1 SCR 85. (Para 68)

 

M/s. Kasturi Lal Lakshmi Reddy & Ors. v. State of J. & K. & Anr., (1980) 4 SCC 1. (Para 28)

 

Rashbihari Panda v. State of Orissa, (1969) 1 SCC 414. (Para 39)

 

R.D. Shetty v. International Airport Authority of India & Ors., (1979) 3 SCC 489. (Para 39)

 

State of Haryana v. Jage Ram, (1983) 4 SCC 556. (Para 39)

 

Ram & Shyam Co. v. State of Haryana & Ors., (1985) 3 SCC 267. (Para 39)

 

Chenchu Rami Reddy & Anr. v. Government of A.P. & Ors., (1986) 3 SCC 391. (Para 39) Myurdhwaj Cooperative Group Housing Society Ltd. v. Presid-ing Officer, Delhi Cooperative Tribual & Ors., (1998) 6 SCC 39 : 1998(5) Supreme 411. (Para 56)

 

UTTAR PRADESH NAGAR MAHAPALIKA ADHINIYAM : S.114

 

Important Points

 

1.  Where Municipal Corporation gran-ted licence to a builder to enter into its park and construct underground shopping complex ostens-ibly to decongest the area but the real intent was to favour the builder and park was the only open area in the locality and provisions of various Act were violated, Supreme Court ordered demolition of the construction and restoration of the park to its original position.

2.  Under Section 119 of the U.P. Munici-pal Corporation Adhiniyam repro-duced above, delegation can only be to the Executive Committee or to the Mukhya Nagar Adhikari and to no other person or authority or Committee.

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 peti-tions, 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) situ-ated at Aminabad Market, Lucknow, was illegal, arbitrary and unconsti-tutional. 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 Mahapa-lika 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 no-ticed that the fact that the park was of historical importance was not denied by the Mahapalika and also the fact that perseverance or main-tenance 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 pur-pose, which is alleged to be served by construction of the underground commercial complex, seemed totally illusory.

2.  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 Mahapali-ka were subsequently allowed to be withdrawn by order dated February 6, 1997. There is controversy as to how the Maha-palika which had 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 Order

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.”

 

3.  Mahapalika also cancelled the building plans. This action of the Mahapalika was subject matter of criticism by the appellant as to how a duty sanctioned plan could be revoked without any notice to the appellant. We may, at this stage, itself reproduce the relevant por-tion 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 con-struction 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 Luck-now, 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 Judg-ment dated 23.8.1994 of Lucknow Bench of Hon’ble High Court of Allaha-bad.

Unanimously decided that the aforesaid resolution be passed and ac-cordingly 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 dated 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 stand-ing 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

 

17.4.1997

 

Copy to:

 

The Vice Chairman,

 

Lucknow Development Authority, for information.

 

Sd/-

 

S.K. Gupta

 

Mukhya Nagar Adhikari”

 

4. 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 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.”

5.  It is contended by the appellant that after the aforesaid interim order, it got necessary building plans sanctioned by the Mahapalika and started construction. Res-pondents, 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 Loombs, 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 pro-ceeds 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 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 not 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 per-missible 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 con-struction 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.”

 

6.   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.

7.   Before we consider the details of the case we may note in brief the contentions of the parties.

8.  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 appel-lant (M.I. Builders) in violation of the provisions of law to con-struct 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 under-ground market in the garb of the decongesting area of the encroachers to destroy a park of historical importance and of environmental neces-sity. It would be in breach of Articles 21, 49, 51-A(g) of the Consti-tution as the existing park which is the only open space in the busi-est commercial area in the heart of the city of Lucknow can be de-stroyed 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 also Uttar Pradesh Parks, Playgrounds and Open Spaces (Preservation and Regula-tion) 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 Maha-palika 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

 

authori-ties 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 Maha-palika was against public inter-est. Lucknow Development Authority (for short LDA) which was consti-tuted 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.

9.  The builder as well as the Mahapalika filed their respective coun-ter 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 allega-tions. In the High Court a very strange scenario emerged and that was that though the stand of Mahapalika and LDA as spelled out from docu-ments 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 sup-porting 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 chang-ing 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.

 

10. The impugned judgment has been challenged by the builder on the following grounds :--

 

(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 omis-sion 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 v. Union of India1 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.

11.  This last submission we need not go into the question if cancella-tion of the sanctioned building plans by the Mahapalika was valid as that was not the issue before the High Court.

12.  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 Corpora-tion as the Corporation may with the previous sanction of the State Government establish with respect thereto.”

13.  Chapter II provides for constitution of various committees and Chapter III for proceedings of the Mahapalika, Executive Committee, Development Committee and other Committees. In view of the applicabil-ity of the Development Act, 1973, the Executive Committee of Mahapali-ka 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.”


14.  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 func-tions. 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 proce-dure 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 Sche-dule I.”

15.  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 delega-ted. 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 Com-mittee. 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.

16.  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 includ-ing 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 Sec-tion 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 other-wise 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 Gov-ernment shall be sold, let on hire, exchange of 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 provi-sions 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 Corpora-tion.

(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 other-wise 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.

(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 Com-mittee or of the Corpora-tion 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 execut-ed, 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 vanied or dis-charged :

 

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 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 sup-plied 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 speci-fied 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 .......... 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.”

17.   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 estimated 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 sugges-tions and may reject the project or may approve it either in its entirety or subject to modifications.”

(By the amending Act 12 of l994 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.)

18. 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.

 

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 Sec-tion 114, are as under :


“114. Obligatory duties of the Corporation.—It shall be incumbent on the Corporation to make reasonable and adequate provi-sion, 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 consump-tion 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.”

19.  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.”

20.   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 amend-ment 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 devel-opment of land shall be undertaken or carried out or continued in that area by any person or body (including a department of Government) unless 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 contain-ed 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 pro-posed development on the ground that the development is not in con-formity 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 develop-ment 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 requi-rement of sub-sections (1) and (2).”

21. 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 of this Act. When the Development Act is in operation, then under Section 59 of this Act, certain func-tions of the U.P. Municipal Corporation Adhiniyam, 1959 become inoper-ative 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.

22.  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 remain-der 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.

 

23.   As to how the impugned agreement dated November 4, 1993 came to be executed between the Mahapalika and the builder we how consider the proceedings of the Mahapalika, the Executive Committee and its sub-committee called the High Power Committee.

 

24.  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 Execu-tive 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 consti-tuted under the chairmanship of the Nagar Pramukh in which two Hon’ble Sabhasad and three officers be appointed. For nominating the members, the Nagar Pramukh may be autho-rised. The 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 Chairman-ship 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 afore-mentioned rights of the Mahapalika conditions of allotment and agree-ment etc. In this manner this Sub Committee is authorised to exercise the aforementioned rights of the Mahapalika.”

 

26.  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. Akhi-lesh 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 Au-tho-rity 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 M.I. Builders was appro-ved. 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 Hon’ble Chairman also directed that the entire proceedings may be presented for information in the meeting of the Executive Committee dated 20.10.1993 and meeting of the Mahapalika house held on 21.10.1993.

 

Sd/- Sd/-


B.K. Singh Yadav Sushil Dubey Sabhasad Member.

 

Mukhya Nagar Adhikari

 

Member.

 

Sd/- G.C. Goyal Sd/- D.K. Doal, Architect Member, Member UP Nagar Adhikari.

 

Sd/- Akhilesh Dass Sd/- Nagar Pramukh Laxmi Narain Chairman of the Sabhasad, Committee Member.”

27.  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 Chair-manship of the Hon’ble Nagar Pramukh was entrusted with the powers of developing, leasing and to transfer the immovable property of the Mahapalika. In exercise of these powers, the Sub-Committee, keeping in view the grave problem of encroachment and parking in Aminabad Submit-ted the proposal of the Hon’ble Members namely Sh. Kalraj Mishra (President Bhartiya Janta Party U.P.) and Shri Ejaj Rijvi, Ex. Minis-ter for the construction of an Air Conditioned Palika Bazar and park-ing 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 Com-mittee 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 record-ed:—

“In view of the decision taken by the General House of Mahapalika dated 12.7.1993, 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 (Presi-dent) 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-condi-tioned) 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 infor-mation 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 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 hygieni-cally sound free from all adverse effects but the problem of encroachment is no less than a headache for the Lucknow Nagar Mahapa-lika which has emerged like a growing nightmare and becoming unmanage-able 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 major hindrances in keeping the func-tioning 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 exhaustive-ly 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 autho--rity under Section 14 of Urban Build-ing Planning and Development Act, 1973 for constructing the PALIKA BAZAR on the land mentioned above 279/vastuvid dated 16.10.1993.

Now this agreement witnasseth 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 pre-scribed 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 installa-tion 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. 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 avail-able 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 reeipts.

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 com-pleting 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 comple-tion of parking and other services of the complex to ensure the proper compliance of the agreement and further ensure the quality of con-struction.

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.

 

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 Hon’ble 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 follow-ing witnesses and the terms of this agreement shall be binding upon the legal heirs, successors, assignees and legal representative.

Sd/-

 

Lucknow : dated             Party No. 1 November 4, 1993. For M.I. Builders

 

Pvt. Ltd.

 

Witnesses Sd/-

 

 

1.  Sd/- Drafted by: Sd/-

 

2.  Sd/- (Arvind Razdan) Advocate. Civil Court, Lucknow”

 

28.  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 & Ors. v. State of Jammu & Kashmir & Anr.2. 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 ac-cordance 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 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 re-spondents for awarding tapping contract, without affording any oppor-tunity 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.”

 

29.  This Court, after examining the whole facts of the case and apply-ing the parameters laid in Ramana Dayaram Shetty v. International Airport Authority of India3 negatived all the pleas raised by the petitioners. Referring to its earlier decision in International Air-port Authority of India case

 

this Court had observed that there are two limitations imposed by law which structure and control


the discre-tion 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 pri-vate 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 him self-interest or to oblige another in entering into a contract or dealing with his property. But the govern-ment is not free to act as it likes in granting largess such as award-ing 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 gov-ernment must be in public interest; the government cannot act arbi-trarily 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 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 consid-erations 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 encour-aging 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.

 

30.  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.

 

31.   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 Mahapali-ka 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 uni-versal rule that tender be invited in every case. There was no secre-cy. 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 affi-davit 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 v. M/s. Indo-Afghan Agencies Ltd.4 approving the earlier deci-sion of the Calcutta High Court in The Ganges Manufacturing Co. v. Sourujmull & Ors.5 . Mr. Sobrabjee said a party could not change its stand even if it was legally wrong in its earlier stand as other-wise it could be a negation of everything.

 

32.  In the Ganges Manufacturing Co. v. Sourujmull & Ors., (supra) 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.”

33.  In Union of India & Ors. v. M/s. Indo-Afghan Agencies (supra) in a certain scheme called the Export Promotion Scheme incentives were provided to the exporters for woollen 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 Commission-er, 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 Govern-ment 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 Govern-ment from honouring its solemn promises relying on which citi-zens 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 favour as a result of the repre-sentation 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 Gov-ernment from the equity arising out of the acts done by the exporters to their prejudice relying upon the representation.”

 

34.  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 v. M/s. Thomas Stephen & Co. Ltd.6. This judgment was of course in context of sale of goods. Reference was also made to a decision of House of Lords7 to contend that “disposal” means disposal absolutely.

35.  If it was necessary to call tender reference was made to a deci-sion of this Court in G.B. Mahajan & Ors. v. Jalgaon Municipal Council & Ors.8 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 pro-ject was challenged on the ground that it was unconventional and thus untena-ble. 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 Munici-pal 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 unconven-tional 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 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 occu-pancy rights in the commer-cial complex in such manner and no 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 viola-tive 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 financ-ing and execution. This Court did not find any violation of any provi-sions of the Maharashtra Municipalities Act, 1965 governing the Munici-pal 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 re-spect 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.”

 

36.  Reference was then made to a decision of this Court in Tata Cellu-lar v. Union of India (supra) 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 admin-istrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the neces-sary expertise which itself may be fallible.

 

(4)   The terms of the invitation to tender cannot be 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 qualita-tively by experts.

(5)  The Government must have freedom of contract. In other words, 8 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 (includ-ing its other facts pointed out above) but must be free from arbi-trariness 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 expendi-ture.”

37.  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.

38. 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 inter-vene 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 accompa-nied 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 property. It is like an unpaid creditor. When the term “dis-posed 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 irregular-ity 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 extraor-dinary 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 constrution is underground made to remove conqes-tion and the only complaint of the petitioners was that it would create more congestion. Therefore, a mere irregularity or even ille-gality would not result in destroying the construction, particularly, when there is no clear findings of any mala fide by the High Court. It is not that any other fuilder has been aggraieved by the action of the Mahapalika and had come forward to complain. In fact one of the per-sons who himself is a party to the resolution was one of the petition-ers. 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 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 Mahapa-lika. 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 :

“The freedom with which the court can use its discretion to mould its remedies to suit special situations is shown by two decisions already encoundered. One was the case where the House of Lords refused manda-mus 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 ofun-lawful 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 rathe 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 estab-lished itself as


a general principle of law in contexts where the enabling Act is silent on the poing, 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 crite-rion in relation to remedies provided by the courts in judicial re-viewe. 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 adminis-trative chaos that would result from such a remedy. Judicial discre-tion is employed here to balance fairness to the individual against the general public interest. The Lask, 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 imconvenience to excuse in advance the violation of its statutes. Such an implication invites careless admin-istration and assumes that the legislature would too easily excuse a breach of its statutes. It is suggested, therefore, that administra-tive inconvenience is not normally a proper criterion to guide the question of whether a statutory provision is “mandatory”."

 

39.  Mr. Sorabjee and Mr. Salve were opposed by a 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 Execu-tive 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 tobe taken up first and rest in seriatim. Regulation 7(f) requires that resolution of the Executive Committee should be separately circu-lated 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 require-ment 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. v. The New Delhi Municipal Committee9. In this case the question for consideration before this court was whether the provisions of Section 8 of the Delhi

 

and Ajmar 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 rela-tionship 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 Cort, 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 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 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 counter-signed 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 prisident or vice-president and by at least two other members of committee, whose execution thereof shall be attested by the secretary.

(3)  No contract of 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 thes 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 mandetory 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 Akadai Padhan v. State of Orissa10. It was, therefore, mandatory that the building plan be approved by the LDA.

In Akadast Padhan v. State of Orissa 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 restric-tions put on his fundamental rights. In the course of discussion this Court said :

“When the Statae 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 inexpe-dient 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 behlf 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 person’s agaent. 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 sence 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 im-pugned 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 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 v. Kamal Nath and others11 was applicable to the park in ques-tion. 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 v. Kamal Nath and others (supra) 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 judg-ment, is a part of the law of land. The Court gave various directions even cancelling the laease granted in favour of the Motel and direct-ing the Motel to pay

 

compensation by way of cost for restiltution of the environment and ecology of the area. The


judgment was cited to reaffirm the argument for preservation of ecology, which is an impor-tamt 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 under-groung construction Mahapalika has deprived itself to its obligatory duties which cannot be pormitted. 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 terrace park. Though the Park Act came into opertion w.e.f. February 1, 1995 and the construction of the undergroun 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. v. State of West Bengal and others12, 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 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 thisf 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 Govern-ment without inviting tenders or holding a public auctuion. 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 v. State of Orissa13; R.D. Shetty

 

v.  International Airport Authority of India & Ors.14; Kasturi Lal Lakshmi Reddy v. State of J & K (supra); State of Haryana v. Jage Ram15; Ram & Shyam Co. v. State of Haryana & Ors.16; and Chenchu Rami Reddy & Anr. v. Government of A.P. & Ors.17. Then this Court observed as under

:

 

“On a consideration of the relevant cases cited at the bar the follow-ing propositions may be taken as well established : State-owned or public-owned property is not to be dealt with at the absolute discre-tion of the excecutive. 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 neces-sary 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 reasons for the departure must be rational and should not be sugges-tive of discrimination. Appearance of public justice is as importance 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 Gov-ernment of West Bengal did

 

not act with probity in not inviting ten-ders or in not holding a public auction but negotiating


straightway at arm’s lenght 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 Maha-palika 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 Malapalika 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 Mahapa-lika 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 sacri-fied. 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 pro-spective allottees at the time of registration when it was originally planned to construct 500 shops. There were no building plan in exist-ence. 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 of refund the earnest money so collected. Its conduct does not entitle it to any consideration. No proper study was undertaken before the Maha-palika granted its approval for construction of the underground shop-poing 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 constrcu-tion is in clear violation of the Act, the

 

Development Act and Article 21 of the Constitution. That crores of rupees have been sent is an


argument which is advanced in every other case of unauthorised con-struction.

 

13.   There is no alternative to the construction which is unauthorised and illegal to be dimantled. The whole structure, built is in contra-vention of the provisions of law as contained in the Development Act. The decision to award contract and the agreement itself was unreasona-ble. 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 & Ors. v. Seth Nagarmal & Ors.18 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 dismissed. 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 demoli-tion of unauthorised construction was ordered, were referred to, these being (1) K. Ramdas Shenoy v. The Chief Officers, Town Municipal Council, Udipi & Ors.19, (2) Virender Gaur & Ors. v. State of Haryana & Ors.20, (3) Pleasant Stay Hotel & Anr. v. Palani Hills Conservation Council & Ors.21, (4) Santonment Board, Jabalpur & Ors. v. S.N. Awas-thi & Ors.22, (5) Pratibha Cooperative Housing Society Ltd. & Ors. v. State of Maharashtra & Ors.23 , (6) Dr. G.N. Khajuria

 

&  Ors. v. Delhi Development Authority & Ors.24, (7) Mrs. Manju Bhatia & Anr. v. New Delhi Municipal Council & Anr.25 and (8) an unreported decision of this Court in Ram Awatar Agarwal v. Corporation of Calcutta26.

40.   In K. Ramadas Shenoy v. The Chief Officers, Town Municipal Coun-cil, Udipi & Ors. (supra) respondent was granted by resolution of the Munic-ipal 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 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 appel-lant contended before this Court that the Town Planning Scheme forbade in cinema building at the place asked for and, therefore, the resolu-tion 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 resi-dents 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 Munici-pality 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 compli-ance 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.”

 

41.   In Virender Gaur & Ors. v. State of Haryana & Ors. (supra), 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 peti-tion was filed by the appellants Punjab Samaj Sabha instead of await-ing the decision on merits proceeded with the construction in post-haste and expended the money on the construction. Therefore, the Court “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 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 condi-tion 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.”

 

42.  In Pleasant Stay Hotel & Anr. etc. etc. v. Palani Hills Conserva-tion Council & Ors. (supra) the question were lawfully and validly made and, if so, whether they could regularise the unauthorised 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 neces-sarily 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 con-structed above the road level and to yield to any workable formula. It is in that cotext that the Hotel, without prejudice to its rights and 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 keepin air-conditioning plant and other at-tendant purposes for running the Hotel on the two floors above the suggestion on the ground that acceptance thereof would mean giving judicial imprimatur to utter and flagrant breach of statutory provi-sions to which the Hotel resorted to in spite of repeated opportuni-ties given and reminders


issued to retrace their steps and any sympa-thy shown to the Hotel would be wholly misplaced. We need not, Howev-er, 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.”

43.  In Cantonment Board, Jabalpur & Ors. v. S.N. Avasthi & Ors. (supra) 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 suspected by the GOC-in-Chief.

44.   In Pratibha Cooperative Housing Society Ltd. & Anr. v. State of Maharashtra & Ors. (supra) 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 the Hous-ing 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.”

45.  In Dr. G.N. Khajuria & Ors. v. Delhi Development Authority & Ors. (supra), 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 submis-sion 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 arrange-ments 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. Sec-ondly, to tkae 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. This really gives fillip to the commission of tained acts, whereas the aim should be opposite.”

 

46.  In Mrs. Manju Bhatia & Anr. v. New Delhi Municipal Committee & Anr. (supra), 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 demol-ished. 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 then of the illegal construction, should be compensated for the loss suffered by them. High Court in the impugned judgment direct-ed the return of the amount plus the escalation charges. All this was on as 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.

 

47.  In an unreported decision of this Court in Ram Awatar Agarwal & Ors. v. 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 unscru-pulous builder took advantage of the court’s order upto a point of time and after 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.”

48.  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 construc-tion 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.

 

49.   Prof. T.S. Narayanaswami, Ex-Head of Department of Building Engi-neering 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?

 

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 ameni-ties like public convenience etc.?

10. If the land earmarked for parking in the building plans submitted to the Nagar Nigam by the appellant, and whihc 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 ncessary 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 approxi-mately Rs. 3.52 crore and the cost of work still to be done is approx-imately 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 of the Layout at the LDA level was recommended by the 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 conges-tion of the surrounding area;

 

8.  structure as designed is safe from the structural engineer-ing 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 occasion-al 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 the large the Report of Prof. Narayanaswamy has found acceptance by all the parties.

 

50.  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 as 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, there-fore, accept the Report of the Local Commissioner in its entirety. But to what effect we shall presently see.

51.   Jhandewala Parkl, 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-resi-dential 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 appear-ance 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 construc-tion many trees have been out. 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 asquired 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 obligetory 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 them one of the obligatory functions of the Mahapalika under Section 114 is also to construct and maintaion parking lots. To that extent some 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 manag-ment of the park. When true nature of the park, as it existed, es destroyed it would be violative of the doctrine of public trust as expounded by this Court in Span Recort Case27. 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 responsi-bilities who, under the pressures of the changing needs of an increas-ingly complex society, find it necessary to enorach to some extent upon open lands heretofore considered inviolate to change.”


52.   In the treatise “Environmental Law and Policy : Nature, Law, and Society” by Plater Abrams Goldfarb (American Casebook series”1991) 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 te 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 scat-tered evidence, taken together, suggests that the idea of a public trusteeship rests upon three related principles. First, that certain interests “like the air the sea “have such importance to the citizen-ery as a whole that it would be unwise to make them the subject of private ownership. Secone, 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 economioc status. And, finally, that it is principle 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 refarence to a decision in Illinois Central Railroad Company v. IIIi-nois28 , 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 the general public, a court will look with considerable skepticism upon any government conduct which is calculated eithe 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 apprar, has grown from Article 21

 

of the Constitution.

 

53.  Thus by allowing construction of underground shopping complex in the park Mahapalika has violated not only Section 114 of the U.P. Nagar Mahapalika Act but also the public trust doctrine.

54.  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 au-thority with the Mahapalika to 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 con-sideration of the underground shopping complex. There were no prepo-sale, no documents, no plan, no study, no project report or feasibili-ty 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 abdicat-ed its functions. Mahapalika delcgated 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 deci-sion to hand over the park to the builder for construction of the underground shopping complex and also approved the terms of the agree-ment dated November 4, 1993. Decision of the High Power Committee was put before the Executive Committee and the general body of the Mahapa-lika 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 mat-ter, where the cost of the project was likely to run in crores of rupees, could not have been considered under the topic “other sub-jects, 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 Section 91 and 119 of the Act which are mandatory.

55.  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 under-ground 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 Committe.

56.   In Myurdhwaj Cooperative Group Housing Society Ltd. v. Presiding Officer, Delhi Coorperative Tribunal and Ors.29, the appellant was a Housing Co-operative Soviety 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 con-struction. Respondent No. 3 who was one of the original members of the society challenged the decision of the general meeting. One of the contantion raised was that decision of the general body which relegat-ed 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 residuary power except those not delegated to any other authority under the Act, the rules and its bve-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 consider-ing the statutory provisions for holding of the meetings of the Maha-palika and the Executive Committee which have been violated.

 

57.  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 exected 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 contract (Sec. 131). Under sub-section (1) of Section 1132 contract shall be ex-pressed tobe 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 maade by Mukhy Nagar Adhikari (Chief Executive Officer) unless ithas been sanctioned by the Mahapalika. Proviso (a) to Section 133(1) requires common seal of the Mahapalika to be affixed on every con-tract. 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 distince from the signature of any witness to the execution 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 is accordance with the requirements of law. Further, under sub-sections (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 Statae Government to reject or sanction the project with or without modificetions. Till that is done no work shall be commenced. No such snaction of the Statate 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 Maha-palika. As held in H.S. Rikhy’s case (supra) where a statute makes a spe-cific 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 prepo-sition that there is no estoppel against a statute.

 

58.   We may now exemine some of the terms of the agreement dated Novem-ber 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 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 shope as per its own terms and condi-tions to persons of its choice on behalf of the Mahapalika and Mahapa-lika 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 anc conditions which the builder may deem fit and proper. Builder is only required to give a copy of the agreement to the Maha-palika 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 transfar 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 atroclous. No person of ordinary prudence shall ever enter into such an agree-ment. 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 inderfinito period. It has completely abdicated its functions.

 

59.   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 decid-ing authority the full range of choices which the legislature is presumed to have intended. Decisions which are extravagant or capri-cious cannot be legitimate.” Quothing Lord Hailsham LC in Re W. (an infant) [(1971) AC 682] where he said, “two reasonable persons can perfectly reason-ably 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 omni-bus’. 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 `Wednesdury unreasonableness’, after the now famous case in which Lord Greene MR expounded it as follows:

 

It is trus 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 was frequenntly 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 atten-tion 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 common-ly cited only by its nickname) in administrative law. It explains how ‘unreason-ableness’, in its classic formulation, covers a multitude of sings. 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 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 discrotion has this variety of differing legal facets, in practice the courts often treat them as distinct. When several of


them fit the case, the court is often in-clined to invoke them all. The one principle that 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 minis-ters and other responsible public authorities could almost never be found 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 ministere and public authorities take leave of their senses, but because the courts in deciding cases tend to lower the threshold of unreasonableness to fit their more exacting ideas of administrative good behaviour.”

 

60.  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 certiainly 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 keep-ing in view the principles laid by this Court in Tata Celluler v. Union of India (supra). 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 v. Laxmidas Ranchhoddas and another30. It was submitted that bad governance sets a bad example. That is what exactly happened in the present case.

 

61.  In State of Bombay v. Luxmidas Ranchhoddas & Anr. (supra) a Division Bench of the High Court was considering the argument that the writ of manda-mus 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 inconven-ience 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 heips the good 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 havae been assumed which the Legislature never conferred upon the executive.”

62.   It cannot be said that the construction of the underground shop-ping complex is by the builder as an agent 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 Padhan’s case (supra) quoted above. When the”develop-ment” 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 was been pointed out that process of sanction appeared to be ad hoc and skeletal. When construction started LDA issues a snow cause notice to the Mahapalika but then in view of the interim order made by this Court show cause notice was subsequent-ly 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.

 

63.  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 utilises for commercial purposes. Rather using the park for commercial purposes would be against the Master Plan. However, in letter dated October, 16, 1993 be 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 accord-ingly.”

64.  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 commer-cial use. By letter dated Novemver 23, 1993, LDA objected to the construction being undertaken in the park without obtaining permis-sion/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 re-quired 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 commer-cial exploitation considering the density and congestion in the area.

65.  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 irrationali-ty.

66.  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 incorporat-ed in the Master Plan for the city of Lucknow and of course violated by allowing construction of underground shopping complex.

67.   Action of the Mahapalika in agreeing to the construction of under-ground shopping complex in contravention o 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 v. M/s. Indo-Afgan Agencies Ltd. (supra) and of Calcutta High Court in The Ganges Manufacturing Co. v. Sourujmull & Ors. (supra) cannot apply to the facts of the present case.

68.   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 trans-ferred by the Mahapalika to the builder. Respondent, as noted above, contended to the contrary. Under Section 54 of the Transfer of

Proper-ty Act, 1882 agreement to sell does not create any interest in land. We are not concerned with this provisions. 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 & Anr. v. The Dharmodayam Company31. In this case an argument has raised by the appellant that he had been granted a licence and acting upon the licence ha 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:-

 

“In our opinion no case of licence really arises but if it does what is the licence which the appellant obtained and what is the licence, which he is seeking to plead as a bar. The licence, if it was a li-cence, was to construct the building and hand it over to the respond-ent company as trust


pro-perty. 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 Section 60(b) of the Act. Even such a license is deemed to be revoked under Section 60(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 licence 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(b) 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 immov-able 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;)

69.  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 subert 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 execu-tion of the work,

 

thus making the licence irrevocable. 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, 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 covered by Section 128 and, therefore, Section 129 will not apply is certainly incredulous. Provision of Sectionof the Act has, therefore, been flouted. Impugned agreement dated November 4, 1993 is bad having been executed also in contravention of the require-ment of Section 129 of the Act.

 

70.   The facts and circumstances when examined point to only one con-clusion 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.

71.  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.

72.  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 considera-tion 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 impor-tance and environmental necessity was in itself a public purpose and, therefore, the 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.

 

73.   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 more competent for the job or if of equal competence could offer better terms. In these circumstances, Reddy v. State of J & K44 be-comes inapplicable. No advantage can be drawn by the builder from the decision of this Court in G.B. Mahajan’s case45 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 te 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. Build-ers. 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.

 

74.  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 bordening rule of law. Stress was laid by the appellant and the prospective allottees of the shops to exercise judicial discretion in moudling the relief. Such discretion cannot be exercised when 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 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 the exercised has to be in accordance with law and set legal princi-ples. 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.

 

75.  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 Govern-ment were 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 demol-ished and restoring the park to its original condition at its own cost. The builder did not foresee the change in stand not only the Mahapalika but also of the State Government. It also, as it would appear, over-rated its capacity to manage with the State Governent 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 Mahapa-lika in its favour and the impugned agreement executed. Now, construc-tion 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 no environment conditions in the area and the congestion that will aggravate on account of in-creased traffic and people visiting the complex. There is no alterna-tive 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.

 

76.  There are four blocks under construction. Services like air-conditioning, fire-fighting, water supply, santiary installation, necessary pumps for drainage and sewerage, etc. are yet to be in-stalled 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 lebel 9’6". There is no lower basement level.

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 vehi-cles to the two levels of parking in the third block a new ramp shall be constructed adjacent to and contiguous to the third block.

77.  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, but stops and public convenience.

78.  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 construc-tions. This does not appear to have any salutary effect in cases of unauthorised construction coming to this Court. While directing demo-lition 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, elec-tricity etc. in Block 3 shall be provided by the Mahapalika.

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. Li-cence 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 pur-poses 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. (C.R.) Appeals dismissed.

 

1.  1994(6) SCC 651.

 

2.  1980(4) SCC 1.

 

3.  1979(3) SCC 489.

 

4.  1968(2) SCR 366.

 

5.  1880 ILR Cal. 669 at 678.

 

6.  1988(2) SCC 264 at 266.

 

7.  1959(1) WLR 465 at 472.

 

8.  1991(3) SCC 91.

 

9.  AIR 1962 SC 554.

 

10.  1963(2) Supp. SCR 691 at 722.

 

11.  1997(1) SCC 388.

 

12.  1987(2) SCC 295.

 

13.  (1969) 1 SCC 414.

 

14.  (1979) 3 SCC 489.

 

15.  (1983) 4 SCC 556.

 

16.  (1985) 3 SCC 267.

 

17.  (1986) 3 SCC 391.

 

18.  1959(1) Supp. SCR 769 at 774.


19.  1975(1) SCR 680 at 685.

 

20.  1995(2) SCC 577 at 582.

 

21.  1995(6) SCC 127 at 139.

 

22.  1995 Supp. (4) SCC 495 at 496.

 

23.  1991(3) SCC 341.

 

24.  1995(5) SCC 762.

 

25.  JT 1997(5) SC 574.

 

26.  Civil Appeal 6416 of 1981, decided on 20.8.1996.

 

27.  1997(1) SCC 388.

 

28.  146 US 387 (1892).

 

29.  (1998) 6 SCC 39 : 1998(5) Supreme 411.

 

30.  AIR 1952 Bom. 468 at 475.

 

31.  (1963) 1 SCR 85.

 

 

G. B. Mahajan and Ors. v. The Jalgaon Municipal Council and Ors., 1991 3 SCC 91

1991 0 AIR(SC) 1153; 1991 1 JT 605; 1991 1 Scale 378; 1991 3 SCC 91; 1990 0 Supreme(SC) 539;

 

 

 

SUPREME COURT OF INDIA

 

M.N. VENKATACHALIAH, N.D. OJHA AND J.S. VERMA, JJ.

 

G. B. Mahajan and others, Appellants

 

 

Versus

 

 

The Jalgaon Municipal Council and others, Respondents.

 

C.A. No. 6266 of 1990

 

 

Decided on 13-9-1990.

 

 

IN A MATTER EVEN AS BETWEEN THE PARTIES THERE MUST BE SHOWN A PUBLIC LAW ELEMENT TO THE CONTRACTUAL DECISION BEFORE JUDICIAL REVIEW IS INVOKED

 

 

 

 

 

Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation Nottinghamshire County council v. secretary of State for Environment See Chief Constable of the North Wales Police v. Evans Short v. Poole Corporation

relied on : New State Ice Company v. Ernest A. Liebrmann

 

Forward Construction Co. v. Prabhat Mandal (Regd.), 1986 1 SCC 100

 

Secy. of State for Education and Science v. Metropolitan Borough of Tameside

 

Sir Gerard Brennan: "The Purpose and Scope of Judicial Review" in Judicial Review of Administrative Action in the 1980s ; Colin S. Diver "Policy making Paradigms in Administrative Law"

 

distinguished : Ramana Dayaram Shetty v. International Airport Authority of India, 1979 3 SCC

 

489:1979 3 SCR 1014

 

Kasturi Lal Lakshmi Reddy v. State of and K, 1980 4 SCC 1:1980 3 SCR 1338 referred to : Administrative Law, H.W.R. Wade Tiller v. Atlantic Coast Line Rail Road Company

 

Davis Contractors Ltd. v. Fareham Urban Distt. council

 

CONSTITUTION OF INDIA : Art.136, Art.14, Art.226, Art.298

 

.


JUDGMENT

 

VENKATACHALIAH, J.:— Petitioners seek special leave to appeal to this Court from the order dated 18-9-1989 made by the Bombay High Court, Aurangabad Bench, dismissing appellants Writ Petition No. 2404 of 1989 in which they assailed certain contracts of the Municipal Council of Jalgaon with a Developer of real estate for the execution of a project for Administrative Building and a Commercial Complex on a plot of land belonging to the Municipality.

2.   We have heard Sri R. K. Jain, learned Senior Advocate for the Petitioners; Sri K. K. Singhvi, Sri A. S. Bhasme and Dr. Y. S. Chitale, learned Senior Advocates for Respondents 1, 4, 5 and 6 respectively.

Special leave granted. The main appeal is taken up for final hearing, heard and disposed of by this judgment.

3.  The controversy relates to a project for the development of real estate sponsored by the Town Municipal Council, Jalgaon, in the State of Maharashtra. In the year 1913 the Municipal Council, it would appear, received by way of gift of a piece of land of an extent of 5 acres and 32 guntas from a certain Lila Dhar Bhatia. The land had been in the use of the Agricultural Produce Market Committee, Jalgaon, as a cotton-market and wholesale fruit and vegetable market. The Municipal Council having entertained the idea of putting the land to a better and more profitable use persuaded the Market Committee to yeild-up possession. The terms of the original gift, it would appear, stipulated conditions that the land be put to use for only as a cotton and vegetable market. In order to enable itself to put the land to uses other and more beneficial uses and to exploit the commercial-potential which the property had with the passage of time acquired, the Municipal Council appears to have approached the heirs of the original donor who appear to have agreed to amend the terms of the gift accordingly. But the permission was not without strings attached. The project as envisaged by the Municipal Council, contemplated, amongst other things, the erection of a commercial complex. The heirs appear to have bargained for and secured a benefit that they should be given five-shops free of cost in the commercial complex.

 

4.  The Municipal Council invited competitive proposals as to the ways in which the potential of the land could be commercially exploited and invited competitive plans and designs on the basis of which the Architects could be selected from architects all over the country. By its Resolution dated

17-3-1988 the Municipal Council selected M/s. Kabra Chaudhary Associates as Architects for the project.

 

The project envisaged a Central Administrative Building with ground plus 17 floors intended to be utilised by the Municipal Council for locating its own offices and an adjacent structure with a basement plus five upper floors to be used as a vegetable-market and a commercial complex. The broad aspects as to the funding of the project were that the project was to be executed by a "Developer" who would be required to take up and execute the project at his own cost; that the developer would be obliged to rehabilitate 486 small-time vegetable vendors who were in occupation of the land in various units by providing them small stalls at, what was described as, a concessional-premium of Rs. 3,000/- per stall; that 83 more shops, at fixed premia of Rs. 40,000/ - each, be given to Adatias who were carrying on their business on the property and that, further, another 60 shops, at the same rate, be allotted to some traders who are stated to have


encroached upon the land. This was in addition to the five shops, which had to be made available to the heirs of the original donor free of cost. The nature of the rights conferred on to these beneficiaries is stated to be "occupancy rights" for a period of 50 years u/ S. 272(1) of the Maharashtra Municipalities Act, 1965 (Act for short) which regulated the matter. The municipality would get rents from those occupants at rates stipulated. The administrative block comprising of ground plus 17 floors was, however, intended to be handed over to the Municipal Council free of cost for its own use and of its tenants.

 

5.   The project-scheme contemplated a mode of financing which contemplated that in consideration of the "developer" putting-up the entire construction at its own cost and making various allotments to the shop-keepers to whom the Municipal Council had given assurances of alternative accommodation at fixed rates of premia and providing Ground plus 17 floors of the Administrative building free of cost to the Municipality, the developer would be entitled and at liberty to dispose of the occupancy rights in respect of the rest of the accommodation in "commercial-Complex" and retain the premia paid by the disponees so to reimburse itself the financial outlays on the project plus its profit. The occupiers, including those who would have the benefit of the allotments at such fixed-rates as well as those to be inducted by the developer, were expected to pay rents to the Municipal Council for the period of 50 years at rates envisaged in the scheme, though, however, certain incentives and concessions were afforded for the first two periods of 3 years each. According to the financial estimates prepared by the Municipal Council with the assistance of its architects as to the economics of the scheme the project was to involve a financial outlay of about Rs. 11 crores. On certain estimates prepared by it the Municipal Council was of the view that the project would benefit the local community both from the immediate as well as long-term advantages if this mode of financing and execution of the project was adopted. It was the Councils view that while the project would help to rehabilitate all those businessmen and traders who were carrying on business on the land and obviate protracted litigation for their eviction, the Municipal Council would, in addition, get a building consisting of a Ground plus 17 floors in the Central Administrative Block which would be an impressive structure 70 metres in height adding greatly to the value of the municipal estate. It was also said that the rents from those occupants in the commercial complex would considerably augment the municipal revenues.

 

6.  After enunciating these criteria the project was put to tender. Advertisements were taken

 

out in the Newspapers and it is stated that five Developers responded and submitted their tenders. After a process of scrutiny of the tenders and elimination of ineligible and non-competitive ones, the tender of respondent No. 6 was accepted by the Municipal Council by its unanimous resolution dated 8-10-1988. On 9-10-1988, a "Letter of Intent" was issued to the respondent No. 6, which, in turn, on 15-10-1988 issued its own advertisement of the project. On 18-10-1988, a formal agreement was entered into between the Municipal Council and the respondent No. 6 in this behalf.

 

7.  Appellants who are residents of Jalgaon and who entertained serious misgiving as to the legal permissibility, the economic soundness and propriety of the policy of this venture petitioned to the Collector of the District under the provisions of the Act to suspend the resolutions of the Municipal Council undertaking the project and the agreement with respondent 6 for its execution.

 

They urged that the transaction was really amounted to grant of a lease for 50 years prohibited u/


S. 92 of the "Act"; that under the Act a scheme of this kind could not be embarked upon without the sanction of the Development Department of the Government of the State of Maharashtra; that the transaction resulted in the creation of an impermissible encumbrance on the property of the Municipal Council in favour of the developer and lastly that the intended user violated the original terms of the gift. The Collector suspended the impugned resolutions. But the Minister, in a revision-petition preferred against the Collectors order, stayed the operation of that order. Simultaneously, some persons, including some of those who had moved the Collector, filed Writ PetitionNo.1765/ 1988 in the High Court assailing the said resolutions. It is unnecessary to refer in any great detail to the several proceedings that ensued. Suffice it to say, in WP No. 1765/1988, in which the resolutions touching the clearance of the project and the agreement with respondent No. 6 had been assailed and the writ-petition 1825/ 1988 in which the Ministers order staying the Collectors order was challenged came up together before a Division Bench of the High Court on 20-12-1988. The contention that was pressed appears to be that in the calculations forming the basis of the financial estimates of the project were made grossly under-estimating the probable receipts by way of premia for the grant of occupancy-rights with the intention of giving an opportunity for unjust enrichment to respondent 6 as, according to the appellants, the occupancy-rights for the shops were capable of fetching far higher premia than those estimates made by the Municipality. Learned Judges of the Division Bench who dealt with the writ-petitions were of the opinion that any apprehension in that behalf would be allayed if it was ensured that any such excess should go to the benefit of the Municipality. Accordingly, the Division Bench directed that in the matter of disposal of the occupancy-rights in regard to the shops - other than those ear-marked for the preferential category of existing businessmen and traders - tenders should be called from the public so that the difference between what was taken into account in the estimates of the project and what was actually secured in response to the advertisement might go to the benefit of the Municipality. The order said:

 

"Shri Singhvi, appearing for the Jalgaon Municipal Council, states that the Council will invite tenders for sale of 68 shops on the ground floor with basement on the eastern side facing Sane Guruji Road, stipulating Rs. 3,50,000/ - per shop as the floor price, and of 32 shops on the ground floor without basement, on the rear of the above 68 shops, i.e. on the western side and facing Jaikisanwadi, stipulating Rs. 2,50,000/ - per shop as the floor price. The advertisement will be given within a week from today and it will be repeated within a space of two days in between. The advertisement will mention that Rs. 25,000/- have to be paid at the time of submitting the tender for the shop.

 

If the applications are received tendering more amount than is stipulated in the notice, then the surplus amount will be credited to the Municipal Council and only the floor-price shall be paid to the contractor.

 

If applications for all the shops are not received, or, if the applications received tender less amount than the floor-price, then the Council is at liberty to go ahead with their present scheme

 

........."

 

W.P. No. 1765/1988 dated 20-12-1988

 

It would appear that the advertisement issued in that behalf did not elicit any favourable response from the public. The matter was listed again before the High Court on 21-1-1989. The


Division Bench held that its earlier order dated 20-12-1988 was self-executory and had put an end to the writ-petition finally and nothing really survived in the writ-petition. That was how WP No. 1765/1988 came to an end. Writ-petition 1825/ 1988, directed against the stay order granted by the Minister was disposed of on 8-2-1989. In review-petition 223 of 1989 appellants had sought a review of the order dated 20-12-1988 which was also dismissed on 7-2-1989. The advertisement issued pursuant to the order dated 20-12-1988, was itself challenged in a separate writ-petition and that writ-petition was also dismised on 8-2-1989.

 

8.  All these orders were assailed before this Court in Special Leave Petition No. 3293/1989, SLP No. 3222/1989, SLP No. 3268/1989 respectively. The SLP 3293/ 1989 which arose out of the writ-petition challenging Ministers order was disposed of on 17-4-1989 by this Court with the following observation:

"Since the order made by the Honble Minister is evidently in the nature of ad-interim order, it is open to the petitioner to move the Minister for final disposal. It is hoped that the Minister, having regard to the importance of the matter, will expeditiously dispose of the matter. The minister will also consider whether the scheme in question is in conformity with the statutory provisions. With these observations the special leave petition is dismissed."

Special Leave Petition (Civil) No. 3293 and 3268/1989 which arose out of the orders in W.P. 1765 of 1988 and the writ-petition preferred against the advertisement were also dismissed with the following observation:

"In view of the above order in Special Leave Petition (Civil) No. 3222/ 1989 these special leave petitions are dismissed."

9.  Later, the Minister disposed of the revision application by his order dated 3-8-1989. The Minister took into account the order made by the High Court in Writ Petition No. 1765/1988 and was persuaded to the view that that decision could not be ignored by him. That apart, he also went into the merits of the scheme and recorded findings against the appellants. Against this order of the Minister, appellants preferred a fresh Writ Petition No. 2404/ 1989 before the High Court. The present appeal before us arises out of the High Courts order dismissing the said W.P. 2404/1989. The High Court was of the view that the orders made by this Court in the earlier SLPs indicated that this Court had really intended that all the controversies should conclude with the decision of the Minister. The High Court, however, also went into the merits as well and held . that there were

no grounds to interfere.

 

10.  Sri R. K. Jain, strenuously contended before us that the High Court misdirected itself as to the scope of the proceedings before it on an obviously erroneous view that this Court, while disposing of the earlier SLPS, had precluded any further enquiry into the merits after the Ministers decision. Sri Jain submitted that this Court while disposing of the special leave petitions had merely indicated its disinclination to interfere at that stage and had left the matter to be dealt with under the statute by the Minister which obviously meant that at an appropriate stage when the correctness of the Ministers order came to be assailed the matter would require to be examined on its own merits. It was erroneous to think, contended Sri Jain, that the effect of the orders of this Court was to impart a finality to the Ministers order whatever its vitiating features.

 

There might be some force in what Sri Jain says if the observations which Sri Jain takes

 

exception to are alone taken into account. The High Court was possibly wrong in its view as to the


effect of this Courts earlier order. But what appears clear is that the High Court also went into the merits of the matter. Therefore the grievance that the High Court abdicated its jurisdiction on an erroneous interpretation of this Courts earlier order may not be correct. However, in order that there be no dissatisfaction on the question that the matter did not receive adequate consideration in the High Court, we asked the appellants to present their case on the merits also so that any need for a remit of the matter to the High Court at this late stage was obviated. Parties placed their case fully before us.

 

11.  Sri Jain raised a number of contentions touching the power of the Municipal Council to make such disposal of Municipal property as was implicit in the scheme and on, what Sri Jain called, a manifest susceptibility of the scheme for arbitrariness in the matter of the choice of the developer. The main thrusts of Sri Jains argument are, first, that the project, in substance, envisaged a disposal of the property-rights of the Municipal Council in favour of respondent No. 6 which, in turn, became entitled to further deal with the properties squarely attracting the prohibition u/ S. 92 of the Act; and secondly, that the scheme was a wholly non-conventional one unknown to settled principles of public finance. Sri Jain strenuously urged that the non-conventional and unorthodox features of the scheme particularly as to the mode of its finances were tailored with respondent 6 in mind and were intended to, and did, confer on respondent 6 a pre mediated largesse, in flagrant violation of financial disciplines and morality. It was also urged that the project gave enormous pecuniary advantage to respondent 6 wholly disproportionate to its outlay of funds on the project.

 

In the ultimate analysis, the contentions of Sri Jain admit of being formulated thus:

 

(a)  That the scheme of financing of the project 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 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, in short, ultra vires of 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 u/ S. 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 S. 92 of the Act.

 

(d)   That the scheme is arbitrary and unreasonable and is violative of Art. 14 of the Constitution. The project is patently one intended to and does provide for an unjust enrichment of respondent No. 6 at public expense.

 

We may now deal with these contentions.

 

12. Re: Contention (a)

 

The mode of financing of the project is stated to be unconventional one and does not accord with any recognised or accepted norms of functioning and financial discipline of Governmental bodies. It is urged that while the Municipal Council could have engaged a contractor to execute the

 

work against payment in accordance with well accepted procedures for Government contracts or


could have executed the works itself departmentally. It is said that the method now chosen for the development involves a policy impermissible for a Government body. This contention of the appellants, as a legal contention is not somewhat vague and does not admit of clear-cut legal contours. As we apprehend the contention, it pertains to the legality or propriety of a policy-option. However, reliance was placed on certain observations of this Court in Ramana Dayanand Shetty v. International Airport Authority (1979 (3) SCR 1014 and Kasturilal Laxmi Reddy v. State of J & K (1980 (3) SCR 1338).

 

In those cases relied this Court pointed out that with the growth of a welfare state and with the Government assuming a pluralist role as provider of social welfare services and with the corresponding increase in the magnitude of the governmental functions and the consequent evolution of new forms of wealth and new forms of property, the scope for conferment of largesse by Government had increased and the discretion of Government in the disposal of such properties, rights or privileges should not be unlimited and arbitrary.

Sri Jain said that in the present case the project involved purely commercial considerations and had no social objectives and the securing of terms to the best advantage of the Municipal Council should have been the objective. It is urged that the Municipal Council disregarded this criterion and resorted to a method which gave uncontrolled discretion and authority to respondent 6 to exploit the commercial potential of the property for its own aggrandisement. Sri Jain said that the avowed reason why the Municipal Council did not itself, with all its vast financial resources, undertake the execution of the project was that the Municipal Council wanted to save itself from the difficulties involved in the process. Sri Jain said that if the developer could finance the project by the income received from a disposal of the occupancy-rights and make huge profits, there was no reason why the Municipal Council itself could not have done the same.

 

13.  Sri Singhvi, for the Municipal authority submitted that the execution of the project of this magnitude involved a degree of financial outlay and management expertise well beyond the immediate sources of the Municipal Council and that though the Municipal Council had, a budget which indicated crores of rupees on the receipt side, the increasing revenue expenditure and other financial commitments rendered it well neigh impossible to set apart the financial inputs requisite for this project. Sri Singhvi said that in the matter of management of the transactions relating to the disposal of occupancy rights and prompt mobilisation of funds, the deficiencies and limitations of

 

the bureaucratic machinery should not be put out of consideration in assessing the value and utility of the alternatives. Sri Singhvi pointed out that despite the heterogeneity of their political affiliations, the members, the Municipal Council, passed all the resolutions in regard to this project unanimously. Sri Singhvi said that although popular support could not validate an ultra vires action, it might become relevant to the question whether a certain action was reasonable or not and that the circumstance that all the resolutions had been passed unanimously would lend credence to the propriety and wisdom of the measure. Sri Singhvi claimed that the estimates and calculations on which the scheme was worked out by the Municipal Council would show that the developer would not have any opportunity of making any runaway profits or exploitative gains.

 

14.   On a consideration of the matter, it appears to us that the argument that a project envisaging a self-financing scheme, by reason alone of the particular policy behind it, is beyond

 

the powers of the local authority is somewhat too broadly stated to be accept . A 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. The criticism of the project being unconventional does not add to or advance the legal contention any further. The question is not whether it is unconventional by the standard of the extant practices, but whether there was something in the law rendering it impermissible. There is, no doubt, a degree of public accountability in all governmental enterprises. But, the present question is one of the extent and scope of judicial review over such matters. With the expansion of the States presence in the field of trade and commerce and of the range of economic and commercial enterprises of government and its instrumentalities there is an increasing dimension to governmental concern for stimulating efficiency, keeping costs down, improved management methods, prevention of time and cost over-runs in projects, balancing of costs against time-scales, quality-control, cost-benefit ratios etc. In search of these values it might become necessary to adopt appropriate techniques of management of projects with concommitant economic expediencies. these are essentially matters of economic policy which lack adjudicative disposition, unless they violate constitutional or legal limits on power or have demonstrable pejorative environmental implications or amount to clear abuse. of power. This again is the judicial recognition of administrators right to trial and error, as, long as both trial and error are bona fide and within the limits of authority. We might recall the memorable words of what Justice Brandeis said:

 

"The discoveries in physical science, the triumphs in invention, attest the value of the process of trial and error. In large measure, these advances have been due to experimentation............."

" .............There must be power in the States and the Nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs.............."

"To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country. This Court has the power to prevent an experiment..........."

".........But in the exercise of this high power, we must be ever on our guard, lest we erect our

 

prejudices into legal principles............."

 

(See: New State Ice Company v. Ernest A. Liebmann, 285 US 262 at 310-11 - Dissenting opinion of Brandeis, J,.)

 

In regard to Courts and policy we might recall the following words of a learned author:

 

"The Courts are kept out of the lush field of administrative policy, except when policy is inconsistent with the express or implied provisions of a statute which creates the power to which the policy relates or when a decision made in purported exercise of a power is such that a repository of the power, acting reasonably and in good faith, could not have made it. In the latter case, something overwhelming must appear before the Court will intervene. That is, and ought to be, a difficult onus for an applicant to discharge. The Courts are not very good at formulating or evaluating policy. Sometimes when the Courts have intervened on policy grounds, the Courts view of the range of policies open under the statute or of what is unreasonably policy has not won


public acceptance. On the contrary, curial views of policy have been subjected to stringent criticism. In the world of politics, the Courts opinions on policy are naturally less likely to reflect the popular view than the policies of a democratically elected Government or of expert administrators......."

"The considerations by reference to which the reasonableness of a policy may be determined are rarely judicially manageable........"

(Emphasis Supplied)

 

[See : "The Purpose and Scope of Judicial Review" - by Sir Gorard Brennan in "Judicial Review of Administrative action in the 1980s" Oxford University Press.]

In Forward Construction Co. v. Prabhat Mandal, (1986 (1) SCC 100), a similar self-financing project was embarked upon by the Municipal Corporation of Bombay. It is true, the present argument as to the manner of execution of the project being ultra vires the powers of the local authority was not in terms raised there. But some of the arguments have a familiar ring. This Court, noticing the financial feature of the scheme observed (at page SC 399: AIR 1986):

"The mere fact that the Corporation was to make a gain of the non-refundable premium did not mean that that was the only purpose which was in view. The purpose obviously was the best utilisation of the available space. If in a commercial zone the Corporation was able to make available accommodation for commercial purposes we do not see why such a venture cannot be one either for the purpose of promoting public safety, convenience or in the nature of facilities being made available as a part of the improvement of the city. If commercial activities are to be pin-pointed in a commercial zone and for that purpose the Municipal Corporation takes a step to provide accommodation for commercial purposes it cannot be said that the property of the Corporation was being acquired or held for purposes other than the purposes of the Act." (p. 115)

 

While the concern of public law is to discipline the public power by forging "legal techniques as both part of the way in which public power is made operational and part of the process through which it is attempted to render such public power legitimate and to think of issues of legal regulation of public power in a way that goes deeper than particular instances and seeks to elaborate issues of general principle". There is, however, as Professor Wade points out, ample room, within the legal boundaries for radical differences of opinion in which neither side is unreasonable. In Tameside case Lord Denning pointed out the error of confusing differences of opinion, however strong, with unreasonableness on the part of one side or the other. Lord Diplock said that the very concept of administrative discretion involves a right to choose between more than one possible course of action upon which there is. room for reasonable, people to hold differing opinions as to which is to be preferred.

 

In the ever increasing tempo of urban life and the emerging stresses and strains of planning, wide range of policy options not inconsistent with the objectives of the statute should be held permissible. Referring to the "Role of the judge in Public Law Litigation" a learned author says:

 

"Administrative law is, in essence, a search for a theory of how public policy should be made. Two powerful traditions mark the boundaries of that search. On one side, we leave the choice among competing values to a largely unstructured process of pulling and hauling by individuals directly accountable to the citizenry. On the other side, we demand a highly structured process of party-controlled proof and argument before a neutral arbiter to resolve disputes over the


application of rules to specific facts. Between these extremes is that vast landscape we call policymaking - the reconciliation and elaboration of lofty values into operational guidelines for the daily conduct of societys business."

(See: "Policy making Paradigms in Administrative Law" - Colin S. Diver - Harward Law Review - vol. 95 - 393)

It appears to us that in the context of expanding exigencies of urban planning it will be difficult for the Court to say that a particular policy option was better than another. The contention that the project is ultra vires of the powers of the Municipal Council does not appeal to us.

15.  We hold that Contention (a) does not justify quashing of the impugned Resolution of the Municipal Council.

16.  Re : Contentions (b) and (c)

 

Sri Jain contended that the transaction essentially concerns the disposal of Municipal property by way of a lease and violates Section 92 of the "Act". Section 92 of the Act provides:

"(1) No Council shall transfer any of its immovable property without the sanction of the State Government,

(2)..... Omitted as unnecessary

 

(3)  Notwithstanding anything contained in sub-section (1), a Council may lease its immovable property for a period not exceeding three years, and the lessee shall not be allowed to make any permanent constructions on such immovable property. Such lease may be renewed by the Council beyond the period of three years with the permission of the Director, so, however, that the total period of any lease shall not exceed seven years.

No such lease or any renewal thereof shall be granted unless supported by a resolution passed at a meeting of the Council."

The question is whether the present transaction amounts to lease. Sri Singhvi submitted that the transaction is limited to the disposal of occupancy-rights covered by Section 271(1) of the Act and is not one of transfer or lease of immovable property under Section 92. Sri Singhvi says that even otherwise the two areas of the statute are mutually exclusive and provisions of S. 272(1) were intended to and did meet a special situation pertaining to municipal markets while S. 92 dealt with transfer or lease of other properties. It is unnecessary in the present case to examine the larger question raised by Sri Singhvi whether Section 92 has no application at all to "municipal

 

markets". But the transaction would be out of Section 92 if it is not a lease or a transfer prohibited by that section. On this Sri Singhvi says that the transaction relates to mere rights of user without transfer of an interest in the property.

 

In the present case it is possible to fit the power exercised by Municipal authority into Section 272(1) of the Act. The relevant provisions say:

 

272.  (1) The Council may

 

(a)

 

(i)to (iv) omitted as unnecessary

 

(b) put up to public auction or dispose of by private sale, the privilege of occupying or using

 

any stall, shop, stand, shed, pen or space in a municipal market or municipal slaughterhouse for such period and on such conditions as it may think fit.


(2) to (4) omitted as unnecessary

 

If it is reasonably possible to fit in the basic conceptions of this project into what can be held to be comprised in the power under S. 272(1), there is no reason why the provision to stifle be interpreted unduly restrictively to exclude such enterprise.

As to the contention of an impermissible delegation of power to the developer Sri Singhvi would say that the occupancy rights in respect of certain portions of the commercial complex were granted to the developer in lieu of the monetary outlay that he would make on the project and that the fact that the developer in respect of such accommodation was enabled to induct his nominees would not, in principle, detract from the character of the transaction as long as the Municipal Council, in turn, recognised such nominees as grantees of the occupancy.

On a consideration of the matter it appears to us that the appellants have not been able to establish that the essential elements of the transaction are such that Section 92 of the Act is violated. It would, indeed, 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. The point to note is that 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 Muncipal 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.

 

Indeed, in the course of his submissions, Dr. Chitale for respondent 6 stated that the project had turned out to be white-elephant for respondent No. 6; that the shops and other commercial accommodation made available to him are not, indeed, goods selling propositions and that the project had proved quite burdensome. Dr. Chitale, on behalf of his client frankly stated that in view of the adverse and embarrassing publicity the litigation had generated, respondent 6 was ready and willing to surrender the agreement and all his rights thereunder if the work done by him so far was valued and paid for in terms of the specific clauses of the agreement in this behalf. Dr. Chitale also submitted that the allegation that respondent No. 6 could make disproportionately high returns is unfair and that while in respect of some of the shops the financial estimates of the Municipal Council were built on the expectations of a return of Rs. 3,40,000/- per shop and in respect of others at Rs. 2,50,000, respondent No. 6 has not been able to get even so much from the intending or prospective occupants.

17.  On a consideration of the matter we find no substance in contentions (b) and (c) either

 

18.  Re : Contention (d)

 

The contention is that the resolutions of the Municipal Council touching the approval of the project and authorised its execution by respondent 6 are vitiated by unreasonableness and arbitrariness. The unreasonableness is said to consist in the choice of the manner of the execution of the project and arbitrariness in the process enabling the choice of respondent 6. Both these sins, according to the contention, were the result and in furtherance of the anxiety on the part of the Municipal Council to favour respondent 6.

 

Sri Jain urged that in the process of putting the project to tender the criteria on which the competitive merits of the tenders could be evaluated were not susceptible of such comparative assessment at all as, according to Sri Jain, there was no common denominator or objective-standard with reference to which one specific offer could be evaluated in comparative terms


against the other.

 

19.  It was urged that the basic concept of the manner of the development of the real-estate and disposal of occupancy rights were vitiated by unreasonableness. It is a truism, doctrinally, that powers must be exercised reasonably. But as Prof. Wade points out:

"The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the Court must not usurp the discretion of the public authority which Parliament appointed to take the decision. Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion. If it passes those bounds, it acts ultra vires. The Court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion. It 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. But if the decision is within the confines of reasonableness, it is no part of the Courts function to look further into its merits. With the question whether a particular policy is wise or foolish the Court is not concerned; it can only interfere if to pursue it is beyond the powers of the authority

(See:Administrative Law: H.W.R. Wade, 6th Edn. p. 407)

 

In the arguments there is some general misapprehension of the scope of the "reasonableness"-test in administrative law. By whose standards of reasonableness that a matter is to be decided? Some phrases which pass from one branch of law to another - as did the expressions void and voidable from private law areas to public law situations carry over with them meanings that may be in apposite in the changed context. Some such thing has happened to the words "reasonable", "reasonableness" etc. In Tiller v. Atlantic Coast Line Rail Road Company,

(318 US 54 at 68): (143 ALR 967), Justice Frankfurter said :

 

"A phrase begins life as a literary expression; its felicity leads to its lazy repetition; and repetition soon establishes it as a legal formula indiscriminatingly used to express different and sometimes contradictory ideas."

Different context in which the operation of "reasonableness" as test of validity must be kept distinguished. For instance as the arguments in the present case invoke, the administrative law test of reasonableness as the touchstone of validity of the impugned resolutions is different from the test of the reasonable man familiar to the law of torts, whom English Law figuratively identifies

as the "man on the clapham omnibus". In the latter case the standards of the reasonable man, to the extent such a reasonable man is Courts creation, is in a manner of saying, a mere transferred epithet. Lord Radcliffe observed:

 

"By this time, it might seem that the parties themselves have become so far disembodied spirits that their actual persons should be allowed to rest in peace. In their place there rises the figure of the fair and reasonable man. of the fair and reasonable man, who presents after all no more than the anthropomorphic conception of justice, is, and must be, the Court itself ........"

 

(Emphasis Supplied)

 

(See : Davis Contractors v. Fareham U.D. C.; 1956 (2) All ER 145 at 160).

 

Yet another area of reasonableness which must be distinguished is the constitutional standards of reasonableness of the restrictions on the fundamental rights of which the Court of judicial review is the arbiter.


The administrative - law test of reasonableness is not by the standards of the "reasonable man" of the Torts Law. Prof. Wade says:

"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 so. 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 case in which Lord Greene MR expounded it."

 

(Emphasis Supplied)

 

(See: Administrative Law - HWR Wade, 6th Edition - 407)

 

To the same effect are the observations in "Legal Control of Government" (Bernard Schwartz and H.W.R. Wade) at page 253:

"................Confusion has perhaps arisen because the test of reasonableness in this context is

 

the law of tort and elsewhere. In applying the latter standard the judge merely enforces what he thinks is reasonable. But in condemning unreasonable administrative action he asks himself whether the decision is one which a reasonable body could have reached. In other words he allows some latitude for the range of differing opinions which may fall within the bounds of reasonableness........."

The reasonableness in administrative law must, therefore, distinguish between proper use and improper abuse of power. Nor is the test the Courts own standard of reasonableness as it might conceive it in a given situation. This is the essence of Lord Greenes dictum now familiar as the Wednesbury 1991 G. B. Mahajan v. Jalgaon Municipal Council S. C. 1165unreasonableness, in (1948) 1 K B 223). It was observed:

"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 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."

 

Referring to the doctrine, Prof. Wade says:

 

"This has become the most frequently cited passage (though most commonly cited only by its nickname) in administrative law. It explains how reasonableness, 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 of errors commonly described as irrelevant considerations, and mistakes and misunderstandings which can be classed as self-misdirection, or addressing oneself to the wrong question.........."

(See: Administrative Law: H.W.R. Wade; Sixth Edn., p. 408)

 

The point to note is that a thing is not unreasonable in the legal sense merely because the Court thinks it is unwise. Some observations of Lord Scarman in Nottinghamshire County Council v. Secretary of State for Environment, (1986 AC 240 at 247) might usefully be recalled:

".............But I cannot accept that it is constitutionally appropriate, save in very exceptional

 

circumstances, for the Courts to intervene on the ground of "unreasonableness" to quash guidance framed by the Secretary of State and by necessary implication approved by the House of Commons, the guidance being concerned with the limits of public expenditure by local authorities and the incidence of the tax burden as between taxpayers and ratepayers. Unless and until a statute provides otherwise, or it is established that the Secretary of State has abused his power, these are matters of political judgment for him and for the House of Commons. they are not for the judges or your Lordships House in its judicial capacity."

 

"For myself, I refuse in this case to examine the detail of the guidance or its consequences. My reasons. are these. Such an examination by a Court would be justified only if a prima facie case were to be shown for holding that the Secretary of State had acted in bad faith, or for an improper motive, or that the consequences of his guidance were so absurd that he must have taken leave of his senses........."

When Lord Denning MR stated in the Court of Appeal that "Not only must (the probationer-Counseller) be given a fair hearing, but the decision itself must be fair and reasonable" (emphasis supplied), the House of Lords thought that the statement of the learned Master of the Rolls, if allowed to pass into law, would wrongly transform the remedy of judicial review, as the statement would imply that the Court can itself sit, as in appeal, in judgment of the reasonableness of the decision instead of on the correctness of the "decision making process". "The purpose of judicial review", it was stated : "...... is to ensure that the individual receives fair treatment, and not to

 

ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the Court." (See: Chief Constable v. Evans; (1982 (3) All ER 141 at 144).

 

20.  While it is true that principles of judicial review apply to the exercise by a government body of its contractual powers, the inherent limitations on the scope of the inquiry are themselves a part of those principles. For instance, in a matter even as between the parties, there must be shown a public law element to the contractual decision before judicial review is invoked. In the present case the material placed before the Court falls far short of what the law requires to justify interference.

 

21.  In regard to the allegation that the Project Scheme was tailored to suit respondent 6 alone or that the project as put to tender did not admit of tenders on fixed comparable parameters, we find no merit. Sri K. K. Singhvi submitted that the tender papers were prepared by reputed architects and the precise points on which comparative quotations were invited were specifically

 

incorporated in the tender-papers. The point again is that no other tenderer expressed any


grievance. The tenders were such that the tenderer could identify the terms which form the basis of comparative evaluation. The charge of arbitrariness cannot be upheld. Tests to be applied in a given case may be influenced by the extent to which a decision is supported by a democratic unanimity which evidences the decision - granted, of course, the power.

22.  Sri R. K. Jain stated that the scheme enables respondent 6 to resort to certain well-known financial malpractices for tax-evasion now known to be rampant when properties change hands. Sri Jain said that the Court ought to take judicial notice of so rampant and pervasive an evil and interdict anything that tends to promote such unhealthy economic trends. While it is true that large scale tax-evasion and evils of unaccounted money bedevils the nations economic discipline and that with the increasing erosion of morality in public life and the serious personal degradations for unjust gains one sees all-round, the situation is, indeed, serious. But we fail to see what the Court can do in a case like this. The present argument proceeds on two assumptions. The first is that respondent No. 6 has, in fact, indulged in such practices in the matter of disposal of occupancy-rights. This is a mere allegation which is emphatically repudiated by respondent No. 6. The second is that the accommodation in this commercial complex is such good competitive selling proposition that there is great demand and limited supply enabling respondent 6 to exploit the situation. This again is a matter of mere allegation. To condemn the municipal authoritys decision, otherwise valid, on the ground alone that the developer is likely to resort to transactions of unaccounted money would, as a judicial remedy, be plainly unthinkable.

 

Contention (d) requires to be and is also held against appellants.

 

23.  On a consideration of the matter, we think that the conclusion reached by the High Court does not call for interference. These appeals are accordingly dismissed. In the circumstances, we make no order as to the costs.

Appeals dismissed.

 

 

For Citation : AIR 1991 SC 1153= (1991) 3 SCC 91 = 1990 Supp. (3) SCR 20 = 1991(1) JT 605 =1991(1) Scale 378.

 

 

Kasturi Lal Lakshmi Reddy, etc. v. The State of J. and K. and Anr., 1980 4 SCC 1

1980 0 AIR(SC) 1992; 2010 6 JKJ(SC) 763; 1980 4 SCC 1; 1980 3 SCR 1338; 1980 0 Supreme(SC) 272;

 

 

 

SUPREME COURT OF INDIA

 

P.N. BHAGWATI, V.D. TULZAPURKAR AND R.S. PATHAK, JJ.

 

M/s. Kasturi Lal Lakshmi Reddy, etc., Petitioners

 

Versus

 

The State of J. and K. and another, Respondents.

 

Writ Petns. Nos. 481-482 of 1979

 

Decided on 9-5-1980.

 

 

Advocates appeared

 

Mr. K. N. Bhatt, Advocate, for Petitioner; Mr. Altaf Ahmed, Advocate (for No. 1) and Mr. E. C.

 

Agarwal, Advocate (for No. 2), for Respondents.

 

 

 

 

 

relied on : Ramana Dayaram Shetty v. International Airport Authority of India, 1979 3 SCC 489 State of Madras v. V. G. Row, AIR 1952 0 196

Maneka Gandhi v. Union of India, 1978 1 SCC 248 E. P. Royappa v. State of T. N., 1974 4 SCC 3

Ramana Dayaram Shetty v. International Airport Authority, 1979 3 SCC 489

 

Maneka Gandhi v. Union of India, 1978 1 SCC 248

 

E. P. Royappa v. State of T.N., 1974 4 SCC 3

 

CONSTITUTION OF INDIA : Art.13, Art.14, Art.19, Art.21, Art.32

 

.

 

 

JUDGMENT

 

BHAGWATI, J.:— These two writ petitions under Article 32 of the Constitution raise questions of some importance in the field of constitutional law but they are not abstract questions which can be divorced from the facts giving rise to them and in order to resolve them satisfactorily, it is necessary to state the facts in some detail. Though the petitioners in two writ petitions are different, the respondents are the same and the same Order of the State of Jammu and Kashmir is challenged in both the writ petitions. Hence whatever we say it regard to the first writ petition applies equally in regard to the second.

 

2. The dispute in these writ petitions relates to the validity of an Order dated 27th April, 1979, passed by the Government of Jammu and Kashmir, allotting to the 2nd respondents 10 to 12 lacs blazes annually for extraction of resin from the inaccessible chir forests in Poonch, Reasi and


Ramban Divisions of the State for a period of 10 years on the terms and conditions set out in the Order. The validity of the Order has been challenged on various grounds which we shall presently set out, but in order to understand and appreciate these grounds, it is necessary to state briefly the circumstances in which the Order came to be passed by the Government of Jammu and Kashmir. There is a commodity called Oleo-resin, which we shall hereafter refer shortly as resin, which is a forest produce extracted from a certain species of trees popularly known as chir trees. The process of extraction is called tapping and it involves several steps. Chir trees are annually given one or two wounds which are technically called blazes and cups and lips are fixed at the bottom of each blaze for collection of resin. The actual collection of resin starts from 1st April and ends on 31st October every year. The maximum flow of resin from blazes is during the months of May and June and in the subsequent months of the working season, namely, July to October, the flow gradually decreases due to the rainy season followed by fall in temperature. The tapping of resin is a continuous process and the initial blazings have to be followed by freshenings given every week. If the blazes are not freshened regularly, the resin ducts get blocked and the blazes become dry and once a blaze becomes dry, the flow of resin stops completely. The resin that is collected in the cups is transferred to tin containers every weekends or earlier if required, and the tin containers are then transported to the transit depots for being carried to the destination. This process of tapping requires employment of skilled labour and involves a considerable amount of expenditure. The State of Jammu and Kashmir started tapping operations in respect of its chir trees since about 1973 by giving contracts to private parties for extraction and collection of resin. The contracts were of three types:

 

(1)  One was contract on wage basis, commonly known as wage contract, which was given by auctioning the blazes to the person who was prepared to undertake the work of extraction and collection of resin at the lowest rates of labour charges and in such contract, the entire resin extracted and collected by the contractor would belong to the State and the contractor would be entitled only to the wage or labour charges for extraction and collection of resin.

(2)   The second type of contract was on the basis of royalty without load and under this contract, which was again given by auction stipulating for payment of royalty per blaze, the entire resin extracted and collected by the contractor would belong to him and he would be free to sell or process it as he liked.

(3)   The third type of contract given by the State was on the basis of royalty with load and under this contract, which was also given by auction, the royalty was payable per blaze and out of the resin extracted and collected by the contractor, a certain part would have to be surrendered to the State while the balance would remain with the contractor.

 

Every year the State auctioned the blazes in the different forests within its territory and about 40 per cent of the forests were given on royalty basis, some with load and some without load, while the balance of about 60 per cent were given on wage contract basis.

 

3. The resin, which was thus obtained by the State by giving out blazes on contract whether on royalty-cum-load or on wage basis, was auctioned by the State from time to time and manufacturers having factories for manufacture of resin, turpentine and other derivatives purchased it at the auctions. It is common ground that most of these purchasers were

 

manufacturers having their factories in Hoshiarpur district of Punjab and at the material time, they


depended for their requirement of raw material solely on the resin available at the auctions held by the State since supply of resin had ceased to be available from Uttar Pradesh and Himachal Pradesh on account of the policy adopted by the Governments in these territories. The State, however, in furtherance of its policy to bring about rapid industrialisation, decided that from the year 1979-80 onwards, the resin extracted from its forests should not be allowed to be exported outside the territories of the State and should be utilised only by industries set up within the State. The State in fact entered into contracts with three manufacturers, namely, Prabhat Turpentine and Synthetics Pvt. Ltd., Dujodwala Resin and Turpentine Pvt. Ltd. and Pine Chemicals Ltd. under which these three manufacturers agreed to put up factories in the State for Manufacture of resin, turpentine and other derivatives and State agreed to make available to them respectively an assured supply of 4,000, 3500 and 8,000 metric tonnes of resin per year. The validity of these contracts was challenged before us in Writ Petns. Nos. 37-38 of 1979, but these writ petitions were dismissed by an Order made on 21-12-1979. The State had also commitments to supply resin to its own concern, namely, J & K Industries Ltd., which was running a factory for manufacture of resin and turpentine as also to various small scale units which were set up in the State. It appears that the total requirement of the State for the purpose of meeting these commitments was in the neighbourhood of 24,000 metric tonnes of resin. Now in view of the fact that quite a large number of forests were being given out by the State for tapping on royalty contract basis, sometimes with load and sometimes even without load, the aggregate quantity of resin which was being collected by the State was very much short of the total requirement of 24,000 metric tonnes and it was, therefore, felt to be absolutely necessary for the State of increase its procurement of resin so as to be able to meet its commitments. With this end in view a meeting of the Chief Conservator of Forests and other forest officials was held on 9th December, 1978 for the purpose of discussing ways and means for achieving a higher target of production of resin. It was decided at this meeting that the increased target of production could be achieved only through replacement of royalty contracts by wage contracts wherever possible and hence in future blazes should be auctioned for tapping only on wage contract basis.

 

4.  Now there were certain forests in Reasi and Ramban Divisions of the State which were difficult of access on account of their distance from the roads and so were some forests in the Poonch Division near the line of actual control. So far as the forests in the Reasi Division were

concerned, there were 6,08,115 blazes which were attempted to be given for tapping in the year 1976-77 on royalty contract basis without load but out of them only 1,28,856 blazes were taken by one Prem Kumar Sood and that too on a royalty of only Rs. 2.55 per blaze, as against royalty of about Rs. 6/- per blaze obtained by the State in other inaccessible areas by giving contract on royalty basis with load of 3 Kg. Per blaze. Moreover, these 1,28,856 blazes were situate in the lower reaches of inaccessible forests and no contractors could be found for taking tapping contracts, even on the basis of royalty without load, for blazes in the higher regions of the inaccessible areas. The same 1,28,856 blazes were again put up for auction for the year 1977-78, but no bidders came forward to take a contract even on royalty without load basis. Then for the year 1978-79, out of these 1,28,856 blazes, 72,951 blazes were once again put up for auction and though these were situate in less inaccessible areas than the rest of the blazes, the response was most discouraging and no one came forward to make a bid for taking the contract even on royalty


basis without the load. The result was that practically no tapping was done from the 6,08,115 blazes in the forests of the Reasi Division up to 1979-80. There were also some new blazes marked in the forests of the Reasi Division for the year 1979-80 and out of them, 4,20,340 blazes were in areas which were inaccessible on account of their being at a distance of 6 to 40 k. ms. from the road-side. Even out of the old 6,08,115 blazes there were 3,10,674 blazes which were situate in the same category of inaccessible areas. So far as the forests in the Ramban Division are concerned, there were 1,24,400 blazes which were equally inaccessible "due to long lead up to coupe boundaries and transit depots" and the position in regard to 3,30,000 blazes which were under tapping in Poonch Division, was also similar to that of the inaccessible areas in Reasi and Ramban Divisions with the additional handicap of their being situate along the line of actual control. There were thus in all about 11,85,414 blazes in the Reasi, Ramban and Poonch Divisions which were in inaccessible areas and having regard to the high cost of extraction and collection of resin also the scarcity of trained labour in those areas, it was not possible to give out these blazes by auction on wage contract basis. The past experience showed that even on the basis of royalty without load, contractors were not forthcoming for taking contracts in respect of blazes in the inaccessible areas of the Reasi Division and giving out of the aforesaid blazes in the Reasi, Ramban and Poonch Divisions on wage contract basis was, therefore, almost an impossible proposition. The Chief Conservator of Forests and other forest officers accordingly decided at their meeting of December 9, 1978 that these blazes could not be tapped through wage contract because "apart from the total non-availability of local labour in these areas, cost of production due to long lead up to coupe boundaries and transit depots would be prohibitive" and all such areas should, therefore, be excluded from tapping through wage contracts.

 

5.   These decisions taken in the meeting of 9th December, 1978 were confirmed at a subsequent meeting which took place between the Forest Minister, the Forest Secretary, the Chief Conservator of Forests and other forest officers on 26th December, 1978. It was further decided in this meeting that "the departmental tapping through wage contracts should be confined to accessible chir forests" only and so far as 11,85,414 blazes in the inaccessible areas of the Reasi, Ramban and Poonch Divisions were concerned, the consensus was that "these blazes should be allotted to some private party as procurement of resin from them through wage contracts was not feasible, being difficult and costly" and "the financial status and experience in extraction of resin

 

from forests and its distillation in the factory should be decisive factors" in regard to such allotment. Now it is necessary to point out that prior to the date of this meeting, the 2nd respondents had addressed a letter dated 15th April, 1978 to the Minister for Industries, offering to set up a factory for manufacture of resin, turpentine oil and other derivatives in the State "with the latest know-how under the supervision of the State Government" and seeking allotment of 10,000 metric tonnes of resin annually for that purpose. The 2nd respondents pointed out in their letter that they possessed vast experience in processing of resin and reprocessing of resin and turpentine oil and manufacture of a wide range of derivates, since they had 2 factories for manufacture of resin and turpentine oil, one in Hoshiarpur and the other in Delhi and moreover, they had also been working as resin extraction contractors since 1974 and were also bulk purchasers of resin at the auctions held by the State. It was also stated by the 2nd respondents that they had reliably learnt that Camphor and Allied Products Ltd. and Prabhat General Agencies


were being considered by the State for allotment of resin to feed the units to be set up by them within the State and they expressed their willingness to take the allotment of resin for their proposed factory on the same terms and conditions. This offer of the 2nd respondents was forwarded to the Forest Minister, but despite the policy of the State to encourage setting up of resin-based industrial units in the State, it was not found possible, having regard to the commitments already made by the State, to make any allotment of resin to the 2nd respondents. A proposal was, therefore, mooted by the forest officials that about 10 to 12 lacs blazes in inaccessible areas could be made available for tapping to the 2nd respondents on certain terms and conditions, so that out of the quantity tapped, a certain portion could be retained by the 2nd respondents for being utilised in the factory to be set up by them within the State and the balance could be surrendered to the Government. The 2nd respondents were agreeable to this proposal and in fact they put it forward as an alternative proposal for consideration by the State, but no decision was taken on it until the meeting of 26th December 1978. When, as a result of discussions at this meeting, the consensus was reached that 11,85,414 blazes in the inaccessible areas of Reasi, Ramban and Poonch Divisions should be allotted to some private party for ensuring supply of resin to be utilised in the factory to be set up by such party within the State, the proposal of the 2nd respondents was considered along with the applications of some others including the petitioners in the light of the factors agreed upon at the meeting and having regard to the vast experience of the 2nd respondents in extraction and processing of resin and in view of the fact that they were large purchasers of resin at the auctions held by the State, it was decided that the case of the 2nd respondents should be processed for submission to the Government.

 

6.   It appears that J & K Resin Contractors Association (hereinafter referred to as the association) came to know sometime in October, 1978 that the 2nd respondents had approached the State Government and there was a proposal to allot to them "certain resin coupes on royalty system of 10 years" on the basis that they would install a factory for manufacture of resin and turpentine at Jammu with sizable investment. The association thereupon addressed a letter to the Chief Minister in October, 1978 complaining against giving of contract to an outside party by private negotiations and pleading that contract, whether on royalty basis or otherwise, should be given only by open auction. It is significant to note that no offer was made by the association in this letter to set up a resin-based industrial unit in the State and the only plea was that tapping

 

contract should not be given by private negotiations to a non-State party, but should be given only by open auction. Since the decision was taken at the meetings of 9th December, 1978 and 26th December, 1978 the blazes in the inaccessible areas of Reasi, Ramban and Poonch Divisions should not be given on wage contract basis, they were excluded from the auctions held by the State and the association, therefore, addressed a letter dated 22nd January, 1979 to the Chief Conservator of Forests requesting him to include these blazes in the auctions. This was followed by another letter dated 5th February, 1979 addressed by the association to the Forest Minister where the request for inclusion of these blazes in the auctions was repeated by the association. The association also pleaded with the Forest Minister that instead of adopting the wage contract method for giving out blazes for tapping contracts, "the system of royalty contract with increased load" should be continued in the forest divisions including Reasi, Ramban and Poonch. The same request was repeated by the association in a letter dated 8th March, 1979 addressed to the Chief


Minister. There was obviously no reply to these communications since it had already been decided that tapping of blazes in the accessible chir forests should be done only through wage contracts and 11,85,414 blazes in the inaccessible areas of Reasi, Ramban and Poonch Divisions should be allotted to some private party, which was prepared to set up a factory for manufacture of resin turpentine and other derivatives in the State.

7.  The 2nd respondents presumably, on coming to know that their alternative proposal for allotment of 10 to 12 lacs blazes in inaccessible areas was being processed by the Government, addressed a letter dated 22nd February, 1979 to the Secretary to the Forest Department formulating the broad terms of the proposal and requesting the State Government to consider the proposal favourably and come to a decision immediately, since the tapping season was commencing from 1st April, 1979. The association by its letter dated 18th March, 1979 addressed to the Chief Minister protested against the blazes in the Reasi, Ramban and Poonch Divisions being given to the 2nd respondents by negotiations on royalty basis for 10 years and urged that doing so would be contrary to the interests of the local contractors and local labour and "will also be a source of huge loss to the Government exchequer since the price of resin was increasing day by day. Once again a plea was made by the association that these blazes should be given out for tapping contract by public auction. The petitioners also complained to the Chief Minister by a letter addressed in March, 1979 against giving of contract to the 2nd respondents who were an outside party and offered to take "all the untapped forests in the State on 2 to 3 years lease on rotational basis" stating that they would pay 50 paise per blaze more than that offered under any other proposal and that out of the quantity tapped by them they would retain 3,000 metric tonnes which they would utilise for manufacturing resin, turpentine oil and other derivatives in a new modern factory to be set up by them in some backward area of the State. The State did not accept this offer made by the petitioners and decided to go ahead with giving tapping contract in respect of these blazes to the 2nd respondents.

 

8.  The State accordingly passed an Order dated 27th April, 1979 sanctioning allotment of 11-85 lacs blazes in the inaccessible areas of Reasi, Ramban and Poonch Divisions to the 2nd respondents for a period of 10 years on the terms and conditions set out in the order. The 2nd respondents were required by cl. II (iii) of the Order to surrender 25 of the annual resin collected by them, subject to a minimum of 1500 metric tonnes per annum, to the State for feeding the new

resin distillation plant which J & K Industries Ltd. proposed to set up in Rajouri/Sunderbani and they could retain the balance of the extracted resin subject to a maximum of 3500 metric tonnes per annum. Clauses II (iv) and V of the Order provided that the 2nd respondents shall set up a resin distillation plant in the small scale sector for processing up to 3500 metric tonnes of resin and the extracted resin which is allowed to remain with them under the Order shall be utilised only in the plant to be set up by them and shall not be removed outside the State. Clause II (v) of the Order stipulated that the 2nd respondents shall :

 

"(a) be paid the same wages for part of the resin extracted and delivered to the department as would be sanctioned by the Forest Department from year to year for other departmental resin extraction contracts for the adjoining blocks in the respective locality;

 

(b) get proportionate rebate in royalty on the quantity thus surrendered (i.e. no royalty shall be charged for such quantity); and


(c)  deliver such resin at the JKL factory at Rajouri/Sunderbani for which no transport charges will be allowed."

Clause III provided that the price of resin retained by the 2nd respondents shall be Rs. 350/-per quintal and it shall be subject to review after three years and every year thereafter and so far as the royalty is concerned. Clause IV stated that it shall be worked out by a committee, the basis of calculation being the cost of resin extraction and collection in adjoining areas given out on wage-contracts from year to year and the sale price of resin as fixed at Rs. 350/- per quintal, for a period of three years after which it shall be reviewed annually." This Order made by the State Government is challenged in the present petitions filed under Article 32 of the Constitution.

9.  There were in the main three grounds on which the validity of the Order was assailed on behalf of the p