WRIT PETITION NO. 12362 OF 2023 v. Bombay High Court, Fort Mumbai)

Judgment

1. Rule. by consent returnable forthwith. 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors

2. There is an Affidavit in Reply on behalf of Respondents Nos 1 to 3, the Thane Municipal Corporation (“TMC”).

3. The dispute pertains to the decision of the TMC to purportedly keep in “abeyance” its proclaimed Buy-Back Policy (“BBP”). This was a policy for the buy-back of lands acquired under Development Control Regulations (“DCR”) and of plots reserved under the sanctioned Development Plan (“DP”) for public use. The policy was always subject to certain terms and conditions.

4. This Petition under Article 226 of the Constitution of India assails not only the general direction to keep this policy in abeyance but the failure of the TMC to honour the terms of that policy after the TMC has received benefit under it and after the Petitioners have acted on the assurances contained in their policy, significantly altering their position to their prejudice. Of necessity, at least part of the Petition invokes principles of promissory estoppel or legitimate expectations.

5. By and large, the facts are not contentious. On 1st October 2003, the Petitioners acquired development rights over 1,15,018 sq mts of land from Voltas Ltd (“Voltas”). The two parties had a Development Agreement. This was registered.

6. On 2nd May 2016, the Maharashtra Government notified an ‘Accommodation Reservation Policy’. This policy was intended to transfer the burden of developing reserved plots to private land owners or developers in consideration of certain incentives. To 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors explain more clearly what this means, various plots in the command area of the TMC, which is the planning authority under the Maharashtra Regional And Town Planning Act, 1966 (“the MRTP Act”) were reserved for various public purposes, amenities and so forth in the sanctioned DP. Ordinarily, these reservations would have had to be developed by the TMC for public use.

7. If there was not an actual acquisition for monetary compensation of a reservation, with all its attendant of lapsing, the owner/developer would obtain development benefits in lieu of the reservation. There are cases where the condition is that the developer is to construct the amenities (typically a municipal

market, for instance, or a playground, a dispensary, bus station, fire stations and so on) and hand these over free of cost to the TMC, in consideration of which the developer gets additional buildable area.

8. The present policy of 2nd May 2016 allowed the owners/developers to retain a part of the reserved plot for private development and provided additional Floor Space Index (“FSI”) or Transferable Development Rights (“TDR”) benefits for the reserved area. While this remained in the form of a policy, it was later incorporated in the finally sanctioned Unified Development Control And Promotion Regulations 2020 for Maharashtra State (“UDCPR 2020”) under Regulation 11(1). A copy of the policy is at Exhibit “B” to the Petition.

9. We come directly to Regulation 11 of the UDCPR 2020 at Exhibit “C”. Regulation 11(1) is captioned as “Manner of 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors Development of Reserved Sites in Development Plan (Accommodation Reservation Principles)”. In Table 11-A, the manner of development of various types of facilities are set out. In almost all of them, there is an option available to the Planning Authority. For example, where there is a recreational reservation, instead of acquiring and developing the land, the authority will retain 70% of the land and allow the developer to develop the remaining 30% by using the FSI/TDR of the plot in accordance with the adjoining use and subject to certain stipulated conditions. Similar provisions are made for public utilities (cremation ground, burial ground, slaughter house, sewerage treatment plants, water treatment plants, water tanks); commercial (markets and mandis and shopping centres), health facilities (such as health centres, hospitals and dispensaries etc), transportation, roads, parking, truck terminus, educational complexes, residential reservations, assembly and institutional uses, public and semi-public uses, composite reservation, other compatible reservations, other buildable reservations and reservations for an authority other than the Planning Authority.

10. This Petition concerns itself with one particular sub-item of the Public-Semi Public Reservation i.e., a Fire Brigade Station. The relevant portion of the UDCPR 2020 reads: “CHAPTER -11 ACQUISITION AND DEVELOPMENT OF RESERVED SITES IN DEVELOPMENT PLANS

11.0 GENERAL These regulations shall be applicable for the areas within the jurisdiction of planning authorities, unless otherwise 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors specified.

11.1 Manner of Development of Reserved Site in Development Plan (Accommodation Reservation Principle) The use of lands situated within the limits of Planning Authority which have been reserved for certain purpose in the Development Plan, shall be regulated in regard to type and manner of development/redevelopment according to the provisions mentioned in following Table No. 11A. When owner is allowed to develop a reservation, he should have exclusive ownership/title of the land without any restriction under any other Act or Regulations in force. Table No.11-A-Manner of Development Reservation Person/Authority who may acquire/develop Principle For Development through Accommodation Reservation subject to which development is permissible 1 2 3 9) Public-Semi public Planning Authority/ Appropriate Authority / Owner a) Govt Offices b) Fire Brigade Station c) Reservations similar to above. Planning The Authority/ Appropriate Authority may acquire and develop reservation site for the same purpose. OR 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors Reservation Person/Authority who may acquire/develop Principle For Development through Accommodation Reservation subject to which development is permissible 1 2 3 i) The Authority may allow the owner to develop the reservation, subject handing over to Planning Authority independent plot constructed amenity of total area, mentioned in Note-1 below Table & as per prescribed by the Authority. ii) The owner shall be entitled develop remaining land for the uses permissible adjoining zone permissible FSI of the entire Plot and permissible 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors Reservation Person/Authority who may acquire/develop Principle For Development through Accommodation Reservation subject to which development is permissible 1 2 3 TDR potential of the entire plot. iii) The Authority, if required, allow the TDR for the unutilized FSI, if any (after deducting in-situ FSI), to be utilised as per TDR Regulations iv) Reservation may be allowed to be developed parts.

11. From this tabulation it is clear that acquisition and development by the planning authority is one option available to the Planning Authority. The second option allows the owner to develop the reservation. It has four sub-options built into it as indicated above. 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors

12. At the time when the Petitioners began work, it was the policy and not the Regulation that was operational. In exercise of its powers under Section 79 of the Maharashtra Municipal Corporations Act, 1949 (“the MMC Act”), the TMC passed Resolution No 1434. A copy is at Exhibit “D” to the Petition. Broadly stated, by this Resolution the TMC adopted the 2016 policy.

13. On 5th February 2019, the TMC wrote to the Petitioners demanding roughly Rs 19.76 crores for the fire brigade station and Rs 22.51 crores for a MRTS or a Rapid Transit Station.

14. Separately on 9th October 2019, Voltas and the Petitioners executed a Deed of Transfer by which complete title in the reservation was conveyed or transferred to the TMC against or in lieu of TDR. Then on 16th October 2019, the 1st Petitioner and the TMC executed a second Deed of Transfer and under this the TMC transferred title and the reservations to the Petitioners against payment of Rs 42,26,84,962/-. Now this is not a random number. It is 125% of the then prevalent Ready Reckoner value of the physical plot area of the reservation. The permissions granted to the Petitioners were subject to certain conditions and terms.

15. On 4th February 2022, the Petitioners sought the release of proportionate TDR (i.e., linked to the stage of construction) for the amenity building which had been completed up to the fourth floor. 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors

16. By 11th February 2022, the Petitioners had transferred a portion of the property of about 1909 sq mts to the TMC under a Registered Deed of Transfer.

17. It seems that on 20th May 2022, the TMC communicated through the Assistant Director of Town Planning that some question had been raised in the Legislative Assembly and that the Ministry of Town Planning had given an assurance that there would be an enquiry into the BBP.

18. On 27th July 2022 the Petitioners replied saying that they had complied with all conditions under the stated and operated Accommodation Reservation Principle and BBP and there was no question therefore of refusing to grant them the additional pro-rata TDR. As we have noted, the amenity included a ‘Fire Brigade Station’. On 16th November 2022, the Chief Fire Officer of the Thane Fire Department issued its No Objection Certificate.

19. The Petitioners continued their correspondence with the TMC and in March 2023 sought an amended development permission in view of the UDCPR 2020 which had increased the FSI allowable to the Petitioners for the free sale building. This application was rejected on 28th July 2023 by the TMC. A copy of this communication is at Exhibit “R” to the Petition at page 282. The reason given was that the BBP had purportedly not yet been approved by the State Government and therefore revised plans could not be approved since they were founded or based on an operation of the BBP. Another representation from the Petitioners 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors followed on 15th September 2023. A copy is at Exhibit “S”. There is no reply. This Petition was filed on 21st September 2023.

20. On 11th October 2023, we asked that an Affidavit in Reply be filed. A copy is at page 292. It is filed by one Satish P Ugile, the Assistant Director of Town Planning.

21. The Affidavit candidly states that there was indeed such a BBP. But in the context of what has happened thereafter, paragraphs 6 and 7 of the Affidavit at page 294 must be noted. They read as follows: “6. I say that a query was raised by a Member of the Legislative Assembly (“MLA”) before the Legislative Assembly as regards the Buyback Policy introduced by the TMC and Hon’ble Minister of UDD had assured an enquiry with the respect of the said Buyback Policy. I say that in view of the above the Urban Development Department by its Letters dated 25th February 2022 and 20th April 2022 had called for a report from the TMC. Hereto annexed and marked as Exhibit-A are copies of Letters dated 25th February 2022 and 20th April 2022 issued by the Urban Development Department.

7. I say that in response to Letters dated 25th February 2022 and 20th April 2022, the TMC has submitted its Report by Letters dated 28th February 2022 and 18th May 2022. I say that it appears from the said Report that the Buyback Policy introduced by the TMC appears to be in conflict with the provisions of section 79(d) of the MMC Act. I say that at the relevant time when the TMC had introduced the said Buyback Policy, no sanction of the State Government was obtained by the TMC and in view thereof till the Urban Development Department does not approve 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors the said Buyback Policy, the applications of the Petitioners dated 4th February 2022 and 27th March 2023 will be kept in abeyance and cannot be processed in terms of the said Buyback Policy. Hereto annexed and marked Exhibit-B are copies of Letters dated 28th February 2022 and 18th May 2022.” (Emphasis added)

22. As regards the enquiry, we note that all that has happened is that the Urban Development Department has asked for a report. There is no directive by the State Government to hold the policy in abeyance. There is certainly no directive in regard to what is to be done where the policy has been at least partly operated and especially in case where the Planning Authority has received material benefit either in terms of a cash pay-out or in terms of a built amenity or both. Absent such a directive, we do not know how a simple query and calling for a report can possibly keep in abeyance an entire policy, especially one that has been actively operated and under which a public authority has received benefit. Nothing in this Affidavit suggests that the TMC has even offered to return, let alone with interest, the amount that it had taken from the Petitioners or how the Petitioners would be compensated for the benefits so received by the TMC. As we have noted, the policy has embedded in it the default provision in law which is for acquisition and development by the authority itself. Even this is not being done. In other words, the TMC is quite literally having it both ways. It will not acquire and develop on its own these reservations. It accepts the money under the BBP that it had announced. It allows the amenity to be built, and 80% of that construction has been completed. Now, apparently, the entire process is to be held in stasis. 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors

23. We note that no Municipal Corporation responds like this when a Division Bench of this Court asks a question or calls for an Affidavit.

24. As to Section 79 of the MMC Act, this deals with disposal of municipal property. We reproduce that Section. “79. Provisions governing the disposal of municipal property. With respect to the disposal of property belonging to the Corporation, other than property vesting in the Corporation exclusively for the purposes of the Transport Undertaking the following provisions shall have effect, namely:— (a) the Commissioner may, in his discretion, dispose of by sale, letting out on hire or otherwise, any moveable property belonging to the Corporation not exceeding in value in each instance five hundred rupees or such higher amount as the Corporation may, with the approval of the State Government, from time to time determine, or grant a lease of any immoveable property belonging to the Corporation including any right of fishing or of gathering and taking fruit, and the like, for any period not exceeding twelve months at a time: Provided that, the Commissioner shall report to the Standing Committee every lease of immoveable property within fifteen days of the grant thereof unless it is a contract for a monthly tenancy or the annual rent thereof at a rack rent does not exceed three thousand rupees; with the sanction of the Standing Committee the (b) Commissioner may dispose of by sale, letting out on hire or otherwise any moveable property belonging to the Corporation, of which the value does not exceed five 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors thousand rupees; and may with the like sanction grant a lease of any immoveable 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 immoveable 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; (c) with the sanction of the Corporation the Commissioner may lease, sell, let out on hire or otherwise convey any property, moveable or immoveable, belonging to the Corporation; Provided that, where the immovable property or any right belonging to the Corporation has been leased or otherwise transferred in accordance with the provisions of this section by following due procedure of public auction, then it shall be lawful for the Corporation to subsequently renew the said lease or transfer of the immovable property, in accordance with the rules framed by the Government in this behalf. (d) the consideration for which any immoveable property or any right belonging to the Corporation may be sold, leased or otherwise transferred shall not be less than the current market value of such premium, rent or other consideration; the sanction of the Standing Committee or of the (e) Corporation under clause (b) or clause (c) may be given either generally for any class of cases or specially in any particular case; (f ) the aforesaid provisions of this section and the provisions of the rules shall apply, respectively, to every disposal of property belonging to the Corporation made under or for any purposes of this Act: 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors Provided that,— no property vesting in the Corporation for the (a) purpose of any specific trust shall be leased, sold or otherwise conveyed in such a manner that the purpose for which it is held will be prejudicially affected; no property transferred to the Corporation by (b) the Government shall be leased, sold or otherwise conveyed in any manner contrary to the terms of the transfer except with the prior sanction of the appropriate Government; notwithstanding anything contained in this section, (g) the Commissioner may, with the sanction of the Corporation and with the approval of the State Government grant a lease, for a period not exceeding thirty years, of a land belonging to the Corporation,— which is declared as a slum area under the (i) provisions of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971, to a co-operative society of eligible slum dwellers; or as the case may be, to the eligible slum dweller individually, at a premium to be decided by the State Government and subject to the prescribed terms and conditions; or to persons who are dishoused as a result of the (ii) implementation of any Development Scheme of the Corporation or to the Co-operative Housing Society formed exclusively by persons who are dishoused as a result of the implementation of any Development Scheme of the Corporation; or (iii) to any Department or undertaking of the Government of Maharashtra or of the Government of India, for the public purposes; or 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors (iv) to a public trust, society or company registered exclusively for medical and educational purposes registered under the Bombay Public Trusts Act, the Societies Registration Act, 1860 or the Maharashtra Co-operative Societies Act, 1960 or the Companies Act, 2013, as the case may be; or to a public trust registered under the (v) Maharashtra Public Trusts Act, or a society registered under the Societies Registration Act, 1860 or the Maharashtra Co-operative Societies Act, 1960 or a company registered under the Companies Act, 2013, or any person, for the purposes of the provisions of public latrines, urinals and similar conveniences or construction of a plant for processing excrementitious or other filthy matters or garbage, at such rent, which may be less than the market value of the premium, rent or other consideration, for the grant of such lease, and subject to such conditions as the Corporation may impose. The approval of the State Government under this clause may be given either generally for any class of cases of such lands or specially in any particular case of such land: Provided that, where the Municipal Corporation has granted approval to the implementation of the Pradhan Mantri Awas Yojana of the Central Government on the land belonging to it, the Commissioner shall grant lease of such land to the eligible individual beneficiary in the manner, as may be notified by the State Government: Provided further that, the Commissioner may in like manner renew, from time to time, the lease for such period and subject to such conditions as the Corporation may determine and impose. 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors Explanation.—For the purposes of this clause, “eligible slum dweller” means the eligible slum dweller as defined in clause (c-b) of section 2 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act 1971.” (Emphasis added)

25. The so-called query to the TMC is unfocused because it is not even demonstrated on Affidavit how the BBP is in any way in contravention of Section 79. The submission seems to be that sub- clause (d) is violated. But sub-clause (d) only says that the consideration cannot be less than the market value of such premium rent or other consideration. What has been computed is 125% of the Ready Reckoner rate. Prima facie it is difficult to see how the policy can be on this ground said to be in conflict with Section 79(d) of the MMC Act.

26. But even leaving that aspect aside, we believe it is now firmly settled that no authority can act in an arbitrary manner in the exercise of its statutory powers. There is much settled law in this regard and it goes back several decades. We will refer to only some of it.

27. But before we do so, we return once again to the UDCPR 2020 and to the 2016 policy. We have considered the Appendix to the policy . We find that but for the most minor and immaterial differences, if any, it is almost identical to the one that we find in Regulation 11 of the UDCPR 2020. Particularly, the public and semi-public caption did not exist in the 2016 policy. There was only 1st November 2023 Sheth Developers Pvt Ltd v MCGM Thane & Ors a residual Clause 11 for ‘reservations other than shown in the DP’ and not covered by other items in the policy, but the rest is virtually identical including the terms on which the buy back and the development by the property owner could be permitted.

28. The doctrine of promissory estoppel is firmly part of the jurisprudence in this country. In Manuelsons Hotels Private Limited v State of Kerala And Ors,1 there was a comprehensive review and survey authored by Justice Rohinton Fali Nariman of the law on promissory estoppel and, in that context and in the context of administrative law, the scope of and grounds for judicial review. The discussion covers all the relevant case law on promissory estoppel, Wednesbury unreasonableness and judicial review including the celebrated cases of Associated Provincial Picture Houses Ltd v Wednesbury Corporation,2 Union of India v Anglo-Afghan Agencies,3 Turner Morrison And Co Ltd v Hungerford Investment Trust Ltd,4 and Motilal Padampat Sugar Mills Co Ltd v State of UP.5

29. The principle is enunciated in the context of in that case, a question of taxation. The Supreme Court held that where a Government makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee acting in reliance on it, alters his position, the Government would be held bound by the promise. That promise is then enforceable against the 1 2 3 4 5