Builders Pvt. Ltd. Vs. Radhey Shyam Sahu & Ors  INSC 228 (26 July 1999)
D.P.Wadhwa D.P. Wadhwa, J.
appeals are directed against the judgment dated August 23, 1994 of a Division Bench of the High Court of Judicature at Allahabad, (Lucknow Bench). By a common
judgment in three writ petitions, High Court speaking through Shobha Dixit, J.
held that the decision of the Lucknow Nagar Mahapalika ('Mahapalika' for
short), also now called Nagar Nigam or Corporation, permitting M.I. Builders
Pvt. Ltd. (the appellant herein) to construct underground shopping complex in
the Jhandewala Park (also known as Aminuddaula Park) situated at Aminabad
Market, Lucknow, was illegal, arbitrary and unconstitutional. High Court set
aside and quashed the relevant resolutions of the Mahapalika permitting such
construction and also the agreement dated November 4, 1993 entered into between the Mahapalika
and the appellant for the purpose. Writ of mandamus was issued to the
Mahapalika to restore back the park in its original position within a period of
three months from the date of the judgment and till that was done, to take
adequate safety measures and to provide necessary safeguard and protection to
the public, users of the park. High Court had noticed that the fact that the
park was of historical importance was not denied by the Mahapalika and also the
fact that perseverance or maintenance of the park was necessary from the
environmental angle and that the only reason advanced by the Mahapalika for
construction of the underground commercial complex was to ease the congestion
in area. High Court, however, took judicial notice of the conditions prevailing
at the Aminabad market. It said it was so crowded that it was bursting from all
of the underground shopping complex in question would only complicate the
situation and that the present scheme would further congest the area. It said
that the public purpose, which is alleged to be served by construction of the
underground commercial complex, seemed totally illusory.
by the impugned judgment of the High Court, appellant has come to this Court.
Mahapalika also felt aggrieved and filed appeals (Civil Appeal Nos. 9326-28 of
1994) but these appeals by the Mahapalika were subsequently allowed to be
withdrawn by order dated February
is controversy as to how the Mahapalika 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 O R D E R Taken on board.
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.
.......CJI New Delhi, Sd/- February 6,
Mahapalika also cancelled the building plans. This action of the Mahapalika was
subject matter of criticism by the appellant as to how a duly sanctioned plan
could be revoked without any notice to the appellant. We may, at this stage,
itself reproduce the relevant portion of the resolution dated August 6, 1996 of
the Mahapalika for withdrawal of its appeals which is as under:- "The
Lucknow Bench of Hon'ble High Court of Allahabad has declared the agreement
dated 4.11.1993 executed between the Nagar Mahapalika, Lucknow and M.I.
Builders, Karamat Market Lucknow in respect of construction of underground
Palika Bazar and Multistoreyal parking on Jhandewala Park Aminabad, Lucknow as
invalid and not in the public interest vide their judgment dated 23.8.1994.
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.
directions of the then Nagar Pramukh Shri Akhilesh Das, who wanted to cause
undue profit to M.I.
against the interest of Nagar Mahapalika now Nagar Nigam Lucknow, the citizens
of Lucknow, the Nagar Nigam Lucknow filed Special Leave Petition No. 17223-25
of 1994 in the Hon'ble Supreme Court against the Judgment of the Hon'ble High
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 Judgment dated 23.8.1994 of Lucknow Bench of Hon'ble
High Court of Allahabad.
decided that the aforesaid resolution be passed and accordingly the action may
be taken." The letter revoking the sanctioned building plans is dated
April 17, 1997 and is as under:- "To M/s M.I. Builders (P) Ltd. Karamat
Market, Nishatganj, Lucknow Sir, Vide this office letter No. 223/Sa.Sa.A./95
the building plans for construction of underground shopping and parking complex
at Jhandewala Park, Ameenabad were sanctioned.
taking legal advice by the Hon'ble Nagar Pramukh from the standing counsel of
the Nagar Nigam and Add.
General the earlier sanctioned building plans has been revoked vide order dated
17.4.97. As such these have no legal sanctity.
faithfully, Sd/- S.K. Gupta Mukhya Nagar Adhikari 17.4.97 Copy to: The Vice
Chairman, Lucknow Development Authority, for information.
S.K. Gupta Mukhya Nagar Adhikari" There were three writ petitions before
the High Court and during the course of hearing of those petitions High Court
had directed maintenance of status quo. At that time, it would appear only
digging in some part of the park had been done and there was no construction.
When the matter came before this Court, by order dated December 14, 1994 the Court passed the following
order:- "Exemption from filing official translation is allowed.
Liberty to add the omitted parties in the
have heard counsel on the question of grant of interim relief.
operation of the impugned order of the High Court is stayed on the following
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.
(C) Nos. 17223-25/94 Exemption from filing official translation is allowed.
with appeals arising from S.L.P. (C) Nos.
of 1994 in which interim orders have already been made." It is contended
by the appellant that after the aforesaid interim order, it got necessary
building plans sanctioned by the Mahapalika and started construction.
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').
ascertain the nature of construction being carried out at that time this Court
appointed a Local Commissioner. These applications were then disposed of by
passing the following order:- "I.A. Nos. 10-12 The Commissioner, Mr.
Justice Loomba, a retired Judge of the High Court of Allahabad, has pursuant to
this Court's order, submitted his Report dated February 15, 1996. In paragraph 3 of the Report he identifies the points on
which the Report was required and then proceeds to indicate the actual physical
condition in regard to the construction of the market and states that the
entire market is being constructed underground and not above the ground and
that the total area on the surface of the market for the ingress and egress
(with Chabutras) and light purposes etc. does not exceed 10 per cent of the
plot and is about 9.74 per cent of the area in which the market is being
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 no consequence. He
also points out that the park made on the market area is and will be available
for the public in the form of park less the structures made on the surface,
which as pointed out above; does not exceed the permissible limit of 10 per
cent of the total plot area. He also states that the Chabutras constructed on
the back of the structures will also be available to the public and may serve
as benches in the park. In view of this Report which precisely indicates the
actual physical condition existing on the date of the Report and the plan
appended thereto which shows beyond any manner of doubt that the entire
construction is underground, the total surface area does not exceed the
permissible limit of 10 per cent and the raising of the height on the periphery
is of no consequence because it does not in any manner affect the surface area.
We, therefore, accept the Report of the learned Judge and see no merit in these
I.As." The Court, however, did not go into other issues raised in the
applications. By a subsequent order dated May 7, 1997 the Court stopped further
we consider the details of the case we may note in brief the contentions of the
(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.
the park is the only open space in the Aminabad market, which is an
over-crowded commercial and residential area of the city. Possession of the
park was handed over to the appellant (M.I. Builders) in violation of the
provisions of law to construct an underground shopping complex and underground
parking with the ostensible purpose of decongesting the area. It is not that
the encroachers would be removed from the area as the underground shops were
not allotted to any one of them. They would nevertheless remain at the places
occupied by them. Challenge to the action of Mahapalika in allowing
construction was on the grounds: -
was against the public purpose to construct an underground market in the garb
of the decongesting area of the encroachers to destroy a park of historical
importance and of environmental necessity. It would be in breach of Articles
21, 49, 51-A(g) of the Constitution as the existing park which is the only open
space in the busiest commercial area in the heart of the city of Lucknow can be
destroyed and the citizens particularly the residents of the area would be
deprived of the quality of life to which they are entitled under the law and to
maintain ecology of the area.
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.
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
Regulation) Act, 1975 (for short the 'Parks Act').
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.
agreement between Mahapalika and the builder smacks of arbitrariness, is unfair
and gives undue favour to the builder and this was done with mala fide motives
of personal gain by the authorities of the Mahapalika particularly the Mukhya
Nagar Adhikari (Chief Executive Officer) and the Adhyaksh (the Mayor).
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.
whole action of the Mahapalika was against public interest. Lucknow Development
Authority (for short LDA) which was constituted under the Development Act and
was responsible for development in the area which would mean construction of
the underground shopping complex and underground parking lot was side-lined and
no sanction was obtained from the Vice Chairman in accordance with the provisions
of the Development Act.
builder as well as the Mahapalika filed their respective counter affidavits in
the High Court opposing the writ petitions. No counter affidavit was filed
either by the State or by LDA though they were parties in the writ petitions.
Chief Executive Officer and the Mayor were impleaded by name as respondents in
the writ petitions and allegations of mala fides and favourtism made against
them but none of them choose to file any counter affidavit controverting those
allegations. In the High Court a very strange scenario emerged and that was
that though the stand of Mahapalika and LDA as spelled out from documents was
at variation with each other, yet both were represented by one counsel. Builder
was represented by the Advocate General of the State while State was
represented by its standing counsel. Before us though Mahapalika earlier
supported the builder as noted above and also filed appeals against the
impugned judgment but subsequently it reversed its stand, withdrew its appeals
and filed an affidavit supporting the impugned judgment of the High Court. The
State Government and the LDA also filed their affidavits supporting the
judgment of the High Court with full vigour though as seen earlier before the
High Court they were just mute spectators. We may also note that in reply to
the applications IA Nos. 10 and 11 in this Court the Mahapalika lent its
support to the builder. This action of the Mahapalika changing its stand
midstream was subjected to severe criticism by the appellant and it was stated
that there was estoppel by deed in the case and Mahapalika could not go back on
its earlier stand.
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
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.
such a situation omission to invite tenders would not vitiate the agreement
particularly when the proposal for construction of the project by the builder
was widely known.
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
High Court exceeded its jurisdiction as it did not apply correct parameters of
its power of judicial review as laid by this Court in Tata Cellular vs. Union
of India (1994 (6) SCC 651) and other cases and the High Court went wrong in
going into the question of expediency and wisdom of the proposed project.
Mahapalika could not revoke the building plan without notice to the builder and
without hearing it in the matter.
last submission we need not go into the question if cancellation of the
sanctioned building plans by the Mahapalika was valid as that was not the issue
before the High Court.
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;
Mukhya Nagar Adhikari and an Apar Mukhya Nagar Adhikari appointed for the
Corporation under this Act; and (e) in the event of the corporation
establishing or acquiring electricity supply or public transport undertaking or
other public utility services, such other committee or committees of the
Corporation as the Corporation may with the previous sanction of the State
Government establish with respect thereto." Chapter II provides for
constitution of various committees and Chapter III for proceedings of the
Mahapalika, Executive Committee, Development Committee and other Committees. In
view of the applicability of the Development Act, 1973, the Executive Committee
of Mahapalika has ceased to be in operation to that extent. Under Section 91
falling in this Chapter, a list of the business to be transacted at every
meeting except an adjourned meeting, shall be sent to each member of the
Mahapalika or of other Committees at least ninety-six hours in the case of a
meeting of the Corporation before the date fixed for the meeting and seventy
two hours in the case of a meeting of any such Committee and "no business,
except as provided in sub- section (2), shall be brought or transacted at any
meeting other than a business of which notice has been given". Sub-section
(2) is as under: - "(2) Any member of the Corporation or of a Committee
referred to in sub- section (1), as the case may be, may send or deliver to the
Mukhya Nagar Adhikari notice of any resolution with a copy thereof proposed to
be moved by him at any meeting of which notice has been sent under sub-section
(1). The notice shall be sent or delivered at least forty-eight hours in the
case of a meeting of the Corporation and twenty four hours in the case of a
meeting of any committee before the date fixed for the meeting and thereupon
the Mukhya Nagar Adhikari shall with all possible despatch cause to be circulated
such resolution to every member in such manner as he may think fit. Any
resolution so circulated may, unless the meeting otherwise decides, be
considered and disposed of thereat." Under Section 95 of the Act, the
Mahapalika may from time to time by special resolution constitute a special
committee to enquire into and report upon any matter connected with its powers,
duties or functions. Every such special committee shall conform to any
instruction that may be given to it by the Mahapalika. The report of the
special committee shall, as soon as may be practicable, be laid before the
Mahapalika which may thereupon take such action as it thinks fit or may refer
back the matter to the special committee for such further investigation and
report as it may direct. Section 97 provides for constitution of sub-committees
by the Executive Committee or any committee appointed under clause (e) of
Section 5 and any such sub- committee shall possess such powers and perform
such duties and functions as the committee appointing it may from time to time
delegate or confer. Section 105 of the Act provides that no act done or
proceeding taken under this Act shall be called in question in any court on the
ground merely of any defect or irregularity in procedure not affecting the
substance. Under Section 119 of the Act falling under Chapter V which
prescribes duties and powers of the Mahapalika and its authorities, there is
provision for delegation of functions which we reproduce, in relevant part, as
under: - "119. Delegation of functions, - (1) Subject to the other
provisions of this Act and the rules thereunder and subject to such conditions
and restrictions as may be specified by the Corporation - (a) the Corporation
may delegate to the Executive Committee or to the Mukhya Nagar Adhikari any of
its functions under this Act other than those specified in Part A of Schedule
I." It is not necessary to refer to Part A of Schedule I mentioned in
Section 119 as none of the functions of Corporation on which there is
prohibition has been delegated. Under Section 119, reproduced above, delegation
can only be to the Executive Committee or to the Mukhya Nagar Adhikari and to
no other person or authority or Committee. Sections 421, 422 and 423 of the Act
were referred to contend that it is only for the Mahapalika itself to establish
private markets. These sections fall in Chapter XVI dealing with regulation of
markets, slaughter-houses, certain trades and acts, etc.
VI of the Act deals with property and contracts. Under Section 125 falling in
this Chapter, Mahapalika has power to acquire, hold and dispose of property or
any interest therein whether within or without the limits of the city. Under
sub-section (3) of Section 125 any immovable property which may be transferred
to the Corporation by the Government shall be held by it, subject to such
conditions including resumption by the Government on the occurrence of a
specified contingency and shall apply to such purpose as the Government may
impose or specify while making the transfer. Section 128 deals with power of
the Mahapalika to dispose of the property. As to what are the provisions
governing disposal of property these are mentioned in Section 129. Sections 128
and 129, in relevant part, are as under: - "128. Power to dispose of property.
- (1) The Corporation shall, for the purpose of this Act, and subject to the
provisions thereof and rules made thereunder, have power to sell, let on hire,
lease, exchange, mortgage, grant or otherwise dispose of any property or any
interest therein acquired by or vested in the Corporation under this Act.
that no property transferred to the Corporation by the Government shall be
sold, let on hire, exchange or mortgaged or otherwise conveyed in any manner
contrary to the terms of the transfer except with the prior sanction of the
Provision governing disposal of property. - With respect to the disposal of
property belonging to the Corporation the following provisions shall have
Every disposal of property belonging to the Corporation shall be made by the
Mukhya Nagar Adhikari on behalf of the Corporation.
XXX XXX XXX (3) The Mukhya Nagar Adhikari may with the sanction of the
Executive Committee dispose of by sale, letting out on hire or otherwise any
movable property belonging to the Corporation, of which the value does not
exceed five thousand rupees; and may with the like sanction grant a lease of
any immovable property belonging to the Corporation, including any such right
as aforesaid, for any period exceeding one year or sell or grant a lease in
perpetuity of any immovable property belonging to the Corporation the value of
premium whereof does not exceed fifty thousand rupees or the annual rental
whereof does not exceed three thousand rupees.
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.
xxx xxx xxx (6) the sanction of the Executive Committee or of the Corporation
under sub-section (3) or sub-section (4) may be given either generally or any
in class of cases or specially in any particular case.
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
Certain provisions relating to the execution of the contracts. (1) All
contracts referred to in Section 131 including contracts relating to the
acquisition and disposal of immovable property or any interest therein made in
connection with the affairs of the Corporation under this Act, shall be
expressed to be made, for and on behalf of the Corporation, and all such
contracts and all assurances of property made in exercise of that power shall
be executed, for and on behalf of the Corporation, by the Mukhya Nagar Adhikari
or by such other officer of the Corporation as may be authorised in writing by
the Mukhya Nagar Adhikari either generally or for any particular case or class
contract involving an expenditure exceeding five lakh rupees shall be made by
Mukhya Nagar Adhikari unless it has been sanctioned by the Corporation."
"133. Manner of execution. - (1) Every contract entered into by the Mukhya
Nagar Adhikari on behalf of the Corporation shall be entered into in such
manner and form as would bind him if it were made on his own behalf and may in
like manner and form be varied or discharged :
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 supplied as the case may be;
the price to be paid for such work, materials or goods; and (iii)the time or
times within which the contract or specified portion thereof shall be carried
The common seal of the Corporation shall remain in the custody of the Mukhya
Nagar Adhikari and shall not be affixed to any contract or other instrument
except in the presence of a Sabhasad, who shall attach his signature to the
contract or instrument in token that the same was sealed in his presence.
The signature of the said Sabhasad shall be distinct from the signature of any
witness to the execution of such contract or instrument.
contract executed otherwise than as provided in the section shall be binding on
the Corporation." Relevant part of Section 136 on which some arguments
addressed, is reproduced hereunder: - "136. Estimates exceeding rupees
fifty thousand - (1) Where a project is framed for the execution of any work or
series of works the entire estimated cost of which exceeds fifty thousand
rupees- (a) the Mukhya Nagar Adhikari shall cause a detailed report to be
prepared including such estimates and drawings as may be requisite and forward
the same to the Executive Committee who shall submit the same before the Mahapalika
with its suggestions, if any;
the Mahapalika shall consider the report and the suggestions and may reject the
project or may approve it either in its entirety or subject to
modifications." (By the amending Act 12 of 1994 w.e.f. 30.5.1994 the amounts
in sub-sections (1) and (2) of Section 136 are now respectively 5 lakhs and 10
lakhs of rupees.) Part IX of the Constitution was inserted by the Constitution
(74th) Amendment Act, 1992. Article 243W under this part prescribes the powers,
authorities and responsibilities of Municipalities etc. It provides, in
relevant part, that the legislature of a State may, by law, endow the Committee
or the Municipality such powers and authority with respect to performance of
functions and the implementation of schemes as may be entrusted to it including
those matters listed in the Twelfth Schedule. If we refer to the Twelfth
Schedule, Entries 8, 12 and 17 would be relevant and are as under: - "8.
Urban forestry, protection of the environment and promotion of ecological
Provision of urban amenities and facilities such as parks, gardens,
Public amenities including street lighting, parking lots, bus stops and public
conveniences." Keeping this aspect in view, the Act was amended and some of
the relevant duties of Mahapalika, which are obligatory as given in Section
114, are as under:
duties of the Corporation.- It shall be incumbent on the Corporation to make
reasonable and adequate provision, by any means or measures which it is
lawfully competent to it to use or to take, for each of the following matters,
namely: - (viii) guarding from pollution water used for human consumption and
preventing polluted water from being so used;
the lighting of public streets, Corporation markets and public buildings and
other public places vested in the Corporation;
the construction and maintenance of parking lots, bus stops and public
planting and maintaining trees on road sides and other public places.
promoting urban forestry and ecological aspects and protection of the
providing urban amenities and facilities such as parks, gardens and
play-grounds." The Development Act is in force and it is not disputed that
whole of the city of Lucknow has been declared as development area within the
meaning of Section 3 of this Act. "Development" is defined in clause
(e) of Section 2 of the Act and it is as under:- "(e)
"development", with its grammatical variations, means the carrying
out of building, engineering, mining or other operations in, on, over or under
land, or the making of any material change in any building or land, and
includes re-development." Lucknow Development Authority (LDA) has been
constituted under Section 4 of the Development Act. Chapter III of the
Development Act provides for preparation of Master Plan and zonal development
plan for the development area. Section 13 provides for the procedure for
amendment of the Master Plan or zonal development plan. Section 14 provides for
development of land in development area and this section is as under:-
"14. Development of land in the developed area. - (1) After the
declaration of any area as development area under Section 3, no development of
land shall be undertaken or carried out or continued in that area by any person
or body (including a department of Government) unless permission for such
development has been obtained in writing from the Vice-Chairman in accordance
with the provisions of this Act.
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.
Notwithstanding anything contained in sub-sections (1) and (2), the following
provisions shall apply in relation to development of land by any department of
any State Government or the Central Government or any local authority -- (a)
when any such department or local authority intends to carry out any
development of land it shall inform the Vice Chairman in writing of its
intention to do so, giving full particulars thereof, including any plans and
documents, at least 30 days before undertaking such development;
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
where the Vice Chairman raises any objection to the proposed development on the
ground that the development is not in conformity with any Master Plan or zonal
development plan prepared or intended to be prepared by it, or on any other
ground, such department or the local authority, as the case may be, shall - (i)
either make necessary modifications in the proposal for development to meet the
objections raised by the Vice- Chairman; or (ii) submit the proposals for
development together with the objections raised by the Vice- Chairman to the
State Government for decision under clause (d);
the State Government, on receipt of proposals for development together with the
objections of the Vice- Chairman, may either approve the proposals with or
without modifications or direct the department or the local authority, as the
case may be, to make such modifications as proposed by the Government and the
decision of the State Government shall be final;
the development of any land begun by any such department or subject to the
provisions of Section 59 by any such local authority before the declaration
referred to in sub- section (1) may be completed by that department or local
authority with compliance with the requirement of sub-sections (1) and
(2)." The Development Act also contains provision for penalties and power
of the LDA to demolish buildings and to stop development in case of
contravention of the provisions of this Act. When the Development Act is in
operation, then under Section 59 of this Act, certain functions of the U.P.
Corporation Adhiniyam, 1959 become inoperative so far as these are relevant for
the purpose :
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.
Parks Act provides for preservation and regulation of parks, play-grounds and
open spaces in the State of Uttar Pradesh.
The Parks Act applies to an area included in every Nagar Mahapalika under the
Uttar Pradesh Nagar Mahapalika Adhiniyam, 1959. It is not disputed that this
Act is now in force (w.e.f. February 1, 1995).
Park has been defined in clause (b) of Section 2 of the Act to mean a piece of
land on which there are no buildings or of which not more than one-twentieth
part is covered with buildings, and the whole or the remainder of which is laid
out as a garden with trees, plants or flower-beds or as a lawn or as a meadow
and maintained as a place for the resort of the public for recreation, air or
light. The Act provides for maintenance of parks and prohibits construction of
building, except with the previous sanction of the concerned authority, which
is likely to affect the utility of the park.
how the impugned agreement dated November 4, 1993 came to be executed between the Mahapalika and the builder
we now consider the proceedings of the Mahapalika, the Executive Committee and
its sub- committee called the High Power Committee.
On July 6, 1993 notice was issued for meeting of
the Mahapalika for July
12, 1993 with
on the accepted proposals passed by the Executive Committee on 27.5.1993, and
Discussions on the various proposals.
Other subjects, subject to the permission of Presiding Officer." There
were no details regarding agenda item No. 3, which, it is said, pertained to
Palika Bazaar, i.e., the underground shopping complex. On that day following
resolution constituting the High Power Committee for disposal of the properties
of the Mahapalika was passed under aforesaid agenda item No.3:- "The full
details, maps, conditions of allotment in respect of Shri Rafi Ahmad Kidwai
Nagar Yojna and Rajaji Puram Vistar Yojna may be prepared at the earliest. And
for this act a committee may be constituted under the chairmanship of the Nagar
Pramukh in which two Honble Sabhasad and three officers be appointed. For
nominating the members, the Nagar Pramukh may be authorised. The powers of
disposing of the entire land, allotment and transfer in respect of both the
schemes shall be vested in the above committee.
also decided that the Committee constituted under the Chairmanship of the Nagar
Pramukh shall have the rights of disposing of all the properties, allotment,
transfer etc. situated within the limits of the Nagar Mahapalika and the above
committee shall have the right to give the final shape to the conditions of
allotment and agreement etc. In this manner this sub Committee is authorised to
exercise the aforementioned rights of the Mahapalika conditions of allotment
and agreement etc. In this manner this Sub Committee is authorised to exercise
the aforementioned rights of the Mahapalika." Meeting of the High Power
Committee so constituted under the aforesaid resolution of the Mahapalika, was
held on October 13,
1993 and was adjourned
to October 19, 1993.
meeting of the High Power Committee held on October 19, 1993, presided over by Mr. Akhilesh Das, Nagar Pramukh as
Chairman, there is discussion regarding construction of the underground air
conditioned Palika Bazar at Aminabad Jhandewala Park on the lines of Palika Bazar in New Delhi.
recorded that the Vice-Chairman, Lucknow Development Authority by his letter
No.279/Architect dated October
16, 1993 intimated
that as per the Master Plan, the land use of the Aminabad, Jhandewala park is
commercial. The draft of the contract to be entered into between the Mahapalika
and the MI Builders was approved. The minutes ended with the recording as
under: "Amended and final draft of the contract was read by the Advocate
before the Committee on this, the opinion of the members was asked for by the
Chairman on which all the members were unanimous that all the members after
discussing over the suggestions and conditions set out by the Mahapalika
Advocate took this decision that the prescribed project may got executed by
M.I. Builders Pvt. Ltd. And the Mukhya Nagar Adhikari should be authorised for
conducting all the forthcoming actions and formalities.
Honble Chairman also directed that the entire proceedings may be presented for
information in the meeting of the Executive Committee dated 20.10.93 and
meeting of the Mahapalika house held on 21.10.93.
Sd/- B.K. Singh yadav Sushil Dubey Sabhasad Member. Mukhya Nagar Adhikari Member.
G.C. Goyal Architect Sd/-D.K. Doal, Member Member, UP Nagar Adhikari.
Akhilesh Dass Sd/- Laxmi Narain Nagar Pramukh Sabhasad, Chairman of the
Committee Member." In view of the directions of the High Power Committee
the matter was placed before the Executive Committee on October 20, 1993 which
passed the following resolution: - "Resolution No. (85) As per the
decision taken in the meeting dated 12.7.1993 of the Mahapalika, Sub- Committee
constituted under the Chairmanship of the Honble Nagar Pramukh was entrusted
with the powers of developing, leasing and to transfer the immovable property
of the Mahapalika.
exercise of these powers, the Sub- Committee, keeping in view the grave problem
of encroachment and parking in Aminabad Submitted the proposal of the Honble
Members namely Sh. Kalraj Mishra (President Bhartiya Janta Party U.P.) and Shri
Ejaj Rijvi, Ex. Minister for the construction of an Air Conditioned Palika
Bazar and parking place in the Jandewala park (Aminabad Park) on the pattern of
the Delhi Bazar, with a parking place for about 1000 vehicles through M/s. M.I.
Builders Pvt. Ltd. Presented before the Executive Committee for information
which was welcomed by all and the proposal was approved." Thereafter, the
matter came to be placed before the Mahapalika in its meeting dated October 21,
1993 and the following minutes were recorded: - "In view of the decision
taken by the General House of Mahapalika dated 12.07.93, a subcommittee under
the Chairmanship of Mayor was entrusted to transfer, to develop and to give on
lease of immovable properties of Mahapalika.
exercise of these powers, the Sub-Committee, keeping in view the grave problem
of encroachment and parking in Aminabad submitted the proposal of Sh. Kalraj
Misra (President) Bhartiya Janta Party U.P. and Sh. Eagaz Risvi (Ex-Minister)
for construction of an air-conditioned Palika Bazar and parking place in the
Jhandewala Park (Aminuddaula Park) on the pattern of Delhi (Air-conditioned)
Palika Bazar and a parking in which there should be a provision for parking of
about 1000 vehicles through M.I. Builders Pvt.
presented before the House for information which was welcomed and a unanimous
resolution was passed and the Nagar Pramukh was congratulated for this
important work." It will be advantageous to reproduce the impugned
agreement dated November 4, 1993, which is executed between the Mahapalika and
the builder: - "WHEREAS, the party No.1 is an absolute owner of the plot
of land situated at Aminabad popularly known as Jhandewala Park measuring about
2,45,000 sq.ft. and bounded as below :
Chhedilal Dharamshala Road SOUTH Ganga Prasad Road EAST Road locating Central
Bank of India WEST Road locating Hyder Husain building.
specifically mentioned in the site- plan attached herewith.
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.
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.
the party No.1 remained ever conscious to keep the city hygienically sound free
from all adverse effects but the problem of encroachment is no less than a
headache for the Lucknow Nagar Mahapalika which has emerged like a growing
nightmare and becoming unmanageable by the Lucknow Nagar Mahapalika owing to
its limited and scanty resources and flow of supplementary income. The
eagerness of Nagar Mahapalika to maintain proper road, construction of new
roads with street lighting and the cleanliness derive during monsoon for
removing sand and silt from the nallahs is too often inadequately met by the
Local Bodies Department of the Government as the Schedule of New Demands for
providing requisite funds are not available timely as well as sufficiently.
This is one of the major hindrances in keeping the functioning of the Lucknow
Nagar Mahapalika at low ebb.
considering the above points M/s. M.I.
Private Limited had prepared a viable and constructive proposal keeping in view
the interest of Lucknow Nagar Mahapalika in all respects and, the same was
submitted to Lucknow Nagar Mahapalika as it dealt exhaustively the benefits
that will be oriented after its implementation to the Lucknow Nagar Mahapalika
as well as to the Lucknow Populace. The proposal was found beneficial to the
Nagar Mahapalika Lucknow as well as to the general public. The proposal which
will be known as PALIKA BAZAR if given affect will be a source of control over
the traffic and will reduce the congestion in the vicinity.
the aforesaid proposal was accepted by the Lucknow Nagar Mahapalika in its
Meeting thereby procuring a No Objection Certificate from the Lucknow
Development authority under Section 14 of Urban Building Planning and
Development Act, 1973 for constructing the PALIKA BAZAR on the land mentioned
above 279/vastuvid dated 16.10.1993.
this agreement witnesseth as under :-
That party no.2 shall construct the said PALIKA BAZAR according to the plan
(attached herewith) with respect to which No Objection Certificate has been
obtained by party no.1 from the prescribed authority.
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
That the party no.2 shall also provide air-conditioning facility in the PALIKA
BAZAR at his own cost as well as the installation of the plant and construction
of the infrastructure in this regard.
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.
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.
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.
That the party no.2 shall also have the right to sign the agreement if
necessary on behalf of party no.1 as person authorised by party no.1 on the
terms and conditions which the party no.2 may deem fit and proper and the copy
of the agreement shall be given to party no.1 after its execution and the terms
of the deed shall be binding upon both the parties of this deed provided the
party no.2 executes only that much of agreement which number of shops are
available in Palika Bazar and in any case shall not exceed the same but the
rent of the shops shall remain the same as mentioned above.
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.
That party no.2 shall have the right to publicise the project and take advances
from the buyers and to give them proper allotment receipts.
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.
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.
That party no.1 shall help the party no.2 in getting the Project completed and
meeting all the needs and requirements in completing the project.
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
That party no.2 shall not allot the 5% shops before completion of parking and
other services of the complex to ensure the proper compliance of the agreement
and further ensure the quality of construction.
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
That party no.1 shall charge Rs.5,000/- per shop for every second and
subsequent transfer of the shops.
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.
That in case of any disputes or differences arising out of the project between
the parties to the agreement, the same shall be referred for arbitration to the
mutually appointed arbitrator who shall in all cases be the retired justice of
Honble High Court or its equivalent and his award shall be binding upon both
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
That all the legal expenses in executing this agreement shall be borne only by
the party no.2.
WITNESS WHEREOF, the parties of this deed have signed the deed on the day and
the year mentioned herein below in presence of the following witnesses and the
terms of this agreement shall be binding upon the legal heirs, successors,
assignees and legal representatives. Sd/- Lucknow : dated Party No.1 November
4, 1993. For M.I.
Sd/- Managing Director Party No. 2 1. Sd/- Drafted by: Sd/- 2. Sd/- (Arvind
Razdan) Advocate. Civil Court, Lucknow" Mr. Soli Sorabjee, learned counsel
for the builder, submitted that the agreement was not against public interest
and could not have been revoked by the Mahapalika. He said the petitioners in
the writ petitions did not bring forward any contractor who could say that he
was more competent than M.I. Builders to execute the job and at a cost less
than that to be incurred by M.I. Builders. He said case of the builder was
covered by a judgment of this Court in M/s.
Lal Lakshmi Reddy and others vs. State of Jammu and Kashmir and another (1980
(4) SCC 1). In this case the State of J & K awarded a contract to the
second respondent for tapping of 10 to 12 lakhs blazes annually for extraction
of resin from the inaccessible chir forests in the State for a period of 10
years. This was in accordance with the policy of the State Government and it
was agreed upon that a part of resin so extracted would be delivered to the
State for running the State-owned industry and the rest would be retained by
the second respondent for establishing and running its own factory in the
State. The petitioners in the writ petition assailed the order of the State
Government on the following main three grounds:- "(A) That the order is
arbitrary, mala fide and not in public interest, inasmuch as a huge benefit has
been conferred on the 2nd respondents at the cost of the State.
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.
The State has acted arbitrarily in selecting the 2nd respondents for awarding
tapping contract, without affording any opportunity to others to complete for
obtaining such contract and this action of the State is not based on any
rational or relevant principle and is, therefore, violative of Article 14 of
the Constitution as also of the rule of administrative law which inhibits
arbitrary action by the State." This Court, after examining the whole
facts of the case and applying the parameters laid in Ramana Dayaram Shetty vs.
International Airport Authority of India (1979 (3) SCC 489) negatived all the
pleas raised by the petitioners. Referring to its earlier decision in
International Airport Authority of India case this Court had observed that there
are two limitations imposed by law which structure and control the discretion
of the Government in giving largess. The first is in regard to the terms on
which largess may be granted and the other in regard to the persons who may be
recipients of such largess. Then the Court said as under: - "So far as the
first limitation is concerned, it flows directly from the thesis that, unlike a
private individual, the State cannot act as it pleases in the matter of giving
largess. Though ordinarily a private individual would be guided by economic
considerations of self-gain in any action taken by him, it is always open to
him under the law to act contrary to his self-interest or to oblige another in
entering into a contract or dealing with his property. But the government is
not free to act as it likes in granting largess such as awarding a contract or
selling or leasing out its property. Whatever be its activity, the government
is still the government and is, subject to restraints inherent in its position
in a democratic society. The constitutional power conferred on the government
cannot be exercised by it arbitrarily or capriciously or in an unprincipled
manner; it has to be exercised for the public good. Every activity of the
government has a public element in it and it must therefore, be informed with
reason and guided by public interest. Every action taken by the government must
be in public interest; the government cannot act arbitrarily and without reason
and if it does, its action would be liable to be invalidated. If the government
awards a contract or leases out or otherwise deals with its property or grants
any other largess, it would be liable to be tested for its validity on the
touchstone of reasonableness and public interest and if it fails to satisfy either
test, it would be unconstitutional and invalid." The Court said that the
State of J & K, in view of its policy of industrialization, was interested
in the setting up of the factory by the second respondents, particularly since
the second respondents had two factories for manufacture of resin, turpentine
oil and other derivatives and they possessed large experience in the processing
of resin and reprocessing of resin, turpentine oil and other derivatives. The
Court considered the nature of the contract and observed that it was obvious
that, in view of the policy of the State Government, no resin would be
auctioned in the open market and in this situation, it would be totally
irrelevant to import the concept of market price with reference to which the adequacy
of the price charged by the State to the second respondents could be judged. If
the State were simply selling resin, there could be no doubt that the State
must endeavour to obtain the highest price subject, of course, to any other
overriding considerations of public interest and in that event, its action in
giving resin to a private individual at a lesser price would be arbitrary and
contrary to public interest. But, where the State has, as a matter of policy,
stopped selling resin to outsiders and decided to allot it only to industries
set up within the State for the purpose of encouraging industrialization, there
could be no scope for complaint that the State was giving resin at a lesser
price than that which could be obtained in the open market. The yardstick of
price in the open market would be wholly inept because in view of the State
policy, there would be no question of any resin being sold in the open market.
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
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.
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.
of Mahapalika to enter into the agreement with the builder was validly passed.
The project was the brainchild of M.I. Builders and the nature of the
transaction was such that it was unconventional and there is no universal rule
that tender be invited in every case.
was no secrecy. Everything was done in open and discussed freely at various
stages. In the affidavit dated January 8, 1994 of Mr. B.K. Singh, Chief
Executive Officer of the Mahapalika filed in the High Court he had explained
why it was necessary to have the project executed in order to avoid congestion
in Aminabad commercial area. In the affidavit dated October 19, 1995 of Mr.
T.K. Doval, Upnagar Adhikari which was filed in answer to IAs 10-12/95,
complaining breach of this Court's order dated December 14, 1994, again the
earlier stand of Mahapalika was re-affirmed.
Sorabjee criticised the action of the Mahapalika in withdrawing its appeals in
this Court on February 6, 1997 on mere mentioning in the Court. He said plan,
which had been sanctioned by order dated January 23, 1995, was revoked
illegally on April 17, 1997 without any notice to the builder. There is,
however, resolution of the Mahapalika dated August 6, 1996 filed by Mr. S.K.
Gupta, Mukhya Nagar Adhikari of the Mahapalika opposing the present appeals by
the builder. Mahapalika took a summersault and gave a complete go- bye to its
earlier stand. That there could be estoppel by pleadings reference was made to
a decision of this Court in Union of India vs. M/s Indo-Afghan Agencies Ltd.
(1968 (2) SCR 366) approving the earlier decision of the Calcutta High Court in
The Ganges Manufacturing Co. vs.
and others (1880 ILR Calcutta 669 at 678). Mr. Sorabjee said a party could not
change its stand even if it was legally wrong in its earlier stand as otherwise
it could be a negation of everything. In the Ganges Manufacturing Co. vs.
Sourujmull & Ors. [(1880) 5 ILR Cal 669] a Division Bench of the Calcutta
High Court held that "a man may be estopped not only from giving
particular evidence, but from doing any act or relying upon any particular
argument or contention, which the rules of equity and good conscience prevent
him from using as against his opponent".
Union of India and others vs. M/s. Indo-Afghan Agencies Ltd. [(1968) 2 SCR 366]
in a certain scheme called the Export Promotion Scheme incentives were provided
to the exporters for woolen goods. M/s. Indo- Afghan Agencies Ltd. Exported
woolen goods to Afghanistan of F.O.B. value of over Rs.5 crores. The Deputy
Director in the office of the Textile Commissioner, Bombay, issued to them an
Import Entitlement Certificate for about Rs.2 crores only. When the
representations made to the Government for grant of Import Entitlement
Certificate for full F.O.B. value, it produced no response and writ petition
under Article 226 of the Constitution was filed in the High Court. High Court
allowed the writ petition. In the appeal filed by Union of India to this Court
various contentions were raised. This Court said: - "Under our
jurisprudence the Government is not exempt from liability to carry out the
representation made by it as to its future conduct and it cannot on some
undefined and undisclosed ground of necessity or expediency fail to carry out
the promise solemnly made by it, nor claim to be the judge of its own
obligation to the citizen on an ex parte appraisement of the circumstances in
which the obligation has arisen." And further: - "The defence of
executive necessity was not relied upon in the present case in the affidavit
filed on behalf of the Union of India. It was also not pleaded that the
representation in the Scheme was subject to an implied term that the Union of
India will not be bound to grant the import certificate for the full value of the
goods exported if they deem it inexpedient to grant the certificate. We are
unable to accede to the contention that the executive necessity releases the
Government from honouring its solemn promises relying on which citizens have
acted to their detriment. Under our constitutional set-up no person may be
deprived of his right or liberty except in due course of and by authority of
law: if a member of the executive seeks to deprive a citizen of his right or
liberty otherwise than in exercise of power derived from the law -- common or
statute -- the Courts will be competent to and indeed would be bound to,
protect the rights of the aggrieved citizen." It was also held: - "We
hold that the claim of the respondents is appropriately founded upon the equity
which arises in their favour as a result of the representation made on behalf
of the Union of India in the Export Promotion Scheme, and the action taken by
the respondents acting upon that representation under the belief that the
Government would carry out the representation made by it. On the facts proved
in this case, no ground has been suggested before the Court for exempting the
Government from the equity arising out of the acts done by the exporters to
their prejudice relying upon the representation." Mr. Sorabjee then
referred to Section 128 of the Act and to the expression "disposal"
and also to Sections 129(4), 131 and 132 of the Act. According to him there was
no disposal of any property and no interest in the land had been transferred by
the Mahapalika to the builder. In this connection reference was made to the
agreement dated November 4, 1993. Reference was also made to the counter
affidavit filed earlier by Mr. B.K. Singh, Mukhya Nagar Adhikari, wherein he
had stated that the property vested in Mahapalika and that there was no
disposal or transfer of any interest in the property to the builder. As to what
is meant by the expression "disposed of" reference was made to
another decision of this Court in Deputy Commissioner of Sales Tax (Law), Board
of Revenue (Taxes), Ernakulam vs.
Thomas Stephen and Co. Ltd. (1988 (2) SCC 264 at 266). This judgment was of
course in context of sale of goods. Reference was also made to a decision of
House of Lords (1959 (1) WLR 465 at 472) to contend that "disposal"
means disposal absolutely.
was necessary to call tender reference was made to a decision of this Court in
G.B. Mahajan and others vs. Jalgaon Municipal Council and others (1991 (3) SCC
91) where tender was invited to construct the building but authority was given
to the developer to grant occupancy rights. In this case, this Court considered
the scope of judicial review in the case of contractual transaction of
Government, its policy decision and right of the Government on its
instrumentality to evolve any method for execution of the project. In this case
respondent Jalagaon Municipal Council entered into a contract with a private
developer/builder for construction of a commercial complex. The project
contemplated its execution by the developer on self-financing basis subject to
handing over the administrative building of the complex to the Municipal
Council free of cost and allotting some shops at a fixed rate/free of cost to
certain specified persons while having right to dispose of the remaining accommodation
at its own discretion and to retain the premia received by way of reimbursement
of its financial outlays plus profits. The execution of the project was
challenged on the ground that it was unconventional and thus untenable. This
Court said that the Government or its instrumentality policy option to adopt
any method or technique for management of the project provided the same is
within the constitutional and legal limits. This Court held that the project
was not ultra vires the powers of Municipal Council and such a case was not
open to judicial review. The following main contentions were raised apprising
the project: - "a) That the scheme of financing of the project was
unconventional and was not one that was, as a matter of policy, open and permissible
to a governmental authority.
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.
That the terms of the agreement with the developer that the latter be at
liberty to dispose of the occupancy rights in the commercial complex in such
manner and on such terms as it may choose would amount to an impermissible
delegation of the statutory functions of the Municipal Council under Section
272 of the Act to the developer.
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'.
That the scheme is arbitrary and unreasonable and is violative of Article 14 of
the Constitution. The project is patently one intended to and does provide for
an unjust enrichment of respondent 6 at public expense." This Court
negatived all these contentions. It said that the project, otherwise legal,
does not become any the less permissible by reason alone that the local
authority, instead of executing the project itself, had entered into an
agreement with a developer for its financing and execution.
Court did not find any violation of any provisions of the Maharashtra
Municipalities Act, 1965 governing the Municipal Council. On the question of
reasonableness this Court said that a thing is not unreasonable in the legal
sense merely because the court thinks it is unwise. Then this Court said: -
"The contention regarding impermissible delegation is not tenable. The
developer to the extent he is authorised to induct occupiers in respect of the
area earmarked for him merely exercises, with the consent of the Municipal
Council, a power to substitute an occupier in his own place. This is not
impermissible when it is with the express consent of the Municipal Council. It
would be unduly restrictive of the statutory powers of the local authority if a
provision enabling the establishment of markets and disposal of occupancy
rights therein are hedged in by restrictions not found in the statute."
Reference was then made to a decision of this Court in Tata Cellular vs. Union
of India (1994 (6) SCC 651) where this Court considered the scope of judicial
review and adduced the following principles: - "(1) The modern trend
points to judicial restraint in administrative action.
The court does not sit as a court of appeal but merely reviews the manner in
which the decision was made.
The court does not have the expertise to correct the administrative decision.
If a review of the administrative decision is permitted it will be substituting
its own decision, without the necessary expertise which itself may be fallible.
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.
often than not, such decisions are made qualitatively by experts.
The Government must have freedom of contract. In other words, a fair play in
the joints is a necessary concomitant for an administrative body functioning in
an administrative sphere or quasi-administrative sphere.
the decision must not only be tested by the application of Wednesbury principle
of reasonableness (including its other facts pointed out above) but must be
free from arbitrariness not affected by bias or actuated by mala fides.
Quashing decisions may impose heavy administrative burden on the administration
and lead to increased and unbudgeted expenditure." Lastly, Mr. Sorabjee
said that after this Court allowed builder to construct, in upholding the
judgment of the High Court, equities would have to be balanced. Of course, it
would be different matter if the appeals were to be allowed, he said.
prospective allottees of the shops, who had made payment to M.I. Builders for
allotment of shops before High Court granted order of stay, filed an
application in this Court seeking permission to intervene in these appeals. We
heard Mr. Salve, learned senior counsel, who appeared for them. We record his
submissions as under: -
is not in public interest to dismantle the shops if the court ultimately
upholds the judgment of the High Court.
Advertisement was made by the builder on December 24, 1993 offering to allot
the shops and required each of the prospective allottee to pay Rs.25,000/- with
application for allotment. 500 such applications were received out of which 380
applications were accompanied with cheque of Rs.25,000/- each. Remaining 120
prospective allottees deposited the amount of Rs.25,000/- each by mean of cash.
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.
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.
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 "disposed of"
is used it means that full title had passed but when we say any interest in the
property is passed then we mean a slice of that title has passed.
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
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.
this Court decides to uphold the judgment of the High Court the applicants
would request that the relief be moulded. In Public Law relief can be moulded
even where the court found irregularity or illegality to deny relief.
can be done under Article 142 of the Constitution.
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.
is not the case of the writ petitioners that any extraordinary advantage was
conferred on the builder or that funds of the taxpayers have been drained out.
If it was a hospital or an industry or a dangerous building it would be
imperative that the building be pulled down but here construction is
underground made to remove congestion and the only complaint of the petitioners
was that it would create more congestion. Therefore, a mere irregularity or
even illegality would not result in destroying the construction, particularly,
when there is no clear finding of any mala fide by the High Court. It is not
that any other builder has been aggrieved by the action of the Mahapalika and
had come forward to complain. In fact one of the persons who himself is a party
to the resolution was one of the petitioners. In the Administrative Law there
is an authority that relief could be moulded. There is no affidavit of the
Lucknow Development Authority that building was in any way dangerous. Shopping
complex and the parking lot, which has been built upon, is for public good and
an order of demolition would not be in general public interest.
should be used not to invalidate the whole process even if provision of
Sections 128 and 129 were violated. Some mechanism could be evolved so that
fair price for the shops and use of parking lot is fixed and the case of every
prospective allottee could be examined and so also perhaps the terms of the
agreement between the builder and the Mahapalika. It would be an extraordinary order
if demolition is ordered.
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 encountered. One was the case where the House of Lords
refused mandamus to a police probationer wrongly induced to resign, although he
made out a good case for that remedy, in order not to usurp the powers of the
chief constable, and instead granted him an unusual form of declaration to the
effect that he was entitled to the remedies of unlawful removal from office
except for reinstatement. The other was the case of the Take-over Panel, where
in fact no relief was granted but the Court of Appeal explained the novel way
in which remedies should be employed in future cases, with the emphasis on
declaration rather than certiorari and on 'historic rather than
contemporaneous' relief. The same freedom to mould remedies exists in European
Community law, where the European Court of Justice may declare
non-retroactivity when holding some act or regulation to be void." In De
Smith it is as under: - "The principle that failure to observe formal or
procedural rules in the administrative process may be venial if no substantial
prejudice has been caused to those immediately affected now appears in a number
of statutory contexts, but it is too early to say that it has established
itself as a general principle of law in contexts where the enabling Act is
silent on the point, though some of the cases on the effect of disregarding
statutory time limits point vaguely in this direction.
inconvenience Is administrative inconvenience a proper reason for rebutting the
presumption that a decision which violates a statutory provision is unlawful
(and therefore that the provision is, in the circumstances not
"mandatory")? Administrative inconvenience is an accepted criterion
in relation to remedies provided by the courts in judicial review. For example,
where a series of commercial transactions have been undertaken in reliance upon
the impugned decision the court may, in its discretion, fail to quash that
decision in view of the administrative chaos that would result from such a
remedy. Judicial discretion is employed here to balance fairness to the
individual against the general public interest. The task, however, of deciding
the force of a statutory provision does not involve judicial discretion. It
involves the faithful construction of the objects and purposes of an act of
Parliament in the context of the particular decision. Although aspects of
public policy may play a part in this exercise, it would be wrong of the courts
to impute any general implication that Parliament may intend administrative
inconvenience to excuse in advance the violation of its statutes. Such an
implication invites careless administration and assumes that the legislature
would too easily excuse a breach of its statutes. It is suggested, therefore,
that administrative inconvenience is not normally a proper criterion to guide
the question of whether a statutory provision is "mandatory"."
Mr. Sorabjee and Mr. Salve were opposed by a 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: -
There was no proper convening of the meetings of the Executive Committee and
the Mahapalika, which granted approval to the construction of underground
shopping complex. There was also no such agenda in the meeting of the
Mahapalika. Constitution of the High Power Committee by the Mahapalika was
itself not legal. Regulations had been framed under the Act for conduct of the
meetings. Under Section 91 of the Act the requirement is four days notice for
the general body meeting of the Mahapalika and three days notice for the
meeting of the Executive Committee.
7 prescribes as to how the business of the meeting is to be conducted, as to
which item is to be taken up first and rest in seriatim. Regulation 7(f)
requires that resolution of the Executive Committee should be separately
circulated to the members and the business respecting that should not be
transacted in the heading "any other business with permission of the
chair". Under Regulation 30 it is necessary for a resolution to be valid
that there should be a proposer and a seconder.
impugned agreement was not executed as per the requirement of Section 133 of
the Act and on that account it is not binding on the Mahapalika. Reliance was
placed on a decision of this Court in Dr. H.S. Rikhy & Ors. vs. The New
Delhi Municipal Committee [AIR 1962 SC 554]. In this case the question for
consideration before this Court was whether the provisions of Section 8 of the
Delhi and Ajmer Rent Control Act, 1952 (the Rent Act) applied to the transactions
between the appellants and the New Delhi Municipal Committee (the Committee)
constituted under the Punjab Municipal Act, 1911. The Committee had constructed
a market and allotted the shops and flats by inviting tenders in pursuance to
an advertisement. On an application filed under Section 8 of the Rent Act by an
allottee, an objection was raised by the Committee that there was no
relationship of landlord and tenant between the parties. High Court held that
there was no relationship of landlord and tenant between the parties inasmuch
as there was no 'letting', there being no properly executed lease. In coming to
the conclusion that there was no valid lease between the parties, High Court
relied upon the provisions of Section 47 of the Punjab Municipal Act. High
Court negatived the contention that the Committee was estopped from questioning
the status of the applicants as tenants, having all along admittedly accepted
rent from them. On an appeal against the judgment of the High Court to this Court,
it was held that use of the term 'rent' cannot preclude the landlord from
pleading that there was no relationship of landlord and tenant. The question
must, therefore, depend upon whether or not there was a relationship of
landlord and tenant in the sense that there was a transfer of interest by the
landlord in favour of the tenant. This Court said that in its opinion the Rent
Act applied only that species of 'letting' by which the relationship of
landlord and tenant is created, that is to say, by which an interest in the
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 :
(1) Every contract made by or on behalf of the Committee of any municipality of
the first class whereof the value or amount exceeds one hundred rupees, and
made by or on behalf of the Committee of any municipality of the second and
third class whereof the value or amount exceeds fifty rupees shall be in
writing, and must be signed by two members, of whom the president or a
vice-president shall be one, and countersigned by the secretary :
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
Every transfer of immovable property belonging to any committee must be made by
an instrument in writing, executed by the president or vice-president and by at
least two other members of committee, whose execution thereof shall be attested
by the secretary.
contract or transfer of the description mentioned in this section executed
otherwise than in conformity with the provisions of this section shall be
binding on the committee." This Court said that in order that the transfer
of the property in question should be binding on the Committee, it was
essential that it should have been made by an instrument in writing, executed
by the President or the Vice-President and at least two other members of the
Committee, and the execution by them should have been attested by the Secretary
and If these conditions are not fulfilled, the contract of transfer shall not
be binding on the Committee. It was observed that provisions of Section 47(3)
are mandatory and not merely directory. Finally considering the argument that
the Committee is estopped by its conduct from challenging the enforceability of
the contract this Court said :
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
was the appellant, the builder, who was building the underground shopping
complex. It was not undertaking the construction as an agent of the Mahapalika.
this connection reference was made to a decisions of this Court in Akadasi
Padhan vs. State of Orissa (1963 (2) Supp.
691 at 722). It was, therefore, mandatory that the building plan be approved by
Akadast Padhan vs. State of Orissa (1963 Supp.
SCR 691) the State of Orissa acquired a monopoly in the trade of Kendu leaves.
Prior to this the petitioner used to carry on extensive trade in the sale of
Kendu leaves. He filed a petition under Article 32 of the Constitution
complaining restrictions put on his fundamental rights. In the course of
discussion this Court said:- "When the State carries on any trade,
business or industry it must inevitably carry it on either departmentally or
through its officers appointed for that purpose. In the very nature of things,
the State cannot function without the help of its servants or employees and
that inevitably introduces the concept of agency in a narrow and limited sense.
There are some trades or businesses in which it may be inexpedient to undertake
the work of trade or business departmentally or with the assistance of State
servants. In such cases, it is open to the State to employ the services of
agents, provided the agents work on behalf of the State and not for
themselves." The Court then said: - "It is true that an agent is
entitled to commission in commercial transactions, and so, the fact that a
person earns commission in transactions carried on by him on behalf of another
would not destroy his character as that other persons agent. Cases of
Delcredere agents are not unknown to commercial law. But we must not forget
that we are dealing with agency which is permissible under Art. 19(6) (ii), and
as we have already observed, agency which can be legitimately allowed under
Art. 19(6)(ii) is agency in the strict and narrow sense of the term; it
includes only agents who can be said to carry on the monopoly at every stage on
behalf of the State for its benefit and not for their own benefit at all. All
that such agents would be entitled to would be remuneration for their work as
being so, the extended meaning of the word agent in a commercial sense on which
the learned Attorney-General relies is wholly inapplicable in the context of
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.
substance of the impugned agreement is looked into it is the transfer of
interest in land by the Mahapalika to the builder.
Even Section 128 of the Act was not applicable as the land was a park which
could not be disposed by the Mahapalika. As a matter of fact Mahapalika was the
trustee of the park and the doctrine of public trust, which was applicable in
India as held by this Court in M.C. Mehta vs.
Nath and others (known as Span case) (1997 (1) SCC 388), was applicable to the
park in question. Mahapalika, therefore, could only manage the park and could
not alienate it or convert it something different from the park. Park was held
by the Mahapalika on trust for the citizens of Lucknow.
M.C. Mehta vs. Kamal Nath and others (1997 (1) SCC 388) the case, which is also
known as that of 'Span Resorts case', owned by Span Motels Pvt. Ltd., this
Court observed, that public trust doctrine, as discussed in the judgment, is a
part of the law of land. The Court gave various directions even cancelling the
lease granted in favour of the Motel and directing the Motel to pay
compensation by way of cost for restitution of the environment and ecology of
the area. The judgment was cited to reaffirm the argument for preservation of
ecology, which is an important factor in preserving the Jhandewala Park.
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
cannot now be done as the park has been dug and construction made underground.
By allowing underground construction Mahapalika has deprived itself to its
obligatory duties which cannot be permitted. Irreversible changes have been
made. Qualitatively it may still be a park but it is a park of different nature
inasmuch as trees cannot be planted. Now it is like a terrace park. Though the
Park Act came into operation w.e.f. February 1, 1995 and the construction of
the underground shopping complex had started in January, 1995 after the interim
order of this Court but since the construction was made subject to the final
order of this Court the provisions of the Park Act will have to be considered
while deciding the matter.
Contract of such a magnitude could not have been awarded to the builder without
calling for tenders. There was no ground to depart from the settled norms.
Decision of this Court in Sachidanand Pandey & Anr. vs. State of West
Bengal and others (1987 (2) SCC 295), is no authority for the proposition that
it was not necessary to invite tenders.
was a case relating to development of tourism industry in the State of West
Bengal. The case did not lay any rule but was an exception thereto. In that
case a lease was granted by the State Government to Taj Group of Hotels for
construction of a Five Star Hotel. This was challenged on various grounds in a
writ petition filed under the banner of PIL. The writ petition was dismissed by
the learned single judge of the High Court. On appeal, the Division Bench
confirmed the judgment of the learned single Judge. The matter then came to
this Court under Article 136 of the Constitution and leave was granted. One of
the questions raised was that lease which was granted by the State Government
without inviting tenders or holding a public auction. This Court posed the question
if in pursuing the socio-economic objective, the State is bound to invite
tenders or hold a public auction. The Court referred to various judgments of
this Court in Rashbihari Panda vs.
of orissa [(1969) 1 SCC 414; R.D. Shetty vs. International Airport Authority of
India & Ors. [(1979) 3 SCC 489]; Kasturi Lal Lakshmi Reddy vs. State of J.
& K. [(1980) 4 SCC 1]; State of Haryana vs. Jage Ram [(1983) 4 SCC 556];
Ram and Shyam Co. vs. State of Haryana & Ors. [(1985) 3 SCC 267]; and
Chenchu Rami Reddy & Anr. vs. Government of A.P. & Ors. [(1986) 3 SCC
391]. Then this Court observed as under :
a consideration of the relevant cases cited at the bar the following
propositions may be taken as well established: State-owned or public- owned
property is not to be dealt with at the absolute discretion of the executive.
Certain precepts and principles have to be observed. Public interest is the
the methods of securing the public interest, when it is considered necessary to
dispose of a property, is to sell the property by public auction or by inviting
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
suggestive of discrimination. Appearance of public justice is as important as
doing justice. Nothing should be done which gives an appearance of bias,
jobbery or nepotism.
these tests, we find it is impossible to hold that the Government of West
Bengal did not act with probity in not inviting tenders or in not holding a
public auction but negotiating straightway at arms length with the Taj Group of
Hotels." This Court also found that on the commercial and financial aspect
of the lease even on a prima facie view, there appears to be nothing wrong or
objectionable in the 'net sales' method. The 'net sales' method is a fairly
well known method adopted in similar situations. It is a profit- oriented and
appears to be in the best interest of the Government of West Bengal.
There was collusion among certain members of the Mahapalika, its officers and
the builder. Even the conduct of the lawyer of the Mahapalika was commented
upon adversely. It was not necessary for the Mahapalika to file a separate
appeal against the impugned judgment of the High Court. These members of the
Mahapalika equated themselves with the builder. The lawyer of the Mahapalika
drafted the agreement dated November 4, 1993 between the Mahapalika and the
builder. He also filed special leave petitions on behalf of the Mahapalika
which had since been withdrawn.
the fees of the lawyer of the Mahapalika for attending the meetings of the
Mahapalika, drafting the agreement, preparing special leave petitions, etc.
were paid by the builder though that was shown to be done at the instance of
the Mahapalika. There is on the record of the Mahapalika a letter of the
builder that there was a collusion among the Mahapalika, builder, the lawyers
and the officers of the Mahapalika, the architect of the Mahapalika, who
approved the lay out plan, was also the architect of the LDA. After the lay out
plan was submitted to the LDA the architect of the Mahapalika himself okays the
lay out plan as architect of the LDA, which is then approved by the
Vice-Chairman of the LDA.
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.
The agreement is a fraud on the power of the Mahapalika. Prime land has been
given to the builder for a song. The fact that the scheme was so lucrative
could be seen that all shops to be constructed less 5% were booked within six
days of the advertisement appearing in December, 1993. Public interest and
public exchequer have been sacrificed. Mahapalika divested itself of its
control over the project. The agreement is wholly one sided favouring the
builder. It is unjust, unreasonable and irrational.
Builder had already collected Rs.25,000/- from each of the prospective
allottees at the time of registration when it was originally planned to
construct 500 shops. There were no building plan in existence.
of this amount by the builder is of no consequence in deciding the present
appeals. It is now stated that 263 shops had been constructed though the
builder collected earnest money for 500 shops. In spite of the judgment of the
High Court the builder did not care to refund the earnest money so collected.
Its conduct does not entitle it to any consideration. No proper study was
undertaken before the Mahapalika granted its approval for construction of the
underground shopping complex. There were no building plans when the agreement was
Narrow consideration that a few crores of rupees have been spent on the
construction cannot come into consideration when the construction is in clear
violation of the Act, the Development Act and Article 21 of the Constitution.
That crores of rupees have been spent is an argument which is advanced in every
other case of unauthorised construction.
There is no alternative to the construction which is unauthorised and illegal
to be dismantled. The whole structure built is in contravention of the
provisions of law as contained in the Development Act. The decision to award
contract and the agreement itself was unreasonable. The construction of the
underground shopping complex, if allowed to stand, would perpetuate an
illegality. Mahapalika could not be allowed to benefit from the illegality. A
decision of this Court in Seth Badri Prasad and others vs. Seth Nagarmal and
others (1959 (1) Supp. SCR 769 at 774) was referred to, to contend that the
court could not exclude from its consideration a public statute and since the
construction of the underground shopping complex was wholly illegal it had to
be dismantled. No question of moulding a relief can arise as the builder made
construction on the basis of the interim order of this Court and at its own
risk. Various decisions of this Court in support of these contentions where
demolition of unauthorised construction was ordered, were referred to, these
being (1) K. Ramdas Shenoy vs. The Chief Officers, Town Municipal Council,
Udipi and others (1975 (1) SCR 680 at 685), (2) Virender Gaur and others vs.
State of Haryana and others (1995 (2) SCC 577 at 582), (3) Pleasant Stay Hotel
and another vs.
Hills Conservation Council and others (1995 (6) SCC 127 at 139), (4) Cantonment
Board, Jabalpur and others vs.
Awasthi and others (1995 Supp. (4) SCC 595 at 596), (5) Pratibha Cooperative
Housing Society Ltd. And another vs. State of Maharashtra and others (1991 (3)
SCC 341), (6) Dr. G.N. Khajuria and others vs. Delhi Development Authority and
others (1995 (5) SCC 762), (7) Mrs. Manju Bhatia and another vs. New Delhi
Municipal Council and another (JT 1997 (5) SC 574) and (8) an unreported
decision of this Court in Ram Awatar Agarwal vs. Corporation of Calcutta (Civil
Appeal 6416 of 1981) decided on August 20, 1996.
Ramadas Shenoy vs. The Chief Officers, Town Municipal Council, Udipi and others
(1975 (1) SCR 680) respondent was granted by resolution of the Municipal
Committee to construct a cinema theatre at a place where earlier respondent was
granted licence for the construction of Kalyan Mantap-cum-Lecture Hall. In a
petition under Article 226 of the Constitution the High Court held that the
cinema theatre could not be constructed in a place other than specified
localities without proper sanction but since the third respondent had spent a
large sum of money it did not quash the impeached resolution of the Municipal
Committee. The appellant contended before this Court that the Town Planning
Scheme forbade in cinema building at the place asked for and, therefore, the
resolution of the Municipal Committee was invalid. This Court observed as
under: - "An illegal construction of a cinema building materially affects
the right to or enjoyment of the property by persons residing in the residential
area. The Municipal Authorities owe a duty and obligation under the statute to
see that the residential area is not spoilt by unauthorised construction. The
scheme is for the benefit of the residents of the locality. The Municipality
acts in aid of the schemed. The rights of the residents in the area are invaded
by an illegal construction of a cinema building. It has to be remembered that a
scheme in a residential area means planned orderliness in accordance with the
requirements of the residents. If the scheme is nullified by arbitrary acts in
excess and derogation of the powers of the Municipality the courts will quash
orders passed by Municipalities in such cases.
Court enforces the performance of statutory duty by public bodies as obligation
to rate payers who have a legal right to demand compliance by a local authority
with its duty to observe statutory rights alone. The scheme here is for the
benefit of the public. There is special interest in the performance of the
duty. All the residents in the area have their personal interest in the
performance of the duty. The special and substantial interest of the residents
in the area is injured by the illegal construction." In Virender Gaur and
others vs. State of Haryana and others (1995 (2) SCC 577), the Municipal
Committee, Thanesar, District Kurukshetra in the State of Haryana framed Town
Planning Scheme, which was sanctioned by the Government. In the Scheme certain
land vested in the municipality. State Government sanctioned allotment of that
land to Punjab Samaj Sabha on payment of a price at the rates specified
therein. When the Punjab Samaj Sabha after getting sanction started
construction the appellants filed writ petition in the Punjab and Haryana High
Court, which was, however, dismissed. It was submitted before this Court that
the purpose of the Scheme was to reserve the land in question for open spaces
for the better sanitation, environment and the recreational purposes of the
residents in the locality and that the Government had no power to lease out the
land to Punjab Samaj Sabha. Reversing the judgment of the High Court this Court
said that after the writ petition was filed by the appellants Punjab Samaj
Sabha instead of awaiting the decision on merits proceeded with the
construction in post-haste and expended the money on the construction.
Therefore, the Court said, "we do not think that it would be a case to
validate the actions deliberately chosen, as a premium, in not granting the
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 condition in which it existed
prior to allotment. The Municipality is directed to pull down the construction
within four weeks from today. They should place the report on the file of the
Registry of the action taken in the matter." In Pleasant Stay Hotel and
another etc. etc. vs.
Hills Conservation Council and others (1995 (6) SCC 127) the question was
whether the impugned Government Orders were lawfully and validly made and, if
so, whether they could regularise the unauthorized construction. High Court
quashed the impugned Government orders and issued certain directions. This
Court observed as under and then referred the matter to the High Court for
certain clarifications: - "In our considered opinion the most eloquent and
patent fact that must tilt the scale in this dispute in favour of the Council
is that the Hotel has admittedly made a residential construction of seven
floors even though their sanctioned plan was only for two floors. That
necessarily means that five floors of the building have been constructed
illegally and unauthorisedly. It is not surprising therefore that the entire
endeavour of the Hotel now is to protect the two floors constructed above the
road level and to yield to any workable formula. It is in that context that the
Hotel, without prejudice to its rights and contentions, had suggested that the
entire structure of seven floors might be allowed to remain and, for that
purpose it was prepared to give an undertaking that they would not use the five
floors below the road level for any residential purpose but utilise it only the
for keeping air- conditioning plant and other attendant purposes for running
the Hotel on the two floors above the road level. The Council, however,
vehemently opposed the above suggestion on the ground that acceptance thereof
would mean giving judicial imprimatur to utter and flagrant breach of statutory
provisions to which the Hotel resorted to in spite of repeated opportunities
given and reminders issued to retrace their steps and any sympathy shown to the
Hotel would be wholly misplaced. We need not, However, dilate on this aspect of
the matter as it appears to us that there is some confusion as to the nature of
the above-quoted direction, given by the High Court and it requires to be
clarified." In Cantonment Board, Jabalpur and others vs. S.N.
and others (1995 Supp. (4) SCC 595) this Court observed that construction made
in contravention of law would not be a premium to extend equity so as to
facilitate violation of the mandatory requirements of law. Here the Cantonment
Board had granted permission for construction of a building which was later on
cancelled as the resolution of the Board granting permission was suspended by
Pratibha Cooperative Housing Society Ltd. And another vs. State of Maharashtra
and others (1991 (3) SCC 341) this Court came down heavily on the housing
society which made construction in violation of Floor Space Index.
Court said that such unlawful construction was made by the Housing Board in
clear and flagrant violation and disregard of FSI and upheld the order of
demolition of eight floors as ordered by the Bombay Municipal Corporation.
dismissing the special leave petition this Court observed as under: -
"Before parting with the case we would like to observe that this case
should be a pointer to all the builders that making of unauthorised
constructions never pays and is against the interest of the society at large.
The rules, regulations and by-laws are made by the Corporations or development
authorities taking in view the larger public interest of the society and it is
the bounden duty of the citizens to obey and follow such rules which are made
for their own benefits." In Dr. G.N. Khajuria and others vs. Delhi
Development Authority and others (1995 (5) SCC 762), appellants were some of
the residents of Sarita Vihar colony, developed by the Delhi Development
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.
Court said that the allotment for opening the nursery school was misuse of
power and it cancelled the allotment.
Court observed that the construction put up by the allottee, even though
permanent, was of no relevance as the same has been done on a plot of land
allotted to it in contravention of law. As to the submission that dislocation
from the present site would cause difficulty to the tiny tots, this Court said
that the same has been advanced only to get sympathy from the court inasmuch as
children, for whom the nursery school is meant, would travel to any other
nearby place where such a school would be set up by the allottee or by any
other person. Six months time was granted to the allottee to make alternative
arrangements as it thinks fit to shift the school so that the children are not
put to any disadvantageous position. Then, this Court observed as under:-
"Before parting, we have an observation to make. The same is that a
feeling is gathering ground that where unauthorised constructions are
demolished on the force of the order of courts, the illegality is not taken
care of fully inasmuch as the officer of the statutory body who had allowed the
unauthorised construction to be made or make illegal allotments go scot free.
This should not, however, have happened for two reasons. First, it is the
illegal action/order of the officer which lies at the root of the unlawful act of
the citizen concerned, because of which the officer is more to be blamed than
the recipient of the illegal benefit. It is thus imperative, according to us,
that while undoing the mischief which would require the demolition of the
unauthorised construction, the delinquent officer has also to be punished in
accordance with law.
however, seldom happens. Secondly, to take care of the injustice completely,
the officer who had misused his power has also to be properly punished.
Otherwise, what happens is that the officer, who made the hay when the sun
shined, retains the hay, which tempts others to do the same.
really gives fillip to the commission of tainted acts, whereas the aim should
be opposite." In Mrs. Manju Bhatia and another vs. New Delhi Municipal
Committee and another (JT 1997 (5) SC 574), the builder, after obtaining
requisite sanction to build 8 floors, constructed more floors, sold the flats
and gave possession to the respective buyers. Subsequently it was found that
the builder constructed the building in violation of the building regulations
and consequently flats on the top four floors were ordered to be demolished.
The demolition was challenged in the High Court by way of a writ petition,
which was dismissed. Special leave to appeal to this Court was also dismissed.
The question before this Court was whether the appellants, who had purchased
the flats without the builder informing them of the illegal construction,
should be compensated for the loss suffered by them. High Court in the impugned
judgment directed the return of the amount plus the escalation charges. All
this was on a suit brought by the appellants. This Court noticed that the
escalated price as on the date was around Rs.1.5 crores per flat. Taking into
consideration the totality of the circumstances this Court directed the builder
to pay Rs.60 lacs including the amount paid by the allottees.
unreported decision of this Court in Ram Awatar [C.A. No. 6416 of 1981] decided
on August 20, 1996, an unauthorised construction in the city of Calcutta was
allowed to be demolished by the Corporation of Calcutta. It was a multistory
building. The Court observed as under:- "We share the feeling of the
Deputy City Architect when he states in paragraph 18 of his affidavit that this
is a case in which an unscrupulous builder took advantage of the courts order
upto a point of time and after he failed in the legal process upto this court
the tenants were set up to delay the inevitable and thus in this matter the
unauthorised structure hazardous and unsafe has stood all these years. We have,
therefore, no manner of doubt that this is a case in which exemplary costs
should be awarded." At the conclusion of the arguments and in order to
decide the matter fully and finally but without prejudice to the respective
contentions of the parties, we wanted to know the nature of construction so far
as carried out; the cost thereof; the area meant for shopping and parking
separately; and if the plans were in accordance with the Development Act and
Rules. This was particularly so when by an interim order of this Court
construction was allowed though with certain clear stipulations.
T.S. Narayanaswami, Ex-Head of Department of Building Engineering and
Management, School of Planning and Management, New Delhi was appointed as Local
Commissioner for the purpose. He was asked to report on the following aspects
of the construction :
What is the extent of construction put up by the appellant under ground the
What is the nature of said construction?
What cost can be said to have been incurred by the appellant in the
construction uptil now?
What further costs, if any, are required to be incurred for completion of the
project with parking provisions?
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?
Whether the present structures are put up by the appellant in accordance with
the building plans sanctioned by the Nagar Nigam?
Whether the present structures comply with the building requirements as per the
provisions governing the Lucknow Development Authority?
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?
Whether the existing structures with suitable alterations can be used for
parking of vehicles and/or for putting up other amenities like public
the land earmarked for parking in the building plans submitted to the Nagar
Nigam by the appellant, and which land is dug up at present, if restored to its
original position, is it feasible to use the existing structures for parking of
vehicles and for putting up other amenities?
What are the existing general conditions of the locality and the area around
the park?" It is not necessary to examine the report of the Local
Commissioner in detail except to note that :
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;
is a First Class permanent construction;
cost of construction of the work so far executed is approximately Rs.3.52 crore
and the cost of work still to be done is approximately 2.97 crore;
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;
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).
Lucknow Development Authority (LDA) did not play any role in sanctioning the
project except the Layout Plan.
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 same person who
forwarded it from the Mahapalika);
Master Plan could not have envisaged the park as a site available for
commercial exploitation, given the density and congestion of the surrounding
structure as designed is safe from the structural engineering view point;
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
there is a lot of crowding during day hours (9.00 a.m to 6.00 p.m.) leading to
generally slow movement of traffic and occasional traffic hold ups. A high
decibel level thanks to vehicles and moving people and vendors. A lot of solid
waste collection at the end of the day and generally high level of pollution as
large the Report of Prof. Narayanaswamy has found acceptance by all the
M.L. Verma, learned senior advocate, who appeared for M.I. Builders after the
report of Prof.
submitted that the Report of the Local Commissioner insofar as it gives cost
incurred on the constructions is not correct and so also the cost required to
be incurred for completion of the project. His argument was that cost so far
incurred was in fact more than what the Local Commissioner said and that cost
required for completion of the project was less than that arrived at by the
Local Commissioner. We, however, do not find merit in his submission as we find
that the Local Commissioner has applied the same principles while arriving at
the cost so far incurred and the cost to be incurred for completion of the
project. We, therefore, accept the Report of the Local Commissioner in its
entirety. But to what effect we shall presently see.
Park, the park in question, has been in existence for a great number of years.
It is situated in the heart of Aminabad, a bustling commercial-cum- residential
locality in the city of Lucknow. The park is of historical importance. Because
of the construction of underground shopping complex and parking it may still
have the appearance of a park with grass grown and path laid but it has lost
the ingredients of a park inasmuch as no plantation now can be grown. Trees
cannot be planted and rather while making underground construction many trees
have been cut. Now it is more like a terrace park.
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.
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 management of the park. When true nature of the park, as it
existed, is destroyed it would be violative of the doctrine of public trust as
expounded by this Court in Span Resort Case (1997 (1) SCC 388). Public Trust
doctrine is part of Indian law. In that case the respondent who had constructed
a motel located at the bank of river Beas interfered with the natural flow of
the river. This Court said that the issue presented in that case illustrated "the
classic struggle between those members of the public who would preserve our
rivers, forests, parks and open lands in their pristine purity and those
charged with administrative responsibilities who, under the pressures of the
changing needs of an increasingly complex society, find it necessary to
encroach to some extent upon open lands heretofore considered inviolate to
treatise "Environmental Law and Policy :
Law, and Society" by Plater Abrams Goldfarb (American Casebook series -
1992) under the Chapter on Fundamental Environmental Rights, in Section 1 (The
Modern Rediscovery of the Public Trust Doctrine) it has been noticed that
"long ago there developed in the law of the Roman Empire a legal theory
known as the Doctrine of the public trust." In America Public Trust
doctrine was applied to public properties, such as shore-lands and parks. As to
how doctrine works it was stated: "The scattered evidence, taken together,
suggests that the idea of a public trusteeship rests upon three related
principles. First, that certain interests - like the air and the sea - have
such importance to the citizenry as a whole that it would be unwise to make
them the subject of private ownership.
that they partake so much of the bounty of nature, rather than of individual
enterprise, that they should be made freely available to the entire citizenry
without regard to economic status. And, finally, that it is a principle purpose
of government to promote the interests of the general public rather than to
redistribute public goods from broad public uses to restricted private
benefit... With reference to a decision in Illinois Central Railroad Company v.
Illinois (146 U.S. 387 ), it was stated that the court articulated in
that case the principle that has become the central substantive thought in
public trust litigation.
state holds a resource which is available for the free use of the general
public, a court will look with considerable skepticism upon any governmental
conduct which is calculated either to reallocate the resource to more
restricted uses or to subject public uses to the self-interest of private
parties. This public trust doctrine in our country, it would appear, has grown
from Article 21 of the Constitution.
by allowing construction of underground shopping complex in the park Mahapalika
has violated not only Section 114 of the Act but also the public trust
now refer to the provisions of law relating to notice of meetings and business
of the Mahapalika and its committees it is apparent that these provisions were
not adhered to. There is no authority with the Mahapalika to constitute High
Power Committee and to delegate its functions to that High Power Committee.
There was no agenda at any time in any of the meetings of the Mahapalika for
consideration of the underground shopping complex. There were no proposals, no
documents, no plan, no study, no project report or feasibility report on the
basis of which Mahapalika could have given a green signal for construction of
the underground shopping complex. There was no discussion and no informed
decision. Mahapalika completely abdicated its functions. Mahapalika delegated
its functions to the High Power Committee in contravention of the Act.
of the High Power Committee itself was wholly illegal. High Power Committee
took decision to hand over the park to the builder for construction of the
underground shopping complex and also approved the terms of the agreement dated
November 4, 1993. Decision of the High Power Committee was put before the
Executive Committee and the general body of the Mahapalika for the purpose of
"information and both these bodies stamped their approval.
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
an important matter, where the cost of the project was likely to run in crores
of rupees, could not have been considered under the topic "other subjects,
subject to the permission of the Presiding Officer". Section 105 of the
Act protects any act done or proceeding taken on account of any defect or
irregularity in procedure not affecting the substance. In the present case it
is not mere irregularity or defect in the procedure but the whole procedure is
in clear breach of Sections 91 and 119 of the Act which are mandatory.
law mandates that not only the notice of the date and the time of the meeting
but the notice of the business to be transacted at such meeting should be given
at least 4 clear days before the date of the meeting for the Mahapalika and 3
days for the Executive Committee. When the agenda did not include the subject
of construction of underground shopping complex nor was there any material to
support the discussion the subject of construction of underground shopping
complex it could not have been considered in the meetings of the Mahapalika and
the Executive Committee.
Myurdhwaj Cooperative Group Housing Society Ltd. vs. Presiding Officer, Delhi
Cooperative Tribunal and Ors. [(1998) 6 SCC 39), the appellant was a Housing
Co-operative Society registered under the Delhi Co- operative Societies Act,
1972 and Delhi Co-operative Societies Rules, 1973. In the meeting of the
general body of the society, it was decided that only those who have deposited
minimum amount specified by the general meeting would be allotted flats and
others would be accommodated on the flats to be constructed on the additional
land in Phase-II construction. Respondent No.3 who was one of the original
members of the society challenged the decision of the general meeting. One of
the contention raised was that decision of the general body which relegated her
and other such members to Phase-II was not on the agenda. This Court said a
general body can always with the approval of the house in the meeting of its
members take up any other matter not covered by the agenda on that account, no
illegality could be held. This Court also observed that Section 28 of the Delhi
Co-operative Societies Act, 1972 vests final authority in the general body of a
cooperative society. It has wide powers including residuary power except those
not delegated to any other authority under the Act, the rules and its bye-laws.
In other words, its power, if any, is only restricted by the Act, the rules,
the bye-laws and any order having force of law. This decision is of no help to
the appellant as in the present case we are considering the statutory
provisions for holding of the meetings of the Mahapalika and the Executive Committee
which have been violated.
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.
Pvt. Ltd. and the Mukhya Nagar Adhikari should be authorised for conducting all
the forthcoming actions and formalities". Now, Mahapalika has power to
enter into contracts (Sec.131). Under sub-section (1) of Section 132 contract
shall be expressed to be made, for and on behalf of Mahapalika and shall be so
executed for and on behalf of the Mahapalika. Under sub-section (4), no
contract involving an expenditure exceeding five lakh rupees shall be made by
Mukhya Nagar Adhikari (Chief Executive Officer) unless it has been sanctioned
by the Mahapalika. Proviso (a) to Section 133(1) requires common seal of the
Mahapalika to be affixed on every contract. The common seal shall be affixed only
in the presence of a corporator (Sabhasad) who shall attach his signatures to
the contract in token that the same was sealed in his presence. The signature
of the corporator shall be distinct from the signature of any witness to the
execution of such contract (sub-sections 2 and 3 of Section 133). Under
sub-section 4 of Section 133 no contract executed otherwise than as provided in
the section shall be binding on the Mahapalika. The impugned agreement is thus
not executed in accordance with the requirements of law.
under sub- section (2) of Section 136 where the Mahapalika approves the project
and the entire estimated cost exceeds rupees ten lakhs, the project report
shall be submitted to the State Government and it is for the State Government
to reject or sanction the project with or without modifications. Till that is
done no work shall be commenced. No such sanction of the State Government was
obtained in the present case. It was submitted that this provision would apply
only if the project cost was to be incurred by the Mahapalika. We do not think
it is so. It is the cost of the project that matters and not who incurs the
cost in the first instance. Agreement dated November 4, 1993 is, therefore, not
a valid contract and not binding on the Mahapalika. As held in H.S. Rikhys case
(AIR 1962 SC 554) where a statute makes a specific provision that a body
corporate has to act in a particular manner and in no other, that provision of
law being mandatory and not directory has to be strictly followed. This
principle will apply both as regards holding of meeting of the Mahapalika and
execution of contract on its behalf. This judgment is also authority for the
preposition that there is no estoppel against a statute.
now examine some of the terms of the agreement dated November 4, 1993. There
are six recitals to the agreements which cannot be co-related to any discussion
in any of the meetings of the Mahapalika, the Executive Committee or the High
Power Committee. Under clause (2) of the agreement it is for the builder to
make construction at its own cost and then to realise the cost with profit not
exceeding more than 10% of the investment in respect of each shop. Nobody knows
how much cost the builder is likely to incur and how long it will continue to
be in possession of the shopping complex. Full freedom has been given to the
builder to lease out the shops as per its own terms and conditions to persons
of its choice on behalf of the Mahapalika and Mahapalika shall be bound by
these terms and conditions. Builder has also been given the right to sign the
agreement on behalf of the Mahapalika on the terms and conditions which the
builder may deem fit and proper.
is only required to give a copy of the agreement to the Mahapalika after its
execution and both the Mahapalika and the builder shall remain bound by the
terms of that agreement. Since there is no project report nobody knows how many
shops the builder would construct and of what sizes. Mahapalika is allowed to
charge Rs.5,000/- per shop for every second and subsequent transfer of shops by
the builder but what amount is to be charged for the first transfer or
subsequent transfers is left to the sole discretion of the builder. A bare
glance at the terms of agreement shows that not only that the clauses of the
agreement are unreasonable for the Mahapalika but they are atrocious. No person
of ordinary prudence shall ever enter into such an agreement. A trustee, which
the Mahapalika is, has to be more cautious in dealing with its properties.
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.
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.
question of reasonableness reference may be made to Wade on Administrative Law,
7th Edition, page 399. The learned author observed that "The court must
strive to apply an objective standard which leaves to the deciding authority
the full range of choices which the legislature is presumed to have intended.
Decisions which are extravagant or capricious cannot be legitimate".
Quoting Lord Hailsham LC in Re W. (an infant) ( AC 682) where he said,
"two reasonable persons can perfectly reasonably come to opposite
conclusions on the same set of facts without forfeiting their title to be
regarded as reasonable". The following passage from the treatise would be
relevant:- "This is not therefore the standard of the man on the Clapham
omnibus. It is the standard indicated by a true construction of the Act which
distinguishes between what the statutory authority may or may not be authorised
to do. It distinguishes between proper use and improper abuse of power. It is
often expressed by saying that the decision is unlawful if it is one to which
no reasonable authority could have come. This is the essence of what is now
commonly called 'Wednesbury unreasonableness, after the now famous case in
which Lord Greene MR expounded it as follows.
true that discretion must be exercised reasonably. Now what does that mean?
Lawyers familiar with the phraseology used in relation to exercise of statutory
discretions often use the word unreasonable in a rather comprehensive sense. It
has frequently been used and is frequently used as a general description of the
things that must not be done. For instance, a person entrusted with a
discretion must, so to speak, direct himself properly in law. He must call his
own attention to the matters which he is bound to consider. He must exclude
from his consideration matters which are irrelevant to what he has to consider.
If he does not obey those rules, he may truly be said, and often is said, to be
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  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.
has become the most frequently cited passage (though most commonly cited only
by its nickname) in administrative law. It explains how unreasonableness, in its
classic formulation, covers a multitude of sins. These various errors commonly
result from paying too much attention to the mere words of the Act and too
little to its general scheme and purpose, and from the fallacy that
unrestricted language naturally confers unfettered discretion.
has thus become a generalised rubric covering not only sheer absurdity or
caprice, but merging into illegitimate motives and purposes, a wide category or
errors commonly described as irrelevant considerations, and mistakes and
misunderstandings which can be classed as self-misdirection, or addressing
oneself to the wrong question. But the language used in the cases shows that,
while the abuse of discretion has this variety of differing legal facets, in
practice the courts often treat them as distinct. When several of them will fit
the case, the court is often inclined to invoke them all. The one principle
that unites them is that powers must be confined within the true scope and
policy of the Act.
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);
outrageous in its defiance of logic or of accepted moral standards that no
sensible person who had applied his mind to the question to be decided could
have arrived at it (Lord Diplock). It might seem from such language that the
deliberate decisions of ministers and other responsible public authorities
could almost never be found wanting.
as may be seen in the following pages, there are abundant instances of legally
unreasonable decisions and actions at all levels. This is not because ministers
and public authorities take leave of their senses, but because the courts in
deciding cases tend to lower the threshold of unreasonableness to fit their
more exacting ideas of administrative good behaviour." When we keep in
view the principles laid by this Court in its various judgments and which we
have noticed above, it has to be held that the agreement dated November 4, 1993
is not a valid one. The agreement defies logic. It is outrageous. It crosses
all limits of rationality.
has certainly acted in fatuous manner in entering into such an agreement. It is
a case where the High Court rightly interfered in exercise of its powers of
judicial review keeping in view the principles laid by this Court in Tata
Cellular vs. Union of India (1994 (6) SCC 651). Every decision of the authority
except the judicial decision is amenable to judicial review and reviewability
of such a decision cannot now be questioned. However, a judicial review is
permissible if the impugned action is against law or in violation of the
prescribed procedure or is unreasonable, irrational or mala fide. On the
principle of good governance reference was made to a decision of Division Bench
of Bombay High Court in State of Bombay vs. Laxmidas Ranchhoddas and another
(AIR 1952 Bombay 468 at 475) (Para 12). It was submitted that bad governance
sets a bad example. That is what exactly happened in the present case.
State of Bombay vs. Laxmidas Ranchhoddas & Anr.
AIR Bom. 468] a Division bench of the High Court was considering the argument
that the writ of mandamus being discretionary, the Court should consider
whether it should not put a limitation upon its own powers and jurisdiction.
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 :
may be that interference by the High Court may result in inconvenience or
difficulty in administration.
what we have to guard against is a much greater evil.
we find in the modern State wide powers entrusted to Government, powers which
affect the property and person of the citizen, it is the duty of the Courts to
see that those wide powers are exercised in conformity with what the
Legislature has prescribed. We are not oblivious of the fact that in order that
the modern State should function the Government must be armed with very large
powers. But the High Court does not interfere with the exercise of those powers.
The High Court only interferes when it finds that those powers are not
exercised in accordance with the mandate of the Legislature. Therefore, far
from interfering with the good governance of the State, the Court helps the
good governance by constantly reminding Government and its officers that they
should act within the four corners of the statute and not contravene any of the
conditions laid down as a limitation upon their undoubtedly wide powers.
even from a practical point of view, even from the point of view of the good
governance of the State, we think that the High Court should not be reluctant
to issue its prerogative writ whenever it finds that the sovereign Legislature
has not been obeyed and powers have been assumed which the Legislature never
conferred upon the executive." It cannot be said that the construction of
the underground shopping complex is by the builder as an agent of the
Mahapalika. Concept of agency is totally missing in the present case. Rather
the deal is from principal to principal. Reference may be made to the decision
of this Court in Akadasi Padhans case [1963 Supp.(2) SCR 691] quoted above.
When the "development" is by the builder provisions of Section 14 of
the Development Act would apply.
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.
of the building plan by the Mahapalika would, therefore, be meaningless. Even
then, there were no sanctioned drawings. It has been pointed out that process
of sanction appeared to be ad hoc and skeletal. When construction started LDA
issued a show cause notice to the Mahapalika but then in view of the interim
order made by this Court show cause notice was subsequently withdrawn. It was
stated that against the order withdrawing the show cause a revision was filed
by Mr. Amrit Puri, a writ petitioner to the State Government, which was stated
to be still pending.
not disputed that there is a Master Plan applicable to city of Lucknow. This
Master Plan is prepared under the Development Act. It was submitted by the
builder that the park could be exploited for commercial purposes as Aminabad
has been shown to be a commercial area. No doubt Aminabad is a commercial area
but that does not mean that the park can be utilised for commercial purposes.
Rather using the park for commercial purposes would be against the Master Plan.
However, in letter dated October 16, 1993 by Vice-Chairman, LDA to the
Mahapalika did say :
am to inform you in this regard that the land use of the Jhandewala park
situated in Aminabad is commercial one as per the Master Plan. This department
has no objection on the layout plan submitted accordingly." How this
letter came to be written one may notice the sequence. High Power Committee
meets on October 13, 1993 and is adjourned to October 19, 1993. Mr. G.C. Goyal
is the Architect of Mahapalika and he forwarded the layout plan to LDA. Mr.
Goyal is also officiating as Architect of LDA.
of the layout plan by LDA is dated October 16, 1993, which is 3 days before the
next meet of the High Power Committee. This approval of the layout at LDA was
recommended by the same person who forwarded it from the Mahapalika and in a
great hurry. In the Master Plan for the city of Lucknow, it is Aminabad area
which is commercial and that would not mean that Park can be put to commercial
letter dated November 23, 1993, LDA objected to the construction being
undertaken in the Park without obtaining permission/No objection from it and
required the construction to stop. Mahapalika in turn by its letter sent on the
following day to the builder informed it of the objection raised by LDA and
that before starting any construction the permission/No objection of LDA as
required under Sections 14 and 15 of the Development Act was necessary. It does
appear to us that the Master Plan of the city of Lucknow could not have
envisaged the Jhandewala Park as a site available for commercial exploitation
considering the density and congestion in the area.
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.
and the bogie of congestion was introduced to justify the action of the
Mahapalika. It is wholly illegal and smacks of arbitrariness, unreasonableness
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
said under Section 41 of the Development Act read with Section 5 of the U.P.
Regulation of Building Operations Act a Government order was issued on August
18, 1986 by the State Government whereby the use of park for any other use was
prohibited. This direction of the State Government was incorporated in the
Master Plan for the city of Lucknow and of course violated by allowing
construction of underground shopping complex.
of the Mahapalika in agreeing to the construction of underground shopping
complex in contravention of the provisions of the Act and then entering into an
agreement with the builder against settled norms was wholly illegal and has
been held to be so by the High Court.
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.
cannot be any estoppel operating against the Mahapalika. Principles laid in
Union of India vs. M/s.
Agencies Ltd. (1968 (2) SCR 366) and of Calcutta High Court in The Ganges
Manufacturing Co. vs. Sourujmull and others (1880 ILR Calcutta 669) cannot
apply to the facts of the present case.
128 of the Act confers powers on the Mahapalika to sell, let of, hire, lease,
exchange, mortgage, grant otherwise dispose of any property or any interest
therein acquired by or vested in the Mahapalika. Appellant and the intervenors
said that there was no disposal of any property and no interest in the land had
been transferred by the Mahapalika to the builder. Respondent, as noted above,
contended to the contrary. Under Section 54 of the Transfer of Property Act,
1882 agreement to sell does not create any interest in land. We are not
concerned with this provision.
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.
may be made to a decisions of this Court in Chawalier I.I. Iyappan and another
vs. The Dharmodayam Company [(1963) 1 SCR 85]. In this case an argument was
raised by the appellant that he had been granted a licence and acting upon the
licence he had executed a work of permanent character and incurred expenses in
the execution thereof and, thereafter, under Section 60(b) of the Easement Act,
1882 the licence was irrevocable. This Court said:- "In our opinion no
case of licence really arises but if it does what is the license which the
appellant obtained and what is the licence, which he is seeking to plead as a
bar. The licence, if it was a licence, was to construct the building and hand
it over to the respondent company as trust property. There was no licence to
create another kind of trust which the appellant has sought to create. It
cannot be said therefore that there was an irrevocable license which falls
under s. 60(b) of the Act. Even such a license is deemed to be revoked under s.
62(f) of that Act where the licence is granted for a specific purpose and the
purpose is attained or abandoned or becomes impracticable.
present case the purpose for which the license was granted has either been
abandoned or has become impracticable because of the action of the
appellant." [The Indian Easement Act, 1882: Sections 52, 53, 60(b0 and
Where one person grants to another, or to a definite number of other persons, a
right to do, or continue to do, in or upon the immovable property of the
grantor, something which would, in the absence of such right, be unlawful, and
such right does not amount to an easement or an interest in the property, the
right is called a license.
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.
license may be revoked by the grantor, unless:- (a)..........
the licensee, acting upon the license, has executed a work of a permanent
character and incurred expenses in the execution.
license is deemed to be revoked - (a) to (e) ...........
where the license is granted for a specified purpose and the purpose is
attained, or abandoned, or becomes impracticable;] We find force in the
submissions of respondents that by granting licence to the builder to construct
underground shopping complex of permanent nature and to hold on to the same for
a period which is not definite and then under the impugned agreement builder
having been authorised to lease out the shops on behalf of the Mahapalika, it
is a dubious method adopted to subvert the provision of Section 128 which apply
as well in the case of lease and thus the transaction will also be covered by
the expression "otherwise dispose of any interest in the property".
It is, therefore, difficult to accept the argument of the builder that
transaction is outside Section 128 of the Act. Now, first licence has been
granted to the builder to enter upon the park and to execute a work of
permanent character and incur expenses in the execution of the work, thus
making the licence irrevocable.
the licence is deemed to be revoked after the licensee has recovered his full
cost on the construction plus 10% of the profit on the investment made by him.
When this purpose is achieved by the licensee is anybodys guess.
only that licensee, i.e., the builder is then authorised to lease out the shops
so constructed on behalf of the Mahapalika. The result would be that to the
builder provisions of Section 129 of the Act, cannot be thus made applicable.
In such a situation for the builder to contend that the transaction is not
covered by Section 128 and, therefore, Section 129 will not apply is certainly
incredulous. Provision of Section 129 of the Act has, therefore, been flouted.
Impugned agreement dated November 4, 1993 is bad having been executed also in
contravention of the requirement of Section 129 of the Act.
facts and circumstances when examined point to only one conclusion that the
purpose of constructing the underground shopping complex was a mere pretext and
the dominant purpose was to favour the M.I. Builders to earn huge profits. In
depriving the citizens of Lucknow of their amenity of an old historical park in
the congested area on the spacious plea of decongesting the area Mahapalika and
its officers forgot their duty towards the citizens and acted in a most brazen
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
there are two distinct areas of challenge in the present case - (1) the
agreement is fraud on power, prime land has been given for a song by the
Mahapalika. The fact that the scheme is so lucrative could be seen from the
fact that all shops less 5% were booked within six days of the advertisement
appearing in December, 1993. Public interest and public exchequer have been
sacrificed. Mahapalika is divested of its control over the project though
notionally not for ever but the builder, on the other hand, has control over
the project for all times to come and (2) construction is in contravention of
the provisions of law as contained in Development Act. The project has been
entrusted to the builder in violation of the provisions of the Act. The
decision taken by the Mahapalika was not on proper consideration and was not an
informed objective decision.
review is permissible if the impugned action is against law or in violation of
the prescribed procedure or is unreasonable, irrational or mala fide. As said
earlier High Court rightly exercised its power of judicial review in the
present case. It has examined the manner in which the decision was made by the
Mahapalika. Second principle laid in Tata Cellular's case [(1994) 6 SCC 651]
applies in all respects. High Court held that the maintenance of the park
because of its historical importance and environmental necessity was in itself
a public purpose and, therefore, the 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.
Court in its impugned judgment has not doubted the capacity of M.I. Builders to
undertake the project but then that is not the issue. The question is why it
was not necessary to invite tenders for the project of such a high cost. Why it
was thought that it was only the M.I. Builders in the country who could
undertake the job? Why project report was not obtained to know the cost of the
project? Why could it not be thought that there could be any other person who
could undertake the job at a lesser cost and in equally competent manner?
Public interest has certainly been given a go bye. There was some undercurrent
flowing to award the contract to M.I. Builders. High Court said "lest we
are taken amiss we wish to make it clear that we do not doubt either the bona
fides of the authorities or the competence of the respondents M/s. M.I.
Builders to enter into the impugned agreement but we are of the view ..."
The competence of M/s. M.I. Builders to undertake the project is not doubted
when now it is seen that proper construction has been made but before taking
decision to award the contract to it nobody knew its credentials. No attempt
made whatsoever to consider if there was any other person more competent for
the job or if of equal competence could offer better terms. In these
circumstances, dictum contained in the case of Kasturi Lal Lakshmi Reddy vs.
of J & K [(1980) 4 SCC 1] becomes inapplicable. No advantage can be drawn
by the builder from the decision of this Court in G.B. Mahajans case [(1991) 3
SCC 91] as here the whole process of awarding contract to M.I. Builders has
been gone through in an unabashed manner and in flagrant violation of law with
the sole purpose of conferring benefit on it. All said and done we fail to
understand the certificate given by the High Court about the bona fides of the
authorities in awarding the contract to M/s. M.I.
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.
Court has directed dismantling of the whole project and for restoration of the
park to its original condition. This Court in numerous decisions has held that
no consideration should be shown to the builder or any other person where
construction is unauthorised. This dicta is now almost bordering rule of law.
Stress was laid by the appellant and the prospective allottees of the shops to
exercise judicial discretion in moulding the relief. Such discretion cannot be
exercised which encourages illegality or perpetuates an illegality.
Unauthorised construction, if it is illegal and cannot be compounded, has to be
demolished. There is no way out. Judicial discretion cannot be guided by
expediency. Courts are not free from statutory fetters. Justice is to be
rendered in accordance with law. Judges are not entitled to exercise discretion
wearing robes of judicial discretion and pass orders based solely on their
personal predilections and peculiar dispositions. Judicial discretion wherever
it is required to be exercised has to be in accordance with law and set legal
principles. As will be seen in moulding the relief in the present case and
allowing one of the blocks meant for parking to stand we have been guided by
the obligatory duties of the Mahapalika to construct and maintain parking lots.
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
should the builder take such a risk when the interim order was specific that
the builder will make construction at its own risk and will not claim any
equity if the decision in the appeal goes against it? When the interim order
was made by this Court Mahapalika and the State Government were favouring the
builder. As a matter of fact Mahapalika itself filed appeals against the
impugned judgment of the High Court. Perhaps that gave hope to the builder to
go ahead with the construction and to take the risk of getting the construction
demolished and restoring the park to its original condition at its own cost.
The builder did not foresee the change in stand not only of the Mahapalika but
also of the State Government. It also, as it would appear, over-rated its
capacity to manage with the State Government to change the land use of the
is not an innocent player in this murky deal when it was able to get the
resolutions of the Mahapalika in its favour and the impugned agreement
executed. Now, construction of shops will bring in more congestion and with
that the area will get more polluted. Any commercial activity now in this
unauthorised construction will put additional burden on the locality. Primary
concern of the Court is to eliminate the negative impact the underground
shopping complex will have on environment conditions in the area and the
congestion that will aggravate on account of increased traffic and people
visiting the complex. There is no alternative to this except to dismantle the
whole structure and restore the park to its original condition leaving a
portion constructed for parking. We are aware that it may not be possible to
restore the park fully to its original condition as many trees have been
chopped off and it will take years for the trees now to be planted to grow.
beginning has to be made.
are four blocks under construction. Services like air-conditioning,
fire-fighting, water supply, sanitary installation, necessary pumps for
drainage and sewerage, etc. are yet to be installed and completed.
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".
block 2 there are shops on the upper basement level 9'6". There is no
lower basement level.
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.
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.
to facilitate the movement of the vehicles to the two levels of parking in the
third block a new ramp shall be constructed adjacent to and contiguous to the
have noted above that under clause (ix-a) of Section 114 of the Act, it is
incumbent on the Mahapalika to make reasonable and adequate provision by any
means or measures which it is lawfully competent to it to use or to take for
the construction and maintenance of parking lots, bus stops and public
of cases coming to this Court pointing to unauthorised constructions taking
place at many places in the country by builders in connivance with the
Corporation/Municipal officials. In the series of cases, this Court has
directed demolition of unauthorised constructions. This does not appear to have
any salutary effect in cases of unauthorised construction coming to this Court.
While directing demolition of unauthorised construction, court should also
direct inquiry as to how the unauthorised construction came about and to bring
the offenders to book. It is not enough to direct demolition of unauthorised
construction, where there is clear defiance of law. In the present case, but
for the observation of the High Court, we would certainly have directed an
inquiry to be made as to how the project was conceived and how the agreement
dated November 4, 1993 came to be executed.
direct as under :
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.
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.
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.
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.
services like sanitation, electricity etc. in Block 3 shall be provided by the
Mahapalika shall be responsible for maintaining the park and the Block 3 for
parking purposes in proper and efficient manner.
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
Block 3 shall vest in Mahapalika free from all encumbrances. Licence of M.I.
Builders to enter into the park and the structure built therein is cancelled of
which possession is restored to the Mahapalika with immediate effect. No
obstruction or hindrance shall be caused to the Mahapalika by any one in
discharge of its functions as directed by this order.
Restoration of the park and operation of Block 3 for parking purposes shall be
completed by Mahapalika within a period of 12 months from today and report
filed in the registry of this Court. With the directions aforesaid, the appeals
are dismissed with costs.