Ravi Development Vs.
Shree Krishna Prathisthan & Ors. [2009] INSC 1026 (11 May 2009)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. OF 2009 (Arising out of
S.L.P. (C) No. 13149 of 2008) Ravi Development .... Appellant(s) Versus Shree
Krishna Prathisthan & Ors. .... Respondent(s) WITH CIVIL APPEAL
NOS.............OF 2009 (Arising out of S.L.P.(c) Nos. 11229, 11355-11356,
21754-21755 & 21756-21757 of 2008)
P. Sathasivam, J.
1.
Ravi
Development and Maharashtra Housing and Area Development Authority (in short
"MHADA") filed S.L.P.(c) No. 13149 of 2008, S.L.P.(c) Nos. 11229 of
2008 and 11355-11356 of 2008 against the common order dated 27.03.2008 in W.P.
(L) No. 2714 of 2007 with PIL No. 72 of 2007 of the High Court of Bombay,
whereby it was held that inviting public tender on 20.05.2007 for development
of the Government lands by invoking the Swiss Challenge Method with a view to
confer preferential treatment to Ravi Development was wholly unfair,
unreasonable, arbitrary, illegal and quashed the contract awarded to Ravi
Development. As in the impugned judgment, High Court disapproved the Swiss
Challenge Method and accordingly, MHADA had refused to award the contract to
Shree Developers to whom land at Kavesar, Thane was allotted and Gurukrupa
Developers, to whom land at Chhitalsar Manpada at Thane was allotted, both the
said developers filed S.L.P.(c) Nos. 21754-21755 & 21756-21757 of 2008
respectively challenging the very same common order after getting permission
from this Court.
2.
Leave
granted.
3.
The
common issue involved in all these appeals centres around the validity of the
Swiss Challenge Method adopted by the MHADA on a pilot basis with respect to a
proposal received from a private entrepreneur i.e. Ravi Development for
development of undeveloped land owned by MHADA.
4.
Brief
facts in a nutshell are as under:
Ravi Development
submitted a proposal dated 25.08.2006 to the Chief Executive Officer, MHADA for
development of undeveloped land in Survey No. 126 to 130, 150 (pt.), 151 (pt.)
at Mira Road, District Thane which was received by MHADA on 31.08.2006. On
11.10.2006, similar proposal was also submitted by Ravi Development to the
Chief Minister of Government of Maharashtra who was also holding the portfolio
of Housing. The Desk Officer, Housing Department, Government of Maharashtra
forwarded the aforesaid proposal received by the office of Chief Minister on
11.10.2006 to MHADA calling upon a detailed report. On 04.12.2006, the Chief
Executive Officer, MHADA submitted note regarding proposal of Ravi Development
to Housing Department of Government of Mahrashtra. The Chief Executive Officer,
Maharashtra on 24.04.2007 submitted detailed report of West Bengal Joint Venture
Method and Jaipur Swiss Challenge Method to Housing Department of Government of
Maharashtra and recommended for Swiss Challenge Method thereby seeking
Government's approval. It was recommended that proposal received could be
advertised under Swiss Challenge Method on pilot basis.
1.
2.
3.
4.
5.
The
Housing Department of Government of Maharashtra approved Swiss Challenge Method
on 17.05.2007 and directed MHADA to use the same on pilot project basis and for
other similar proposals in future MHADA should take policy decision at its own
level.
Pursuant to the said
decision MHADA issued a public notice on 20.05.2007 for development of the land
in question and two other lands by Swiss Challenge Method.
In the public notice
as well as bid document, it was specifically stated that Swiss Challenge Method
would be applied. The Swiss Challenge Method was also explained in the
publication as well as in bid document making it clear that the developer, who
has given proposal, would have first right of refusal.
6.
In
respect of the land in question, MHADA received four bids on 11.06.2007, they
are: (a) M/s EBR Enterprises; (b) M/s Harshad P. Doshi Associates; (c) M/s Ravi
Developments; and (d) M/s Ostwal Builders Ltd. All the bidders including M/s
Ostwal Builders Ltd. accepted knowledge of initiator of proposal and following
of Swiss Challenge Method and gave an undertaking to the effect that they are
well aware of Swiss Challenge Method and that the original proposer shall be
given an opportunity to take up the project on the highest eligible bid offer.
They were also informed that in case the original proposer agrees to match his
bid to the highest offer then the project shall be awarded in his favour. On
14.06.2007, Ravi Development wrote a letter to MHADA accepting to match highest
bid amount. While so on 04.09.2007, Shree Krishna Pratisthan filed PIL No. 72
of 2007 before the High Court of Bombay challenging the public notice dated
20.05.2007 issued by MHADA only in respect of Mira Road Project and not in
respect of two other projects.
7.
On
22.11.2007, MHADA passed Resolution No. 6284 of 2007 accepting the bid of Ravi
Development and awarded contract to them for getting construction of 30,000 Sq.
Mtr. + 18,841 sq. mtr. (in lieu of receivable amount) = 48,841 sq. mtr. After
giving undertaking accepting the Swiss Challenge Method and after participation
and having failed in tendering process, M/s Ostwal Builders Ltd. filed W.P. (L)
No. 2714 of 2007 challenging the public notice dated 20.05.2007 as well as
MHADA's resolution dated 22.11.2007. The High Court of Bombay, by the impugned
common order dated 27.03.2008, allowed the writ petition holding that Swiss
Challenge Method itself is arbitrary and unreasonable consequently, struck down
the action taken thereto.
Aggrieved by the said
order, MHADA, Ravi Development, Shree Developers and Gurukrupa Developers filed
the above appeals by way of special leave petitions.
1.
2.
3.
4.
5.
6.
7.
8.
Heard
Mr. G.E. Vahanwati, learned Solicitor General of India for State of Maharashtra
and MHADA, Mr. P.P. Rao, learned senior counsel for Ravi Development, Mr. Mukul
Rohtagi, learned senior counsel for Shree Developers, Mr. P.H. Parekh, learned
senior counsel for Gurukrupa Developers and Mr. Shyam Diwan and Mr. Rakesh
Dwivedi, learned senior counsel for the contesting respondents.
9.
Learned
Solicitor General for the State and MHADA and learned senior counsel appearing
for Ravi Development contended that there was no flaw in applying Swiss
Challenge Method and awarding contract in favour of Ravi Development. They also
submitted that there is no arbitrariness or illegality in the said contract as
concluded by the High Court, on the other hand, Swiss Challenge Method is
followed in many countries as well as several States in India also. It was also
pointed out that by adopting the said method proper public notice was issued,
all the intending developers offered their bid and originator of proposal was
given an opportunity to match the highest bid amount and after fulfilling all
the formalities the contract was accepted in favour of Ravi Development. It was
further submitted that the Government of Maharashtra was, in no way, suffered
any financial loss or sidelined the other developers in awarding contract in
favour of Ravi Development. It is their claim that the High Court cannot
substitute its decision in the light of various clauses in the tender
documents, particularly, when the policy decision of the Government is based
upon the expert opinion. On the other hand, learned senior counsel appearing
for the contesting respondents submitted that in the absence of any innovative
method offered by Ravi Development, application of Swiss Challenge Method and
awarding of contract in their favour cannot be sustained. They also submitted
that the High Court was fully justified in quashing the public notice and
awarding of contract in favour of Ravi Development.
10.
We
have considered the rival contentions and perused the relevant materials. It
was highlighted that the High Court has gone totally wrong in observing that
the proposal of Ravi Development under Swiss Challenge Method ought to have
been innovative and since the said proposal was not innovative, the same should
not have been processed under Swiss Challenge Method. With regard to the said
conclusion, MHADA and the Government of Maharashtra placed materials to show
that the said proposal under Swiss Challenge Method by `originator of proposal'
need not be innovative at all and the said requirement has nowhere been stated
under the said Swiss Challenge Method. Accordingly, it was pointed out that the
repeated observations of the High Court to that effect are unsustainable.
11.
It
is useful to refer the Project details about the contract allotted to Ravi
Development:
"Project Details
1.1 Maharashtra
Housing and Area Development Authority (MHADA) established under MHADA 9 Act,
1976 is engaged in the activity of housing development, Konkan Housing and Area
Development Board is a regional unit of MHADA.
An opportunity to
private develop land at Mira Road, District Thane, owned by MHADA, is made
available.
1.2 Scheme of the
Project:
1. The work of
Planning, scheme, actual construction and for that purpose obtaining necessary
sanctions from various authorities concerned shall be done by the developer.
2. The area of the
said project is approximately 3.55 hectares, bearing survey Nos. 226 to 230,
150 (part) and 151 (part).
3. The successful
developer has to prepare plans/designs in consultation with MHADA.
4. In this project
approximately 60% of the flats should be for Lower Income Group, is possible.
5. Plans shall have
got to be sanctioned by the Mira-Bhayander Municipal Corporation.
Save and except the
minimum area required to be handed over to MHADA free of costs, the developer
will be at liberty to sell remaining area at market price.
1.3 Details of the
Project:
1. Area Approximately
3.55 hectares.
2. Area available for
construction approximately 70,000 sq. meters.
3. The specifications
of the flats, which are required to be handed over to MHADA free of costs,
shall be as directed by MHADA.
4. The remaining
area, as per sanctions of Mira-Bhayandar Municipal Corporation, may be utilized
for High Income Group and Commercial purpose.
1.6 SWISS CHALLENGE
METHOD
1. MHADA has received
a Suo Moto proposal from a developer for development of this land. The tenders
will be received in response to this advertisement will be compared with the
proposal given by the developer (original proposer) to MHADA. As per the Swiss
Challenge method the developer who has given the original proposal has the
opportunity (first right of refusal). However, the said developer has to
match/raise his bid (rate) with the highest proposal tendered. The original
proposer shall have the opportunity to take up the project on highest offer,
and in the event if he refuses, then the highest bidder shall have right to
implement the project.
As such if the
original proposer exercises his right of first refusal then the project will be
offered to the highest bidder. However, if such highest bidder refuses the
offer then the amount deposited shall be forfeited."
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
It
was highlighted by the appellants that Swiss Challenge Method is adopted in
Chile, Coasta Rica, Guram (U.S. Territory), Indonesia, Korea, Philippines,
South Africa, Sri Lanka, Taiwan (China), Virginia (U.S.) and also in India by
Andhra Pradesh, Rajasthan, Madhya Pradesh, Chhattisgarh, Gujarat, Uttaranchal,
Punjab States and Cochin Port authorities. The above information by way of an
assertion shows that Swiss Challenge Method is already in prevalence in various
States in India as well as overseas.
13.
The
application of Swiss Challenge Method by MHADA is accused of being not fair and
transparent but the said contention raised by the respondent as well as
concluded in the impugned judgment cannot be relied upon as the public notice
for tender dated 20.05.2007 issued by MHADA had clearly mentioned about the
said method and the scheme to be followed under it. Moreover, in the said
notice the rule of "First right to refusal" to the "originator
of the proposal" has also been discussed accordingly. Though the name of
the "originator of the proposal" may not have been mentioned but it
was contended in the said public notice that "MHADA has received a suo
motu proposal from a developer for development of this land" pointing out
the land marked in the said public notice for due development. So it can be
concluded that the existence of the "originator of the proposal" was
very much in knowledge of the other builders at the time of applying for the said
bidding. The relevant portion of the Judgment of this Court in Monarch
Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and
Others, (2000) 5 SCC 287, which has been relied upon by the High Court in the
impugned judgment reads as under :- "10. There have been several decisions
rendered by this Court on the question of tender process, the award of contract
and have evolved several principles in regard to the same. Ultimately what
prevails with the courts in these matters is that while public interest is
paramount there should be no arbitrariness in the matter of award of contract
and all participants in the tender process should be treated alike. We may sum
up the legal position thus:
(i) The Government is
free to enter into any contract with citizens but the court may interfere where
it acts arbitrarily or contrary to public interest.
(ii) The Government
cannot arbitrarily choose any person it likes for entering into such a
relationship or to discriminate between persons similarly situate.
(iii) It is open to
the Government to reject even the highest bid at a tender where such rejection
is not arbitrary or unreasonable or such rejection is in public interest for
valid and good reasons."
We are of the view
that the said rejection of the highest bidder has been made by following the pre-condition
of the acceptance of the tender already given in the said public notice.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
The
appellant had provided MHADA in its innovative project plan how to balance with
highly developed high-rise with the low-rise building of lower specifications
built up for the EWS, LIG and MIG groups and in that way this project plan was
in accordance with the objective MHADA was looking for as well as profit
sharing mode in a public-private partnership. After going through this idea, it
can be concluded that the contention given in the impugned judgment of the High
Court that there was dearth of innovativeness and originality in the proposal
made by the appellant is wrong on factual ground. Moreover, the acceptance
letter of the appellant to accept the project on the terms offered by the
highest bidder to MHADA was sent on 14.06.2007 i.e. much before the filing of
PIL No. 72 of 2007 to challenge the public tender. So it can be concluded that
failure in the said bidding has raised the question of acceptability of Swiss
Challenge Method and not before that when the public notice was actually
published.
15.
It
was also pointed out that the tender notice and bid documents specify the
details about Swiss Challenge Method without mentioning the innovativeness of the
proposal, in such circumstances, interference by the High Court under the wrong
assumption of innovativeness as one of the pre-conditions in the proposal of
Ravi Development is totally incorrect.
16.
The
following materials are culled out from the information furnished by MHADA and
State of Maharashtra. They are:- At Mira Road, total land available with MHADA
is 100286.25 sq.mtr. and out of the same (excluding area of 18969.40 sq.mtr.
which went under D. P. Road, Nalla, amenities, open spaces etc.), near about
46400 sq.mtr. have been utilized and on the same, construction of merely
17840.23 sq.mtr. is actually carried. Thus, it is a fact that with the
available subsidy to keep prices of LIG, EWS & MIG affordable MHADA has to
construct low rise structures with poor specifications and MHADA was not able
to utilize the potential of the land which is the case in most of the MHADA
layouts.
Further from the year
2001 to 2005 MHADA was not able to sale these constructed houses even at 15
reduced prices & MHADA had same experience in case of another property at
Ambernath, Thane. As against this, in the present proposal submitted by M/s
Ravi Development on the available balance land of 35500 sq. mtr., construction
of 70000 sq.mtr. was proposed with richer specifications.
Furthermore, for
allowing 0.8 TDR, additional construction 65052.80 sq.mtr. (with the total
share of MHADA to 48841.02 sq.mtr.) will be there on the said land of 35500
sq.mtr. from that point of view, proposal of Ravi Developments can be called as
innovative proposal. Further, though as stated herein above, Swiss Challenge
Method is adopted in various countries outside, and also in various States in
India, but for MHADA and for State of Maharashtra, this was suggested and
applied for the first time therefore, it can certainly be called as pilot
innovative proposal of M/s. Ravi Developments.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
It
is also seen from the approved order of the Government of Maharashtra dated
17.05.2007 that Swiss Challenge Method has to be applied in the area of Mira
Road land, Kavesar land, Chitalsar Manpada land on Pilot Project basis and
MHADA has to evolve its own policy for taking decision in future in identical
cases. In those circumstances, as rightly pointed out by Mr. G.E. Vahanwati,
learned Solicitor General appearing for MHADA and Mr. P.P. Rao, learned senior
counsel for Ravi Development that requirement of innovativeness is not there in
Swiss Challenge Method, even otherwise, the above mentioned facts clearly show
that the proposal of Ravi Development under the Swiss Challenge Method was a
new innovative venture for MHADA and for State of Maharashtra.
18.
The
next ground on which the High court interfered with the decision of MHADA
awarding contract for developing Mira Road in favour of Ravi Development was
about the influence of the Chief Minister of Maharashtra.
With regard to the
said allegation, the MHADA and the State of Maharashtra placed relevant
materials which show that at first Ravi Development submitted their proposal to
the Chief Executive Officer, MHADA on 25.08.2006 and thereafter, to the Chief
Minister of Maharashtra on 11.10.2006. It is clear from the provisions of MHADA
Act, 1976, that MHADA is an undertaking working under the control and in
coordination with the Housing Department of Government of Maharashtra. It was
explained that Ravi Development on 25.08.2006 submitted the proposal to the
CEO, MHADA and since no immediate decision was taken by MHADA level as the same
was new proposal, therefore, on 11.10.2006 similar proposal was submitted by
them to the Chief Minister of Government of Maharashtra. It was pointed out
that the Chief Minister had portfolio of Housing Department and as per Rules 3
and 12 of Maharashtra Government Rules for Conduct of Business, 1975 - business
of the concerned Department of the Government are transacted by the Cabinet
Minister of the said Department. In those circumstances, there was nothing
wrong in submitting the same proposal to the Chief Minister of Maharashtra on
11.10.2006. As rightly pointed out by Mr. P.P. Rao, learned senior counsel, if there
was no decision by MHADA in respect of their proposal dated 25.08.2006,
naturally the party concerned viz., Ravi Development in the normal
circumstances could approach to the higher authorities, in the case on hand,
Cabinet Minister of Housing Department (i.e. Chief Minister of Maharashtra),
hence rightly approached the Chief Minister by submitting the same proposal on
11.10.2006 which cannot be motivated or deemed as contrary to any of the Government
orders. It was pointed out that the Chief Minister or Government has not at all
favoured Ravi Development and no order or endorsement to that effect was either
made or reflected anywhere in the record. On the other hand, the Desk Officer
of Housing Department of Government of Maharashtra, by letter dated 20.10.2006,
simply forwarded the proposal submitted by Ravi Development to MHADA thereby
calling upon a detailed report. Pursuant to the said communication, CEO, MHADA
recommended the proposal of Ravi Development on 04.12.2006 and also submitted a
detailed study report on 24.04.2007 to Principal Secretary, Housing Department,
Government of Maharashtra after examining the merits and demerits of `West
Bengal Joint Venture Method' and `Jaipur Swiss Challenge Method' and
recommended for following the Swiss Challenge Method and sought Government's
approval. It is seen that thereafter, Housing Department of Government of
Maharashtra, by letter dated 17.05.2007, issued directions to follow Swiss
Challenge Method as recommended by MHADA and also directed MHADA to take policy
decision at its own level for other similar proposals in future. It was pointed
out that thereafter, by a letter dated 14.06.2007, in terms of the Ravi
Developments willingness to match the highest bid, MHADA took a decision on
22.11.2007 to award the said contract to Ravi Development. In those
circumstances and in view of the materials placed, particularly, two letters
dated 20.10.2006 and 10.05.2007 issued by the Housing Department of Government
of Maharashtra, it is clear that no favoritism was ever shown to Ravi
Development at the instance of the Chief Minister of Maharashtra. We are
satisfied that contrary observations of the High Court are baseless and not
warranted.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Apart
from the above information and conclusion by us, it was highlighted that MHADA,
as a State Government Undertaking, works under the control of Housing
Department of Government of Maharashtra and as per Section 164 of the MHADA
Act, 1976, Government could issue instructions if really had to favour Ravi
Development and the same would be statutorily binding on MHADA. However, the
materials placed by the State and MHADA show that on receipt of the
representation from the Ravi Development without any endorsement or direction
to consider the case of Ravi Development, the officer concerned merely
forwarded the same to the Chief Executive Officer, MHADA to offer their
remarks. As rightly pointed out, perusal of the entire documents clearly shows
that there was no attempt either from the authorities of the State of
Maharashtra or from the Chief Minister to favour Ravi Development. In such
circumstances, the contention of the learned Solicitor General appearing for
the State and MHADA is well founded and the contrary conclusion of the High
Court is liable to be rejected.
20.
In
the public notice and bid documents dated 20.05.2007, it was specifically
mentioned about the principle of "initiator or proposer" and with the
said understanding Shree Ostwal Builders Ltd. has participated in the tender
process and also gave an undertaking on 11.06.2007 while submitting their bid
document. The following undertaking submitted by them which is not in dispute
is as follows:- "We are well aware of Swiss Challenge method and that the
original proposer of the suo moto proposal shall be given opportunity to take
up the project on the highest eligible bid offer. In case the original proposer
agrees to match his bid to the highest offer then the project shall be awarded
in his favour."
In view of clear
undertaking, as rightly pointed out by the State, after participation in tender
process and failing in the same when the contract was awarded to Ravi
Development by MHADA's decision dated 22.11.2007 only at that point of time
i.e. on 11.12.2007 Shree Ostwal Builders filed a writ petition in the High
Court.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
It
is relevant to mention that the legality of Swiss Challenge Method in its
entirety is not challenged. Except the land at Mira Road, in respect of other
two remaining properties, no challenge was ever raised till date by any party.
Only after issuance of public notice in the newspaper to follow Swiss Challenge
Method, Krishna Pratisthan choose to file public interest litigation that too
only in respect of land at Mira Road, Thane and admittedly no challenge was
raised in respect of other two properties.
22.
It
was submitted by the learned Solicitor General before us that as per the
initial tender document, what was receivable for MHADA was 30,006 sq. mtr. construction
(out of 70000 sq.mtr. construction) with 1.2 Floor Space Index (FSI). As per
the rules, with the help of Transferable Development Rights (TDR), FSI can be
extended upto 2 that means 0.8 TDR = 65052.80 sq.mtr. can be utilized. For this
utilization of 0.8 TDR i.e. additional construction of 65052.80 sq.mtr., MHADA
was entitled to receive amount of Rs.2750/- per sq. mtr. which comes to
Rs.17.89 crores. However, it was pointed out that changing the said terms in
the approval order dated 22.11.2007, it is the assertion of MHADA that it
gained more and Ravi Development had to loose more, as in view of the said
amount of Rs.17.89 crores, M/s Ravi Development was directed to give additional
constructed carpet area of 18841 sq. mtr., whose actual market value comes to Rs.60.69
crores. Thus, it was pointed out that after the said alternate construction of
Rs.60.69 crores is compared to receivable amount of Rs.17.89 crore, then, MHADA
is in fact gaining advantage of Rs.42.80 crores. It was brought to our notice
that all the details are matter of record. In those circumstances, it was
pointed out that the terms were altered to the great advantage of MHADA and
more dis-advantage of Ravi Development.
23.
The
further particulars furnished by the State of Maharashtra show that National
Housing Policy & Maharashtra State Housing Policy promote Public-Private
partnership for construction of EWS (Economically Weaker Section), LIG (Lower
Income Group), MIG (Middle Income Group) Housing. MHADA is a major player for
the same in state of Maharastra. Subsidy provided is not adequate and MHADA has
no control on actual quality construction, therefore, MHADA has to construct
low rise and ground floor structures with poor specifications so as to keep the
prices of the EWS, LIG, MIG houses affordable to masses and FSI of 1.20 is
unutilized due to the low rise structures and poor specifications in almost all
the layouts of MHADA in Mumbai and in Mumbai Metropolitan region and MHADA is
finding it difficult to sell even these houses at concessional rates.
Therefore, MHADA conducted a detailed survey of Public Private Participation
(PPP) options available for carrying out land developments for construction of
better EWS, LIG and MIG houses at affordable price. In the report dated
24.04.2007, written to the Government, pros and cons of Joint Venture Method
and Swiss Challenge Method are clearly reflected and Swiss Challenge Method is
recommended with due application of mind. Therefore, on that count also,
application of Swiss Challenge Method into present allotment of Mira Road land
at Thane is justified and not violative of Article 14 of the Constitution.
24.
As
pointed out earlier, in the Swiss Challenge Method, there is no provision for
allowing other tenderers to raise the bid further, when "initiator of
proposal" accepts to raise up to the highest bid. It was brought to our
notice that even there was no such request by Shree Ostwal Builders Ltd. after
Ravi Development accepting to match highest bid by their letter dated
14.06.2007.
25.
It
is well settled principle that in the matters of Government contract, the scope
for judicial review is very limited and that the Court cannot substitute its
own decision for that of the government vide Tata Cellular vs. Union of India,
(1994) 6 SCC 651 and Air India vs. Cochin International Airport, (2000) 2 SCC
617. Even as early as in State of M.P. and Others vs. Nandlal Jaiswal and
Others, (1986) 4 SCC 566, this Court held that when the State Government is
granting licence for putting up a new industry, it is not at all necessary that
it should advertise and invite offers for putting up such industry. The State
Government is entitled to negotiate with those who have come up with an offer
to set up such industry. In that case, the predominant purpose of the policy
decision dated 30.12.1984 was to ensure construction and setting up of new
distilleries with modern technologically advanced plant and machinery at new
sites where there would be no possibility of air and water pollution and if for
achieving this purpose the State Government considered the offer of the
existing contractors and negotiated with them and ultimately decided to grant
to them licences for construction of new distilleries on the terms and
conditions set out in the recommendations of the Cabinet Sub-Committee. This
method was approved by the Court and held that the State Government could not
be said to have acted arbitrarily or capriciously in violation of Article 14.
In 5 M & T Consultants, Secunderabad vs. S.Y. Nawab and Another, (2003) 8
SCC 100, it is worthwhile to refer the following conclusion in para 17:
"17. ... ... ...
It is by now well settled that non-floating of tenders or absence of public
auction or invitation alone is no sufficient reason to castigate the move or an
action of a public authority as either arbitrary or unreasonable or amounting
to mala fide or improper exercise or improper abuse of power by the authority
concerned. Courts have always leaned in favour of sufficient latitude being
left with the authorities to adopt their own techniques of management of
projects with concomitant economic expediencies depending upon the exigencies
of a situation guided by appropriate financial policy in the best interests of
the authority motivated by public interest as well in undertaking such
ventures. ... ..."
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
The
decision to apply Swiss Challenge Method clearly fell within the realm of
executive discretion and in this case, exercised after due application of mind.
It is clear from the materials placed before us that there is neither arbitrariness
nor unreasonableness in the adoption of the said policy.
27.
Recently,
there has been shift towards encouraging private participation in the
government works and promoting of public-private partnership. The Ministry of
Housing and Urban Poverty Alleviation in its National Urban Housing Habitat
Policy, 2007 specifically mentions participation of private sector as one of
its aims. It envisages that the State Government and the Central Government
shall act as facilitators and enablers. The Maharashtra State Housing Policy
dated 23.07.2007 provides for private participation. Pursuant to the declared
policy by the Central and State Governments, the Maharashtra State Housing
Board and MHADA are well within their rights to apply the Swiss Challenge
Method with respect to the MHADA lands that were lying undeveloped since the
same was being applied only on trial basis as a method of encouraging private
participation. Though an argument was built up by the contesting respondents
based on Ramanna Dayaram Shetty vs. International Airport Authority of India
&
Ors., (1979) 2 SCC
489, E.P. Royappa vs. State of Tamil Nadu, (1974) 4 SCC 3, Maneka Gandhi vs.
Union of India, (1978) 1 SCC 248, and Erusion Equipment and Chemicals Ltd. vs.
State of West Bengal, (1975) 1 SCC 70, in the light of the stand of the State
of Maharashtra and MHADA and the materials placed before us, we are of the view
that while holding that there is no doubt about the principles laid down but
they are not helpful to the case on hand. On the other hand, we are satisfied
that the State of Maharashtra, after due deliberations and study of the
methodologies which is prevailing in the country for dealing with suo motu
development proposals, decided to apply Swiss Challenge method to the proposal
of Ravi Development. Further, Swiss Challenge method was being applied by the
State Government only on a pilot basis. The method is transparent inasmuch as
all the parties were well aware of the "right of first refusal"
accorded to the
"originator of proposal". As per the method which was known to all
the parties the originator of the proposal must in consideration of his vision
and his initiative be given to the benefit of matching the highest bid
submitted. As pointed out earlier, the said method is beneficial to the
government inasmuch as the government does not loose any revenue as it is still
getting the highest possible value. Further, in view of financial crunch and
availability of undeveloped lands, National and State Housing Policies provide
for encouragement of private participation. The State Government is also well
within its rights to try out on pilot basis a methodology recognized
internationally as well as in India. In those circumstances, the High Court is not
justified in striking out the Swiss Challenge Method without allowing the State
Government to exercise its executive discretion on a pilot basis. It is not
possible to reject the claim of State of Maharashtra and MHADA, in view of
shortage of land, increasing cost in housing sector, the Central and State Governments
recommended strongly for public private joint ventures and in the said category
Swiss Challenge method is the acceptable democratic method as compared to other
options.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
The
slums in urban area are primarily a resultant of shortage of supply of housing
and shortage in supply of LIG/MIG category of housing. To ensure that the lands
for public housing and metropolis like Mumbai are put to maximum utilization
and maximum tenements are made available for families of MIG and LIG categories
for which in the present scenario one of the way outs is joint venture
development by public and private bodies.
29.
Due
to shortage of land, ever increasing cost, and maximum utilization of
permissible FSI, by adopting public-private joint ventures, it would be
possible to minimize the cost of LIG, EWS and MIG categories. In the present
project, land is partially developed by MHADA with ground floor structures and
low rise buildings with lower specifications so as to make housing affordable
for EWS, LIG and MIG with the subsidies granted by the Government. The balance
FSI cannot be utilized without high rise buildings which involves higher cost
and expenses. Ravi Development has proposed multi-storied building to consume
balance FSI with 60% number of tenements under LIG and EWS category as per DCR
33(5) of Mira Bhainder Municipal Corporation, which if constructed by MHADA
will require higher cost of construction and subsidies required to make MIG,
LIG houses will be quite high. In the present project, constructed built up
area with richer specifications is to be handed over by Ravi Development to
MHADA free of costs in turn MHADA will be at liberty to price these tenements
in accordance with policies of MHADA or as may be determined by MHADA.
Therefore, utilization of maximum permissible FSI, adopting higher
specifications and effecting utilization of scarce land for housing and yet
make LIG, MIG housing group financially attractive to the people is possible
through joint venture of public and private bodies in which reasonable built
area be available by private developer free of cost to MHADA. The above claim
and concept cannot be ignored lightly.
30.
Lastly,
we conclude that the impugned pilot project or initiation taken by the
Government of Maharastra along with MHADA to encourage public-private
participation is in accordance with the need of the time as well as a laudable
effort. But to make it an effective approach Swiss Challenge Method or any other
encouraging concept should be duly publicized first. The effort of
public-private participation can only be possible when private entities are
aware of such scheme. Also in the scheme of availing a new system thorough
rules and regulations are needed to be followed otherwise unfairness,
arbitrariness or ambiguity may creep in. In order to avoid such ill-effects the
State Government is suggested to consider the following aspects:-
1. The
State/Authority shall publish in advance the nature of Swiss Challenge Method
and particulars;
2. Publish the nature
of projects that can come under such method;
3. Mention/notify the
authorities to be approached with respect to the project plans;
4. Mention/notify the
various fields of the projects that can be considered under the method;
5. set rules
regarding time limits on the approval of the project and respective bidding:
6. the rules are to
be followed after a project has been approved by the respective authorities to
be considered under the method.
7. All persons
interested in such developmental activities should be given equal and
sufficient opportunity to participate in such venture and there should be
healthy inter se competition amongst such developers.
These suggestions are
not exhaustive and the State is free to incorporate any other clauses for
transparency and proper execution of the scheme. The State Government is
suggested to frame regulations/instructions on the above lines and take
necessary steps thereafter in future.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
In
view of the above discussion and conclusion, the common impugned judgment and
order dated 27.03.2008 of the Bombay High Court in W.P. (L) No. 2714 of 2007 and
P.I.L. No. 72 of 2007 are set aside. Consequently, the appeals are allowed. No
costs.
....................................CJI.
(K.G. BALAKRISHNAN)
..........................................J.
(P. SATHASIVAM)
NEW
DELHI;
MAY
11, 2009.
Back
Pages: 1 2 3