1999 Supreme(SC) 753

1999(6) Supreme 273
Supreme Court of India
(From Allahabad High Court)
S.B. Majmudar & D.P. Wadhwa, JJ.
M.I. Builders Pvt. Ltd. —Appellant
versus
Radhey Shyam Sahu & Ors. —Respondents
Civil Appeal Nos. 9323-9325 of 1994
Decided on 26-7-1999
Counsel for the Parties :
For the Appearing Parties : M.L. Verma, Arun Jaitley, Dushyant Dave, G.L. Sanghi, Raju Ramachandran, Sr. Advocates, Ms. Nisha Bagchi, Vikas Mehta, Ms. Indu Malhotra, S.V. Deshapande, Ashok Srivastava, Pradeep Misra, R.C. Verma, C. Sidhartha, M.K. Srivastava, (A.K. Goel) Addi­tional Advocate General for U.P., R.B. Misra, Kamlendra Misra, and Uday Umesh Lalit, Advocates.

Important Points
1. Where Municipal Corporation gran­ted licence to a builder to enter into its park and construct underground shopping complex ostens­ibly to decongest the area but the real intent was to favour the builder and park was the only open area in the locality and provisions of various Act were violated, Supreme Court ordered demolition of the construction and restoration of the park to its original position.
2. Under Section 119 of the U.P. Munici­pal Corporation Adhiniyam repro­duced above, delegation can only be to the Executive Committee or to the Mukhya Nagar Adhikari and to no other person or authority or Committee.

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

        Held : The park in question, has been in existence for a great number of years. It is situated in the heart of Aminabad, a bustling commercial-cum-resi­dential locality in the city of Lucknow. The park is of historical importance. Because of the construction of underground shopping complex and parking it may still have the appear­ance of a park with grass grown and path laid but it has lost the ingredients of a park inasmuch as no plantation now can be grown. Trees cannot be planted and rather while making underground construc­tion many trees have been cut. Now it is more like a terrace park. Qualitatively it may still be a park but it is certainly a park of different nature. By construction of underground shopping complex irreversible changes have been made. It was submitted that the park was acquired by the State Government in the year 1913 and was given to the Mahapalika for its management. This has not been controverted. Under Section 114 of the Act it is the obligatory duty of the Mahapalika to maintain public places, parks and plant trees. By allowing underground construction Mahapalika has deprived itself of its obligatory duties to maintain the park which cannot be permitted. But then one of the obligatory functions of the Mahapalika under Section 114 is also to construct and maintain parking lots. To that extent some 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. By allowing construction of underground shopping complex in the park Mahapalika has violated not only Section 114 of the U.P. Nagar Mahapalika Act but also the public trust doctrine. (Paras 51 & 53)

       It is not disputed that there is a Master Plan applicable to city of Lucknow. This Master Plan is prepared under the Development Act. It was submitted by the builder that the park could be exploited for commercial purposes as Aminabad has been shown to be a commercial area. No doubt Aminabad is a commercial area but that does not mean that the park can be utilised for commercial purposes. Rather using the park for commercial purposes would be against the Master Plan. (Para 63)

       The facts and circumstances when examined point to only one con­clusion that the purpose of constructing the underground shopping complex was a mere pretext and the dominant purpose was to favour the M.I. Builders to earn huge profits. In depriving the citizens of Lucknow of their amenity of an old historical park in the congested area on the spacious plea of decongesting the area Mahapalika and its officers forgot their duty towards the citizens and acted in a most brazen manner. (Para 70)

       The builder got an interim order from this Court and on the strength of that order got sanction of the plan from the Mahapalika and no objection from the LDA. It has no doubt invested considerable amount on the construction which is 80 complete and by any standard is a first class construction. Why should the builder take such a risk when the interim order was specific that the builder will make construction at its own risk and will not claim any equity if the decision in the appeal goes against it? When the interim order was made by this Court Mahapalika and the State 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 the Mahapalika but also of the State Government. It also, as it would appear, over-rated its capacity to manage with the State Government to change the land use of the park. Builder is not an innocent player in this murky deal when it was able to get the resolutions of the Mahapa­lika in its favour and the impugned agreement executed. Now, construc­tion of shops will bring in more congestion and with that the area will get more polluted. Any commercial activity now in this unauthorised construction will put additional burden on the locality. Primary concern of the Court is to eliminate the negative impact the underground shopping complex will have on environment conditions in the area and the congestion that will aggravate on account of in­creased traffic and people visiting the complex. There is no alterna­tive to this except to dismantle the whole structure and restore the park to its original condition leaving a portion constructed for parking. (Para 75)

       Number of cases coming to this Court pointing to unauthorised constructions taking place at many places in the country by builders in connivance with the Corporation/Municipal officials. In the series of cases, this Court has directed demolition of unauthorised construc­tions. This does not appear to have any salutary effect in cases of unauthorised construction coming to this Court. While directing demo­lition of unauthorised construction, court should also direct inquiry as to how the unauthorised construction came about and to bring the offenders to book. It is not enough to direct demolition of unauthorised construction, where there is clear defiance of law. In the present case, but for the observation of the High Court, we would certainly have directed an inquiry to be made as to how the project was conceived and how the agreement dated November 4, 1993 came to be executed.

       We direct as under :

        1. Block 1, 2 and 4 of the underground shopping complex shall be dismantled and demolished and on these places park shall be restored to its original shape.

        2. In Block 3 partition walls and if necessary columns in the upper basement shall be removed and this upper basement shall be converted into parking lot. Flooring should be laid at the lower basement level built to be used as parking lot. Ramp shall be constructed adjacent to Block 3 to go to upper and lower basement levels for the purpose of parking of vehicles. Further to make block 3 functional as a separate unit walls shall be constructed between block 2 and block 3 and also block 3 and block 4.

        3. Dismantling and demolishing of these structures in Blocks 1, 2 and 4 and putting Block 3 into operation for parking shall be done by the Mahapalika at its own cost. Necessary services like sanitation, elec­tricity etc. in Block 3 shall be provided by the Mahapalika.

        4. Mahapalika shall be responsible for maintaining the park and the Block 3 for parking purposes in proper and efficient manner.

        5. M.I. Builders Pvt. Ltd., the appellant, is divested of any right, title or interest in the structure built by it under or over the park. It shall have no claim whatsoever against Mahapalika or against any other person or authority.

        6. Block 3 shall vest in Mahapalika free from all encumbrances. Li­cence of M.I. Builders to enter into the park and the structure built therein is cancelled of which possession is restored to the Mahapalika with immediate effect. No obstruction or hindrance shall be caused to the Mahapalika by any one in discharge of its functions as directed by this order.

        7. Restoration of the park and operation of Block 3 for parking pur­poses shall be completed by Mahapalika within a period of 12 months from today and report filed in the registry of this Court.

        (Para 78)

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

       Held : Under Section 119, of the U.P. Munici­pal Corporation Adhiniyam reproduced above, delegation can only be to the Executive Committee or to the Mukhya Nagar Adhikari and to no other person or authority or Committee. There is no 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. Constitution of the High Power Committee itself was wholly illegal. High Power Committee took deci­sion to hand over the park to the builder for construction of the underground shopping complex and also approved the terms of the agree­ment dated November 4, 1993. Decision of the High Power Committee was put before the Executive Committee and the general body of the Mahapa­lika for the purpose of “infor­mation” and both these bodies stamped their approval. As noted above there was no agenda for consideration of these resolutions of the Executive Committee of the Mahapalika. Corporators had no time to apply their minds. Such an important mat­ter, where the cost of the project was likely to run in crores of rupees, could not have been considered under the topic “other sub­jects, subject to the permission of the Presiding Officer”. Section 105 of the Act protects any act done or proceeding taken on account of any defect or irregularity in procedure not affecting the substance. In the pre­sent case it is not mere irregularity or defect in the procedure but the whole procedure is in clear breach of Sections 91 and 119 of the Act which are mandatory. (Paras 15 & 54)

       (iii) Uttar Pradesh Municipal Corporation Adhiniyam, 1959—Sections 131, 133 and 136—Power to make contract — Manner of execu­tion—Mahapalika constituted High Power Committee to consider proposal of construction of underground shopping complex—High Power Committee passed resolution autho­rising Mukhya Nagar Adhikari to conduct all forthcoming actions and formalities—Contract signed by Mukhya Nagar Adhikari—Com­mon seal affixed not in presence of a Corporator nor a Corporator signed the document—Execution of contract in violation of Section 133—Not binding on Mahapalika.

       Held : Agreement dated November 4, 1993 has not been executed as required under Section 133 of the Act. Resolution of the High Power Committee, which was placed before the Mahapalika and the Executive Committee for information, required that “the prescribed project may be got executed by M.I. Builders Pvt. Ltd. and the Mukhya Nagar Adhikari should be authorised for conducting all the forthcoming actions and formalities”. Now, Mahapalika has power to enter into contracts (Sec. 131). Under sub-section (1) of Section 132 contract shall be 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 is accordance with the requirements of law. Further, under sub-sections (2) of Section 136 where the Mahapalika approves the project and the entire estimated cost exceeds rupees ten lakhs, the project report shall be submitted to the State Government and it is for the State Government to reject or sanction the project with or without modifications. Till that is done no work shall be commenced. No such sanction of the State Government was obtained in the present case. It was submitted that this provision would apply only if the project cost was to be incurred by the Mahapalika. We do not think it is so. It is the cost of the project that matters and not who incurs the cost in the first instance. Agreement dated November 4, 1993 is, therefore, not a valid contract and not binding on the Maha­palika. (Para 57)

       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. (Para 57)

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

       Every decision of the authority except the judicial decision is amenable to judicial review and reviewability of such a decision cannot now be questioned. However, a judicial review is permissible if the impugned action is against law or in violation of the prescribed procedure or is unreasonable, irrational or mala fide. (Para 60)

       (v) Estoppel by pleading—Muni­cipal Corporation granting permission to a builder to enter into its park and construct underground shopping complex—Writ petition challenging construction — Munici­pal Corporation supporting case of builder—Writ petition allowed—In appeal before Supreme Court Corporation opposing builder’s appeal —Plea of estoppel by pleading raised by builder—Not tenable—Contract itself was in con­travention of provisions of Act—No estoppel against Statute. (Para 67)

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

       Held : Full freedom has been given to the builder to lease out the shops as per its own terms and condi­tions to persons of its choice on behalf of the Mahapalika and Mahapa­lika shall be bound by these terms and conditions. Builder has also been given the right to sign the agreement on behalf of the Mahapalika on the terms and conditions which the builder may deem fit and proper. Builder is only required to give a copy of the agreement to the Maha­palika after its execution and both the Mahapalika and the builder shall remain bound by the terms of that agreement. Since there is no project report nobody knows how many shops the builder would construct and of what sizes. Mahapalika is allowed to charge Rs. 5,000/- per shop for every second and subsequent transfer of shops by the builder but what amount is to be charged for the first transfer or subsequent transfers is left to the sole discretion of the builder. A bare glance at the terms of agreement shows that not only that the clauses of the agreement are unreasonable for the Mahapalika but they are atroclous. No person of ordinary prudence shall ever enter into such an agree­ment. A trustee, which the Mahapalika is, has to be more cautious in dealing with its properties. Valuable land in the heart of commercial area has been handed on a platter to the builder for it to exploit and to make run away profits. As a matter of fact on examining the terms of the agreement we find that Mahapalika has been completely ousted from the underground shopping complex for an indefinite period. It has completely abdicated its functions. To repeat, the agreement is completely one sided favouring the builder. The land of immense value has been handed over to it to construct underground shopping complex in violation of the public trust doctrine and the Master Plan for the city of Lucknow. Mahapalika has no right to step in even if there is any violation by the builder of the terms of the agreement or otherwise. Mahapalika, though considered to be the owner of the land, is completely ousted and divested of the land for a period which is not definite and which depends wholly on the discretion of the builder. (Paras 58 & 59)

       By granting licence to the builder to construct underground shopping complex of permanent nature and to hold on to the same for a period which is not definite and then under the impugned agreement builder having been authorised to lease out the shops on behalf of the Mahapalika, it is a dubious method adopted to subvert the provision of Section 128 which apply as well in the case of lease and thus the transaction will also be covered by the expression “otherwise dispose of any interest in the property”. It is, therefore, difficult to accept the argument of the builder that transaction is outside Section 128 of the Act. Now, first licence has been granted to the builder to enter upon the park and to execute a work of permanent character and incur expenses in the execu­tion of the work, thus making the licence irrevocable. However, the licence is deemed to be revoked after the licensee has recovered his full cost on the construction plus 10 of the profit on the investment made by him. When this purpose is achieved by the licensee is anybody’s guess. Not only that licensee, i.e., the builder is then authorised to; lease out the shops so constructed on behalf of the Mahapalika. The result would be that to the builder provisions of Section 129 of the Act, cannot be thus made applicable. In such a situation for the builder to contend that the transaction is not covered by covered by Section 128 and, therefore, Section 129 will not apply is certainly incredulous. Provision of Section of the Act has, therefore, been flouted. Impugned agreement dated November 4, 1993 is bad having been executed also in contravention of the require­ment of Section 129 of the Act. (Para 69)