JUDGMENT

SEN, J.—Leave granted.

2. On 28-5-1974, Gokak Patel Volkart Ltd, submitted a plan for construction of two houses at premises Nos. 124-126 Wodehouse Road, Colaba, Bombay, to the Municipal Corporation of Greater Bombay. The said two houses were occupied by tenants. The plan was for construction of a thirty-storeyed building utilising Floor Space Index (for short FSI) of 2.45 of the said plot.

3. The Development Control Rules existent at the relevant time permitted construction of building on the FSI of 2.45 under R-8 FSI zone in which the above property was situated. The plan was approved by the Corporation and on 13-9-1974 Intimation of Disapproval (IOD) was granted to the Company under Section 346 of the Bombay Municipal Corporation Act. It was stipulated in the IOD that no work should be started unless the existing structures proposed to be removed were in fact removed. It was also stated in the IOD that it was given exclusively for the purposes of enabling the party to proceed further with arrangements of obtaining "No Objection" Certificate from the Housing Commissioner under Section \?>(bb) of the Bombay Rents, Hotel and Lodging House Rates Control Act. In pursuance of the IOD granted by the Corporation, the Company initiated proceeding for eviction of the tenants from the existing structures on the property in question. Ultimately in August 1979, the tenants were evicted and old structures were demolished. In the meantime, in 1975, the State Legislature of Maharashtra enacted the Bombay Metropolitan Region Development Act, 1974 (Maharashtra Act No. IV of 1975) to provide for the establishment of an authority for the purpose of planning, coordinating and supervising the proper, orderly and rapid development of the areas falling within that region. The said Act came into force with effect from 26-1-1975. Section 13 of the Act provides:

"13. (1) Notwithstanding anything contained in any law for the time being in force, except with the previous permission of the Authority, no authority or person shall undertake any development within the Metropolitan Region of the type as the Metropolitan Authority may from time to time specify, by notification published in the Official Gazette, and which is likely to adversely affect the overall development of the Metropolitan Region.

(2) Any authority or person desiring to undertake development referred to in sub-section (1) shall apply in writing to the Metropolitan Authority for permission to undertake such development.

(3) The Metropolitan Authority shall, after making such inquiry as it deems necessary and within 60 days from the receipt of an application under sub-section (2), grant such permission without any conditions or with such conditions as it may deem fit to impose or refuse to grant such permission. If such permission is not refused within 60 days as aforesaid, it shall be deemed to have been granted by the Authority.

(4) Any authority or person aggrieved by the decision of the Metropolitan Authority under sub-section (3), may, within 30 days, appeal against such decision to the State Government, whose decision shall be final."

4. The Metropolitan Authority, in exercise of powers under sub-section (1) of Section 13 of the said Act, published in the Official Gazette a notification dated 10-6-1977 providing, inter alia, that no construction or reconstruction of any building including addition to any existing building shall be carried out so as to have a Floor Space Index exceeding 1.33.

5. As a result of the provisions of Section 13(1) of the Act and the notification dated 10-6-1977, a person desiring to undertake development in contravention of the notification had to apply in writing to the authority for permission to undertake such development. The authority could grantpermission without any condition or with such conditions as it thought fit or refuse to grant such permission. This has to be done within 60 days from the receipt of the application under sub-section (2) of Se