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2007 Supreme(SC) 313
SUPREME COURT OF INDIA
Dr.AR. Lakshmanan & Altamas Kabir
SUNIL PANNALAL BANTHIA & ORS-PETITIONER
VERSUS
CITY AND INDUSTRIAL DEVELOPMENT CORPN. OF MAHARASHTRA LTD. & ANR-RESPONDENT:
Appeal (civil) 1219 of 2007
(Arising out of SLP (C) No.14300/2006)
DECIDED ON : 08/03/2007
Public bodies are bound by their representations; they cannot unilaterally cancel allotments based on internal rule violations if the allottee acted upon such assurances to their prejudice, especially where regulations explicitly permit the mode of allotment used.
Headnote:(A) Indian Contract Act, 1872 - Section 23 - Maharashtra Regional Town Planning Act, 1966 - Section 45 - New Bombay Disposal of Land Regulations, 1975 - Regulation 4 - Cancellation of lease allotment by a public body - Public bodies are bound by representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice - Whenever government officers assume authority in a matter, the subject is entitled to rely on that authority and ought not to suffer if the officers exceed their limits - Promissory estoppel applies against public bodies to prevent them from resiling from assurances that caused prejudice to a citizen.
(B) Writ Petition - Alternative remedy - The availability of an alternative remedy does not absolutely bar the filing of a writ petition, particularly when the petition has been admitted and the parties have completed their pleadings, and the primary question is one of law.
Facts of the case:
A public body allotted a commercial plot on lease to the appellants after accepting the full lease premium and transfer charges. The body executed a Deed of Lease and Deed of Confirmation, and issued development permissions and commencement certificates. Relying on these and commencing construction, the appellants spent significant sums. Subsequently, the public body issued a show cause notice and terminated the lease agreement, asserting that the allotment was void under Section 23 of the Contract Act as it was made in contravention of the body's own rules (by not calling for tenders) and was thus opposed to public policy. The High Court dismissed the writ petition on the grounds that an alternative remedy was available.
Findings of Court:
The court found that having accepted the premium and issued the necessary certificates, the public body was estopped from unilaterally cancelling the allotment on the ground that it had violated its own rules. Furthermore, under Regulation 4 of the applicable land disposal regulations, the body was empowered to dispose of land by considering individual applications, meaning the lack of public auction did not render the allotment void. The attempt to cancel the allotment after the appellants had significantly altered their position was itself opposed to public policy.
Issues: Whether a public body is entitled to unilaterally cancel an allotment and terminate a lease on the ground of its own internal rule violations and opposition to public policy, after the allottees had acted upon the body's assurances and altered their position to their prejudice.
Ratio Decidendi: Public bodies are bound by the representations and promises they make. If a citizen alters their position to their prejudice based on such assurances, the public body cannot resile from its actions by claiming a lack of jurisdiction or violation of internal rules. Moreover, if statutory regulations explicitly permit the method of allotment used (such as individual applications), the allotment cannot be deemed void or opposed to public policy for lacking a public tender process.
Result: Appeal allowed, order of the High Court set aside, and the order of cancellation and show cause notice quashed.
Legal Category Hierarchy
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administrative law
- estoppel against public bodies
- alternative remedy
- allotment of land
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contract law
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void agreements
- opposed to public policy
- section 23, contract act, 1872
-
void agreements
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practice and procedure
-
writ petition
- maintainability despite alternate remedy
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appeal
- supreme court
-
writ petition
JUDGMENT:
ALTAMAS KABIR, J.
Leave granted.
This appeal is directed against the order passed by the Division Bench of the Bombay High Court dismissing the writ petition filed by the appellants herein challenging the action of the respondent, City and Industrial Development Corporation of Maharashtra Ltd. (for short CIDCO) in cancelling the allotment made in favour of the appellants. The Division Bench indicated in its impugned order that in identical matters other writ petitions filed at different points of time had been dismissed on the ground of alternative remedy available.
The facts as can be garnered from the materials on record, indicate that the CIDCO had issued a letter of allotment of a commercial plot measuring 1453.75 sq. mts. on lease in plot No.1 in Sector 9, Panvel (West), Navi Mumbai, for a period of 60 years for a premium of Rs.2,12,24,750/- in favour of Mrs. Meera Balkrishna Dhumale and Mrs. Neeta Hemant Patankar jointly. The original allottees applied for transfer of the said plot to the appellants herein. Upon accepting the transfer charges of Rs.2 lacs, CIDCO issued a corrigendum to the original allotment letter dated 5th February, 2004 and executed a Deed of Lease in favour of the appellants on receipt of the full lease premium of Rs. 2,12,24,750/-. CIDCO also executed a Deed of Confirmation in favour of the appellants and issued the Development Permission and Commencement Certificate in terms of Section 45 of the Maharashtra Regional Town Planning Act, 1966 ( for short the MRTP Act).
On the basis of the above, the appellants commenced the construction work and proceeded up to the 1st floor and also completed the construction of the underground water tank. However, on 19th July, 2005, CIDCO issued a Show Cause Notice to the appellants to show cause why the agreement to lease should not be terminated as being void under Section 23 of the Contract Act. The appellants duly replied to the show cause notice through their learned advocate, but despite the above, on 29th March, 2006, CIDCO passed an order terminating the Agreement of Lease and demanded return of possession of the allotted plot with a threat of forcible resumption unless the demand was
complied with.
The appellants filed a writ petition against CIDCO challenging the show cause notice dated 19th July, 2005, and the order dated 29th March, 2006, terminating the Agreement of Lease and demanding possession of the allotted plot on 13th April, 2006. The matter was hotly contested before the Bombay High Court and all the aforesaid facts were brought to its notice. On behalf of the respondents, it was sought to be highlighted that the allotment had been made by it in contravention of the provisions of Section 23 of the Contract Act by not calling for tenders and such action on its part was
void as being opposed to public policy. Without going into the aforesaid questions, the Bombay High Court simply dismissed the writ petition on the ground of alternative remedy available.
On behalf of the appellants, it was sought to be urged by Mr. J.P. Cama, learned senior advocate, that two similar matters, being Civil Appeal No. 408/07 (Amey Co-operative Housing Societies Limited vs. Public Concern for Governance Trust & Ors) and Civil Appeal No.410/07 filed by M/s. Vijay Associates (Wadhwa) Developers, had been considered in detail by this Court and the said appeals had been disposed of on 1st February, 2007 by a judgment in which most of the points raised in the instant appeal had also been raised and decided. Mr. Cama submitted that on the issues as already decided, nothing further was needed to be added, but there was a basic difference between the reliefs sought for in the said appeals and the instant appeal. Mr. Cama pointed out that the said two appeals had arisen out of two writ petitions filed by way of Public Interest Litigation and one of the grievances of the writ petitioners was that the properties which had been allotted had
