The main legal point established in the judgment is the need for a pragmatic and realistic approach in addressing fraudulent allotments and losses incurred by CIDCO. The Court emphasized the importance of conducting a fresh valuation and compensating CIDCO for any under-valuation, rather than resorting to drastic measures such as cancellation and forfeiture.

Headnote:
Public Interest Litigation - Allotment of Plots - Maharashtra Regional and Town Planning Act, 1966 - MRTP Act - Regulations 1995 - CIDCO - FSI - Co-operative Housing Societies - Fraudulent Allotments - Valuation - Compensation
Fact of the Case:

Public Concern for Governance, a registered Trust, filed a Public Interest Litigation in the High Court of Judicature at Mumbai, challenging the allotment of residential plots in the Navi Mumbai Municipal Area by CIDCO. The main ground of challenge was the violation of existing regulations regulating such allotment, alleging fraudulent allotments and loss to CIDCO.
Finding of the Court:

The High Court found that the allotments made in favor of the housing societies were fraudulent and illegal, and directed the cancellation of the allotments and the forfeiture of the constructions. The High Court also directed CIDCO to examine the possibility of regularizing the construction and to take necessary steps for the allotment of the plot and construction.
Issues: The main issues were the fraudulent allotments of residential plots, violation of regulations, and the loss incurred by CIDCO. The Court also considered the possibility of regularizing the construction and the valuation of the plots.
Ratio Decidendi: The Court found that the allotments were fraudulent and illegal, but the directions for cancellation and forfeiture were deemed unrealistic. The Court directed a fresh valuation of the plots and ordered the appellant to compensate CIDCO for any under-valuation. The Court also allowed the construction to continue, subject to the valuation and compensation.
Final Decision: The appeals were allowed, and the directions of the High Court were set aside. The State Government was directed to conduct a fresh valuation of the plots, and the appellant was ordered to compensate CIDCO for any under-valuation. The injunction on construction was to continue until the compensation was paid.

JUDGMENT

ALTAMAS KABIR, J.

1. Of the four Special Leave Petitions heard together by us, two have already been disposed of and the remaining two, namely, SLP (c) Nos.336/06 and 655/06, are being disposed of by this common judgment.

2. Leave granted in both the special leave petitions.

3. Public Concern for Governance is a registered Trust which filed a Public Interest Litigation, being No.43/2005, in the High Court of Judicature at Mumbai, questioning the manner in which certain residential plots in the Navi Mumbai Municipal Area had been allotted by the City and Industrial Development Corporation (hereinafter referred to as CIDCO). CIDCO is an authority constituted by the State of Maharashtra under the Maharashtra Regional and Town Planning Act, 1966 (hereinafter referred to as the MRTP Act) for development of Navi Mumbai and other townships.

4. The allotments made have been challenged on various grounds. The main ground of challenge is that the allotment and disposal of plot Nos. 24 to 29 (Nerul) was in violation of the existing regulations regulating such allotment. According to the writ petitioners, the Regulations provided for the allotment of plots effected either by public advertisement, or at a fixed price for co-operative housing societies or on individual applications. However, tenders were to be invited as far as plots which were to be granted by public advertisement were concerned. Since genuine co-operative housing societies are usually unable to compete with builders in open tender, they were to be granted plots of land at a fixed concessional rate and the buildings to be constructed were to be used for residential purposes only. According to the writ petitioners there is even a difference in the Floor Space Index, (hereinafter referred to as the FSI). In the case of purely residential constructions, the permitted FSI is 1, whereas in the case of constructions to be used for both commercial and residential purposes, the FSI is 1.5.

5. According to the writ petitioners the plots in question were cornered by builders who set up dummy societies to acquire the plots and to raise constructions thereon, which would be used both for residential and commercial purposes, thereby making large gains for themselves and defrauding CIDCO. It is the specific case of the writ petitioners that having acquired the plots for the use of co-operative housing societies with FSI 1, the builders who are the only entrepreneurs in the construction project, sought to convert these plots for commercial use with FSI 1.5, thereby causing wrongful loss to CIDCO to the extent of RS.36 crores.

6. In support of their case, the writ petitioners relied on two Resolutions adopted by the Board of Directors of CIDCO, being Nos. 8848 adopted on 23rd October, 2003 and 8886 adopted on 25th November, 2003, respectively. By the first Resolution, a deviation was made from the normal mode of allotting plots by fixing the rate for plots to be allotted to the co-operative housing societies (with 1 FSI and purely for residential purposes). The said Resolution reads as follows:-

"RESOLUTION NO.8848

RESOLVED THAT the Board do and hereby approve the Proposal to fix the rate for plots to Co-operative Housing Societies (with 1 FSI and purely for residential purpose) without inviting tender in various developed, developing and new nodes except Kalamboli in Navi Mumbai at fixed rate as mentioned in column NO.5 of Table NO.1 and Table 2 of the Board Agenda Note (subject to the modification that in respect of society plots situated on smaller roads of 7 to 11 meters the base price shall be enhanced by 30% (instead of 40%) in respect of Nodes specified in Table 2). The rate of Co-operative housing societies in case of Kalamboli node, however, would be same as base price, i.e. RS.2940/m2".

RESOLVED FURTHER THAT this policy be implemented only after verifying the genuineness of the Society.

RESOLVED FURTHER THAT the Vice Chairman & Managing Director/Chief Economist/Marketing Manager I

Click Here to Read the rest of this document