IMPORTANT POINTS
1. The running of a bank or a commercial business by a company in the residential sector is certainly not permissible. (Paras 44 and 56)
2. Commercial activity of any kind in the residential sector is impermissible. All the cases where banks, nursing homes or any commercial activity is being carried on, particularly like the appellants’ case, where a bank and company are running their offices in the residential sectors, would amount to change of user and thus be impermissible. (Paras 46 and 47).
3. No jurisdiction or authority vests in the officers of the Development Authority to permit change of user in its discretion and in violation of the law in force. (Para 47).
4. Section 14 of the U.P.Industrial Area Development Act 1976 empowers the Development Authority to resume the site or building so transferred and further forfeit whole or any part of the money paid in respect thereof, if the lessee commits breach of the terms and conditions of the lease. (Para 24).
5. The Development Authority or its officers, have no power to vary the user and spaces prescribed in the Master Plan, except by amending the relevant laws and that too, for a proper object and purpose. Any decision, as a policy matter or otherwise, for any extent of public convenience, shall be vitiated, if it is not supported by the authority. (Para 34).
6. The action of the Development Authority in permitting mixed user is in apparent violation of the statutory provisions in the Master Plan. Establishment of banks and nursing homes in the residential sectors meant for residential use alone is unequivocal violation of the statutory provisions in the Master Plan. (Paras 38 and 39).
7. The Doctors, Lawyers and Architects can use 30 per cent of the area on the ground floor in their premises in residential sector for running their clinics/offices . For such use, the lawyers, architects and doctors shall be liable to pay such charges as may be determined by the Development Authority in accordance with law and after granting an opportunity of being heard . The affected parties would be at liberty to raise objections before the Development Authority that no charges are payable for such users as per the law in force. (Paras 54 and 56).

Headnote:(a) U.P. Industrial Area Development Act, 1976, Sections 8(2), 6(2)(h), and 14 New Okhla Industrial Development Area (Preparation and Finalization of Plan) Regulations, 1991, Regulations 2(g), 11, Master Plan, Noida 2001 ¯ New Okhla Industrial Development Area Building Regulations and Directions 2006, Regulation 3.12(h)¯Forfeiture of lease¯ Development Authority executing a lease deed in relation to plot in question ¯ Upon the plot lessee raising some constructions and transferring the plot along with unfinished construction in favour of the appellants ¯ Original lease deed containing specific stipulations that the lessee was to raise constructions as per approved plan and to use the premises only for the purpose for which it was committed in terms of the lease deed as per laws and that the lessee shall use the demised premises only for the purpose of constructing a building for residential purpose of customary home occupation or residential cum medical and surgical clinic or dispensary or professional office and for no other purpose without the consent of the Lessor ¯ The Transfer Deed executed by the original lessee in favour of the appellants also contained similar conditions and in addition thereto provided that the conditions of the lease deed shall be binding upon the appellants ¯ After completing constructions, the appellants letting out the premises to Andhra Bank, one Akariti Infotech who were carrying on their business from the premises in question ¯ The Development Authority issuing notice to both Andhra Bank and Akariti Infotech for stopping commercial use in the said premises, informing that use of the residential plot for commercial purpose was in violation of the terms of the lease deed of the plot ¯ The appellants filing objections, which were rejected by the Development Authority ¯ Appellants filing writ petition before the Allahabad High Court challenging the action of the respondents ¯ The High Court dismissing the writ petition and also directing the Development Authority to take immediate and strong action against those who have started using residential plots, wholly or partially, for other non-residential uses ¯ Hence this appeal ¯ Held, the change in user of the building is violative not only of the Regulations, byelaws and the provisions of the Act, but is also contrary to the law governing erection of the building ¯ The jurisdiction of the Development Authority to permit different user in violation of the statute and the Regulations is not contemplated in law ¯ Appeal dismissed.
        (b) Transfer of Properties Act, 1872 ¯ Section 111 ¯ Cl. (g) ¯ Forfeiture of lease ¯ Where a lessee uses the premises given on lease for a purpose other than the one for which it has been given and violates the terms of the lease, lessor can forfeit the lease.
        (c) Indian Evidence Act, 1872 ¯ Section 115 ¯ Legitimate Expectation ¯ The ground of legitimate expectation taken by the appellants on the premise that public notice issued by the Development Authority proposing to permit mixed user in the residential sector binds the Authority ¯ Held the action of the Development Authority in issuing the notice is not in accordance with law ¯ The doctrine of reasonable expectation has no applicability to the present case as there cannot be any waiver of statutory provisions. (Para 52)
        (d) Master Plan ¯ Zonal Plan ¯ The Master Plan and the Zonal Plan have a binding effect in law ¯ If the scheme/Master Plan is being nullified by arbitrary acts and in excess and derogation of the power of the Development Authority under law, the Court will intervene and would direct such authorities to take appropriate action and wherever necessary and even quash the orders of the public authorities. (Para 53)
       Facts of the Case
        Noida Development Authority executed a lease deed on 2.4.1988 in relation to plot in question ¯ Upon the plot lessee raised some constructions and transferred the unfurnished construction along with plot in the year 1999 in favour of the appellants ¯ Original lessee deed contained specific stipulations obliging the lessee to obey all the Rules, Regulations and Directions made by the lessor, the lessee was to raise constructions as per plan and to use the premises only for the purpose for which it was committed in terms of the lease as per laws , that the lessee shall use the demised premises only for the purpose of constructing a building for residential purpose of customary home occupation or residential cum medical and surgical clinic or dispensary or professional office and for no other purpose without the consent of the Lessor and subject to such terms and conditions as Lessor may impose and will not do or suffer to be done on demised premises or any part thereof, any act or thing which may be or grow to be a nuisance, damage, annoyance, or inconvenience to the Lessor or the owners, occupiers of other premises in the neighbourhood ¯ The Transfer Deed executed by the original lessee in favour of the appellants also contained similar conditions and in addition thereto provided that the conditions of the lease deed shall be binding upon the appellants and that the Transferees shall put the property in the use exclusively for residential purpose and shall not use it for any purpose other than residential ¯ After completing constructions, the appellants rented out the premises to Andhra Bank, one Akariti Infotech who were carrying on their business from the premises in question ¯ The Development Authority issued notice to both Andhra Bank and Akariti Infotech for stopping commercial use in the said premises, informed that use of the residential plot for commercial purpose was in violation of the terms of the lease deed of the plot ¯ The appellants filed objections, which were rejected by the Development Authority and required the misuse to be stopped within four months ¯ Appellants filed writ petition before the Allahabad High Court challenging the action of the respondents ¯ The High Court not only dismissed the writ petition but also directed the Development Authority to take immediate and strong action against those who have started using residential plots, wholly or partially, for other non-residential uses ¯ Hence this appeal
       Findings
        (1) The running of a bank or a commercial business by a company in the residential sector is certainly not permissible. (Paras 44 and 56)
        (2) Commercial activity of any kind in the residential sector is impermissible. All the cases where banks, nursing homes or any commercial activity is being carried on, particularly like the appellants’ case, where a bank and company are running their offices in the residential sectors, would amount to change of user and thus be impermissible. (Paras 46 and 47).
        (3) No jurisdiction or authority vests in the officers of the Development Authority to permit change of user in its discretion and in violation of the law in force. (Para 47).
        (4) Section 14 of the U.P.Industrial Area Development Act 1976 empowers the Development Authority to resume the site or building so transferred and further forfeit whole or any part of the money paid in respect thereof, if the lessee commits breach of the terms and conditions of the lease. (Para 24).
        (5) The Development Authority or its officers, have no power to vary the user and spaces prescribed in the Master Plan, except by amending the relevant laws and that too, for a proper object and purpose. Any decision, as a policy matter or otherwise, for any extent of public convenience, shall be vitiated, if it is not supported by the authority. (Para 34).
        (6). The action of the Development Authority in permitting mixed user is in apparent violation of the statutory provisions in the Master Plan. Establishment of banks and nursing homes in the residential sectors meant for residential use alone is unequivocal violation of the statutory provisions in the Master Plan. (Paras 38 and 39).
        (7). The Doctors, Lawyers and Architects can use 30 per cent of the area on the ground floor in their premises in residential sector for running their clinics/offices . For such use, the lawyers, architects and doctors shall be liable to pay such charges as may be determined by the Development Authority in accordance with law and after granting an opportunity of being heard . The affected parties would be at liberty to raise objections before the Development Authority that no charges are payable for such users as per the law in force. (Paras 54 and 56).

Judgement Key Points

Key Points: - The running of a bank or any commercial business by a company in a residential sector is impermissible and amounts to a violation of the Master Plan and statutory provisions (!) (!) (!) . - Commercial activity of any kind in a residential sector is impermissible, and cases involving banks, nursing homes, or offices in such sectors constitute an impermissible change of user (!) (!) (!) . - No jurisdiction or authority vests in the officers of the Development Authority to permit a change of user in their discretion or in violation of the law in force (!) (!) . - Section 14 of the U.P. Industrial Area Development Act, 1976 empowers the Development Authority to resume the site or forfeit money paid if the lessee commits a breach of lease terms (!) (!) . - The Development Authority has no power to vary the user and spaces prescribed in the Master Plan except by amending relevant laws for a proper object and purpose (!) (!) . - Doctors, lawyers, and architects are permitted to use 30 per cent of the area on the ground floor in their premises in a residential sector for running clinics or offices (!) (!) . - For such permitted use by professionals, the authorities are liable to pay charges as determined by the Development Authority after granting an opportunity of being heard (!) (!) . - The doctrine of legitimate expectation has no applicability when the authority's action violates statutory provisions, as there cannot be a waiver of the law (!) (!) . - The Master Plan and Zonal Plan have a binding effect in law, and arbitrary acts nullifying them invite court intervention to quash orders or direct appropriate action (!) (!) . - If a lessee fails to stop the offending commercial activity within the stipulated time, the Development Authority shall seal the premises and proceed to cancel the lease deed (!) (!) .

What is the legal status of running banks or commercial businesses in residential sectors under the Master Plan and relevant Acts?

What are the rights of doctors, lawyers, and architects regarding the use of ground floor space in residential premises for professional offices or clinics?

What is the legal consequence for a lessee who breaches the terms of a lease deed by changing the user of a plot from residential to commercial?

JUDGMENT

Swatanter Kumar, J.

1. Leave granted in both the Special Leave Petitions.

2. The ambit and scope of power of New Okhla Industrial Development Authority (for short, the ‘Development Authority’) to permit users, other than residential, in the sectors specifically earmarked for ‘residential use’ in the Master Plan of the New Okhla Industrial Development Area (for short, the ‘Development Area’) is the basic question that falls for consideration of this Court in this bunch of appeals. These appeals demonstrate some of the instances of widespread violation of statutory provisions and somewhat arbitrary exercise of power by the Development Authority. Lack of adoption of uniform application of law has resulted in large number of cases of violation of law all over the State of Uttar Pradesh going unnoticed. The time has come for the Development Authorities to change their style of functioning and act vigilantly and uniformly, that too, strictly in accordance with law, keeping in view the larger public interest.

Introductory Facts

3. This judgment shall dispose of the above referred four civil appeals and the applications for intervention therein. Out of the four appeals, in Civil Appeal No. 6962 of 2005and Civil Appeal arising out of SLP(C) No. 24029 of 2005, the lease deed in favour of the parties had been cancelled by the Development Authority while in other two appeals, Civil Appeal No. 6963 of 2005 and Civil Appeal arising out of SLP (C) No.9150 of 2007, after giving notice, it had passed an order requiring the parties concerned to stop the misuse within the stipulated time, failing which appropriate action in accordance with law, including cancellation of the lease deed, would be taken. The facts and circumstances in all the appeals and even the intervention applications are somewhat similar. In any case, the common question of law arising in all the appeals and applications is whether the residential premises can be, wholly or partly, used by the original allottee or even its transferee, for any purpose other than residential? We do not consider it necessary to refer to the facts of each case in greater detail, except the facts of the lead case, i.e., Civil Appeal No.6962 of 2005, R.K. Mittal v. State of U.P. However, wherever reference to certain additional facts is called for, we would notice the same in the other cases as well.

4. The Development Authority executed a lease deed dated 2nd April, 1988 in favour of Shri Rajendra Kumar Srivastava in relation to Plot No.778, Block A, Sector XIV, New Okhla Industrial Development Area, District Ghaziabad, admeasuring about 274.37 square meters as per the boundaries described in the deed. Upon the plot, the lessee raised some construction which remained unfinished. The lessee thereupon actually transferred the plot in question along with unfinished superstructure vide Transfer Deed dated 20th August, 1999 in favour Shri R.K. Mittal, Shri Ashok Garg and Shri Sanjeev Gupta, the appellants herein. The original lease deed contained specific stipulations in regard to the lessee being obliged to obey all the Rules, Regulations and Directions made by the lessor. The lessee was to raise construction as per approved plans and to use the premises only for the purpose for which it was committed in terms of the lease and as per law. These clauses of the lease deed read as under :

“(d) That the lessee will obey and submit to all Directions issued or Regulations made by the Lessor now existing or hereafter to exist so for as the same are incidental to the possession of immovable property or so far as they effect the health, safety or convenience of the other inhabitants of the place.

(e) That the Lessee will at his own cost erect on the demised premises in accordance with the plans, elevation and design and in a position to be approved by the lessor or any officer authorised by the lessor in that behalf in writing and in a substantial and workman like manner, a residential building only with

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2011 Supreme(SC) 1125

What is the legal status of running banks or commercial businesses in residential sectors under the Master Plan and relevant Acts?

What are the rights of doctors, lawyers, and architects regarding the use of ground floor space in residential premises for professional offices or clinics?

What is the legal consequence for a lessee who breaches the terms of a lease deed by changing the user of a plot from residential to commercial?

Cases Referred (13)