( Gavai, J.)

01. Rule. Rule made returnable forthwith and heard finally, with the consent of the parties.

02. The petitioners, who are the owners of the lands bearing CTS Nos. 10908, 10909, 10910, 10912 and 10914 situated at Nanded, had issued a purchase notice to the Respondents, since their lands were reserved for play ground and primary school in the final development plan of Nanded City. The said purchase notice was issued on 13.7.2005, and vide order dated 25.12.2005, the said purchase notice was confirmed by Respondent No.1. with directions to Respondent No.3 for taking steps for acquisition of the lands in question.

03. On 28.11.2006, i.e. about a month before expiry of one year's period, a proposal was sent by Respondent No. 3 to the Collector, for taking steps for acquisition of the said lands. However, vide order dated 22.2.2007, the proposal for acquisition was rejected by the Collector on various grounds. The Respondent-Municipal Corporation also passed a resolution on 31.3.2010 to the effect that since the land acquisition proceedings were not initiated within one year from the date on which the purchase notice was confirmed, the lands stood de-reserved. However, in the meantime, the petitioners had applied to the Collector for grant of permission for Non Agricultural use of the lands, but the same was rejected. The petitioners, therefore, went in appeal before Respondent No.1. In the said appeal, Respondent No.1 held that the reservation does not lapse and, therefore, directed the Municipal Corporation to deposit 2/3rd of the amount of compensation payable towards the said lands and take further steps for acquisition of the said lands. Hence, the present petition.

04. For appreciating the controversy and rival submissions, it would be necessary to refer to Section 49 of the Maharashtra Regional Town Planning Act, 1966 (for short, "MRTP Act"). Section 49 reads:-

"49. Obligation to acquire land on refusal of permission or on grant of permission in certain cases.

(1) Where -

(a) any land is designated by a plan as subject to compulsory acquisition, or

(b) any land is allotted by a plan for the purpose of any functions of a Government or local authority or statutory body, or is land designated in such plan as a site proposed to be developed for the purposes of any functions of any such Government, authority or body, or

(c) any land is indicated in any plan as land on which a highway is proposed to be constructed or included, or

(d) any land for the development of which permission is refused or is granted subject to conditions and any owner of land referred to in clauses (a), (b), (c) or (d) claims -

(i) that the land has become incapable of reasonably beneficial use in its existing state, or

(ii) where planning permission is given subject to conditions that the land cannot be rendered capable or reasonably beneficial use by the carrying out of the permitted development in accordance with the conditions, or

(e) the owner of the land because of its designation or allocation in any plan claims that he is unable to sell it except at a lower price than that at which he might reasonably have been expected to sell if it were not so designated or allocated,

the owner or person affected may serve on the State Government within such time and in such manner, as is prescribed by regulations a notice (hereinafter referred to as "purchase notice") requiring the appropriate authority to purchase the interest in the land in accordance with the provisions of this Act.

(2) The purchase notice shall be accompanied by a copy of any application made by the applicant to the planning authority, and of any order or decision of that authority and of the State Government, if any, in respect of which the notice is given.

(3) On receipt of a purchase notice, the State Government shall forthwith call from the planning authority and the appropriate authority such report or records or both, as may be necessary, which those authorit