Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2012 Supreme(Bom) 299

2012(2) AllMR 716
High Court of Judicature at Bombay
MOHIT S. SHAH & GIRISH GODBOLE
Mr. Abdul Hamid Patel & Another
Versus
The State of Maharashtra through its Secretary & Others
WRIT PETITION NO. 1826 OF 2003 ALONGWITH CIVIL APPELLATE JURISDICTION PUBLIC INTEREST LITIGATION NO. 219 OF 2009
Decided On : 09-02-2012

Advocates Appeared:
For the Petitioners:Mahesh Jethmalani, Sr. Advocate a/w. Naronha Nano Jose, Advocate.
For the Respondent:R1 to R3, Ravi Kadam, Advocate General a/w. V.D. Patil, G.P., R4, A.A. Kumbhakoni, Advocate a/w N.R. Bubna, R5, Ms. Geeta Joglekar, Advocate, R9 & R10, P.K. Dhakephalkar, Sr. Advocate a/w. Simil Purohit and Ms. Azmi Irani & Manish Doshi i/b. M/s. Vimadalal & Co., R5, P.P. Chavan & C.M. Lokesh i/b. Lex Forum, Advocate, R6 & R7, Venkatesh Dhond, Sr. Advocate with Mr. Shahzad Kazi i/b Negandhi Shah & Himayatullah, R9, Harihar Bhave a/w. Ashok Verma, Advocates.

A Joint Venture Agreement entered into without inviting any advertisement or tenders and without a proper valuation of the land involved is null, void, and of no legal effect, and the Court can direct the resumption of the land and the payment of market rent by the Joint Venture Company.

Headnote:
The Court held that the Joint Venture Agreement between the Maharashtra Film Stage and Cultural Development Corporation (MFSCDC) and Mukta Arts Limited, whereby a huge tract of land admeasuring 20 acres was agreed to be given to and transferred in favor of a Joint Venture Company in which the Corporation was to hold only 15 percent shares, was null, void, and of no legal effect. The Court found that the agreement was entered into without inviting any advertisement or tenders and that the valuable land admeasuring 20 acres had been valued at only Rs. 3 Crores, which was a gross undervaluation. The Court also found that the then Chief Minister had signed the agreement as a witness at the spur of the moment, without any formal resolution of the Board of Directors of the MFSCDC, and that his role in the entire transaction was unusual and deprecable. The Court directed the resumption of the entire land in favor of the MFSCDC, with the exception of a 5.5-acre portion on which the building of the Joint Venture Company was constructed, which was to be resumed on or before 31st July 2014. The Court also directed the Joint Venture Company to pay market rent on the entire 20 acres of land to the Government of Maharashtra for the period from the date of the Joint Venture Agreement till the land was resumed, and to pay proportionate rent for the 5.5-acre portion till 31st May 2014. The Court further directed the Government to appoint expert valuers to value the building of the Joint Venture Company, and gave the Joint Venture Company the option of paying the rent independently and claiming the market price of the building from the Government, or of setting off the price of the building against the rent payable. The Court also declined to order a CBI inquiry against the then Chief Minister, finding that there was no material on record to indicate that he had granted undue favors to the Joint Venture Company in exchange for quid pro quo from the company's director for establishing his son in the film industry.
Fact of the Case:

The Maharashtra Film Stage and Cultural Development Corporation (MFSCDC) entered into a Joint Venture Agreement with Mukta Arts Limited, whereby a huge tract of land admeasuring 20 acres was agreed to be given to and transferred in favor of a Joint Venture Company in which the Corporation was to hold only 15 percent shares. The agreement was entered into without inviting any advertisement or tenders and the valuable land admeasuring 20 acres had been valued at only Rs. 3 Crores, which was a gross undervaluation. The then Chief Minister had signed the agreement as a witness at the spur of the moment, without any formal resolution of the Board of Directors of the MFSCDC.
Finding of the Court:

The Court held that the Joint Venture Agreement was null, void, and of no legal effect, as it was entered into without inviting any advertisement or tenders and the valuable land admeasuring 20 acres had been valued at only Rs. 3 Crores, which was a gross undervaluation. The Court also found that the then Chief Minister had signed the agreement as a witness at the spur of the moment, without any formal resolution of the Board of Directors of the MFSCDC, and that his role in the entire transaction was unusual and deprecable.
Issues: Whether the Joint Venture Agreement between the MFSCDC and Mukta Arts Limited was valid and enforceable.
Ratio Decidendi: The Court held that the Joint Venture Agreement was null, void, and of no legal effect, as it was entered into without inviting any advertisement or tenders and the valuable land admeasuring 20 acres had been valued at only Rs. 3 Crores, which was a gross undervaluation. The Court also found that the then Chief Minister had signed the agreement as a witness at the spur of the moment, without any formal resolution of the Board of Directors of the MFSCDC, and that his role in the entire transaction was unusual and deprecable.
Final Decision: The Court directed the resumption of the entire land in favor of the MFSCDC, with the exception of a 5.5-acre portion on which the building of the Joint Venture Company was constructed, which was to be resumed on or before 31st July 2014. The Court also directed the Joint Venture Company to pay market rent on the entire 20 acres of land to the Government of Maharashtra for the period from the date of the Joint Venture Agreement till the land was resumed, and to pay proportionate rent for the 5.5-acre portion till 31st May 2014. The Court further directed the Government to appoint expert valuers to value the building of the Joint Venture Company, and gave the Joint Venture Company the option of paying the rent independently and claiming the market price of the building from the Government, or of setting off the price of the building against the rent payable. The Court also declined to order a CBI inquiry against the then Chief Minister, finding that there was no material on record to indicate that he had granted undue favors to the Joint Venture Company in exchange for quid pro quo from the company's director for establishing his son in the film industry.

Judgment:

Girish Godbole, J.

1. These two Writ Petitions filed as Public Interest Litigations challenge the action of the Maharashtra Film Stage and Cultural Development Corporation (MFSCDC), a wholly owned and controlled Corporation of the Government of Maharashtra, of entering into a contract with Mukta Arts Limited, whereby a huge tract of land admeasuring 20 acres which is equivalent to 8,71,200 sq.ft. situated at Goregaon in Greater Bombay is agreed to be given to and transferred in favour of a Joint Venture Company in which the Corporation is to hold only 15 per cent shares. Since this transfer of land has been done without inviting any advertisement or tenders and since while doing so the valuable land admeasuring 20 acres has been valued only at Rs. 3 Crores, the Petitioners have approached this Court for issuance of appropriate writs under Article 226 of the Constitution of India.

2. Before we proceed further, we must indicate that Writ Petition No. 1826 of 2003 is also filed in Public interest and PIL No. 219 of 2009 seeks to challenge 2 different actions of the State. Since the challenge to the Joint Venture Agreement/M.O.U. dated 24/10/2000 executed between the first Respondent the Maharashtra Film Stage Cultural Development Corporation Ltd. (hereinafter referred to as the MFSCDC Ltd.) is common in both these Petitions and since the controversy involved is same, by this Judgment we are disposing of Writ Petition No. 1826 of 2003 and prayer clauses (a) to (d) and (j) of PIL No. 219 of 2009. The other reliefs in the PIL No. 219 of 2009 relating to allotment of 2 Lakh Sq. Mtrs of land of MIDC to Respondent No. 6 are not being decided or disposed of by this Judgment and the same will be separately decided. Thus by this Judgment Writ Petition No. 1826 of 2003 is being finally disposed of, whereas only prayer clauses (a) to (d) and (j) in PIL No. 219 of 2009 are being disposed of.

3. In Writ Petition No. 1826 of 2003 following substantive reliefs are prayed for :

(a) that this Hon’ble Court may be pleased to issue a writ of certiorari or any other appropriate Writ, Order or Direction calling for the records pertaining to the Agreement dated 24th October, 2000 from Respondent Nos. 1 to 4 herein;

(b) that this Hon’ble Court may be pleased to issue an appropriate Writ, Order or direction Under Articles 226 of the Constitution of India declaring that the Agreement dated 24th October, 2000 being Exhibit “A” hereto is null, void and of no legal effect and not binding upon the Respondent Nos. 1 to 4 herein;

(c) that this Hon’ble Court may be pleased to issue a writ of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India commanding and directing Respondent Nos. 1 to 5 to cancel and/or revoke the Agreement dated 24th October, 2000 and all other approvals, permissions and actions taken in pursuance thereof;

(d) that this Hon’ble Court may be pleased to issue a Writ of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India directing Respondent Nos. 1 to 5 to forthwith stop all construction activities undertaken by Respondent No. 9 on the property situate at Film City, Goregaon (East) bearing CTS No. 1 admeasuring 20 acres (96,800sq.yards/80,000 sq.mtrs or thereabouts);

(e) that this Hon’ble Court may be pleased to issue a Writ of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India directing Respondent Nos. 1 to 3 to conduct a high level investigation and enquiry into the entire transaction including the Agreement dated 24th October, 2000 and the Construction in pursuance thereof undertaken by Respondent Nos. 4, 6 to 9 and conclude the same within a period of three months from commencement thereof and file an action taken report in that behalf in this Hon’ble Court;

(f) that this Hon’ble Court may be pleased to issue a permanent order and injunction restraining the Responde

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