IMPORTANT POINT
The court established that government bodies must adhere to principles of fairness and non-arbitrariness in commercial dealings, and that contractual obligations cannot exempt them from constitutional scrutiny.

JUDGMENT/ORDER

GS PATEL, J. - Regrettably, this Petition has been pending since 2015. Pleadings are complete. We proceed to take it up for final disposal. Rule, returnable forthwith.

2. The challenge in the Petition is to a Tender Notice No. 1 of 2015-16 issued by Maharashtra Housing and Area Development Authority ("MHADA") inviting bids for a plot of land then called a "social facility plot" and now more accurately termed an "amenity plot" on RSC-20/Gorai-1, Borivali (West). There is also a challenge to a corrigendum or a first extension. Then there is a prayer for a mandamus to direct MHADA to accept the balance 75% of the Petitioner's bid as consideration for the plot of land and for delivery of possession.

3. The facts go back two decades. In 2001, MHADA issued an information brochure and an application form inviting offers for taking on lease 12 plots of land. It seems that MHADA had developed residential complexes at various locations in Mumbai. It invited tenders for the allotment of plots for different purposes. The advertisement was issued under the signature of the 4th Respondent, MHADA's Deputy Chief Engineer. The allotment was to be done by a lease under the Maharashtra Housing and Area Development Authority Act, 1976 ("MHADA Act") read with the applicable Disposal of Land Rules and Regulations. The offer was for long leases of 90 years, the first term or tenure to be of 30 years, renewable for two terms of like periods thereafter. The tender conditions said that earnest money was to be deposited. It would not earn interest for 90 days and would thereafter carry simple interest at 4% per annum. One of the tender conditions was that the successful bidder would have to obtain permission from the Municipal Corporation of Greater Mumbai ("MCGM") within three months of the issue of a letter of intent. Clause 5 of the tender conditions required the Petitioner to obtain a development permission under the then applicable Development Control Regulations ("DCR") and to deposit the remaining 75% within 30 days of the date of a letter of permission from the MCGM to MHADA. An extension of time by two months was contemplated subject to simple interest at 16% per annum. On default of payment of the 75% remainder, the Earnest Money Deposit ("EMD") would be forfeited but the 25% would be refunded, though without interest.

4. The Petitioner, who is a builder, submitted a tender for Amenity Plot No. 5 for Rs.85, 49, 535.13 and deposited Rs.Two lakhs. On 27/6/2001, the Petitioner wrote to the Chief Accounts Officer, MHADA confirming the deposit of Rs.Two lakhs. The Petitioner's bid was accepted. Consequently, he had to deposit an amount of 25%, Rs.21, 37, 384/- by 8/8/2001. The Petitioner made that payment to MHADA by 6/8/2001.

5. Meanwhile, on 5/7/2001 the MCGM wrote to MHADA saying that since the amenity plots were not designated for a particular purpose, an allotment by tender would be inappropriate. The Petitioner was unaware of this.

6. On 31/8/2001, MHADA through the Deputy Chief Engineer wrote to the MCGM saying that MHADA had no objection to the Petitioner submitting building plans and to the issuance of either a Letter of Intent or an Intimation of Disapproval ("IoD") by the MCGM.

7. On 17/10/2001, MHADA wrote to the Petitioner contending that the Petitioner had not submitted plans for MCGM approval. MHADA required the Petitioner to get this done within a fortnight and to obtain approval within a month. At this point, it seems that the Petitioner found himself in a crossfire between the MCGM and MHADA regarding the very nature of the land. For, on 19/11/2001, MCGM wrote to the Petitioner saying that it was MHADA's responsibility first to get the plots in question 'designated' as 'amenity plots'.

8. Confronted with this, and having very little choice in the matter, on 18/12/2001, the Petitioner wrote to MHADA asking it to designate Plot No. 5 as an amenity plot. Nothing significant happened until 26/7/2002 when MCGM wrote to MHADA say