Bombay HC sets aside Thane civic body’s decision against Sheth Developers, ET RealEstate
MUMBAI: Thane Municipal Corporation cannot have the “considerable financial benefit” of receiving Rs 42 crore from a builder as well as development by the builder of a public amenity, a fire brigade station, without keeping its assurance under a buy back policy, the Bombay high court held recently.
The HC set aside as “manifestly arbitrary’’ the Corporation’s July 2023 refusal to grant the builder development permission with additional developable space as provided in a 2020 regulation, for its free sale building.
The TMC said the rejection was on the ground that the buy back policy (BBP) was kept in abeyance as there was an enquiry after a question was raised in the State legislative assembly over the policy last May.
The builder, Sheth Developers, had challenged the rejection before the HC, as arbitrary and in violation of principles of legitimate expectations and doctrine of promissory estoppel (a legal principle to ensure that a promise made is enforceable by law).
On November 1, the HC bench of Justices Gautam Patel and Kamal Khata said the rejection violates the established legal principles against unreasonableness and the doctrine of proportionality in administrative action. It also doesn’t stand the “test of non arbitrariness in administrative action mandated by Article 14 (right to equality).’’
The dispute before the HC was over TMC’s decision to keep in “abeyance” its proclaimed Buy-Back Policy. It was a policy, subjected to conditions, for the buy-back of lands acquired under Development Control Regulations (DCR) and of plots reserved under the sanctioned Development Plan for public use. The builder assailed not only the general direction to keep this policy in abeyance but the failure of the TMC to honour its terms after it received benefits under it and after the builder was prejudiced having acted on its assurances.
On 1st October 2003, the builder acquired development rights over 28 acres of land from Voltas Ltd.
On 2nd May 2016, the Maharashtra Government notified an ‘Accommodation Reservation Policy’. This policy was intended to transfer the burden of developing reserved plots to private land owners or developers in lieu of incentives.
Having kept its end of the agreement the builder legitimately expected the TMC to honour the buy back policy its senior counsel Virag Tulzapurkar and advocate Samit Shukla put forth before the HC.
The TMC through Mandar Limaye argued that since a query was raised about the policy allegedly violating the provisions of the Municipal Corporation Act it was purportedly in abeyance.
The HC said when the builder had paid 125 percent of the ready reckoner rate to the TMC for the rights how could it be held to be violative. Besides, the HC said “doctrine of promissory estoppel is firmly part of the jurisprudence in this country.”In Manuelsons Hotels Private Limited v State of Kerala there was a comprehensive judgment authored by Justice Rohinton Fali Nariman of the Supreme Court of the law.
The HC said, “ it is now firmly settled that no authority can act in an arbitrary manner in the exercise of its statutory powers.”
Also, the SC has held that through the doctrine of substantive legitimate expectation is one of the ways in which the guarantee of non arbitrariness enshrined under Article 14 is achieved.
The HC analysed the law and provisions of the UDCPR 2020 and said they are not in any material manner distinct from the 2016 policy. “It is, therefore, not possible for the TMC to refuse to apply the policy. It is required to do so on the basis not only of the UDCPR 2020 but based on the policy of 2016 that was assured, invoking both principles of the doctrine of promissory estoppel and of legitimate expectations.”