1 nmw589-10 srp IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.589 OF 2010 IN WRIT PETITION NO.336 OF 2010 Abhimanyu Hunkar Bhosale (Retd.) & Ors. ....Petitioners V/s. State of Maharashtra & Ors. ....Respondents Mr.J.P. Cama, Senior Counsel with Mr.Rohan Cama, Mr.Sanjay Udeshi i/b Sanjay Udeshi & Co. for the Petitioners. Mr.J.J. Saluja, AGP for Respondent No.1. Mr.Advait M. Sethna for Respondent No.2. Mr.Girish S. Kulkarni with Ms.Swati S. Deshmukh, Mr.H. Amembal and Mr.A. Harsh i/b M.V. Kini & Co. for Respondent Nos.3 and 4. Mr.Ashutosh M. Kulkarni for Respondent No.5. CORAM : MOHIT S. SHAH, C.J. AND S.J. VAZIFDAR, J. WEDNESDAY 9TH FEBRUARY 2011. P.C. :- 1. This notice of motion is taken out by National Aviation Company of India Ltd. (formerly known as Air India and referred to as Air India, for the sake of convenience) and its Chairman & Managing Director, respondent nos.3 and 4, in the above Writ Petition, which was 2 nmw589-10 disposed of by an order dated 30.6.2010 to which one of us (M.S. Shah, CJ.) was a party. The notice of motion was filed on 11.10.2010. Some of the prayers have become infructuous on account of compliance with the relevant directions contained in the order dated 30.6.2010. Some prayers are not required to be adjudicated upon as the matters are required to be discussed by Air India with CIDCO. Prayer (d), which requires consideration, reads as under :- “(d) that the Hon’ble Court be pleased to order and direct that the petitioners/allottees and any other employees of Air India, who desire an allotment of the Flats at Nerul Housing Complex shall not own in their own name or in their spouse’s name any Flats either in Mumbai or in Navi Mumbai and shall submit an undertaking on oath to that effect with the Respondent.” The allottees include the employees of Air India and the Director General Civil Aviation (DGCA). The question that arises for consideration is whether this condition can be imposed at this stage after the entire process which started six years ago, without any such condition, is almost over. We have answered the question in the negative. 2. The broad facts leading to the controversy are set out in paragraphs 2 to 7 of the judgment dated 30.6.2010, which read as under:- “2 When a proposal to set up Air Port in Navi Mumbai was under consideration, Air India proposed to 3 nmw589-10 CIDCO for allotment of land at Nerul in Navi Mumbai, on which Air India would construct flats as service flats for its employees. By agreement dated 30th January 1992 between CIDCO and Air India, which was an agreement to lease, CIDCO had agreed to grant lease in favour of Air India in respect of the plots of land admeasuring 1,00,021.60 sq. meters in Navi Mumbai initially for a period of 60 years on the outright lease premium of Rs.750/- per sq. meter totalling to Rs. 7,50,16,200/-. Upon agreement being entered into the premium was paid by Air India to CIDCO and thereafter the lease period was extended to 90 years vide CIDCO s letter dated 5th August, 1992. As per the said agreement, Air India was to construct not less than 50% of the permissible FSI. The amount paid by Air India to CIDCO is as under: Amount Remarks Rs. 7,50,16,200 At the time of entering into Agreement for sale i.e. year 1991-92 4,50,09,720 At the time of obtaining Occupancy Certificate in respect of built up area admeasuring 34347.45 sq. meters Year 1998-1999 59,28,700 Part Payment of additional lease premium for construction of balance FSI (construction 4 nmw589-10 yet to commence) Year 2000-2001 12,59,54,620 Total 3 Air India proceeded to construct 508 flats in 25 residential towers on 28,626 sq. meters of land along with a Community Hall, School and Shopping Center etc. on 7562.28 sq. meters of land. This construction was put up at the cost of Rs.37,81,31,189/- By 16th January, 1998 Air India completed the construction of 508 flats and Navi Mumbai Municipal Corporation also granted certificate dated 7th December, 1999 for part occupancy. 4 Initially the response from the Air India employees was poor as the place was far away place from Mumbai. Since the response by its employees was not encouraging, Air India put up a proposal to its employees for sale of flats on outright purchase basis of individual flats by notice dated 8th October, 1998. Even that notice did not get enthusiastic response and, therefore, again on 4th November, 2004 Air India proposed to its employees for sale of residential flats on outright purchase basis at Rs.1500/- per sq. ft. for A and B types of Flats and at Rs. 1580/- per sq. ft. in respect of Type 1 and Type 2 i.e. 2 BHK and 4 BHK. The representatives of the employees, however, requested for 5 nmw589-10 reducing the rates and, therefore, Air India agreed to reduce the rates at the relevant time. 5 There was no change in the rights being transferred by CIDCO over the land in question being allotment of land to co- operative societies of employees, on lease basis, CIDCO was agreeable to issue NOC for outright sale of residential flats by Air India to the Co-operative Societies of its employees. Correspondence ensued between CIDCO, Air India and Government of Maharashtra culminating into a consensus. Under the said arrangement the consensus arrived at was that the land would be transferred to the Cooperative Societies of employees and additional premium will be paid for conferring on the Air India employees outright ownership rights in the flats in stead of Air India allotting flats to its employees as staff quarters, but Air India shall have to pay CIDCO the total premium for the entire land at the rate of Rs.17500/- per sq. meter. 6 Since the construction of flats put up by Air India was on 28,626 sq. meters except the Community Hall, shopping center etc. Air India i.e. National Aviation Company of India Limited at the meeting of the Board of Directors held on 24th June, 2010 decided as under: “5 The Board discussed the matter in further detail and decided that the land on which the flats have been 6 nmw589-10 constructed in the Housing Complex at Nerul, Navi Mumbai, to the extent of approx. 28,626 sq. mtr., FSI would be allotted to the applicants on as is where is basis , provided they meet the demand of CIDCO for a premium of Rs.17500/- per sq. mtr. for change of use from Staff Quarters to ownership Housing Societies, in accordance with CIDCO s policy for allotment of co-operative residential accommodation to societies/Public Sector Undertakings/Government staff and on payment of price of land in respect of the proportionate road component and also all other charges i.e. Stamp Duty, Registration charges, society charges, transfer charges of CIDCO, Society Formation Charges, Legal charges, Taxes and any other charges of whatsoever nature to CIDCO and other Authorities. The payment of the said amounts would be in addition to the payment to be made by the applicants to NACIL, as decided, for sale of the respective flats, at the rate of Rs.1,350/- per sq. ft. and Rs1,422/- per sq. ft. as applicable. It was further decided that the proposed society would not have any other claim of any nature whatsoever in respect of the remaining land and buildings of NACIL in the said complex except to the transfer in favour of the proposed Co-operative Housing Societies. An appropriate exercise of demarcation of the plot area would be required to be undertaken; as only the 25 residential buildings comprising 508 flats covering an FSI approx. 28,626 sq. mtr. would be transferable to the proposed Co- operative Housing Societies. (Emphasis supplied) 7 This petition instituted in January 2010 came up for hearing several times. Ultimately on 28th June, 2010 this Court indicated to the learned Counsel for the parties that the orders would be passed on the basis of the above rate of premium i.e. Rs.17500/- per sq. meter for change of housing from staff quarters to ownership cooperative housing societies basis in accordance with the CIDCO s policy for 7 nmw589-10 allotment of co-operative residential accommodation to Societies/Public Sector Undertakings/Government staff etc. The CIDCO was permitted by this Court to place on record the affidavit indicating the stand which was already taken up at the hearing on 28th June, 2010 which was that the premium shall be payable by Air India at the rate of Rs.17,500/- per sq. meter. There were also other issues regarding the remaining land in possession of Air India, but we are not concerned with those issues in the present petition and no reference is made to those issues. “ 3. The writ petition was disposed of in terms of the following directions :- “13 We, therefore, dispose of the petition in terms of the following directions and clarifications. A-1) Upon Air India paying a sum of Rs. 60,10,80,375/- within three months from today, CIDCO shall transfer the land in question to Air India and/or such Cooperative Societies as would be indicated by Air India - being 34,347.45 sq. meters of land out of which 7562.18 sq. meters of land ( on which community hall, school and shopping centre etc. are constructed by Air India) shall be allotted in favour of Air India at the premium rate of Rs. 17,500/- per sq. meters and the remaining 28626 sq. meters of land shall be allotted at the rate of Rs.17,500/- per sq. meters in favour of such cooperative societies as may be indicated by Air India to CIDCO within three months from today. The amounts already paid earlier shall be adjusted against the amounts to be paid under these directions. A-2) The above direction is given in view of the statement made by the learned Counsel for the petitioners that they shall pay the price for the flats of different categories as indicated in the chart reproduced above and signed by Mr.V.M.Datar plus stamp duty, registration charges and other taxes payable to the 8 nmw589-10 local authorities or other authorities. A-3) In order to enable the employees to form their cooperative societies and also to take loans from Banks or other financial institutions, Air India will issue suitable letters to concerned employees who want to take such loans within one month from today. B-1) It is clarified that out of 1,00,021.60 sq. meters of land for which agreement was executed between CIDCO and Air India in 1992, the present petition is concerned only with the land admeasuring 34,347.45 sq. meters and it will be open to the Air India and CIDCO to work out their arrangement regarding remaining 65,674.75 sq. meters of land which is not the subject matter of this petition. B-2) The learned Counsel for the Air India states that apart from 34,347.45 sq. meters of land, Air India is also interested in retaining the remaining 65,674.15 sq. meters of land and that Air India will take up the matter with CIDCO. B-3) It is also clarified that as regards CIDCO s claim for higher rate of premium for the said remaining land of 65,674.15 sq. meters, we are not expressing any opinion. “ 4. When this notice of motion was placed for hearing on 11.10.2010, after hearing the learned counsel for the parties, the Division Bench modified the time limit stipulated in the order dated 30.6.2010 and directed as under :- “i). Within three weeks from today, National Aviation Company of India Ltd. (for short NACIL or Air India) will draw lots for allotment of flats to its employees and others who had paid 10% of what was then decided as the price of flats. ii) Within two weeks from the date of draw of 9 nmw589-10 lots, Air India will issue allotment letters to its employees and others who are allowed to participate in the lots as aforesaid”. 5. At the next hearing on 10.1.2011, the Court recorded the contention of Air India that the premium at the rate of Rs.17,500/- per mtrs. will be payable only in respect of the area admeasuring 19,572 sq. mtrs. and as the balance area admeasuring 9540 sq. mtrs. was to be utilized by Air India itself for a public purpose it should not be required to pay the premium at the rate of Rs.17,500/- per sq. mtr. for the same. The matter is now to be discussed by Air India and CIDCO. Therefore, we need not consider the prayer in that behalf contained in the present notice of motion. 6. The fact now remains that upon receiving the payments from the allottees, Air India has already paid an amount of Rs.34,25,08,275/- to CIDCO in respect of about 325 flats for which the allottees have already made payment to Air India. 7. Mr.Cama, the learned senior counsel appearing for the petitioners states that the allottees have already paid the purchase price of the flats to Air India including the premium for the proposed allotment of land by CIDCO to the proposed co-operative society of Air India employees and others and that a total sum of about Rs.72 crores has been paid by the allottees to Air India. 8. Air India however, contends that the flats cannot be allotted to its employees unless they file undertakings as required in the letter dated 11.11.2010 and particularly paragraph 4 thereof which reads as under :- 10 nmw589-10 “Please note that this allotment is subject to the terms and conditions mentioned in our letter of Oct.04, 2010 except the one mentioned in the last para of the above letter. Besides this, allotment would also be subject to the orders that the Hon’ble Bombay High Court might pass in the Notice of Motion No.589 of 2010 preferred by the Company with reference to the undertaking on oath to be furnished by the individual employee/allottee that he/she does not have a flat in his/her name or in spouse’s name in Mumbai or New Mumbai.” Air India, therefore, by this Notice of Motion, seeks directions in the above terms. 9. Mr.Cama submits that Air India has no right to impose any such condition which was never to be found in the staff notices issued on 4.11.2004 and 6.1.2005 in response to which the allottees had made the applications. Mr.Cama also submitted that there are no rules, directions, orders or regulations, statutory or otherwise, framed by Air India on the basis of which such a condition is now, after over six years, sought to be imposed. 10. Faced with this, Mr.Kulkarni submitted that a condition to this effect was stipulated by Air India even prior to/on the date of the allotments. To establish this, he relied upon a letter dated 8th October, 1998. 11. The submission made on behalf of Air India is not well founded, for two reasons. 11.1 Before referring to the contents of the letter dated 8th October, 1998, it is pertinent to note that the allotments were made, 11 nmw589-10 inter-alia, by various letters issued to the respective allottees in the year 2005. One such letter dated 22nd July, 2005, is annexed at Exhibit-E to the petition. This letter, in turn, is with reference to the allottees’ application in response to “staff notices” dated 4th November, 2004 and 6th January, 2005. As rightly pointed out by Mr.Cama, neither the letter dated 22nd July, 2005, nor the staff notices dated 4th November, 2004 and 6th January, 2005, contained any such stipulation. In other words, the allotment made on 22nd July, 2005, was pursuant to staff notices dated 4th January, 2005 and 6th January, 2005, and not pursuant to the letter dated 8th October, 1998, relied upon by Mr.Kulkarni. Neither the staff notices nor the letters of allotment, therefore, contained a stipulation to the effect now sought to be introduced viz. that the allottees to be eligible ought not to have a flat in his/her name or in the spouse’s name in Mumbai or Navi Mumbai. 11.2 Secondly, the letter dated 8th October, 1998, correctly construed, does not contain such a stipulation by respondent nos.3 and 4 either. Mr.Kulkarni relied upon paragraph 2, the relevant part whereof reads as under:- “2. Air India Management is considering a proposal to offer these flats on ownership basis to full time and permanent India based employees of Air India, subject to the Rules and Regulations of CIDCO. ............” Even assuming that the allotments were made pursuant to this letter, it would make no difference. All that the letter states is that the allotments would be made subject to rules and regulations of CIDCO meaning thereby that the rules and regulations, if any, would be applicable between the allottees and CIDCO. Such rules and regulations 12 nmw589-10 of CIDCO would not govern the relationship between Air India and the allottees. In other words, the contents of paragraph 2 do not imply that the rules and regulations of CIDCO operate between Air India and the allottees. It only implies that the allottees would be governed by the rules and regulations of CIDCO qua CIDCO. 12. There is no dispute that none of CIDCO’s regulations relied upon by CIDCO impose any restrictions against the allotment of flats to persons having a flat in Mumbai. Thus the allotments when made by Air India did not contain any condition of the nature now sought to be imposed by prayer (d) of this Notice of Motion as regards persons having a flat in Mumbai. 13. It is, however, contended by Mr.Kulkarni that Air India has considered it appropriate to impose this condition in order to ensure that its employees having flats in Mumbai should not get the advantage of the allotment of a flat at a concessional price at New Mumbai. It is contended that Mumbai and New Mumbai are parts of the same city and it is easy for the employees to commute from Mumbai to New Mumbai where the concerned flats are situated. 14. At this stage, the learned counsel for the petitioners submits that the allottees have already paid the premium at the rate of Rs. 17,500/- per sq. mtr, as against the original premium of Rs.750/- per sq. mtr. when the plots were to be constructed as staff quarters for the employees of Air India during the course of their employment. It is submitted that the employees having already paid the premium of such a high rate, Air India is not justified either in law or in equity to now impose such a new condition. It is further submitted that as it is not easy 13 nmw589-10 to commute from Mumbai to New Mumbai, the very object of constructing the flats in New Mumbai was to enable the employees to have their residence near their work place. It is further submitted that most of the petitioners are Air India employees, who responded to Air India’s staff notice issued on 4.11.2004. In fact Air India had put up the proposal to its employees as far as back on 8.10.1998, but that notice did not get any response and therefore, the advertisement was issued on 4.11.2004 to which the employees applied for the allotment of flats. 15. In response to the specific query from the Court as to whether there are any statutory regulations requiring or empowering Air India to impose any such condition, the learned counsel for Air India stated that there are no such statutory regulations. Air India has in its wisdom framed the policy to impose such a condition for the allotment of the flats to its employees on out right sale basis. In support of Air India’s stand, Mr. Kulkarni relied upon the judgment of Supreme Court in the case of Victorian Granites (P) Ltd. vs. Rama Rao & Ors. (1996) 10 SCC 665. The judgment is of no relevance to the case before us. It was not even suggested that the allotments made were contrary to Article 39(b) of the Constitution of India, or to any other law as they did not contain the condition now sought to be introduced. 16. We find considerable substance in the submissions made on behalf of the petitioners that in the absence of any statutory rules or regulations framed by Air India empowering Air India to impose the impugned condition and in the absence of any such condition indicated 14 nmw589-10 in the staff notices issued by Air India, inviting applications for allotment of the flats in 2004-2005, it is not open to Air India now to impose the impugned condition. It would be unfair and inequitable to permit Air India to impose the condition at this stage. No such condition was stipulated by Air India at the relevant time i.e. when it invited applications for allotment of the said flats. Our attention has not been invited to any mandatory provisions of law requiring the imposition of such a condition. The allottees, therefore, proceeded on the basis on which they were invited to apply. They thereby arranged their affairs, including their finances, to acquire flats in Mumbai on this basis i.e. the absence of such a condition now sought to be imposed. Air India accepted the entire consideration. It has retained the amount. The imposition of such a condition now, after about six years, is ex-facie illegal. 17. It was the case of Air India itself in the Writ Petition that when there was a proposal to set up an air port in New Mumbai, Air India proposed to CIDCO for allotment of land at Nerul in New Mumbai. Air India was keen to invite the applications from its employees for allotment of flats on out right sale basis and therefore, agreed to pay the lease premium of Rs.17,500/- per sq. mtr. as against the lease premium of Rs.750/- per sq. mtr. which it had initially agreed to pay to CIDCO. There is no dispute about the fact that Air India has already recovered the entire amount of lease premium at the rate of Rs. 17,500/- per sq. mtr from its employees, who applied in response to the advertisement dated 4.11.2004. It is therefore, not open to Air India to contend that because the land was obtained from CIDCO at a concessional price, Air India is entitled to impose the said condition. In any event, even CIDCO’s rules and regulations impose the condition 15 nmw589-10 only in respect of persons having such properties in Navi Mumbai and not to those who have the same in Mumbai. 18. The learned counsel for CIDCO stated that the flats in question came to be constructed after possession was handed over by CIDCO to Air India Corporation, pursuant to the agreement to lease dated 30.1.1992, clause 7A whereof reads as under :- “7A. It is hereby agreed and declared between the parties hereto that the Corporation has agreed to lease the said land to the Licensee and the Licensee has agreed to have such lease upon the terms and conditions contained herein and subject to Section 118 and other applicable provisions of the Maharashtra Regional and Town Planning Act, 1966 (Maharashtra Act XXXVII of 1966) and rules and regulations made thereunder including the New Bombay Disposal of Lands Regulations 1975 for the time being in force.” He invited our attention to City and Industrial Development Corporation of Maharashtra Limited (Lease of Land to Co-operative Housing Society) Regulations, 1995. Regulation 3 thereof provides the eligibility criteria for allottees of flats in buildings constructed upon lands leased by CIDCO to Co-operative Housing Societies. Regulation 3 reads as under:- “(3) Every such person shall fulfill the following conditions: (i) He has resided in the State of Maharashtra for a period of not less than fifteen years on the date of presentation of the initial application to the Corporation. (ii) He or his family has no dwelling unit in New 16 nmw589-10 Bombay or as the case may be in New Town. He or his family has not acquired by purchase or otherwise