WPC 10647/09 Page No.1 of 29 THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 30.07.2010 + WP(C) 10647/2009 KENNETH BUILDERS & DEVELOPERS LTD … Petitioner – versus – UOI & ORS ... Respondent Advocates who appeared in this case: For the Petitioner : Mr A. M. Singhvi and Mr Mukul Rohtagi, Sr Advocates with Mr Rishi Aggarwal and Mr Akshay Ringe For the Respondent No.1 : Mr Shanmuga Patro For the Respondent No.2 : Mr C. Mohan Rao For the Respondents 3&4 : Ms Zubeda Begum with Ms Sana Ansari For the Respondents 5&6 : Mr Amarander Saran, Sr Advocate with Mr M. K. Singh CORAM:- HON’BLE MR JUSTICE BADAR DURREZ AHMED HON’BLE MS JUSTICE VEENA BIRBAL 1. Whether Reporters of local papers may be allowed to see the judgment? YES 2. To be referred to the Reporter or not? YES 3. Whether the judgment should be reported in Digest? YES BADAR DURREZ AHMED, J 1. The Delhi Development Authority issued an advertisement on its website on 20.03.2006 announcing DDA‟s first public-private participation project involving auction of prime residential land at Tehkhand in South Delhi. As per the said announcement, the new initiative to involve the private sector in Delhi‟s development was taken to meet the new challenges of an ever evolving capital city and its growing housing needs. By virtue of the said announcement, the DDA invited private parties for the development of the composite project area of 14.3 hectares of prime land at Tehkhand in South Delhi for building 750 premium residential flats to be WPC 10647/09 Page No.2 of 29 sold by private real estate development on free sale basis, with a maximum FAR of 80000 sq. metres and maximum ground coverage of 15000 sq. metres. As regards the location of the project area, it was mentioned that Tehkhand is located in the heart of South Delhi next to Kalkaji Extension near the sprawling commercial complex of Nehru Place and Okhla Industrial Estate. The private real estate companies were free to develop, construct and market these 750 high quality homes in a self contained community with facilities like school, community centre, neighbourhood convenience store and other spaces as per the DDA norms. 2. In addition to the above, the developer would have to construct 3500 re-settlement houses for the economically weaker sections of society, of 26 sq. metres each (super area) as per the DDA‟s specification with facilities like schools, neighbourhood playground, park community hall, health centre, convenience store etc. It was also stipulated that all re- settlement houses and the developed common facilities would be handed over to the DDA for allotment. The said project was to be allotted through auction to be held on 26.04.2006 at 10:30 am at the DDA Auction Hall, Vikas Sadan, New Delhi. 3. The general terms and conditions of the auction required that the same would be held on “as is where is basis” as per the terms and conditions prescribed in the document entitled “general terms and conditions of the auction”. Clause 2(iii) of the said general terms and conditions was as under:- WPC 10647/09 Page No.3 of 29 “(iii) The bid shall be for the amount of the premium offered for the plot to execute the project. The project is being offered on as is where is basis. It is presumed that the intending purchaser has inspected the site and familiarized himself with the prevalent conditions in all respects including status of infrastructural facilities available etc. before giving the bid.” By virtue of clause 2(i) of the said terms and conditions, the intending bidders were required to deposit a sum of Rs 1 crore with the officer conducting the auction immediately on entering the auction hall, as a condition to participate in the auction. As per Clause 2(vi) of the said general terms and conditions, it was stipulated that the person whose bid is accepted by the officer conducting the auction, shall be required to pay at the fall of hammer, that is, latest by 4:00 pm on the day of auction, a sum equivalent to 25% of the bid offered as earnest money deposit. Clause 4 of the terms and conditions of the auction provided that the allotment-cum- demand letter would be issued by the DDA to the highest bidder after acceptance of the bid by the authority and the highest bidder would be required to deposit the balance 75% amount of the bid offered for the project within 90 days of the issuance of the allotment-cum-demand letter. Clause 5 of the terms and conditions of the auction stipulated that the possession of the project area excluding approximately 4 hectares on which there is a JJ cluster, would be given after payment of the balance 75% of the bid and the execution of the developmental agreement. 4. Clause 8 of the said general terms and conditions of the auction required the developer to comply with all statutory provisions, rules and regulations, bye-laws etc. in all respects, including paying of all fees, taxes WPC 10647/09 Page No.4 of 29 in accordance with the statutory provisions. It was also provided by virtue of Clause 8(iii) that :- “(iii) Each developer will be required to seek approvals / clearances in respect of their project for all services from the concerned local authorities including Fire Department, Electricity Boards, Agencies, Civil Aviation, and abide by all conditions as per their guidelines.” 5. Amongst others, the petitioner made a bid at the said auction held on 26.04.2006. The petitioner‟s bid of Rs 450.10 crores was the highest and as per the condition of the auction, the petitioner deposited a sum of Rs 111.52 crores representing 25% of the bid amount by way of earnest money deposit on that date itself. This was, of course, in addition to the sum of Rs 1 crore already deposited for the purposes of participating in the auction. Thereafter, the DDA issued a demand-cum-allotment letter dated 15.06.2006 in favour of the petitioner. It is relevant to note that the nature of property in the demand-cum-allotment letter was shown to be “residential”. The balance amount of Rs 3,37,50,75,016/- was required to be paid by the petitioner. The same was paid by the petitioner on 11.09.2006. Consequently, the petitioner had paid the entire bid amount of Rs 450.01 crores to DDA by 11.09.2006. 6. On 05.09.2007, the petitioner and the DDA entered into the development agreement. By a letter dated 06.11.2006, the DDA, in view of the fact that the balance 75% had also been paid by the petitioner, issued a no objection certificate in favour of the petitioner for submission of building plans in respect of the Tehkhand project to the building department of the WPC 10647/09 Page No.5 of 29 DDA. Possession of an area of 11.70 hectares had also been handed over to the petitioner, leaving out an area of approximately 2.60 hectares which was covered by a JJ Cluster, on 04.12.2006. 7. On 21.11.2007, the DDA issued a letter to the petitioner that the work was to be completed within a period of three years, that is, up to 04.09.2010 and that the possession had been handed over on 04.12.2006 but the work had not been started and it appeared that the petitioner would be unable to complete the work on time and, therefore, a show cause notice was given to the petitioner as to why a penalty of 0.5 % of the bid amount should not be imposed on the petitioner in terms of clause 57 of the agreement. By a letter dated 27.03.2008, the petitioner informed the DDA that although the DDA had permitted the petitioner to establish the site infrastructure facilities including the construction of a sample flat for the economically weaker sections, the Forest Department had raised objections to the petitioner carrying out any work on the ground that the said area falls within the ridge area and consequently all activities had to be suspended. The petitioner indicated that because of the said suspension of work, it was incurring huge losses on account of idle manpower and equipment. 8. Again, a letter was written on 15.04.2008 by the petitioner to the DDA indicating that the land clearance documents had not yet been passed on to the petitioner by the DDA so as to enable the petitioner to proceed with the establishment of site infrastructural facilities and also to ensure timely completion of the project. A further letter was written on 22.04.2008 WPC 10647/09 Page No.6 of 29 to the Vice Chairman, DDA, informing him that during the past several weeks officials from the Forest Department had been visiting the project site and had cautioned the petitioner‟s representatives not to carry out any activity thereon as the same was a prohibited area. Consequently, it was requested that the matter be taken up with the Forest Department and the DDA should issue a letter in favour of the petitioner permitting the petitioner to continue the development activities at the project site. 9. By a letter dated 28.04.2008 addressed to the Secretary (Environment)-cum-Chairman, Delhi Pollution Control Committee, the DDA referred to the meeting the said Secretary had with the Vice Chairman, DDA on 08.04.2008 when the issue of land use of Tehkhand housing project being developed by the DDA on public-private partnership was discussed. As per the said letter, the matter had been examined in detail by the DDA and it was confirmed that as per the Delhi Master Plan (MPD- 2021), the site under reference was designated under “residential” use complying with the gazette notification dated 08.01.2002 in respect of land measuring 12.4 hectares and gazette notification dated 23.02.2006 for 3.6 hectares. The relevant notifications dated 08.01.2002 and 23.02.2006 were annexed along with the said letter. 10. The notification dated 08.01.2002 reads as under:- “Gazette of India Extraordinary Part II-Section 3-sub Section (ii) Published by Authority New Delhi, Tuesday, January 8, 2002 /Pausa 18, 1923 Ministry of Urban Development and Poverty Alleviation WPC 10647/09 Page No.7 of 29 (Delhi Division) Public Notice New Delhi, the 8th January, 2002 S.O. 37(E) – Whereas certain modifications which the Central Government proposed to make in the master Plan for Delhi Zonal Development Plan regarding the area mentioned hereunder were published as a Public Notice by DDA vide dated 07.08.1999 in accordance to the provisions of Section 44 of the Delhi Development Act, 1956 (61 to 1957) having objections / suggestions as required by sub-section (3) of Section 11-A of the said Act, within thirty days from the date of the said notice. (2) Whereas after considering objections / suggestions received with regard to the proposed modification and whereas the Central Government have after carefully considering all aspects of the nature, decided to modify the Master Plan. (3) Now, therefore, in exercise of the powers conferred by sub- section (2) of Section 11-A of the said Act, the Central Government hereby makes the following modification in the said Master Plan for Delhi with effect from the date of Publication of this Notification in the Gazette of India. Modification:- The land use of the area measuring above 12.4 hectares (30.6 acres) falling in Planning Division „F‟ (South Delhi; and bounded by existing road in the North, District Park in the east and south and existing Hot Mix Plant (District Park) in the West is changed from “Recreational” („District Park‟) to „Residential‟. (No. K-1301130/95-DD-II) Devendra Kumar Goel Under Secy.” The notification dated 23.02.2006, which is in virtually identical terms relates to the area measuring 3.6 hectares at village Tehkhand. 11. By a letter dated 07.05.2008, the Delhi Pollution Control Committee (DPCC) requested the petitioner to submit an application for WPC 10647/09 Page No.8 of 29 “consent to establish” and a copy of the environmental clearance issued by the Ministry of Environment and Forests (MOEF). 12. On 13.06.2008, the Secretary (Environment)-cum-Chairman, DPCC, issued a letter to the Delhi Development Authority in response to the latter‟s letter dated 28.04.2008. The contents of the said letter constitute the very basis of the controversy at hand and, therefore, it would be appropriate to set out the same in its entirety. The said letter reads as under:- “J. K. DADOO, I.A.S. Secretary (Environment) Cum-Chairman, Delhi Pollution Control Committee Dear Sir, Dt. 13.06.2008 Kindly refer to the letter No. 3 (60)/05/MP/58-G dated 28.04.2008 of Jt. Director (MP) DDA. I have had the entire matter carefully researched. You are aware that Hon‟ble Supreme Court has prohibited any construction of Delhi Ridge which is to be preserved in its pristine glory. The word, “Ridge” has been defined in the Master Plan for Delhi Perspective 2001 and its extent indicated in the maps contained in its Preamble. Maps clearly show the Ridge extends of the North of Mehrauli Badarpur Road and east of Tughlakabad Fort (copy of relevant portions of MPD 2001 are enclosed for ready reference). The project site at Tehkhand, is thus clearly a part of Ridge, as described in MPD 2001. This fact has also been ascertained by a field visit myself with the officers of Forest Department. In view of the provisions contained in the MPD 2001 and orders passed by Hon‟ble Supreme Court in Writ Petition (Civil) No. 4677/1995, the Notification S.O. 37(E) dated 8th January, 2002 could not have been issued. MPD 2001 prescribes no change vis-à-vis Ridge. It, however, recognizes that there are discrepancies between the notified areas and exact boundaries of the Ridge. It requires the exact boundaries of the Ridge to be identified by the Forest Department. Forest Department has already initiated the process for identification, survey and demarcation of the exact boundaries of the Ridge. Survey of the Ridge area is beginning WPC 10647/09 Page No.9 of 29 shortly from Andheria Mor and will be carried out in consultation with Revenue Department and DDA. In this regard, the Action Report dated 28.07.2006 of the Ridge Management Board jointly filed by Chief Secretary, GNCTD, Commissioner, MCD Vice-Chairman, DDA, Secretary (E&F), Divisional Commissioner and Conservator of Forest (copy enclosed) in CW No. 4582 of 2003 in the matter of Kalyan Sanstha Social Welfare Organization v. UOI and others in the Hon‟ble High Court may also kindly be referred to, wherein it was submitted that DDA will take measures for protection of ridge areas under its control, against encroachment and new construction. May I, therefore, request you to order for immediate cessation of all construction activity on the project site till clearance for the same is obtained from competent authorities including the Ridge Management Board and the Hon‟ble Supreme Court. With regards. Yours sincerely: Sd/- (J. K. DADOO) Shri Ashok Kumar Nigam, IAS Vice Chairman Delhi Development Authority, Vikas Sadan, INA New Delhi.” 13. The DDA issued a letter dated 30.06.2008 to the Director, Government of India, Ministry of Environment and Forests, New Delhi informing that the “land use of the land where DDA has proposed to take up residential construction is recreational” for which gazette notifications were issued by the Ministry of Urban Development on 08.01.2002 and 23.02.2006. Consequently, as per MPD-2021 the land in question was stated to be not part of regional park/ ridge. WPC 10647/09 Page No.10 of 29 14. The ministry of Environment and Forests, Government of India, by a letter dated 15.07.2008 issued to the petitioner on the subject of construction of residential housing project at Tehkhand, informed that the Expert Appraisal Committee constituted by the competent authority, after due consideration of the relevant documents, had accorded environmental clearance as per the provisions of the Environment Impact Assessment Notification, 2006 and its subsequent amendments, subject to strict compliance of the terms and conditions mentioned in the said letter. One of the conditions specified in the letter was that “consent for establishment” shall be obtained from the DPCC in respect of air and water management and a copy thereof shall be submitted to the Ministry before start of any construction work at the site. 15. Another important letter is that of 17.10.2008, which was sent by the DDA to the Secretary (Environment)-cum-Chairman, DPCC, New Delhi. In the said letter it was stated that in the Master Plan for Delhi, 2001, “ridge” had been defined as an area of 7777 hectares which is to be preserved in its pristine glory. It was further stated in the Preamble of the said Master Plan that one conceptual sketch indicating the ridge has been shown as one of the eight concepts only, whereas the land use plan is the legal document showing the details which are to be referred for the purposes of establishing the land use. It was further stated in the letter that the land pocket where DDA has proposed residential development, was clearly shown as a District Park in MPD-2001 and the land use of the same had already been changed from recreational use (District Park) to residential WPC 10647/09 Page No.11 of 29 vide Gazette of India notifications dated 08.10.2002 and 23.02.2006. It was also pointed out that the said notifications were issued after following the due process of law and after taking all relevant facts into consideration. Furthermore, no objection in respect of the land use of the project land was raised by any department including the Forest Department at that stage. It was further stated in the said letter that the Ministry of Environment and Forests, after considering and taking on record the representation from both the DPCC and the DDA with respect to land use of the project land, had accorded the environmental clearance to the said project on 15.07.2008. It was, therefore, requested that the “consent to establish” be granted by the DPCC under the Air (Prevention and Control of Pollution), Act, 1981 and the Water (Prevention and Control of Pollution), Act, 1974 to the petitioner at the earliest. A similar letter was also written by the petitioner on 04.11.2008 requesting the DPCC to grant the said “consent to establish” under the Air and Water Acts. 16. The DPCC sent a letter dated 27.01.2009 to the petitioner requesting the petitioner to submit the “ridge demarcation report”. Consequently, the petitioner wrote a letter on 29.01.2009 to the Vice Chairman, DDA, New Delhi requesting that the “ridge demarcation report”, as required by the DPCC, be provided to the petitioner in order to enable the petitioner to submit the same to the DPCC. Shortly thereafter, the petitioner also sent a letter to the DPCC on 10.02.2009, indicating that the approach of the DPCC was apparently of jeopardizing the prestigious flagship public- private partnership endeavour of the DDA inasmuch as the issue of the WPC 10647/09 Page No.12 of 29 project land falling within the ridge, already stood clarified and settled by the DDA as per the letter dated 17.10.2008 addressed to the Secretary (Environment)-cum-Chairman, DPCC. The petitioner also stated in the said letter that the issue had time and again been clarified by the DDA. However, it seemed that the DPCC was bent on ensuring that the JJ dwellers rehabilitation project undertaken by the Delhi Government is derailed for reasons best known to them. The petitioner, once again, requested the DPCC to issue the “consent to establish” under the Air and Water Acts for the project at the earliest so that construction activity could be commenced without any further delay. 17. In reply to the petitioner‟s request for supply of the “ridge demarcation report”, the DDA sent a letter dated 10.02.2009 to the petitioner, stating that the reply dated 17.10.2008 earlier sent to the Secretary-cum-Chairman, DPCC clarified all the issues. The petitioner, being frustrated in its endeavour to obtain the “consent to establish” from the DPCC and the clearance to go ahead with the project, sent a letter to the Vice Chairman, DDA on 18.02.2009 indicating that the project had been floated at least three years ago and it had been represented by the DDA that the land measuring 14.3 hectares was residential in nature. The petitioner had responded to the said notice for auction and was the highest bidder in the said auction at Rs 450.01 crores. The petitioner had also, as mentioned above, paid the entire sum of Rs 450.01 crores. Yet, the petitioner was not able to go ahead with the project because of the dispute with regard to the land use of the project land. The DDA had throughout represented the WPC 10647/09 Page No.13 of 29 project land to be residential in nature but the same had been challenged and rejected by the Secretary (Environment)-cum-Chairman, DPCC by asserting the same to be falling within the ridge area and, therefore, entailing that no construction could be carried out thereon. Despite repeated requests, the petitioner had not been able to obtain the consent from the DPCC under the Air and Water Acts for the said project. It was further pointed out that the petitioner had been made to run from pillar to post to obtain various other clearances, permissions, consents. It was further stated that the DDA, as the owner of the project land, had not only failed to get the title of the project land cleared inasmuch as the nature of the land being residential or part of the ridge still remains an issue in limbo, with the Environment Department, Government of NCT of Delhi claiming it to be a „ridge‟. The petitioner thereby called upon the DDA to ensure that all the necessary permissions specifically linked with the land use be obtained within 15 days from the date of the said letter and the other obligations pertaining to clearance of the project land rendering it suitable for development of the prestigious project be fulfilled, failing which the petitioner would be left with no other option but to initiate legal action against the DDA and also claim damages. 18. On 24.02.2009, the DDA, once again, wrote to the Secretary (Environment)-cum-Chairman, DPCC, Delhi that the clarification on the land use had already been furnished by virtue of the DDA‟s letter dated 17.10.2008 and that in the light of the contents of the said letter, it was clear that the land in question was not part of the ridge land and had been legally converted from recreational use (District Park) to residential. Consequently, WPC 10647/09 Page No.14 of 29 it was requested that the “consent to establish” under the Air and Water Acts be granted to the petitioner at the earliest so that the construction activity could be commenced without any further delay as the project had already been substantially delayed. 19. Since the impasse with regard to the status of the project land continued and the petitioner was neither being permitted to continue with the construction activity nor was the DDA ready to refund the amount paid by the petitioner and/ or cancel the auction/ tender, the petitioner filed the present writ petition, inter alia, seeking the setting aside of the tender/ auction notice dated 20.03.2006 as also the allotment letter dated 15.06.2006 and sought a declaration that the project was incapable of performance and, consequently, that the auction had become void. The petitioner also prayed for refund of the sums paid by the petitioner to the DDA under the said auction along with interest at the rate of 18% till realization. 20. Before us, the DDA (respondent No. 5), the Department of Forests, Government of NCT of Delhi (respondent No. 4) and the Delhi Pollution Control Committee (respondent No. 2) filed separate counter- affidavits. The Delhi Development Authority, in its counter-affidavit filed on 22.10.2009 categorically stated in paragraph 1(b) that the land use of the land in question was shown as recreational use (District Park) in MPD- 2001, which had been notified on 01.08.1990. It was further stated that the land use of the said area measuring 14.2 hectares, after following the WPC 10647/09 Page No.15 of 29 procedure laid down in the Delhi Development Act, 1957, had been changed from recreational use (District Park) to residential vide notifications dated 08.01.2002 and 23.02.2006. It was stated that at that point of time, no suggestions/ objections were received in