1 mss IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO. 10243 OF 2004 1. Pooja Estate Consultant & Construc- ) tion Through its Sole Proprietor Daji ) Krishna Zinjurte, having its registered) office at Shop No. 4, Building No. 11, ) Veer Savarkar Nagar, Opp. Powai ) Lake, Mumbai 411 002 ) 2. Daji K. Zinjurte, ) residing at Building No. 22, Flat No. ) 603, “GULMOHAR”, Oshiwara ) Andheri (W) MUMBAI 400 053 ) .. PETITIONERS Versus 1. Maharashtra Housing & Area ) Development Authority, A statutory ) authority having its office at Griha ) Nirman Bhavan, Kala Nagar ) Bandra (East) Mumbai 400 051. ) 2 2. Mumbai Housing and Area ) Development Board, a Unit of MHADA having its office at Griha Nirman ) Bhavan, Kala Nagar, Bandra (East) ) Mumbai 400 051 ) 3. STATE OF MAHARASHTRA ) in its Department of Housing, ) Mantralaya, MUMBAI 400 032 ) 4. Powai Planet Cooperative Housing ) Society (Proposed), through its Chief ) Promoter, Shri K. R. Kamath, having ) his office at 4B-703, Patliputra Nagar ) Oshiwara, Andheri (West) ) Mumbai 400 053. ) .. RESPONDENTS Mr. P. G. Thorat for the petitioners Mr. G. W. Mattos for R-1 & 2. Mr. Rajeev Pandey i/b TRS Legal for R-4 CORAM: SMT. RANJANA DESAI & A. A. SAYED, JJ. DATE ON WHICH THE JUDGMENT RESERVED: 30th September, 2009 3 DATE ON WHICH THE JUDGMENT PRONOUNCED: 8th October, 2009 JUDGMENT: -(Per Smt. Ranjana Desai, J.) The 1st petitioner is carrying on business in the name and style of Pooja Estate Consultant and Construction through its sole proprietor the 2nd petitioner. The 1st respondent is the Maharashtra Housing and Area Development Authority (“MHADA” for short). The 2nd respondent i.e. the Maharashtra Housing and Area Development Board is a unit of the 1st respondent (“the Board” for short). Both the respondents are under the supervisory control of the 3rd respondent i.e. the State of Maharashtra. Respondent 4 is Powai Planet Co- operative Housing Society (Proposed). MHADA issued in its favour letter of intent dated 25/10/04 and provisional offer letter dated 17/11/04 in respect of vacant tenements at Powai. 2. To understand the grievance of the petitioners it is necessary to narrate the facts of the case as stated by the petitioners in the petition. MHADA issued an advertisement which appeared in the newspapers on 27/5/04. The said advertisement announced sale of 4 certain vacant tenements of MHADA to members of public on “First Come First Serve Basis”. The advertisement was inter alia for sale of 165 flats in Building Nos. 22-A, 23-B and 23-C in Code No. 125 at Powai. The advertisement advised the applicants to purchase an information booklet inter alia from the Marketing Department of MHADA upon payment of a non-refundable price of Rs.100/-. According to the petitioners MHADA was unable to get individual purchasers for the said flats and, therefore, it decided to allot the said flats in the buildings which were fully unoccupied to bulk purchasers. Such bulk purchasers could also be the estate agents. According to the petitioners, on 9/9/04 they applied in accordance with law as per their agreements for sale of 100 Non-Deluxe flats in building Nos. 22 and 23 at Veer Savarkar Marg Nagar, Powai. The proposal was submitted by the petitioners on the following terms and conditions: a) To allot building Nos. 22 and 23 fully; b) The petitioners already have 100 customers waiting to buy flats in the said buildings; that they are ready to pay EMD of Rs.25,000/- each immediately which would amount to total Rs.25 lacs; 5 c) For the balance payment of the flats the petitioners may be given 90 days’ period; d) If some of the customers are unable to make the full payment in 90 days, then they will pay interest on the remaining amount as per the MHADA’s rules and regulations applicable; e) As the flats are bought in bulk, 15 per cent discount may be given; f) In the first 90 days the members may be allowed to be changed without charging any transfer fee. According to the petitioners the said letter was duly served on MHADA and MHADA acknowledged its receipt. 3. On 23/8/04 the 4th respondent made an application as ‘proposed society’ for purchasing and allotting 165 flats in building Nos. 22-A, 23-B and 23-C of 55 flats each in Code No. 125 at Powai. 6 4. According to the petitioners they gave an offer to MHADA to pay the balance purchase price within 90 days whereas the 4th respondent had offered to pay the balance purchase price within 270 days from the date of purchase. The petitioners had offered to pay interest in default of payment of purchase price within 90 days. However, respondent 4 did not make any offer as regards interest in default of the purchase amount within stipulated period of 270 days. As regards the change in the name of the members, the petitioners had asked for a period of 90 days whereas the 4th respondent had asked for a period of 270 days. 5. On 25/10/04 MHADA issued letter of intent in favour of the 4th respondent in respect of allotment of 110 flats in building Nos. 23-B and 22-A at Powai (Code No. 125). On 17/11/04 MHADA issued a provisional offer letter in favour of the 4th respondent in respect of the said 110 flats. The petitioners are aggrieved by MHADA’s alleged high handed and arbitrary action of issuing letter of intent and provisional offer letter to the 4th respondent without taking MHADA’s interest into account. According to the petitioners the said offer letter ought to have been issued in their favour as their offer stands on a better footing and is beneficial to MHADA in comparison with the 7 offer made by the 4th respondent. The petitioners contend that they have earlier worked for MHADA. They have requisite experience and, therefore, their offer ought to have been accepted by MHADA. According to the petitioners at any rate MHADA should have at least given them an opportunity of hearing before rejecting their application. 6. It is urged in the petition that after the provisional offer letter was issued in favour of the 4th respondent, the 4th respondent was unable to fulfill the terms and conditions. It submitted only 55 names of the flat purchasers. Therefore, the remaining 55 flats could be allotted to the petitioners in order to benefit MHADA on the basis of the offer made by the petitioners. According to the petitioners, the allotment could be bifurcated for speedy disposal and sale of flats as has been done in the past by MHADA. The petitioners’ case is that after submitting the application they were eagerly awaiting response from MHADA. They made inquiries with the concerned department of MHADA. It is only on 9/12/04 that they learnt that MHADA had accepted the 4th respondent’s proposal. The petitioners, therefore, requested MHADA to furnish relevant documents. After the relevant documents were furnished to them, the petitioners filed the instant 8 petition on 16/12/04 praying that the impugned intent letter dated 25/10/04 and the provisional offer letter dated 27/11/04 issued by MHADA in favour of the 4th respondent be quashed and set aside. 7. Affidavits and counter affidavits came to be filed. The petition was heard by the Division Bench of this court presided over by Chief Justice Dalveer Bhandari (as His Lordship then was) on 25/2/05. The Division Bench observed that the 4th respondent had given its offer on 23/8/04 and MHADA considered the said offer on 25/10/04. On that day the petitioner’s offer was also with MHADA. However, the petitioners’ offer was not considered. This was admitted by learned counsel on instructions from the officials of MHADA who were present in the court. In view of this, the Division Bench quashed the letter of intent and the provisional offer letter impugned in the petition, awarded costs to the petitioners and directed MHADA to re-advertise the sale of flats and disposed of the petition. A review petition filed seeking review of the said order was dismissed. 8. MHADA carried the matter to the Supreme Court. The 4th respondent also carried the matter to the Supreme Court. By judgment and order dated 14/5/07 the Supreme Court set aside the 9 order passed by this court dated 25/2/05 and requested the High Court to decide the writ petition afresh without being influenced by the observations made by it in the judgment. That is how this writ petition is again placed for hearing before us. 9. We have heard Shri Thorat, learned counsel for the petitioners at some length. He reiterated the contentions raised in the petition. He submitted that the petitioners’ offer was far better and beneficial to MHADA and hence MHADA ought to have accepted it instead of issuing letter of intent to the 4th respondent. Learned counsel submitted that when MHADA considered the 4th respondent’s application, the petitioners’ application was very much before it and, therefore, MHADA should have considered it along with the application of the 4th respondent. Learned counsel submitted that in any event the 4th respondent has not been able to sell the flats. Fifty six flats have still to be sold. They are vacant. Learned counsel submitted that in the circumstances MHADA may be directed to sell the said flats by issuing fresh advertisement because there is considerable rise in the prices of properties. 10. Mr. Mattos learned counsel for MHADA submitted that the 10 petition deserves to be dismissed. He submitted that issuance of provisional offer letter and letter of intent to the 4th respondent cannot be faulted, because it is done in accordance with the relevant legal provisions. Mr. Mattos relied on Rule 16-B of the Maharashtra Housing & Area Development Rules, 1985 which permits MHADA to dispose of tenements in any manner deemed fit, if it finds that there is no adequate demand for those tenements. Mr. Mattos also relied on Regulation 14-A of the Estate Management Regulations which also gives similar power to MHADA. Mr. Mattos took us through the affidavits of Shri Nagnath Chintamani and Shri Poman, Directors of Marketing of the Board. Mr. Mattos submitted that MHADA’s efforts to sell the flats by advertising them failed. Respondent 4 vide application dated 23/8/04 sought allotment of 110 flats on bulk basis. Thereafter on 7/9/04, the petitioners made an application for the said flats. In the circumstances by administrative decision dated 12/10/04 in conformity with Resolution No. 5775 dated 25/2/02, the concerned office was authorised to dispose of the said flats on ‘First Come First Serve Basis’ and since the 4th respondent’s application was first in point of time letter of intent was issued to it. Relying on the above mentioned provisions Mr. Mattos submitted that there is nothing wrong in such exercise. 11 11. Mr. Mattos further submitted that circumstances have changed since MHADA issued letter of intent to the 4th respondent. The 4th respondent has not been able to sell the flats. There is a rise in the prices of properties. Mr. Mattos drew our attention to paragraph 3 of Shri Poman’s affidavit dated 31/8/09 and submitted that out of 110 flats, 54 flats have already been sold. Out of the remaining 56 flats in respect of 2 flats money has been paid by the buyers but possession has not been taken by them. They will have to be given possession of the said flats. Mr. Mattos submitted that, however, in respect of 30 flats only Rs.25,000/- each has been paid by each person as per letter of intent dated 17/11/04 issued to them. Amount deposited has been refunded to 17 persons. Seven persons had paid part of the price of flats. Deposited amount was offered to be refunded to them but they have refused to accept the same. Mr. Mattos submitted that vide letter dated 18/7/05 respondent 4 sought refund of earnest money deposit of Rs.27,50,000/- paid by it as per provisional offer letter dated 17/11/04. That amount would be refunded to them in accordance with law. Mr. Mattos submitted that respondent 4 having sought refund of earnest money deposit respondent 4 cannot claim any subsisting right in its favour pursuance to letter of intent dated 12 25/10/04 and provisional offer letter dated 17/11/04. Mr. Mattos submitted that claim of seven persons, who have paid part of the costs, would not survive because they have made payment through respondent 4. Mr. Mattos submitted that in the circumstances MHADA will be legally entitled to dispose of the remaining 54 flats in accordance with law. Mr. Mattos added that being a public body MHADA will have to protect its interest in the larger interest of people. 12. Mr. Rajeev Pandey, learned counsel for the 4th respondent submitted that MHADA rightly exercised its powers under the relevant rules and regulations and issued provisional offer letter to the 4th respondent. To that extent he adopted the submissions of Mr. Mattos. He, however, denied that because of change in circumstances MHADA is entitled to sell the remaining flats in accordance with law. He submitted that because the petitioners dragged MHADA and the 4th respondent in litigation and because MHADA did not point out the correct legal position, the allotment made in favour of the 4th respondent was stalled. For that the 4th respondent and its members cannot be held responsible. Mr. Pandey submitted that letter of intent and provisional offer letter 13 issued in favour of the 4th respondent having revived on account of setting aside of this court’s order dated 25/2/05 by the Supreme Court, on dismissal of this petition, the 4th respondent must be permitted to sell rest of the flats because subsisting right exists in favour of the 4th respondent qua the said letter of intent and provisional offer letter. 13. Learned counsel submitted that not much can be read into letter dated 18/7/05 sent by the 4th respondent to MHADA asking for refund of the deposited amount. He submitted that the amount has not been refunded to the 4th respondent. In any case because MHADA did not point out the correct legal provisions to this court, this court set aside the provisional offer letter and letter of intent issued in favour of the 4th respondent. Buyers’ obvious reaction was to ask for refund of their money. It is, therefore, that the 4th respondent had written a letter to MHADA asking for refund. MHADA cannot draw unfair advantage from that letter. Mr. Pandey submitted that in the circumstances the petition be dismissed but no permission be granted to MHADA to sell the unsold flats in accordance with law. 14. It is first necessary to see whether MHADA’s action of issuing 14 provisional allotment letter and letter of intent in favour of the 4th respondent is legal. We shall first refer to the relevant legal provisions. The Maharashtra Housing and Area Development Act, 1976 (“the said Act” for short), as its preamble states, is inter alia enacted to provide for a comprehensive and coordinated approach to the problems of housing development, and planning and development of certain areas in a balanced manner, necessiated by rapid growth of industries in the urban areas and the fast growth of population and commercial activities in such areas which would not be met by the limited house construction activities in the private sector. One of the objects of the said Act is to provide housing to needy persons so as to bring about equitable distribution of ownership and control of houses in buildings to subserve the common good. The Authority under the said Act can issue directions to the Board inter alia to prepare and execute proposals and plans or projects for housing accommodation in the State, to prepare projects for development including provisions for amenities in areas within the jurisdiction of the Authority, to prepare projects for development of lands vested in the Authority etc. Under the said Act, in short, MHADA is required to provide housing accommodation throughout the State and to dispose of its property in accordance with law. 15 Section 184 of the said Act empowers the State Government to make rules for the purpose of carrying into effect the provisions of the said Act. In exercise of that power the State Government has framed the Maharashtra Housing and Area Development (Disposal of Land) Rules, 1981 (“the said rules” for short). Part III thereof provides for disposal of tenements. Rule 11 provides for disposal of residential tenements on three basis namely; (a) out-right sale, (b) hire- purchase and (c) rental. Rule 12 states that all disposal shall be by public notice unless there is a waiting list for a particular scheme. Rule 13 provides for reservation of tenements. Rule 14 provides for drawal of lots and Rule 15 provides for disposal of amenity tenements. Rule 16 provides for disposal of land under building and Rule 16-A provides for disposal of amenity and commercial tenements on hire-purchase basis in certain circumstances. Rule 16- B is relevant for the present case. It reads as under: “16B. Special provisions for disposal of tenements in certain circumstances. If after following the procedure prescribed in the foregoing rules or the Regulations made thereunder, it is found that there is no adequate response and demand for tenements in any particular 16 scheme, such of the tenements as cannot be so disposed of may be disposed of in any other manner deemed fit by the Authority.” 15. Section 185 of the said Act authorises MHADA to make regulations with the previous sanction of the State Government. In exercise of the said power MHADA has framed the Maharashtra Housing and Area Development (Estate Managements, Sale, Transfer and Exchange of Tenements) Regulations 1981 (“the said Regulations” for short). Part III thereof provides for allotment of residential tenements. Regulation 6 provides for procedure for allotment. Regulation 7 to 13 provide for different steps in the process of allotment. Regulation 14 provides for renotification of vacancies where tenements cannot be offered to those in the approved or waiting list. Regulation 14-A is important. It makes special provision for disposal of tenements in certain circumstances. It reads thus: “14A. Special provision for disposal of tenements in certain circumstances. If even after renotification of vacancies as provided in Regulation 14 there is no adequate response and demand for 17 tenements in any particular scheme such of the tenements as can not be so disposed of must be disposed of on the ‘first served’ basis or in any other manner determined by the Authority from time to time.” 16. Thus though ordinarily tenements have to be disposed of by public notice by out-right sale, hire purchase or on rental basis, Rule 16-B of the said Rules empowers MHADA to dispose of tenements in such manner as may be deemed fit by the Authority, if after following procedure prescribed under the preceding rules there is no adequate response and demand for them. Similarly Regulation 14A empowers MHADA to dispose of tenements on ‘First Come First Serve basis’ or in any other manner, if even after renotification of vacancies there is no adequate response or demand for tenements in any particular scheme. Undoubtedly, therefore, in a given case MHADA can deviate from the regular modes of disposal of tenements, if there is no adequate response or demand from buyers. 17. It is necessary now to refer to the facts of the case as narrated by Shri Chintamani and Shri Poman, Director Marketing of the Board in their affidavits. It is stated in that affidavits that MHADA in 18 accordance with law issued public advertisements for sale of 165 non-deluxe flats from 1995 till 2001. Eight advertisements for the sale of various flats at Powai, Mumbai in various groups and buildings under various codes were published. However, there was no response to the said advertisements. Therefore, on 6/1/2001 MHADA passed a resolution being Resolution No. 5647 inter alia permitting the sale of flats at Powai through agents. The Vice- President and Chief Executive Officer, MHADA was authorized to formulate the guidelines in respect of the sale of the flats by such agents. It was clarified in the said resolution that the said scheme would not be limited to the 9 agents whose applications were received by MHADA and that private brokers would also be permitted to sell the flats constructed by MHADA. Thereafter 3 agents applied to MHADA. Thus in all 12 agents were enlisted by the MHADA and the Board for the said purpose. The 1st petitioner was one of such agents. The Board entered into agency agreements with the said 12 agents in pursuance to the Resolution No. 5647. An Agency Agreement dated 8/10/02 was executed by the Board with the petitioners. As per the said agreement the agency of the petitioners was to remain in force from 8/10/02 and was to be continued till 7/10/03. For the entire year when the agency agreement was 19 subsisting between the petitioners and the Board the petitioner had sold only 14 flats. MHADA’s Scheme to sell flats through agents was not successful as number of flats remained unsold. 18. In view of the above on 21/7/01 MHADA passed a resolution being Resolution No. 5715 permitting the sale of flats at Powai in bulk to proposed co-operative housing societies. The co-operative societies seeking allotment of flats in bulk would be entitled to 15 per cent concession in the sale price. This attempt was also unsuccessful. Hence again an advertisement was published by MHADA and the Board on 25/5/2002. It met with similar fate. Hence in April 2004 an advertisement was published for the sale of balance 214 flats under Code No. 125 in the non-deluxe category. The material particulars of the said 214 non-deluxe flats under Code No. 125 are as under: “(1) Total no. of non deluxe flats under Code 125 214 (2) Flats sold between April 2004 till Sept. 2004 47 (3) Flats allotted in bulk to one Amey Co-op. Soc. (Proposed) 53 (4) Flats in question which are the subject matter 20 of the present proceedings 110 (5) Flats sold in/after October, 2004 4” The 110 non-deluxe flats under Code 125 which are the subject matter of this petition are situated in building No. 22-A and 23-B at Powai. 19. On 23rd August, 2004 the 4th respondent as proposed co- operative housing society applied for allotment for the said 110 flats. On 9/9/04 the petitioners applied for the said 110 flats in their capacity as agents. The petitioners at that point of time were not the agents of the Board because their agency had come to an end as early as on 7/10/03. Paragraph 1 of office note dated 12/10/04 stated that 10 advertisements were issued in respect of sale of flats at Powai and as poor response was received in respect thereof decision was taken to dispose of the said flats on ‘First Come First Serve Basis’ in conformity with Resolution No. 5775 dated 25/2/02. Since the application of the 4th respondent was first in point of time a decision to allot the said 110 flats was taken administratively on 12/10/04 by MHADA. Thereafter on 25/10/04 a letter of intent was issued by MHADA to the 4th respondent and on 17/11/04 a 21 provisional offer letter in respect of 110 flats was issued to the 4th respondent. 20. The above facts make it evident that MHADA’s attempt to dispose of the flats by issuing public advertisements failed. The advertisements were issued in several newspapers in different languages. There was no adequate response to the advertisements. In our opinion in such a situation MHADA had no option but to resort to disposal of the flats under the “Bulk Purchase Scheme”. Admittedly the application of the 4th respondent was first in point of time and, therefore, on ‘First Come First Serve Basis’ letter of intent and provisional offer letter were issued in its favour. The petitioners’ application was later in