City Indl.Devept. Th:Mng Director vs Platinum Entertainment & Ors

2. These appeals are directed against the common judgment and final order dated 01.09.2009 passed by the High Court of Judicature at Bombay whereby Division Bench of the High Court has allowed three Writ Petitions being W.P.Nos. 9467, 9468 of 2005 and 3423 of 2006 preferred respectively by M/s. Popcorn Entertainment Corporation (in short, ‘M/s. Popcorn’), M/s. Platinum Entertainment (in short, ‘M/s. Platinum’) and M/s. Platinum Square Trust (in short, ‘M/s. Platinum Square’). By way of these writ petitions, the writ petitioners had challenged orders of appellant- ‘The City & Industrial Development Corporation’ (in short ‘CIDCO’) by which allotment of plot of lands to M/s. Popcorn and M/s. Platinum Entertainment for erecting entertainment complex in Navi Mumbai and the allotment of plot of land to M/s. Platinum Square for establishment of country club were cancelled.

3. The facts giving rise to aforesaid writ petitions and consequently present appeals are almost similar. However, for the sake of clarity factual matrix of each appeal has been mentioned here separately.

4. The respondent- M/s. Popcorn Entertainment (SLP (C) No.1290 of 2010) in the appeal by special leave arising out of Writ Petition No.9467 of 2005, by way of an application made a request for allotment of plot in Airoli for setting up multiplex-cum-auditorium-cum-entertainment centre. On CIDCO’s instructions, respondent submitted detailed project report. CIDCO, by their letter of intent, requested the respondent herein to pay an Earnest Money Deposit of Rs.20,77,000/- within 15 days from the receipt of the letter to enable the Board to consider the allotment in favour of the respondent. The respondent, accordingly made EMD on 29.6.2004. On 29.7.2004, CIDCO approved the allotment of a plot in favour of the appellant as the Board had not got any response for similar plots in public tender. The total lease premium in respect of the plot was Rs.2,07,70,000/- and the respondent was directed to pay the balance amount of Rs.1,86,93,000/- by 14.9.2004. The allotment was allegedly made in terms of the New Bombay Land Disposal Regulations, 1975 and also in terms of the Land Pricing and Disposal Policy of CIDCO under which the land could be allotted to any person by considering individual application at the reserved price fixed by CIDCO. Thereafter, by making balance payment including additional amount due to the marginal increase in the demarcation of the plot, M/s. Popcorn Entertainment made a total payment of Rs.2,98,22,420/- being the full and final payment in respect of allotment in favour of the respondent as demanded by CIDCO. An agreement to lease was entered into with CIDCO in respect of the plot allotted to the respondent.

5. However, on 1.8.2005, appellant CIDCO issued a show cause notice to the respondent regarding the plot at Airoli seeking cancellation of the agreement to lease executed in favour of the respondent. The respondent submitted reply to the show cause notice and also sought information from CIDCO under the Right to Information Act regarding allotment to various parties and the details thereon. The Agreement of Lease was repudiated and rescinded, against which the respondent approached the High Court by way of a writ petition.

6. The respondent- M/s. Platinum Entertainment in the appeal by special leave (SLP(C)No.1117/2010) arising out of Writ Petition No.9468 of 2005, by way of an application made a request for allotment of plot for construction of a multiplex at Kharghar Railway Station. Upon being asked by the appellant CIDCO, M/s. Platinum deposited EMD of Rs.20 lakh being 10% of the tentative price of the plot in order to consider the application of the respondent. Thereafter, CIDCO approved the allotment in favour of the respondent considering the fact that there was no multiplex in the area and the earlier effort of CIDCO to advertise for such plots had met with no response. CIDCO issued allotment letter in favour of the respondent asking the petitioner to pay Rs. 1,80,00,000/- being the balance price of the plot. The respondent made two separate payments of Rs.90 lakh each towards the balance price of the plot on 16.8.2004 and 19.8.2004. The respondent paid a sum of Rs.20,00,600/- being the other charges demanded by the appellant. The respondent was asked to pay a further sum of Rs.65,096/-, which the respondent paid immediately. CIDCO unilaterally decided to ask the respondent to pay a further sum of Rs.20 lakh by enhancing the rate at which the plot was to be allotted to the respondent from Rs.2500/- per square meter as demanded in the allotment letter to Rs.2750 per square meter because the plot of the respondent was on a 24 meter road. The respondent herein on 17.11.2004 paid a further payment of Rs.20 lakh along with Rs.2,96,078/- plus Rs.4957/- being the additional cost and the other charges. On 14.1.2005, the respondent paid a further sum of Rs.19,828/- being the sum demanded. The respondent on 17.1.2005 entered into an agreement to lease with the appellant for the allotment of plot. On 28.2.2005, CIDCO being the development authority of the area issued commencement certificate to the respondent permitting the respondent to start construction. However, on 14.7.2005, the respondent received a show cause notice seeking cancellation of the allotment in favour of the respondent on the ground that the allotment was void in view of Section 23 of the Contract Act as being opposed to public policy. The main ground in the show cause notice was that the allotment was without issuance of tender and was opposed to public policy. The respondent submitted reply to the show cause notice. On 16.12.2005, CIDCO issued an order cancelling the agreement to lease and sought to resume the possession of the plot, against which the respondent approached the High Court by way of writ petition.

7. The respondent- M/s. Platinum Square Trust in the appeal by special leave petition (SLP(C)No.1215/2010) arising out of Writ Petition No.3423 of 2006, by way of an application made a request for allotment of plot of land admeasuring 80,000 sq.mtr. at Kharghar hill for establishment of country club. CIDCO having a plot of land earmarked for similar purpose, considered the request of the respondent and called upon the respondent to pay Rs.39.52 lakh on or before 20th April, 2004 constituting 10% of the value of the plot as EMD so as to enable the CIDCO to place the proposal of the respondent before the Board of Directors. CIDCO further requested the respondent to submit registration certificate either under the Trust Act or the Society Registration Act before allotment/ possession of the land so that the case of the respondent could be considered for allotment at subsidized rate in terms of the policy; otherwise commercial rates were to attract for such allotment. The respondent in terms of the letter of CIDCO deposited a sum of Rs.39.52 lakh with them. The respondent got its trust deed registered on 14th May, 2004; wherein six Trustees were appointed. Amongst others, objectives of the Trust are to establish and support, maintain and run sports club, gymnasium, health club, amusement park, yoga centre, water sports etc. and to carry out activities relating thereto.

8. The respondent herein was allotted 50,350 sq.mtr. land by CIDCO for a total sale consideration of Rs. 3,43,70,800/-. Out of the said amount of consideration, the respondent had already deposited Rs.39.52 lakh as such the appellant was directed to deposit Rs. 1,52,09,400/- in two installments i.e. on 30th July, 2004 and 29th August, 2004 being the balance lease premium payable in respect of the subject plot. In the allotment letter, it was specifically mentioned that payment of lease premium in a stipulated period is an essence of concluded contract. It was further provided in the allotment letter that extension of time could be granted which would be up to 3 months for payment of the first installment and up to 16 months for the payment of the second installment. It was provided therein that up to 3 months the respondent would be charged 13% interest and beyond 3 months the respondent would be charged 16% interest for the extended period of time. The respondent on 15th September 2004, paid the first installment of Rs.1,52,09,400/- within the extended time permitted under the allotment. The respondent on 3rd May, 2005, wrote letter to the CIDCO for extension of time for making payment of second installment up to December, 2005. Clearly in terms of the allotment letter, the respondent could ask extension of second installment up to 29th December, 2005. The respondent Trust was registered under the Bombay Public Trust Act, 1950 on 19th April, 2005. The respondent submitted documents to CIDCO on 25th May, 2005 evidencing registration of the Trust. However, on 20th July, 2005 the respondent received show cause notice seeking cancellation of the allotment made in favour of the respondent on the basis of Shankaran Report.

12. It is the case of the appellant CIDCO that the aforesaid contesting respondents had been made allotment of lands by the appellant pursuant to a direct application being made to the office of the then Chief Minister and in other similar cases a number of public interest litigation were filed in the High Court. Accordingly, the Government, to ascertain whether the allotments made were bonafide, directed the then Additional Chief Secretary to conduct an enquiry to find out whether the Board of Directors of CIDCO disposed of lands in accordance with law. Enquiry was conducted by the Additional Chief Secretary and submitted the report (called Shankaran Report). The enquiry inter alia revealed that subject allotment was illegal, arbitrary and the appellant had suffered a financial loss in crores. Therefore, the appellant issued notice to the contesting respondents and ultimately cancelled the subject allotments, which led to filing of the writ petition. The writ petitions were dismissed by the High Court on the ground that alternative remedy was available to the writ petitioners by filing suits and therefore writ jurisdiction cannot be invoked.

31. The land Pricing and Land Disposal Policy of CIDCO would show that the commercial plots with FSI 1.5, that is plots for offices, shop, restaurant, showrooms etc., is to be disposed of by tender/at fixed price. Similarly, plots for auditorium, multiplex, theatre complex etc., shall be disposed of on request at fixed rate/by competitive bidding. For better appreciation, the relevant allotment policy of CIDCO is reproduced hereunder:-

3. The undue haste is shown in allotment of Plots resulting in illegal and arbitrary allotment with malafide intention to cause wrongful gain to the individual person. It is a case of favouritism supported by the Report of Dr. D.K. Shankaran.

4. The agenda note and the resolutions demonstrate no discussion about the individual merits of the allotters except need for multiplexes sought to be justified during the case of discussion without indicating any reason for choosing group of petitions for allotment of plots.

8. No reasons are to be found to justify allotment of three plots in favour of one group of persons.

10. Dr. D.K. Sankaran report is the basis for calculation of loss suffered by CIDCO.

12. Surreptitious arbitrary allotment made without inviting tenders leads to the presumption of nepotism and bias etc.

13. The petitioners M/s. Platinum Entertainment were not registered as a charitable trust yet their application for allotment was considered by CIDCO favourably.

55. Taking into consideration the entire facts of the case and the law discussed hereinabove, we have no hesitation in holding that the CIDCO was justified in cancelling all the allotments made in favour of the respondents.

56. For the reasons aforesaid, these appeals are allowed and the judgment and order passed by the High Court in the writ petitions are set aside. Consequently, we uphold the order passed by the CIDCO cancelling the allotments made in favour of the respondents.