Case: Shabi Construction Company Vs. City And Industrial Development Corporation And Anr

2. The appellant is a firm registered under the Partnership Act and carries on business as builders and developers, while Respondent 1 is a government company within the meaning of Section 617 of the Companies Act, 1956. Onthe Government of Maharashtra issued a notification under(1) of Section 113 of the Maharashtra Regional and Town Planning Act, 1966 (Act for short) delineating and designating certain area for development as a site for a new town to be known as New Bombay. Concurrently, it declared, in accordance with) thereof, Respondent 1 to be the New Town Development Authority for that township. Consequent upon such declaration Respondent 1 assumed, by virtue of(8) of the said section, all the powers and duties of a Planning Authority under the Act including those under Chapters III and IV thereof. In due course Respondent 1 framed, in exercise of powers conferred by Section 159 of the Act and with the previous approval of the State Government, a set of Regulations called the General Development Control Regulations for New Bombay, 1975 (Regulations for short). Regulation 16.3.1 of the said Regulations initially provided that the Floor Space Index (FSI for short) for divers land use should not exceed 1. Onthe Board of Directors of Respondent 1 passed a resolution to amend the above regulation by fixing different FSIs for divers land uses; and for land use for business and commercial purposes the maximum permissible FSI was fixed at 2. By its letter datedRespondent 1 forwarded the resolution to the State Government for approval in accordance with Section 159 of the Act. Instead of approving the proposed amendment the State Government wrote back to Respondent 1 onto resubmit the same after following the procedure laid down in Section 37 of the Act to enable it (the State Government) to effectuate the marginal or minor modifications to the final development plan of New Bombay. Pursuant thereto and in compliance thereof Respondent 1 issued and published a notice datedin the Official Gazette inviting objections and suggestions with regard to the proposed amendment by way of a minor modification to the final development plan. As no objection was received to the proposed amendment the Board of Directors of Respondent 1 considered and approved of the proposed amendment and authorised its Chief Administrative Officer to resubmit it to the State Government. Accordingly, the Chief Administrative Officer wrote a letter to the State Government onseeking its approval to the amendment as required under Section 37(1) of theWhile the matter was awaiting final decision of the State Government, Respondent 1 issued a public notice in August 1985 inviting offers for lease of commercial plot No. 4 of the District Business Centre in Sector 17 of Vashi, New Bombay on terms and conditions set out in a booklet published for the purpose. In the booklet the maximum permissible limit of FSI for the successful lessee was shown as 2. Amongst others, the appellant responded to the notice and ultimately succeeded in getting allotment of the plot for which a formal lease agreement was entered into by and between the appellant and Respondent 1 onfor a consideration of Rs 64, 19, 250. Clause 3(aa)(i) of that agreement provides that the maximum permissible FSI as defined by the Regulations shall beIn the meantime6 to be precisethe State Government had issued a notification in the Official Gazette in accordance with Section 37(2) of the Act sanctioning increase in FSI in respect of use for business purpose to 1.50 only. On getting information about the same the appellant wrote a letter to Respondent 1 pointing out that the notification had no bearing upon its construction plan as the maximum permissible built up area granted under the agreement had been fixed at 3200 sq. m. (on the basis that FSI was 2). Without prejudice to his above contentions, it prayed for provisional permission to construct about 2000 sq. m. as per the plan submitted by them. In reply thereto Respondent 1 communicated to the appellant by its letter datedthat its plan could not be approved since there was discrepancy in the FSI mentioned in the agreement and the FSI actually approved by the Government. Aggrieved thereby the appellant filed a petition in the High Court for a writ of mandamus compelling Respondent 1 and the State of Maharashtra (Respondent 2) to forthwith withdraw and/or cancel the impugned notification datedand the letter datedand to forbear and desist them from in any manner implementing or enforcing or taking any action on the basis thereof. The High Court dismissed the writ petition with an observation that as the appellant had with open eyes and possibly in collusion with the officers of Respondent 1 entered into an agreement which was contrary to the Regulations and the law, it was not permissible for it to claim writ of mandamus to enforceTo appreciate the points involved in this appeal it will be imperative at this stage to take a close look into the relevant provisions of the Act. The Act was brought in the statute book in 1966 to make provisions for planning the development and use of land in notified regions and creating new towns through Planning Authorities and Development Authorities to be constituted and declared for the purpose. Chapter III of the Act comprises a fascicle of sections which relate to preparation, submission and sanction of development plan and procedures to be followed therefor. Section 21 thereof requires that within the period prescribed therein every Planning Authority shall prepare draft development plan for the area to be developed and submit the same to the State Government for sanction. Section 22 provides that a development plan shall generally indicate the manner in which the use of the land in the area of a Planning Authority shall be regulated and also indicate the manner in which the development of land therein shall be carried out. The section then says that in particular, it shall provide, so far as may be necessary, for all or any matters as enumerated in the clauses therein. Clause (m) thereof, which is material for our purposes, reads as(m) provisions for permission to be granted for controlling and regulating the use and development of land within the jurisdiction of a local authority including imposition of conditions and restrictions in regard to the open space to be maintained about buildings, the percentage of building area for a plot...."

Court's reasoning:
9. From the facts of the instant case as recorded earlier it is evident that when Respondent 1 issued the public notice in August 1985 inviting offers for lease of the plot in question, the maximum permissible FSI for divers land uses according to the final development plan was 1 and the minor modification proposed by it in respect thereof was awaiting sanction of the State Government. It is also evident, that before execution of the agreement by the appellant and Respondent 1, the State Government had issued the impugned notification in accordance with Section 37(2) of the Act sanctioning increase in the FSI to 1.50 and not to 2 as proposed by Respondent 1. The prior sanction of the State Government being the sine qua non for a final development plan as also for minor modifications thereof under Section 31 and 37 respectively, the agreement so far as it related to FSI did not, and could not, bestow any legal right upon the appellant. To put it conversely, only on such sanction could the inchoate right under the agreement crystallize into a legally enforceable right in favour of the appellant10. Building his argument on the doctrine of estoppel, the learned counsel for the appellant submitted that the prescription of FSI was not a statutory prescription but an administrative decision required to be taken by Respondent 1 from plan to plan under the provisions of Section 22(m) of the Act. He argued that since in the instant case Respondent 1, as the Planning Authority, took a decision to increase the FSI to 2 for business use of land and entered into a contract with the appellant on the basis thereof with open eyes it was estopped from repudiating the contract under Section 115 of the Evidence Act as also the general equitable doctrine of estoppel. He next contended that Regulation 16 of the Regulations made under Section 159 of the Act providing for FSI was ultra vires because the matters which could be brought within the ambit of the Regulations were serialised in the enabling section. According to the learned counsel when FSI has been specifically mentioned to be made a part of each development plan under Section 22(m) the fixation of FSI cannot be brought within the ambit ofpower of the Development Authority and it had to be provided for by their executive orders to be determined in their discretion. The learned counsel contended that Respondent 1 could not resile from their contractual obligations by taking shelter behind a regulation which was ultra vires. He lastly contended that, assuming but without admitting, that FSI could fall within the ambit of regulation made under Section 159 of the Act, the fixation thereof was not a statutory prescription but the expression of anpolicy declaration, which if deviated from by the holder of the Authority could not be used as a shield to retract from their contractual obligations. It was at best, according to the learned counsel, a violation of a rule and the proposition that there cannot be any estoppel against statute did not extend thereto11. Having regard to the scheme of the Act as reflected in the various provisions of the Act and the Regulations referred to earlier we are unable to accept the above contentions. Amongst various matters required to be included in a development plan under Section 22 of the Act, a provision for permission to be granted for controlling and regulating the use and development of land including imposition of conditions and restrictions in regard to the open space to be maintained about buildings and percentage of building are for a plot is required to be made under clause (m) thereof. To conform to the words "percentage of building are for a plot" appearing in that clause the FSI has been defined in the Regulations and maximum permissible limit fixed. Undoubtedly, to start with, fixation of FSI is anexercise of Respondent 1, but it gets its legal sanctity only when the State Government grants its approval thereto under Section 159 of the Act. After the FSI is so fixed to comply with the requirement of Section 22(m), it becomes a part and parcel of the development plan which is to be submitted by the Planning Authority to the State Government under Section 21. Once the State Government grants approval to the development plan it becomes the final development plan and binds the Planning Authority under Section 31(6) of the Act. Therefore, any breach or violation of any of the terms or contents of the final development plan or modification in respect thereof without prior sanction of the State Government would amount to a breach of Sections 31 and 37, as the case may be, of the Act. That necessarily means, that in the instant case the increase in the FSI to 2 without obtaining approval of the State Government, is not only a breach of Regulation 159 but also of Sections 31(6) and 37(2) of the Act. In that view of the matter and in view of thelaw that the doctrine of promissory estoppel cannot be invoked to compel the public bodies or the Government to carry out the representation or promise which is contrary to law or which is outside their authority or power, none of the contentions raised on behalf of the appellant can be entertained