Case: City Indl.Devept. Th:Mng Director Vs. Platinum Entertainment

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. Oninstructions, 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 The Agreement of Lease was repudiated and rescinded, against which the respondent approached the High Court by way of a writ petition.6.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.9. The respondent, on 3rd August, 2005, submitted its detailed reply to the show cause notice challenging the cancellation of allotment of plot, reiterating that the allotment was in accordance with law as such it could not be cancelled. The respondent, on 29th December, 2005, wrote letter to the Marketing Manager of CIDCO requesting him to accept payment of second installment being the last date up to which the extension could be granted under the allotment. However, CIDCO refused to accept the payment. The respondent on the same date wrote another letter recording the fact that CIDCO has refused to accept the second installment and that the respondent would not be liable to pay any further interest from the said date and that the allotment could not be cancelled on the ground that the payment has not been made by the respondent.10. The respondent was served with the order dated 28th April, 2005 cancelling allotment of plot made in favour of the respondent. Being aggrieved by the aforesaid order of cancellation, the respondent herein approached the High Court by way of writ petition filed under Article 226 of the Constitution of India.11. With the aforesaid factual matrix, it is also necessary to note that State of Maharashtra, who is having ultimate authority and power to control and regulate the activities of planning and development under the Maharashtra Regional and Town Planning Act, 1966 (in short, ‘MRTPin 1971 appointed appellant-CIDCO as new town planning authority for the new town - Navi Mumbai. In exercise of powers conferred by sub-clause (a) of clause (1) of section 159 of the MRTP Act, the CIDCO has with the previous approval of the State Government published in July 1979 the New Bombay Disposal of Lands Regulations, 1975 (in short, ‘theThe aforesaid regulations, inter alia, provide for the demarcation of plots vested in the Government by CIDCO into disposable plots having regard to their size and use. The said regulations also make provision for conditions of lease, mode of disposal and for grant of land for religious, educational, charitable and public purposes. For the present purpose, relevant one is Regulation 4 of Chapter IV, according to which the Corporation may dispose of plots of land by public auction or tender or by considering individual applications as the Corporation may determine from time to time.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.13. Aggrieved by the decision of the High Court, respondents approached this Court by way of appeals by special leave. Those Civil Appeals being Civil Appeal Nos. 940-941 of 2007 were disposed of by this Court remitting the matters back to the High Court for deciding the writ petitions on merits. The said order is reported in Popcorn Entertainment & Anr. vs. City Industrial Development Corpn. & Anr., (2007) 9 SCC 593. In the order of remand this Court made some observations with regard to the merits of the case. For better appreciation, para 41 and 47 are reproduced hereinAt the time of hearing, it was suggested by the learned Senior Counsel for the respondent that the allotment was made without any justification and that there was a huge demand for such plot, it is submitted by learned counsel for the appellant that the appellant has sought information from CIDCO under the Right to Information Act as to whether there was no application pending with them for allotment of the said plot prior in time to the application of the appellant. CIDCO in reply has clearly stated that there was no application prior to the application of the appellant. Even the allotment in favour of the appellant was a reasoned allotment taking into consideration the lack of entertainment facilities in the area and the said issue [pic]was also discussed in the board meeting before the allotment and these facts are clear from the information provided to the appellant under the Right to Information Act. Our attention was also drawn to the noting in the file while considering the case of the appellant and before making the allotment that(i)is no cinema/multiplex facility available today for the residents of CBD Belapur, Kharghar and Kalamboli residents.(ii) From accessibility and land use compatibility point of view, Plot No. 1, Sector 2, Kharghar admeasuring about 8000 sq m is an ideal location for multiplex.(iii) This building will be visible from highway and will add to the image of the city.(iv) Adjoining Plot 1 of Sector 1 attached to railway station admeasuring 5600 m2 (not demanded yet) is earmarked for city mall.We have given our careful consideration to the rival submissions made by the respective counsel appearing on either side. In our opinion, the High Court has committed a grave mistake by relegating the appellant to the alternative remedy when clearly in terms of the law laid down by this Court, this was a fit case in which the High Court should have exercised its jurisdiction in order to consider and grant relief to the respective parties. In our opinion, in the instant case, 3 of the 4 grounds on which writ petitions can be entertained in contractual matter were made out and hence it was completely wrong of the High Court to dismiss the writ petitions. In the instant case, 3 grounds as referred to in Whirlpool Corpn. (1998) 8 SCC 1 , have been made [pic]out and accordingly the writ petition was clearly maintainable and the High Court has committed an error in relegating the appellant to the civil court.However, this Court took the view that the matter needs to be remanded back to the High Court, so that the High Court will consider all the submissions made by the parties and dispose of the same afresh.15. The High Court on receipt of the remand order proceeded with the hearing of the writ petitions and after hearing both the parties allowed the writ petitions by passing the impugned order and quashed the orders passed by the appellant-CIDCO cancelling the allotment. The High court while passing the impugned order has gone through the merits of the case of both the parties but held that the observations made by this Court in the remand order (41, 43, 47, 48 and 49) relating to non-observations of rule and regulations causing substantial loss to the CIDCO operate as obiter and is binding on the High Court and, therefore, the High Court has to fall in line with the view expressed by this Court. Para 97 of the impugned order is quoted hereinbelow.As already stated hereinabove, so far as categorical and unequivocal observations made by the Apex Court revolving around the issues relating to non-observation of rule and regulations causing substantial loss to the CIDCO since no tenders were invited and interpretation of Section 23 of the contract Act are concerned, they operate as obiter binding on us as such we have to fall in line with the view expressed by the Apex

Court's reasoning:
The High Court instead of looking into these aspects of the matter, completely ignored the same on the ground that in the show cause notice none of the grounds were made basis of the order of cancellation of allotment. In our considered opinion, the High Court while exercising power of judicial review is supposed to have gone into the question as to how the three plots were allotted in favour of one group of persons. The High Court has lost sight of the admitted fact that by entertaining private applications of the same person three different valuable plots have been allotted in different names. The High Court fell in error in holding that the allotment of plots of land to the same person but in the names of trust is alsoHigh Court ought to have seen the action of the then Board of Directors of CIDCO demonstrating that in the first meeting of the Board itself they cleared the special proposals without considering the individual merits. In the meeting, hardly any official members were present when the allotments were made to theand its agencies and instrumentalities cannot give largesse to any person at sweet will and whims of the political entities or officers of the State. However, decisions and action of the State must be founded on a sound, transparent and well defined policy which shall be made known to the public. The disposal of Government land by adopting a discriminatory and arbitrary method shall always be avoided and it should be done in a fair and equitable manner as the allotment on favoritism or nepotism influences the exercises of discretion. Even assuming that if the Rule or Regulation prescribes the mode of allotment by entertaining individual application or by tenders or competitive bidding, the Rule of Law requires publicity to be given before such allotment is made. CIDCO authorities should not adopt pick and choose method while allotting the Governmenttake serious note and express our anguish, the way the authorities of CIDCO showed undue favour to the respondents and managed to allot the Government land in favour of one person knowing fully well that the aforesaid proprietor of the Company, in different capacity and in dummy names, sought allotments of plots. The way CIDCO has been dealing with the Government property, it is high time, we observe, that notwithstanding Regulation 4, as contained in the Regulations, the appellant CIDCO may take all endeavour to make allotments of plots by open tender or competing bids and shall not take any decision for allotment of Government land at the instance of the Ministers and High Dignitaries for any purposesinto 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.