Case: G B Mahajan  Vs. The Jalgaon Municipal Council

( 3. ) The controversy relates to a project for the development of real estate sponsored by the Town Municipal Council, Jalgaon, in the State of Maharashtra. In the year 1913 the Municipal Council, it would appear, received by way of gift of a piece of land of an extent of 5 acres and 32 guntas from a certain Lila Dhar Bhatia. The land had been in the use of the Agricultural Produce Market Committee, Jalgaon, as aand wholesale fruit and vegetable market. The Municipal Council having entertained the idea of putting the land to a better and more profitable use persuaded the Market Committee topossession. The terms of the original gift, it would appear, stipulated conditions that the land be put to use for only as a cotton and vegetable market. In order to enable itself to put the land to uses other and more beneficial uses and to exploit thewhich the property had with the passage of time acquired, the Municipal Council appears to have approached the heirs of the original donor who appear to have agreed to amend the terms of the gift accordingly. But the permission was not without strings attached. The project as envisaged by the Municipal Council, contemplated, amongst other things, the erection of a commercial complex. The heirs appear to have bargained for and secured a benefit that they should be givenfree of cost in the commercial complex.( 4. ) The Municipal Council invited competitive proposals as to the ways in which the potential of the land could be commercially exploited and invited competitive plans and designs on the basis of which the Architects could be selected from architects all over the country. By its Resolution datedthe Municipal Council selected M/s. Kabra Chaudhary Associates as Architects for the project. The project envisaged a Central Administrative Building with ground plus 17 floors intended to be utilised by the Municipal Council for locating its own offices and an adjacent structure with a basement plus five upper floors to be used as aand a commercial complex. The broad aspects as to the funding of the project were that the project was to be executed by a "Developer" who would be required to take up and execute the project at his own cost; that the developer would be obliged to rehabilitate 486vegetable vendors who were in occupation of the land in various units by providing them small stalls at, what was described as, aof Rs. 3,000.00 per stall; that 83 more shops, at fixed premia of Rs. 40,000/each, be given to Adatias who were carrying on their business on the property and that, further, another 60 shops, at the same rate, be allotted to some traders who are stated to have encroached upon the land. This was in addition to the five shops, which had to be made available to the heirs of the original donor free of cost. The nature of the rights conferred on to these beneficiaries is stated to be "occupancy rights" for a period of 50 years u/ S. 272(1) of the Maharashtra Municipalities Act, 1965 (Act for short) which regulated the matter. The municipality would get rents from those occupants at rates stipulated. The administrative block comprising of ground plus 17 floors was, however, intended to be handed over to the Municipal Council free of cost for its own use and of its tenants.( 5. ) Thecontemplated a mode of financing which contemplated that in consideration of the "developer"the entire construction at its own cost and making various allotments to theto whom the Municipal Council had given assurances of alternative accommodation at fixed rates of premia and providing Ground plus 17 floors of the Administrative building free of cost to the Municipality, the developer would be entitled and at liberty to dispose of the occupancy rights in respect of the rest of the accommodation inand retain the premia paid by the disponees so to reimburse itself the financial outlays on the project plus its profit. The occupiers, including those who would have the benefit of the allotments at suchas well as those to be inducted by the developer, were expected to pay rents to the Municipal Council for the period of 50 years at rates envisaged in the scheme, though, however, certain incentives and concessions :were afforded for the first two periods of 3 years each. According to the financial estimates prepared by the Municipal Council with the assistance of its architects as to the economics of the scheme the project was to involve a financial outlay of about Rs. 11 crores. On certain estimates prepared by it the Municipal Council was of the view that the project would benefit the local community both from the immediate as well asadvantages if this mode of financing and execution of the project was adopted. It was the Councils view that while the project would help to rehabilitate all those businessmen and traders who were carrying on business on the land and obviate protracted litigation for their eviction, the Municipal Council would, in addition, get a building consisting of a Ground plus 17 floors in the Central Administrative Block which would be an impressive structure 70 metres in height adding greatly to the value of the municipal estate. It was also said that the rents from those occupants in the commercial complex would considerably augment the municipal revenues.( 6. ) After enunciating these criteria the project was put to tender. Advertisements were taken out in the Newspapers and it is stated that five Developers responded and submitted their tenders. After a process of scrutiny of the tenders and elimination of ineligible andones, the tender of respondent No. 6 was accepted by the Municipal Council by its unanimous resolution dated8, a "Letter of Intent" was issued to the respondent No. 6, which, in turn, onissued its own advertisement of the project. Ona formal agreement was entered into between the Municipal Council and the respondent No. 6 in this behalf.( 7. ) Appellants who are residents of Jalgaon and who entertained serious misgiving as to the legal permissibility, the economic soundness and propriety of the policy of this venture petitioned to the Collector of the District under the provisions of the Act to suspend the resolutions of the Municipal Council undertaking the project and the agreement with respondent 6 for its execution. They urged that the transaction was really amounted to grant of a lease for 50 years prohibited u/ S. 92 of the "Act"; that under the Act a scheme of this kind could not be embarked upon without the sanction of the Development Department of the Government of the State of Maharashtra; that the transaction resulted in the creation of an impermissible encumbrance on the property of the Municipal Council in favour of the developer and lastly that the intended user violated the original terms of the gift. The Collector suspended the impugned resolutions. But the Minister, in apreferred against the Collectors order, stayed the operation of that order. Simultaneously, some persons, including some of those who had moved the Collector, filed Writ PetitionNo.1765/ 1988 in the High Court assailing the said resolutions. It is unnecessary to refer in any great detail to the several proceedings that ensued. Suffice it to say, in WP No. 1765/1988, in which the resolutions touching the clearance of the project and the agreement with respondent No. 6 had been assailed and the1825/ 1988 in which the Ministers order staying the Collectors order was challenged came up together before a Division Bench of the High Court onThe contention that was pressed appears to be that in the calculations forming the basis of the financial estimates of the project were made grosslythe probable receipts by way of premia for the grant ofwith the intention of giving an opportunity for unjust enrichment to respondent 6 as, according to the appellants, thefor the shops were capable of fetching far higher premia than those estimates made by the Municipality. Learned Judges of the Division Bench who dealt with thewere of the opinion that any apprehension in that behalf would be allayed if it was ensured that any such excess should go to the benefit of the Municipality. Accordingly, the Division Bench directed that in the matter of disposal of thein regard to the shopsother than thosefor the preferential category of existing businessmen and traderstenders should be called from the public so that the difference between what was taken into account in the estimates of the project and what was actually secured in response to the advertisement might go to the benefit of the Municipality. The order said: "Shri Singhvi, appearing for the Jalgaon Municipal Council, states that the Council will invite tenders for sale of 68 shops on the ground floor with basement on the eastern side facing Sane Guruji Road, stipulating Rs. 3,50,000/per shop as the floor price, and of 32 shops on the ground floor without basement, on the rear of the above 68 shops, i.e. on the western side and facing Jaikisanwadi, stipulating Rs. 2,50,000/per shop as the floor price. The advertisement will be given within a week from today and it will be repeated within a space of two days in between. The advertisement will mention that Rs. 25,000.00 have to be paid at the time of submitting the tender for the shop. If the applications are received tendering more amount than is stipulated in the notice, then the surplus amount will be credited to the Municipal Council and only theshall be paid to the contractor. If applications for all the shops are not received, or, if the applications received tender less amount than thethen the Council is at liberty to go ahead with their present scheme ... ...." W.P. No. 1765/1988 datedIt would appear that the advertisement issued in that behalf did not elicit any favourable response from the public. The matter was listed again before the High Court onThe Division Bench held that its earlier order datedry and had put an end to thefinally and nothing really survived in theThat was how WP No. 1765/1988 came to an end.1825/ 1988, directed against the stay order granted by the Minister was disposed of onon 223 of 1989 appellants had sought a review of the order datedwhich was also dismissed onThe advertisement issued pursuant to the order datedwas itself challenged in a separateion was also dismised on8. ) All these orders were assailed before this Court in Special Leave Petition No. 3293/1989, SLP No. 3222/1989, SLP No. 3268/1989 respectively. The SLP 3293/ 1989 which arose out of thechallenging Ministers order was disposed of onby this Court with the following observation: "Since the order made by the Honble Minister is evidently in the nature oforder, it is open to the petitioner to move the Minister for final disposal. It is hoped that the Minister, having regard to the importance of the matter, will expeditiously dispose of the matter. The minister will also consider whether the scheme in question is in conformity with the statutory provisions. With these observations the special leave petition is dismissed." Special Leave Petition (Civil) No. 3293 and 3268/1989 which arose out of the orders in W.P. 1765 of 1988 and thepreferred against the advertisement were also dismissed with the following observation: "In view of the above order in Special Leave Petition (Civil) No. 3222/ 1989 these special leave petitions are dismissed."( 9. ) Later, the Minister disposed of the revision application by his order datedThe Minister took into account the order made by the High Court in Writ Petition No. 1765/1988 and was persuaded to the view that that decision could not be ignored by him. That apart, he also went into the merits of the scheme and recorded findings against the appellants. Against this order of the Minister, appellants preferred a fresh Writ Petition No. 2404/ 1989 before the High Court. The present appeal before us arises out of the High Courts order dismissing the said W.P. 2404/1989. The High Court was of the view that the orders made by this Court in the earlier SLPs indicated that this Court had really intended that all the controversies should conclude with the decision of the Minister. The High Court, however, also went into the merits as well and held . that there were no grounds to interfere.

Court's reasoning:
( 12. ) Re: Contention (a) The mode of financing of the project is stated to be unconventional one and does not accord with any recognised or accepted norms of functioning and financial discipline of Governmental bodies. It is urged that while the Municipal Council could have engaged a contractor to execute the work against payment in accordance with well accepted procedures for Government contracts or could have executed the works itself departmentally. It is said that the method now chosen for the development involves a policy impermissible for a Government body. This contention of the appellants, as a legal contention is not somewhat vague and does not admit oflegal contours. As we apprehend the contention, it pertains to the legality or propriety of aHowever, reliance was placed on certain observations of this Court in Ramana Dayanand Shetty v. International Airport Authority (1979 (3) SCR 1014 : (AIR 1979 SC 1628 ) and Kasturilal Laxmi Reddy v. State of J and K (1980 (3) SCR 1338 ): (AIR 1980 SC 1992 ). In those cases relied this Court pointed out that with the growth of a welfare state and with the Government assuming a pluralist role as provider of social welfare services and with the corresponding increase in the magnitude of the governmental functions and the consequent evolution of new forms of wealth and new forms of property, the scope for conferment of largesse by Government had increased and the discretion of Government in the disposal of such properties, rights or privileges should not be unlimited and15. ) We hold that Contention (a) does not justify quashing of the impugned Resolution of the Municipal Council.(17. ) On a consideration of the matter we find no substance in contentions (b) and (c) either(21. ) In regard to the allegation that the Project Scheme was tailored to suit respondent 6 alone or that the project as put to tender did not admit of tenders on fixed comparable parameters, we find no merit. Sri K. K. Singhvi submitted that the tender papers were prepared by reputed architects and the precise points on which comparative quotations were invited were specifically incorporated in theThe point again is that no other tenderer expressed any grievance. The tenders were such that the tenderer could identify the terms which form the basis of comparative evaluation. The charge of arbitrariness cannot be upheld. Tests to be applied in a given case may be influenced by the extent to which a decision is supported by a democratic unanimity which evidences the decisiongranted, of course, the power.( 22. ) Sri R. K. Jain stated that the scheme enables respondent 6 to resort to certainfinancial malpractices fornow known to be rampant when properties change hands. Sri Jain said that the Court ought to take judicial notice of so rampant and pervasive an evil and interdict anything that tends to promote such unhealthy economic trends. While it is true that large scaleand evils of unaccounted money bedevils the nations economic discipline and that with the increasing erosion of morality in public life and the serious personal degradations for unjust gains one seesthe situation is, indeed, serious. But we fail to see what the Court can do in a case like this. The present argument proceeds on two assumptions. The first is that respondent No. 6 has, in fact, indulged in such practices in the matter of disposal ofThis is a mere allegation which is emphatically repudiated by respondent No. 6. The second is that the accommodation in this commercial complex is such good competitive selling proposition that there is great demand and limited supply enabling respondent 6 to exploit the situation. This again is a matter of mere allegation. To condemn the municipal authoritys decision, otherwise valid, on the ground alone that the developer is likely to resort to transactions of unaccounted money would, as a judicial remedy, be plainly unthinkable. Contention (d) requires to be and is also held against appellants.( 23. ) On a consideration of the matter, we think that the conclusion reached by the High Court does not call for interference.