SURESH EST ATES PVT. LTD. & ORS. ,

Mill>.1CIP AL CORP. OF GREATER MUMBAI & ORS.

DECEMBER 14, 2007 --

B [K.G. BALAKRISHNAN, CJI, LOKESHWAR SINGH PANT A

AND J.M. PANCHAL, JJ.)

TOWN PLANNING: c

ENVIRONMENT (PROTECTION) ACT, I 986:

ss. 3(1) and 3(2)(v)-Coastal Regulation Zone Notification dated

19. 2.1991-Regulating building activities in Coastal Zones within Municipal Corporation of Greater Mumbai as per norms 'existing' on D date of Notification-Application by owners to develop their land falling under CRZ JI as per the Notification, by constructing a luxury hotel thereon in terms of Development Control Rules, 1967-HELD: On 19. 2.1991, the date of issuance of CRZ Notification, DC Rules, 1967 were the 'existing' norms and as such the plan prepared E thereunder would govern the case-Draft Development Rules, 1989 which were notified on 20.2.1991 and came into force w.e.f 25.3.1991 in the form o/Development Control Regulations for Greater Bombay, 1991 were not the existing law in force and prevalent on 19. 2.1991- Norm set out regarding Floor Space Index (FSI) in DC Rules, 1967

; ·- F would be construed to mean the norm of FSI which can be granted by i Government exceeding the norm of permissible FSI, in exercise of discretion under r.10(2) of the DC Rules, 1967.

s. 3---0rder/Notification issued under-HELD: Will prevail over provisions of 'any other law' including MRTP Act, 1966-Thus s.46 G of MRTP Act would not apply to facts of instant case-Maharashtra Regional and Town Planning Act, 1966-s. 46.

ADMINISTRATIVE LAW:

H 882

SURESHESTATESPVT.LTD. v. MUNICIPAL CORP. OF 883

GREATERMUMBAI

Statutory authority-Taking of decision and exercise of discretion A by_:__Application by owners of plot for permission to develop it by constructing a luxury hotel thereon and to allow additional FSI in terms of r.10(2) of D. C. Rules, 1967-Not decided within stipulated time-Writ petition by land owners seeking a declaration that application be deemed to have been allowed-HELD: Applicants are B not entitled to such a declaration as grant of permission was under

"' active consideration of different authorities-Further, Court cannot direct the competent authority to exercise discretion in a particular tnanner-Court can always direct competent authority to exercise discretion in accordance with law-The discretion has to be exercised c judiciously in consonance with the principles incorporated in Article 14 of the Constitution-State Government directed to take a decision as early as possible on application of land owners on the basis of DC Rules, 1967 and to exercise discretion to allow additional FSI as available under r. I 0(2)-Development Control Rules, 1967-r. l 0(2) D -Constitution of India, 1950-Articles 14, 226and136.

MAHARASHTRA REGIONAL AND TOWN PLANNING ACT, 1966:

s.127-Land reserved for school and road-Land owner causing E notice served on competent authority to purchase the land-Decision taken not to purchase the land-Held: Reservation lapsed in terms of provisions of s.127.

WORDS AND PHRASES:

Expression 'any other law' as occurring ins. 3 of the Environment (Protec:tion) Act, 1986-Connotation of

'Existing' as occurring in CRZ Notification dated 19. 2.1991 issued under s.3 of Environment Protection Act, 1986-Connolation of

A plot admeasuring 8983 sq. mtr. belonging to the appellant- Companies and fallingwithin the local limits ofMunicipal Corporation

of Greater Mumbai, was reserved for playground of Municipal School and for a road. According to the appellants, in order to regulate building activities in Coastal Zone, Government of H

884 SUPREME COURT REPORTS [2007] 13 (Add!.) S.C.R.

A Maharashtra issued Notification dated 19.2.1991 u/ss 3(1) and 3(2)(v) of the Environment (Protection) Act, 1986 and r.5(3)(d) of Environment Protection Rules, declaring coastal stretches as Coastal Regulation Zone (CRZ), and as per the Notification their plot fell within CRZ II. The appellants claimed to have served a B purchase notice on the respondent-Municipal authorities, and since the latter declined to purchase the said land, reservation of the same . was stated to have lapsed. Thereafter the appellants, on 26.12.2005,

submitted an application with the plan in terms of the Development Control Rules, 1967 to develop the said land by constructing a luxury C hotel thereon, and claimed additional FSI of3.73 times the FSI in addition to 1.33 FSI allowable on the said plot as per the provisions of Rule 10(2) of the DC Rules, 1967. Since the appellants did not receive any response from the respondent-authorities, they filed a _ writ petition before the High Court. The claim of the appellants was D that since their land fell in CRZ II category and the buildings permitted within CRZ II on landward side of the existing and proposed road would be subject to existing local Town Planning Regulations, in terms of the CRZ Notification dated 19.2.1991 the proposed luxury hotel would be constructed as per D.C. Rules, 1967; E that the Planning Authority did not communicate its decision on their application to them within 60 days from the date of its receipt, and, therefore, they were entitled to a declaration that the permission was deemed to have been granted. The stand of the respondents was that, in the instant case, Draft Development Control Regulations of1989 F which were notified on 20.2.1991 and which later came to be known as Development Control Regulations for Greater Bombay,1991 would apply and not the DC Rules, 1967 and, therefore, the appellants would not be entitled to additional FSI over and above FSI of 1.33 metres; that in any event, it was the prerogative of the State to grant G dicretionary additional FSI under r.10(2) of DC Rules, 1967; and that the land could not be used for construction of a luxury hotel as it was reserved for public purpose. The High Court did not go into the merits of the respective contentions and directed the Government to take a decision on the application filed by the appellants.

Aggrieved, the landowners filed the instant appeal.

SURESHESTATESPVT. LTD. v. MUNICIPAL CORP. OF 885

GREATERMUMBAI 1

Partly allowing the appeal the Court A

HELD: 1.1. In view of the contents ofCRZ Notification dated 19.2.1991, which freezes the building activity in an area falling within CRZ II to the law which was prevalent and in force on February 19, 1991, the application submitted by the appellants to develop their B plot would be governed by the provisions of the Development Control Rules, 1967, and not by the Draft Development Regulations of1989 which were notified on February 20, 1991 and which came into force w.e.f. 25.3.1991 in the form of Development Control Regulations for Greater Bombay 1991 as they were not the existing law in force and c prevalent as on 19.2.1991. [Para 7 and 9] [895-B-C-F]

Overseas Chinese Cuisines India Pvt. Ltd. v. Municipal Corporation of Greater Mumbai, (2001) 1BCR341, cited.

1.2. It is not in dispute that the CRZ Notification was issued on D 19.2.1991 classifying the areas into CRZ I, CRZ II, CRZ ill and CRZ IV categories and the plot belonging to the appellants falls within CRZ II category. The Notification provides that the buildings permitted at landward side of existing and proposed roads shall be subject to existing local town and country planning regulations including existing norms of floor space index (FSl)/floor area ration. E The draft Development Control Regulations, 1991 were notified on 20.2.1991 which came into force w.e.f. 25.3.1991 in the form of Development Control Regulations for Greater Bombay, 1991. When

+ doubt arose whether the existing DC Regulations for CRZ II would mean DC Rules, 1967 or Draft DC Regulations, 1989 which F culminated into DC Regulations, 1991, the Government issued clarifications on 8.9.1998 and 18.8.2006 stating that the DC Regulations as existing on February 19, 1991 would apply to all development activities in Coastal Regulation Zone including CRZ II, and existing DC Regulations applicable to CRZ II areas in G

-+ Mumbai would mean DC Rules, 1967. Even the Municipal Corporation in its letter dated 31.12.2005 to the Urban Development Department, Government of Maharashtra observed that application of the appellants be granted under Rule 10(2) of DC Rules, 1967.

On March 1, 2007 the Municipal Corporation submitted its report H

A to the State Government recommending for grant of additional FSI r

in terms of DC Rules, 1967. [Para 7] [893-H; 894-A-E; G]

1.3. The word 'existing' as employed in the CRZ Notification dated 19.2.1991 means Town and Country Planning Regulations in

B force as on Jl'ebruary 19, 1991. The CRZ Notification refers also to structures which were in existence on the date of the notification.

What is stnssed by the notification is that irrespective of what the local Town and Country Planning Regulations may provide in future, the building activity permitted under the Notification shall be frozen to the laws and norms existing on the date of the notification. On c February 19, 1991 when the CRZ Notification was issued, the only building Regulations that were existing in city of Mumbai, were the DC Rules, 1967 and, therefore, the plan prepared thereunder would govern the case. [Para 7 and 9] (894-G; 895-A-B]

D 1.4. Section 3 of the Environment (Protection) Act, 1986 provides thatthe provisions of the Act and any Order or Notification issued under the said Act will prevail over the provisions ofany other law. The phrase "any other law" will also include the Maharashtra Regional and Town Planning Act, 1966. In view of the peculiar circumstances, Section 46 of the M.R.T.P Act, 1966 would not apply E to the facts of the instant case. Further, when the sanctioned D.C.

Regulations for Greater Bombay, 1991 do not apply to areas covered within CRZ-11, since those regulations came into force with effect from March 20, 1991, its previous draft also cannot apply. Even otherwise what is envisaged under Section 46 of the M.R. T .P. Act F is due regard to draft plan only if there is no final plan. i [Para 9] [895-E; 895-G-H; 896-B]

2.1. It is true that in DC Rules, 1967 the norm of permissible FSI (floor space index) is laid down to be 1.33. However, there is no manner of doubt that under Rule 10 (2) the FSI specified may be G permitted to be exceeded in respect of buildings mentioned therein, including luxury hotels, with the previous approval of the +- Government. The norm as set out regarding FSI in DC Rules of 1967 will have to be construed to mean also the norm ofFSI which can be granted by the Government in.exercise of discretion vested in it H under Rule 10(2). Therefore, it cannot be said that the appellants

SURESH ESTATES PVT. LTD. v. MUNICIPAL CORP. OF 887

GREATERMUMBAI

"I would not be entitled to more than 1.33 FSI in view of nrm set out A in DC Rules of1967. The case of the appellants is that normally all luxury hotels which had applied for additional FSI under rule 10(2) of DC Rules, 1967 were allowed additional FSI; and they have placed material on record indicating that the norm adopted by the Government in case of some hotels was to grant FSI of 5. B

32. (Para 10) (897-B-C; 897-E-F-G)

2.2. However, the question of grant ofFSI would be subject to the discretion to be exercised by the Competent Authority under Rule 10(2) of the 1967 Rules on analysis of objective facts placed C before it. It is well-settled that the discretion vested in an Authority has to be exercised judiciously. The discretion vested under Rule 10(2) of the DC Rules, 1967 cannot be exercised arbitrarily of capriciously or as per the whims of the Authority concerned. The exercise of the discretion must be in consonance with the principles D incorporated in Article 14 of the Constitution so that it does not suffer from the vice of the arbitrariness. Therefore, it cannot be said that it is prerogative of the State Government to grant additional FSI and, therefore, the reliefs claimed in the appeal should be refused. [Para 10 and 12) [897-G; 899-A-C]

2.3. When a statute confers a discretionary power to be exercised by competent authority, the Court cannot direct the competent authority to exercise discretion in a particular manner.

The Court, however, can always direct the competent authority to

exercise discretion vested in it in accordance with law.

F [Para 14] [900-B]

3. It is true that the plot was reserved as play ground for primary and secondary schools as also for a road. However, on the appellants causing the purchase notice dated June 16, 2005 served on the Competent Authority under Section 127 of the M.R.T.P. Act, 1966, G the State Government after following the procedure decided not to acquire the plot which is quite evident from the records. The CRZ Notification has only frozen the FSl/F AR norms but not the operation of Section 127 of the MRTP Act. In terms of the provisions of Section 127, the reservations lapsed. The underlying principle envisaged by H

A Section 127 is either to utilize the land for the purpose it is reserved ,. in the plan or let the owner utilize the land for the purpose it is permissible under the Town Planning Scheme.

[Para 11] [898-A-D-F]

B 4.1. The appellants are not entitled to a declaration that the permission applied for was deemed to have been granted to them .. as the Planning Authority had failed to communicate its decision whether to grant or refuse permission within 60 days from the date of receipt of their application. The facts of the case would indicate thatthe matter of grant of permission was under active consideration c of different authorities. The question whether the appellants were entitled to additional FSI as claimed by them was considered and contested by the respondents. Besides, the proviso to Section 45(5) of the M.R.T .P. Act, 1966 makes it clear that the deeming provision would apply only if the permission applied for is strictly in conformity D with relevant DC Regulations. The competent authority had no occasion to consider whether the plans submitted by the appellants for development of their plot were in accordance with DC Rules, 1967.

Similarly, since Rule 10(2) of the DC Rules, 1967 confers discretion upon the competent authority to grant additional FSI to the buildings

E mentioned therein including luxury hotels, the claim of the appellants that the respondents be directed to grant them permission to develop their plot with demanded FSI cannot be accepted.

(Para 13] (899-D-F; 900-A]

4.2. However, having regard to the facts of the case, interest F of justice would be served with the directions to the State Government to take a decision as early as possible on the application submitted by the appellants seeking permission to develop their plot on the basis that the provisions of DC Rules, 1967 would be applicable, and to exercise the discretion available to the competent

G authority under Rule 10(2), in the light ofrecommendations made by the Municipal Corporation as well as the fact that other hotels were also granted more FSI than 1.33 permissible under Rule 10(1) of the DC Rules, 1967. [Para 14 and 15] [900-C-E-F]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5948 of

H 2007.

SURESH EST ATES PVT.LTD. v. MUNICIPAL CORP. OF 889

GREATER MUMBAI [J.M. PANCHAL, J.]

....

From the final Judgment and Order dated 13.08.2007 of the High A - Court of Bombay in Writ Petition No. 1627 of2007.

Harish N. Salve and Mukul Rohtagi and Parimal Shroff, Mohd.

Himmayatullah, Mahesh Agrawal, Rishi Agrawal, Gourav Goyal (E.C.

Agrawala) for the Appellants.

B T.R. Andhyarujuna and Shekhar Naphade, Ravindra Keshavrao Adsure, Pallay Shishodia, Atul Y. Chitale, Suchitra Atul Clitale and Sunaina Dutta for the Respondents.

The Judgment of the Court was delivered by c J.M. PANCHAL, J. 1. Leave granted.

2. The instant appeal is directed against judgment dated August 13, 2007 rendered by the Division Bench of High Court of Judicature at Bombay in Writ Petition No. 1627 /2007 by which the prayers made by D the appellants, (1) to declare that application submitted by them on • December 26, 2005 to the Municipal Corporation of Greater Mumbai to give permission to develop land bearing CTS No. 2193 (P) of Bhuleshwar Division at Dr. Babasaheb Jaykar Marg stands granted in view of Section 45(5) of the Maharashtra Regional and Town Planning E Act, 1966, (2) in the alternative to direct the respondents to grant forthwith their application for permission to develop land referred to above with additional FSI of3.73 times the FSI permissible under Rule 10(2) of DC Rules, 1967, and, (3) to direct the respondents to allow them to proceed with the development of their plot mentioned above for construction of F +· luxury hotel by utilization of additional FSI of 3.73 times the FSI permissible on the said plot as per DC Rules, 1967, are refused.

3. The appellants No.I and 2 are the Companies incorporated under the provisions of the Companies Act, 1956. The petitioner No. 2 holds/owns a plot of land bearing CTS No. 2193 (P) of Bhuleshwar G Division at Dr. Babasaheb Jaykar Marg, Thakurdwar. The plot .. admeasures approximately 8983 square meters. The respondent No. 1 .

is the Municipal Corporation for Greater Mumbai, and the Planning Authority under the provisions of Mumbai Municipal Corporation Act, 1888 as well as Maharashtra Regional and Town Planning Act, 1966 H

A ('The M.R.T.P. Act', for short). The appellant No. 1, obtained requisite y rights in respect of plot referred to above. The plot was reserved for play ground of Municipal Primary School and Secondary School as well as for D.P. Road. The appellant No. 1 caused a purchase notice to be served to the Municipal Authorities on June 16, 2005. The Municipal Corporation B found that the land was encumbered with residential as well as commercial structures and the cost of purchase would be roughly about Rs. 13.6 crores which was very high. The Municipal Corporation, therefore, decided not to purchase the said plot of land, as a result of which the reservations on the plot lapsed on December 16, 2005 under the relevant c provisions of the M.R. T .P. Act. The appellants thereupon desired to develop the plot for construction of a luxury hotel. It may be mentioned that in exercise of rule-making power conferred by the M.R.T.P. Act, the State Government had earlier framed Development Control Rules, 1967.

According to the appellants, the Ministry of Environment and Forests

D issued Notification I on February 19, 1991 under Section 3(1) and 3(2)(v) of the Environment (Protection) Act, 1986 and Rule 5(3 )( d) of the Environment (Protection) Rules, 1986 declaring coastal stretches as ' Coastal Regulation Zone (CRZ) and regulating activities in the CRZ, as result of which the plot belonging to them falls within CRZ II. What is

E claimed by the appellants is that the buildings permitted in CRZ II on the landward side of the existing and proposed road would be subject to the existing local Town Planning Regulations and therefore, the luxury hotel will have to be constructed as per D.C. Rules of 1967 which were existing local Town Planning Regulations. The appellant, therefore, submitted the

F plaris to develop the land in question by constructing a luxury hotel in terms of Rules of 1967 on December 26, 2005. The case of the appellants is that they are entitled to additional FSI of 3. 73 times the FSI in addition to 1.33 FSI allowable on the said plot as per the provisions of Rule 10(2) of DC Rules, 1967. The appellants did not receive any communication

G from the Mtmicipal Authorities about their application by which permission to develop the plot was sought. On December 31, 2005 the Municipal Corporation submitted a proposal to the Principal Secretary, Urban ,_ Development Department, Government of Maharashtra recommending inter alia that in view of the provisions of CRZ Notification and DC Rules, 1967, additional FSI as applied for by the appellants be granted H

SURESH EST ATES PVT.LTD. v. MUNICIPAL CORP. OF 891

GREATER MUMBAI [J.M. PANCHAL, J.]

under Rule 10(2) of DC Rules, 1967. On August 2, 2006 a letter was A addressed by the State Government to the Ministry of Environment and Forest, Union of India requesting to examine the proposal of the appellants and communicate to Government of Maharashtra whether the stand taken by the appellants for additional FSI was correct. On August 18, 2006 a communication was addressed by the Ministry of Environment B and Forest to Principal Secretary, Urban Development Department, Government of Maharashtra clarifying that in view of earlier clarification issued on September 8, 1998, the DC Rules as existed on February 19, 1991 would apply to the areas falling within the CRZ Notification and further mentioning that "The word existing has been interpreted by the C Ministry vide a letter dated 8th September, 1998 to mean the Rules which prevailed on 19th February, 1991". It was also stated in the said communication that the DCR Regulations which were In force on December 19, 1991 i.e. the approved DC Rules of 1967 shall be considered and not the draft Regulations of 1989 which came into force D on February 20, 1991 as the Draft Development Plan of 1989 was still at a draft stage on February 19, 1991. On February 20, 2007 a letter was addressed by the Government of Maharashtra to Municipal Corporation of Greater Mumbai in which reference was invited to the application submitted by the appellants for development permission and remarks from the Municipal Corporation were called for. The Municipal E Commissioner convened a meeting of the personnel belonging to different Departments and at the said meeting the matter was considered. The Committee decided to recommend the proposal for consideration of Government in terms of the provisions ofDC Rule 52(8)(vii). On March 1, 2007 the Municipal Corporation recommended for grant of additional F FSI in terms of the DC Rules, 1967 as demanded by the appellants. On February 21, 2007 the Ministry of Environment and Forest granted environmental clearance to the appellants for construction of a residential hotel and commercial project subject to the terms and conditions set out therein. The appellant No. 2, on April 30, 2007 created a registered G mortgage of the land in favour ofIL and FS Trust Company Ltd. & Ors. for securing loan facilities amounting to Rs. 550 crores for construction of the luxury hotel. The appellants did not receive any further communication from the respondents. The case of the appellants was that the Planning Authority did not communicate its decision to them as to H

1,;,

A whether the permission sought for was granted or refused, within 60 days ., from the date of the receipt of application and therefore they were entitled - to a declaration that the permission was deemed to have been granted to them in terms of Section 45 (5) of the M.R.T.P. Act. In the alternative it was their case that in terms of the amended DC Rules of 1967 the B competent authority, with the previous approval of the Government, has authority to permit the person who has applied for permission to exceed floor space indices in respect of buildings of educational and medical relief institution as well as Government and semi Government offices and luxury hotels and as the Taj Mahal, Oberoi, Sea Rock, President, Ambassdor c amongst other hotels, were granted benefit of additional FSI under Rule

10 (2) of DC Rules, 1967, they were also entitled to additional FSI 3.73 times permissible FSI of 1.33 available under the relevant Rule. What was asserted by the appellants was that in view of Division Bench decision of the Bombay High Court in Overseas Chinese Cuisines India Pvt. Ltd.

D v. Municipal Corporation of Greater Mumbai, (2001) 1 BCR 341, the provisions of DC Rules of 1967 would be applicable and therefore the appellants were entitled to additional FSI. Under the circumstances the appellants invoked extra ordinary jurisdiction of the High Court of Judicature of Bombay under Article 226 of the Constitution by filing Writ I

E Petition No. 1627 /2007 and claimed the reliefs referred to earlier.

4. On service of notice a reply was filed by the Corporation and State Government controverting the averments made in the petition. The Division Bench of Bombay High Court did not go into the merits of the contentions raised by the Learned Counsel for the parties. The High Court F noticed that the main grievance of the appellants was that the Government had not disposed of their application till the date of hearing of the petition which was causing serious loss to them. The Learned Advocate General, appearing for the State submitted that the Government would deal with the matter expeditiously and pass appropriate orders which would be G communicated to the petitioners. In view of this state of affairs, the Division Bench by Judgment dated 13th August, 2007, directed the Government to take a decision on the application filed by the appellants within 6 weeks + from the date of the order and communicate the order so passed to them, which has given rise to the instant appeal.

SURESHESTATESPVT.LTD.v.MUNICIPALCORP.OF 893

GREATERMUMBAI[J.M.PANCHAL, J.]

5. The matter was placed for preliminary hearing before the Court A on 17th August, 2007 and after hearing the Learned Counsel for the appellants, the Court issued notice to the respondents. On service of notice the respondents have filed the reply. According to the State Govenunent, Development Control Regulations for Greater Bombay, 1991 are applicable, which do not provide for higher FSI to the proposed hotel B project of the appellants located in 'C' ward. What is pointed out in the alternative by the State is that under Section 46 of the M.R.T.P. Act, the Planning Authority has to give due regard to draft Regulations of 1989, which do not permit grant of additional FSI to the appellants. It is further stated in the reply that CRZ Notification of 1991 provides that in CRZ c area, the construction shall be subject to existing Local Town and Country Planning Regulations including existing norms ofFSI and as existing norm is to give FSI of only 1.33 the appellants are not entitled to additional FSI claimed by them. According to the State Govenunent, even if it is assumed that the appellants are entitled to higher FSI, they cannot use D the property for construction of a hotel as the land was reserved for public purpose on the date when the CRZ Notification was issued. What is asserted in the reply is that since it is prerogative of State to grant discretionary additional FSI under Rule 10(2) of DC Rules of 1967, the prayers made by the appellants to grant additional FSI should be refused. E

6. This Court has heard the Learned Counsel for the parties at length and in great detail. This Court has also considered the documents forming part of the appeal.

7. The contention advanced by the Learned Counsel for the F respondents that the DC Rules, 1967 would not apply to the development permission sought for by the appellants, but the Development Control Regulations of 1991 would apply, cannot be accepted. It is not in dispute that on February 19, 1991 the Ministry of Environment and Forest issued a notification under the provisions of the Environment Protection Act, 1986 G regulating building activities in Coastal Zones which is known as Coastal Regulation Zone Notification. The said Notification classifies the areas within 500 meters of high tide land, into CRZ I, CRZ II, CRZ III and CRZ IV categories. It is also not in dispute that the plot belonging to the appellants falls within CRZ II category. The Notification inter alia H

A provides that buildings shall be pennitted only on the landward side of the existing road and buildings pennitted at landward side of the existing and proposed roads shall be subject to the existing local Town and Country Planning Regulations including the existing norms of floor space index/floor area ration. It is true that DC Regulations for Greater Bombay, B 1991werenotifiedonFebruary20,1991 andcameintoforcewitheffect from March 25, 1991. However, a doubt was raised whether the existing DC Regulations for Coastal Regulation Zone II (CRZ II) would mean the DC Rules, 1967 or Draft Development Control Regulations, 1989 which ultimately culminated into D.C. Regulations, 1991 and, therefore, c the Ministry of Environment and Forest was consulted. The Ministry of Environment and Forest issued a clarification on September 8, 1998 stating that the DC Regulations as existing on February 19, 1991 would apply for all developmental activities in Coastal Regulation Zone including CRZ II. The Ministry of Environment and Forest also issued clarification on D August 18, 2006 reiterating that the existing DC Regulations applicable to CRZ II areas in Mumbai would mean the DC Rules, 1967. Even the Municipal Corporation in its letter dated December 31, 2005 addressed to the Principal Secretary, Urban Development Department, Government of Maharashtra, had expressed the view that the application made by the E appellants for construction of a luxury hotel with additional FSI under DC

Rules, 1967 be granted under Rule 10(2) of the Rules. As observed earlier a letter dated February 20, 2007 was addressed by the Government of Maharashtra to the Municipal Commissioner of Greater Mumbai in which reference was invited to the application submitted by the appellants for F development pennission and remarks from the Municipal Corporation

were called for. The Municipal Commissioner had convened a meeting of Officials belonging to different Departments of the State Government and the Committee after discussion had decided to recommend to grant the application made by the appellants pursuant to which on March 1, 2007 the Municipal Corporation submitted its Report to the State G Government and recommended for grant of additional FSI in tenns of DC Rules, 1967. The word 'existing' as employed in the CRZ Notification means Town and Country Planning Regulations in force as on February 19, 1991. Ifit had been the intention that Town and Country Planning Regulations as in force on the date of the grant of pennission for building H

SURESHESTATES PVT. LTD. v. MUNICIPAL CORP. OF 895

GREATERMUMBAI[J.M.PANCHAL, J.]

would apply to the building activity, it would have been so specified. It is A well to remember that CRZ Notification refers also to structures which were in existence on the date of the notification. What is stressed by the notification is that irrespective of what Local Town and Country Planning Regulations may provide in future the building activity permitted under the notification shall be frozen to the laws and norms existing on the date of B the notification. On February 19, 1991 when the CRZ Notification was issued, the only building Regulations that were existing in city of Mumbai, were the DC Rules, 1967. In view of the contents ofCRZ II Notification issued under the provisions of Environment Protection Act which has the effect of prevailing over the provisions of other Acts, the application c submitted by the appellants to develop the plot belonging to them would be governed by the provisions of DC Rules, 1967 and not by the Draft Development Rules of 1989 which came into force on February 20, 1991 in the form of Development Control Regulations for Greater Bombay 1991.

8. The argument that in view of the provisions of Section 46 of the Town Planning Act, 1966, the Planning Authority has to take into consideration the DJaft Regulations of 1989 and, therefore, the appellants would not be entitled to additional FSI is devoid of merits.

9. Section 3 of the Environment (Protection) Act, 1986 inter alia provides that the provisions of the Act and any Order or Notification issued under the said Act will prevail over the provisions of any other law.

The phrase "any other law" will also include the M.R. T.P. Act, 1966.

As noticed earlier the Notification dated February 19, 1991 issued under F the provisions of Environment (Protection) Act, 1986 freezes the building activity in an area falling within CRZ- II to the law which was prevalent and in force as on February 19, 1991. The Draft Rules of 1989 would not therefore apply as they were not existing law in force and prevalent as on February 19, 1991. In view of the peculiar circumstances obtaining G in the instant case, the Court is of the opinion that Section 46 of the M.R.T.P Act, 1966 would not apply to the facts of the instant case.

Further, when the sanctioned D.C. Regulations for Greater Bombay, 1991 do not apply to areas covered within CRZ-11, since those regulations came into force with effect from March 25, 1991, its previous draft also cannot H

A apply. The draft published is to be taken into consideration so that the development plan is advanced and not thwarted. The draft development plan was capable of being sanctioned, but when the final development plan is not applicable, its draft would equally not apply as there is no question of that plan being thwarted at all. As far as development in the B area covered by CRZ-11 is concerned one will have to proceed on the footing that the draft plan after CRZ Notification never existed. Even otherwise what is envisaged under Section 46 of the M.R.T.P. Act is due regard to draft plan only if there is no final plan. The DC Rules of 1967 were in existence as on February 19, 1991 and therefore the plan c prepared thereunder would govern the case. It is relevant to the notice at this stage that the State Government had sought a clarification from Ministry of Environment and Forest on August 2, 2006 as to whether DC Rules, 1967 or the DC Regulations 1991 will apply to the areas covered by CRZ-11. The Ministry of Environment and Forest on August D 18, 2006 clarified that the Development Control Rules of 1967 would apply. The assertion made by the appellants that the clarification issued by the Ministry of Environment and Forest is binding on the State Government in view of the salutary provisions of Section 3, 5 and 24 of the Environment (Protection) Act, 1986 deserves consideration. The E clarification issued by the Central Government in respect of the CRZ

Notification on September 8, 1998 states that the existing rules would be those, which were in force as on February 19, 1991. The Draft Regulations of 1989 were not in force as on February 19, 1991 and, therefore, would not apply to the plot in question. What is emphasized in F Section 46 of the M.R.T.P. Act, 1966 is that the Planning Authority should have due regard to the Draft Rules. The legislature has not used the phrase 'must have regard' or 'shall have regard'. The Municipal Corporation of Greater Mumbai which is the Planning Authority had given due regard to the draft DC Regulations of 1989 in the light of CRZ Notification and recommended to the Government to grant additional FSI of 3 .73 times G permissible as per Development Control Rules, 1967 over and above 1.33 permissible, to the appellants. Having regard to the facts of the case this Court is of the opinion that the contention that the Planning Authority has to take into consideration the Draft Regulations of 1989 and, therefore, the appellants would not be entitled to additional FSI, cannot be accepted H

SURESHESTATESPVT.LTD. v. MUNICIPAL CORP. OF 897

GREATERMUMBAI[J.M.PANCHAL, J.]

and is hereby rejected.

10. The argument that even if it is assumed that the provisions of DC Rules, 1967 would be applicable to the application submitted by the appellants seeking permission to develop their plot, they would be entitled to FSI of only 1.33 which is the existing nonn set out in the Rules and B would not be entitled to additional FSI, has no substance at all. It is true that in DC Rules, 1967 the nonn of pennissible FSI is laid down to be 1.33. However, there is no manner of doubt that under Rule 10 (2) Rules of 1967, the floor space indices specified may be permitted to be exceeded in respect of buildings of educational and medical relief institution as well as Government and semi-Government offices and luxury hotels C with the previous approval of the Government. The respondents could not lay factual data before the Court to indicate that there was no nonn of giving higher FSI over and above 1.33 to hotels to the buildings contemplated under Rule 10(2) of DC Rules, 1967. On the contrary the appellants have placed material on record of the appeal which would D indicate that the nonn adopted by the Government in case of Taj Hotel and Hotel Oberoi was to grant FSI of 5.32. The nonn ofFSI specified in Rule 10(1) of the Rules of 1967 would be subject to the discretion to be exercised by the Government under Rule 10(2) of the Rules. The nonn as set out regarding FSI in DC mies on 1967 will have to be construed E to mean also the nonn ofFSI which can be granted by the Government in exercise of discretion vested in it under Rule I 0(2) of the Rules of 1967.

The case of the appellants is that nonnally all luxury hotels which had applied for additional FSI under rule 10(2) of DC Rules, 1967 were allowed additional FSI. Having regard to the intention of the legislature F the prevalent nonn ofFSI under Rule I 0(1) of the Rules, 1967 will have to be construed to mean also the nonn ofFSI which can be granted in exercise of discretion under Rule 10(2) of the Rules. Therefore, the stand taken by the respondents that the appellants would not be entitled to more than 1.33 FSI in view of nonn set out in DC-Rules of 1967 cannot be G upheld and it is held that the question of grant of FSI would be subject to the discretion to be exercised by the Competent Authority under Rule 10(2) of the Rules on analysis of objective facts placed before it.

11. The contention that even if it is assumed that the appellants are H

A entitled to higher FSI, they cannot use the plot in question for construction of a hotel as the land was reserved for public purpose on the date when CRZ Notification was issued, cannot be accepted. As noticed earlier the plot was reserved as play ground for secondary school as well as for primary school and also for DP road. The appellants had caused the B purchase notice dated June 16, 2005 served to the Competent Authority under Section 127 of the M.R.T .P. Act, 1966. After following the procedure the State Government decided not to acquire the plot which is quite evident from the contents ofletter dated July 18, 2006, addressed by the Government of Maharashtra to Municipal Corporation of Greater c Mumbai. By the said letter the Municipal Corporation of Greater Mumbai was informed that the procedure for acquisition of the land in question had not been commenced within the prescribed period by the Municipal Corporation and therefore there was no objection for presuming that the reservation had lapsed. The CRZ Notification has only frozen the FSI/ D FAR norms but not the operation of Section 127 of the Act. In terms of the provisions of Section 127 of the M.R.T.P. Act, 1966, the reservations lapsed. If the argument of the respondent is accepted, it is likely to result into a piquant situation not contemplated by the Act, because the respondents do not want to acquire land whereas the appellants would E not be entitled to use the land for any purpose for all time to come. The argument advanced by the respondent is misconceived in as much as the State Government in one breath asserts that the appellants are entitled to FSI of 1.33 for construction of hotel whereas in the same breath it asserts that the property is reserved and cannot be used for hotel project. The underlying principle envisaged by Section 127 of the M.R.T.P. Act, 1966 F is either to utilize the land for the purpose it is reserved in the plan or let the owner utilize the land for the purpose it is permissible under the Town

Planning Scheme. Therefore, the plea that the appellants would not be entitled to use the plot in question for hotel project in view of the reservations which were earlier prevalent cannot be accepted.

12. Similarly, the assertion made by the respondents in the reply that since it is prerogative of the State Government to exercise discretion for grant of additional FSI, the prayer made by the appellants to direct the State Government to grant additional FSI should be turned down, cannot H be accepted. It is true that under Rule 10(2) of the DC Rules, 1967 a

SURESHESTATESPVT.LTD. v. MUNICIPAL CORP. OF 899

GREATERMUMBAI[J.M.PANCHAL, J.]

discretion is vested in the Government to grant additional FSI in respect A of the buildings of education and medical relief as well as Government and semi-Government offices and luxury hotels. However, it is well-settled by catena on reported decisions that the discretion vested in an Authority has to be exercised judiciously. The discretion vested under Rule 10(2) of the DC Rules, 1967 cannot be exercised arbitrarily of capriciously or B as per the whims of the Authority concerned. The exercise of the discretion must be in consonance with the principles incorporated in Article 14 of the Constitution so that it does not suffer from the vice of the arbitrariness. Therefore, the assertion made by the State Government that it is prerogative of the State Government to grant additional FSI and, C therefore, the reliefs claimed in the appeal should be refused, cannot be accepted.

13. The contention of the appellants that in view of the provisions of sub-Section 5 of Section 45 of the M.R.T.P. Act, 1966, the application submitted by them for seeking permission to develop their plot should D be deemed to have been granted to them as the Planning Authority had failed to communicate its decision whether to grant or refuse permission within 60 days from the date ofreceipt of their application, cannot be upheld. The facts of the case would indicate that the matter of grant of permission was under active consideration of different authorities. The E question whether the appellants were entitled to additional FSI as claimed by them was considered and contested by the respondents. Further, the proviso to Section 45(5) of the M.R.T.P. Act, 1966 makes it clear that the deeming provision would apply only if the permission applied for is strictly in conformity with relevant DC Regulations. The competent F authority had no occasion to consider whether the plans submitted by the appellants for development of their plot were in accordance with DC Rules, 1967. On the facts and in the circumstances of the case this Court is of the opinion that the appellants are not entitled to a declaration that the.}ilermission applied for was deemed to have been granted to them as G the Planning Authority had failed to communicate its decision whether to grant or refuse permission within 60 days from the date of receipt of their application

14. Similarly, the claim made by the appellants that the respondents H

A should be directed by this Court to grant pennission to the appellants to develop their plot with demanded FSI cannot be accepted. As noticed earlier Rule 10(2) of the Rules of 1967 confers discretion upon the competent authority to grant additional FSI to the buildings mentioned therein including luxury hotels. When a statute confers a discretionary B power to be exercised by competent authority, the Court cannot direct the competent authority to exercise discretion in a particular manner. The Court can always direct the competent authority to exercise discretion vested in it in accordance with law. Therefore, the prayer made by the appellants to direct the State Govenunent to grant additional FSI as was c granted to other hotels or to grant them FSI of 5.32 cannot be accepted.

However, this Court is of the opinion that having regard to the facts of the case interest of justice should be served if the respondent State is directed to exercise discretion vested in it under rule I 0(2) of the DC Rules, 1967 after taking into consideration the relevant material including D the fact that other hotels, were in past granted additional FSI.

15. For foregoing reasons the appeal partly succeeds. The Judgment dated August 13, 2007 rendered by the Division Bench of High Court of Judicature at Bombay in Writ Petition No. 1627/2007 is modified. The State Government is directed to take a decision on the application E submitted by the appellants seeking pennission to develop their plot on the basis that the provisions of DC Rules, 1967 with discretion available to the competent authority under Rule 10(2) of the said Rules would be applicable and decide the said application in the light of recommendations made by the competent authority as well as the fact that other hotels as F pointed out by the appellants were also granted more FSI than 1.33 pennissible under Rule 10(1) of the DC Rules, 1967. The application submitted by the appellants shall be considered by the respondents in the light of observations made in this Judgment as early as possible and preferably within six weeks from today. The decision taken on the G application of the appellants shall be communicated to them.

16. The appeal accordingly stands disposed of. The parties to bear their own cost.

RP.

Appeal partly allowed.