Terming it as “manifestly arbitrary” the Bombay High Court has set aside the order of the Thane Municipal Corporation (TMC) to keep “in abeyance” its buy back policy (BBP) and thereby refusing to grant a builder development permission with additional developable space as provided in a 2020 regulation, for its free sale building.
“The impugned rejections would violate the principles against Wednesbury unreasonableness and the doctrine of proportionality. Such a decision is manifestly arbitrary and cannot withstand the test of non-arbitrariness in administrative action mandated by Article 14. Viewed from any perspective, the impugned rejections cannot be sustained,” said a division bench of Justices Gautam Patel and Kamal Khata on November 1.
Policy subjected to certain terms and conditions
The HC was hearing a plea by Sheth Developers challenging the TMC’s decision to keep in abeyance its BBP. This policy was for buy back of lands acquired under Development Control Regulations (DCR) and of plots reserved under the sanctioned Development Plan (DP) for public use. The policy was always subject to certain terms and conditions.
On October 1, 2003, Sheth Developers acquired development rights over 1,15,018 sq mts of land from Voltas Ltd.
On May 2, 2016, the Maharashtra Government notified an ‘Accommodation Reservation Policy’. This policy was intended to transfer the burden of developing reserved plots to private land owners or developers in lieu of incentives.
Having kept its end of the agreement the builder legitimately expected the TMC to honour the BBP and accordingly made an application to the TMC.
The TMC, however, rejected the application saying that the BBP is kept in abeyance as a query was raised in the State legislative assembly about the policy allegedly violating the provisions of the Municipal Corporation Act.
The developer challenged not only the general direction to keep this policy in abeyance but the failure of the TMC to honour its terms after it received benefits under it and after the builder was prejudiced having acted on its assurances.
HC questions TMC's action
The HC questioned how the TMC could have rejected developer’s application “simply and solely” on the ground that the policy is in abeyance, that there is an enquiry, that a report has been called for or that the policy has not been approved by the State Government.
In a detailed 41-page order, the HC said that the developer had paid 125 percent of the ready reckoner rate to the TMC for the rights.
“It is, therefore, not possible for the TMC to refuse to apply the policy,” the HC said, adding: “It cannot be denied that under that very policy not only have the Petitioners altered their position, but prejudice has been demonstrated and, correspondingly, great benefit to the TMC including considerable financial benefit has already been shown.”
It further added that the “TMC cannot have the benefit of a cash component as well as development of the amenity without performing its obligations and keeping its assurances under the policy”.