Jaykrishna Industries Ltd. Through Director vs State of Maharashtra and Others

JAYKRISHNA INDUSTRIES LTD. THROUGH DIRECTOR .......APPELLANT(s) VERSUS

STATE OF MAHARASHTRA AND OTHERS.....RESPONDENT(s) WITH CIVIL APPEAL No. 498 of 2007

POPCORN PROPERTIES PRIVATE LTD. THROUGH DIRECTOR AND ANOTHER ........APPELLANT(s) VERSUS

STATE OF MAHARASHTRA AND OTHERS.....RESPONDENT(s)

CIVIL APPEAL No. 18489 of 2017 (arising out of SLP (C) No.33322 OF 2011)

POPCORN PROPERTIES PRIVATE LTD. AND ANOTHER ........APPELLANT(s) VERSUS

STATE OF MAHARASHTRA AND OTHERS.....RESPONDENT(s)

CIVIL APPEAL No.18492 of 2017 (arising out of SLP (C) No.30293 OF 2017)

JAYKRISHNA INDUSTRIES LTD. ........APPELLANT(s) Signature Not Verified

Digitally signed by NEETU KHAJURIA Date: 2017.11.13 VERSUS 16:25:13 IST Reason:

STATE OF MAHARASHTRA AND OTHERS.....RESPONDENT(s)

1 JUDGMENT

NAVIN SINHA, J.

Leave granted in both Special Leave Petitions.

2. The present batch of appeals, between the same parties,

arise from a controversy relating to auction settlement by the

Mumbai Housing and Area Development Board (hereinafter

referred to as “the MHADA”), of a plot of land measuring

10,000 sq. mtrs, located at Powai, in the town of Mumbai.

The auction notice published on 17.11.2004, remains

inconclusive, mired in litigation. The subsequent

developments being relevant are also required to be noticed.

The contesting parties, M/s.Popcorn Properties Private Limited

and M/s. Jaykrishna Industries Ltd., shall hereinafter be

referred to as the Appellant and Respondent for convenience.

3. Sri Shekhar Naphade, learned Senior Counsel for the

Appellant submitted that it being the highest bidder at

Rs.22,22,22,300/-, provisional acceptance of the bid was

communicated to it on 17.12.2004. As required, 25% of the

tender amount was deposited on 03.01.2005, awaiting

2 communication for deposit of the balance 75% amount. On

03.05.2005, the Appellant objected to MHADA illegally

negotiating settlement of the subject lands with the

Respondent. Writ Petition No. 2112 of 2005 was instituted

assailing the action of the official Respondents in provisionally

accepting the bid of the Respondent for Rs.22,23,22,300/-.

The order dated 17.12.2004 was subsequently wrongly

cancelled on 07.05.2005, and which was also assailed by the

Appellant in Writ Petition No. 867 of 2010.

4. The Respondent had earlier preferred Writ Petition No.

3466 of 2004 and obtained an order on 23.12.2004 for

submission of a higher bid. The Appellant was not a party to

the same. The High Court was not apprised that the

Appellant’s bid already stood provisionally accepted. Upon

being apprised of the correct facts, the order dated 23.12.2004

was recalled which automatically results in revival of the order

of acceptance of the appellant’s provisional bid. The High

Court wrongly declined to interfere with the order dated

07.05.2005 ordering a fresh tender process for settlement.

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5. Shri Naphade, in the aforesaid facts further submitted

that the Appellant also had a right in equity for settlement in

its favour, especially in view of the interim order of this Court

dated 04.09.2014 permitting it to make a fresh proposal to the

MHADA, and which has been found acceptable by it. MHADA

had acted inequitably, on political influences, to cancel its bid

at the behest of the Respondent, who was not even a bidder in

response to the tender notice. The Appellant has had to suffer

for no fault of it, despite being the highest bidder. An

alternative submission was made that if fresh tenders were to

be invited, the right of the first refusal must be given to it for

matching the highest offer that may be made. The second

alternative submission was that 25 percent of the plot be

settled with it. The present case, on its peculiar facts, was a

fit case where the normal rule of settlement by tender could be

deviated from and settlement could be made by private

negotiation.

6. Mr. Sanjay Hegde, learned Senior Counsel for the

Respondent submitted that even prior to the advertisement

dated 17.11.2004, the Respondent had a pre-existing right to

4 settlement as it was already in negotiation with MHADA,

culminating in orders dated 05.07.1999 and 05.10.1999 in its

favour. This was recognised in Writ Petition No. 3466 of 2004

permitting it to offer a higher bid. On 15.02.2005, the

Respondent offered to increase its bid by Rs.10,00,000/-

above that of the Appellant and payment was made on

02.05.2005. The challenge by the Appellant to the

cancellation dated 07.05.2005 was highly belated. The

Appellant had no locus in the matter after the cancellation

order. The cancellation order having been declined

interference, the question of any private negotiation does not

arise. A like claim in equity was also raised for an opportunity

to pay the market price and match the price that may be

offered by the Appellant.

7. Learned Counsel for the State of Maharashtra submitted

that the order dated 05.07.1999 on which the Respondent’s

claim is founded has itself been annulled on 22.02.2000, and

which has not been assailed. Sri M.L. Verma, learned Senior

Counsel appearing on behalf of MHADA, submitted that the

advertisement dated 17.11.2004 was for construction of a

5 hotel according to the then permissible commercial usage of

the plot. The subsequent change in permissible usage to

residential purpose for construction of a housing complex

renders the entire controversy infructuous. A new

advertisement for auction at the best price available will have

to be made. Considerable time has also passed since the

advertisement. The DCR Regulation 33(5) under the

Development Control Regulations for Greater Bombay, 1991

(hereinafter referred to as “the Regulations”) with regard to

increase in FSI has not yet been finalized and published. It

was specifically denied that any decision had been taken to

make settlement in favour of the Appellant.

8. We have considered the submissions on behalf of the

parties, perused the records, including the impugned orders

and the communications exchanged between the parties.

9. The claim of the Respondent for settlement of a

government property by way of a private largesse, without

open advertisement, is completely unfounded in the law. Its

letter dated 30.06.1999 requesting for a sympathetic

consideration for settlement with it, as otherwise the property

6 was likely to be occupied by encroachers, is but a travesty of

the law. Apparently, the negotiations were done by MHADA

under political influence as evident from the letter of the

Respondent dated 29.11.2004 read with the letter dated

30.04.2005 of one Mr. Mohan Rawle, Member of Parliament.

The Respondent had not submitted any bid in response to the

advertisement. The order of the High Court dated 23.12.2004

was passed in absence of the Court being apprised of the

provisional acceptance of the Appellant’s bid. The plea that the

Respondent was never made aware of the order of cancellation

dated 22.02.2000 merits no consideration as it was also

revealed in the counter affidavit of the State of Maharashtra

dated 11.07.2005 in Writ Petition No. 2112 of 2005. The

cancellation order was addressed to MHADA and copy marked

to the Respondent. There shall be a presumption in law that

a government communication was properly made and reached

the addressee, under Section 114 (e) of the Indian Evidence

Act. It is not the case of the Respondent that the order never

came to be issued and remained in the file. The Respondent

despite awareness never challenged the cancellation and

7 which sets at naught its entire claim. Any offer made to the

Respondent in teeth of, and after the cancellation was

therefore redundant.

10. The bid of the Appellant was provisionally accepted. No

final allotment was made in its favour under the advertisement

dated 17.11.2004. MHADA was inhibited from proceeding

further in view of the Court order dated 23.12.2004 in favour

of the Respondent. MHADA in its affidavit dated 24.06.2005,

in Writ Petition No. 2112 of 2005 preferred by the Appellant,

had disclosed the cancellation of the provisional acceptance by

order dated 07.05.2005. There shall likewise be a

presumption with regard to the issuance and delivery of the

same to the Appellant and it is not its case that no such order

was ever made or issued. The belated challenge to the

cancellation in Writ Petition No. 867 of 2010 was therefore

rightly rejected by the High Court on account of the

intervening developments with regard to the change in

permissible usage of the land from commercial to residential.

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11. The change in permissible land usage by Resolution

No.6684 dated 20.10.2014 is a fundamental issue which goes

to the root of the matter. If the very substratum of the

advertisement has changed, a fresh tender is mandatory. The

passage of thirteen long years since the advertisement is also

an important consideration. The Notification dated

03.07.2017 issued under DCR Regulation 33(5) inter alia

altering the FSI is at the final stage awaiting publication. The

bid price today for that reason will also escalate considerably.

The State Government and MHADA have denied any fresh

negotiated settlement with the Appellant. The interim order of

this Court dated 04.09.2014 was not a carte blanche for a

mandatory settlement with the Appellant. The High Court has

noticed that the value of the property today would be

approximately 75 crores. In the land starved city of Mumbai,

the settlement of any government land, for a housing project,

has to be by public auction only, so as to fetch the best price

in the larger public interest.

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12. The Respondent has only itself to blame for its woes,

based on a conduct that cannot be countenanced in law. It is

therefore not entitled to any interest on the deposit made by it

which shall be refunded by MHADA within four weeks. The

Appellant is found to have been wronged, but must bear part

of the blame for laches on its part also. It is therefore held

entitled to interest @ 8% on the deposit made by it including

the earnest money, only till 24.06.2005, to be paid within six

weeks.

13. In the entirety of the matter, all the appeals lack merit

and are dismissed.

………………………………….J. (Ranjan Gogoi)

……….………………………..J. (Navin Sinha) New Delhi, November 13, 2017.

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