Lakhani Housing Corporation Private Limited v. State of Maharashtra

7.5) He asserts that it would be unjust if, after such extensive efforts, the benefits are transferred to another builder through a tender process initiated by MHADA. Therefore, he requests that the Petition be granted as prayed.

8) The learned Advocate General representing MHADA (Respondent No.3) submitted that, the Petitioners have no locus to file the Petition. He submitted that the Petitioners proceed on the assumption evinced in paragraph 5(b) at page 6 of the Petition, that the members have not formed themselves into a Cooperative Housing Societies yet. This assumption, he submits is incorrect. The Societies have been formed and some of them are represented by another Advocate. He submitted that undisputedly the buildings were dilapidated and declared as C-1 category requiring immediate evacuation and demolition.

8.1) He submitted that the Petitioners drew support of their contentions from individual agreements that belonged to an era when the societies were not in existence. Now the scenario is different, societies are formed. Moreover, the BMC has demolished the buildings during the period 2019 to 2022.

8.2) He submits that the so-called agreements relied upon by Petitioners are neither stamped nor registered. Thus have no evidentiary value. The Petitioners have not obtained resolutions from the societies after their formation. The amount of Rs.17.31 crores (approximately) purportedly spent was in many ways a trivial amount for a project whose estimated costs is Rs.2,930.77 crores for a total rehabilitation construction area of 90,066 sq.mts and estimated saleable area is 1,52,841.60 sq. mts. (seen at pages 435 and 436). Consequently, the Petitioners would have no locus to file the Petition.

8.3) Dr. Saraf relied upon the case of Panama Builders & Developers Pvt. Ltd. Vs. Nutan Kalpana Co-op. Housing Society Ltd. (2023 SCC OnLine page 1085) particularly paragraph 42 to point out that the Single Bench of this Court had rightly rejected a similar contention raised by the present Petitioners that it would be imperative for the general body of the society to accept and honour development agreements executed by the individual members. He submitted that it is well settled that once the society is formed individual members will have no say in the matter. He submitted that the Petitioners clearly failed in the attempt to make out a case.

8.4) In response to the contention that MHADA had no authority to redevelop the subject lands owned by the societies, Dr. Saraf relied upon the provisions of Development Control Regulations Act 2034 more particularly Regulation 33 (9) sub-clause 4. He submitted that what is contemplated under 33(9) sub-clause 4 is that if the competitive authority could garner 51% of each building or 60% of the overall scheme involved in the cluster development scheme, the BMC or MHADA could undertake redevelopment. For ease of reference DCR 33(9) sub-clause 4 is extracted below: “33(9) Reconstruction or redevelopment of Cluster(s) of Buildings under Cluster Development Scheme(s)(CDS): For reconstruction or redevelopment of Cluster(s) of buildings under Cluster Development Scheme(s)(CDS)in the Island City of Mumbai undertaken by (a) the MHADA or the MCGM either departmentally or through any suitable agency or (b) MHADA/MCGM, jointly with land owners and/or Co op. Housing Societies of tenants/occupiers of buildings and/or Co-op. Housing Society of hutment dwellers therein, or (c) land owners and/or Co- op. Housing Society of tenants/occupiers of buildings and/ or Co- op Housing Society of hutment dwellers, independently or through a Promoter /Developer, the FSI shall be 4.00 or the FSI required for rehabilitation of existing tenants/occupiers plus incentive FSI whichever is more as per the provisions of this Regulation as follows: “4(a) Redevelopment or Reconstruction under CDS may be permitted in pursuance of an irrevocable notarized written consent by eligible tenants/ occupiers of all authorized buildings not less than 51 percent of each buildings or 60 percent overall of the scheme involved in the CDS. Consent as aforesaid of tenants/occupiers for reconstruction or redevelopment shall not be required, if MHADA/MCGM undertakes redevelopment, on its own land, directly without any developer. The Developer shall be required to submit along with the CDS proposal, proof of ownership or procurement of Drs in respect of at least 70% of the land under the proposed CDS (excluding Municipal Roads if maintained as existing in proposed CDS) and it shall be mandatory for him to submit such proof of ownership or procurement of development rights in respect of the balance area within one year from the date of issue of the LOI. (b) All the eligible occupants/tenants of the building(s) undergoing redevelopment shall be rehabilitated in the redeveloped building(s).”

8.5) Dr. Saraf argued that the tender process was only an open invitation for developers to participate in the redevelopment of the subject property through MHADA, and this process would not disadvantage the Petitioners. He explained that if the Petitioners truly secured the consent and support of the majority society members, they would hold a competitive edge over others in bidding for the redevelopment assuming they met the tender’s other conditions. As MHADA, is a State under Article 12 of the Constitution, it cannot make an exception for the Lakhani group by bypassing the established tender process and favour them. There is no legal basis to allow the Petitioners to take over the entire redevelopment especially because the documents relied upon by the Petitioners are untenable in law. Dr Saraf concluded that the Petitioners are welcome to bid for the redevelopment of the said project like other developers and submitted that the Petition should be dismissed.

9) Dr. Chandrachud represented 14 of the 25 societies of the subject land and supported contentions of MHADA. He pointed out page 9 sub-clause (e) of the Petition to submit that, the Petitioners had only annexed Minutes of the Annual General Meeting/ Special General Meeting (AGM/SGM) of the societies of building numbers 20, 22, 23 and 24. He argued that the Petitioners’ reliance on multiple documents such as, agreement cum undertaking, indemnity, irrevocable consent, irrevocable power of attorney in their favour held no evidentiary value, as these were unregistered though mandatorily required. Referring to the “Irrevocable Consent” at page 213 of the Petition and particularly paragraph 4 thereof, clearly envisages members executing a development agreement in Petitioners favour after formation and registration of a new society. This exercise was not done. He argued that the Petitioners themselves had admitted that the Petitioners merely had a purported contractual right. He argued that the Petitioners were aware that the agreements were necessarily required to be registered which was admittedly not done. The fact that the development agreement was neither stamped nor registered as admitted and averred by the Petitioners in paragraph 7 at page 18 of the Petition is an acknowledgement of their limitations regarding their rights against the individual members.

9.1) He further submitted that a bare perusal of the Development Agreement (DA) at page 312 of the Petition evinced that there were blanks in the documents, thus incomplete, and would therefore have no evidentiary value. The DA also evinced that the Petitioners had merely obtained individual consents and the conveyance in the name of the society was neither granted nor recorded in the PR Card. By entering into the DA the members of the society had merely agreed to enter into and execute the DA for recording that the members were agreeable to the terms and conditions of Petitioners and for consideration received the society and existing members had agreed to grant to the developer development rights with respect to their property. It also evinced that the developer had agreed to acquire the development rights with respect to the subject property in accordance with the DA terms.

9.2) He submitted that in the Affidavit in reply at page 602, the averments clearly evinced the stand of the 14 societies that, in absence of a proper resolution and payment of stamp duty and the registration of the documents, such documents relied upon by the Petitioners were invalid and not binding upon the other societies. He then submitted that the Petitioners have themselves admitted that the Societies do not have a clear title as could be evinced from paragraph 39 page 884 of the Affidavit in Rejoinder filed by the Petitioner on 12th August, 2024. He submitted that admittedly the Petitioners had not commenced any redevelopment of the societies even for those who had given consent to the Petitioners for redevelopment of their buildings. He submitted that the Petitioners had not even offered transit accommodation to those who were dishoused on account of the demolition since 2019 or 2022 as the case may be. He submitted that the Petitioners were aware that the individual contracts could be terminated and therefore he submitted that the Petitioners have reserved their rights to take appropriate steps towards enforcing contracts against the individual members which can be evinced at paragraph 13 page 867 of the Affidavit in Rejoinder dated 12th August, 2024.

9.3) Dr. Chandrachud thereafter pointed out that the Petitioners have themselves acknowledged that there are signatures of 716 residents of the total 1200 residents of buildings 1 to 25 who have signed the declaration to permit MHADA to redevelop the buildings through the tender process. He submitted that the Petitioners therefore could not feign ignorance of a sizable majority having now approached the MHADA for its redevelopment.

9.4) Dr. Chandrachud then relied upon Daman Singh and Ors Vs State of Punjab and Ors. [(1985) 2 SCC 670] more particularly paragraph 11 to submit that once the societies were formed, the individual members would have no say in the matter. He reiterated that the petitioners would have to obtain resolutions from those societies permitting the Petitioners to redevelop its properties. He therefore submitted that the Petitioners would have to claim their rights by instituting civil suits against those individuals who had entered into contract with the Petitioners. He therefore submitted that in any event the Petition deserved to be dismissed with costs.

10) Mr. Ahmed learned Advocate appearing for Respondent No.21 submitted that the said Respondent supports the Resolution and majority of Societies represented by Dr. Chandrachud.

11) In rejoinder, Mr. Madon submitted that they had already brought their Claim to the notice to the Government. He maintained that MHADA in law cannot claim any authority on the subject land. He reiterated that the resolution was passed on the basis that Government was the owner completely ignoring the record and Sanad’s evincing that the subject land belonged to the society. He vehemently argued that Government or MHADA (a State under Article 12 of the Constitution) cannot behave like a private developer enticing/persuading individuals/societies to breach their individual contacts with the Petitioners by floating such tenders. Such an action would be contrary to the public policy and the law.

11.1) With reference to the judgment in the case of Daman Singh (supra) he submitted that this judgment was not applicable in the facts of this case as it did not prohibit the individual members before formation of the Societies to enter into an agreement for redevelopment with the developer.

11.2) Undisputedly, he submitted that the individuals had entered into Agreements with the developers prior to the formation of the society and such a contract was legally valid and binding contract. Moreover, both parties had acted in furtherance to the agreement executed by individuals in different forms. He submitted that the developer had taken steps to transfer the land from the Government to the Society. Substantial amounts were paid by Lakhani’s and were undisputedly received by the individuals in furtherance of the agreements.

11.3) These steps were undertaken on the basis of the “Irrevocable Consents” one of which is annexed at page 217 under clause (b) paragraph 20 of the Petition. Under the clause the members had agreed not to do any act whereby right, title and interest of the developer for redevelopment shall be affected in any manner. It was also agreed that such a clause would also be mentioned in the development agreement or any other documents executed. Furthermore, under clause 20(e) the members had given consent to execute the development agreement and other documents required by the developers and that those documents would not be challenged in the future. He therefore submitted that the individual members were duty bound by their contracts and could not be enticed to renege on the same.

11.4) He submitted that way back on 1st January 2020, the Petitioners Architect had submitted the proposed layout plan and submitted documents to the Chief Engineer of the BMC. To this, Dr. Saraf submitted that the proposal put up by the Petitioners was rejected.

12) In our view, the Petition is not maintainable. The Petitioners only recourse lies against the individuals — not against MHADA which was merely issuing an e-Tender for redevelopment of the subject land.

13) Undisputedly, at the behest of 716 out of the 1200 residents who agreed to have the property redeveloped through Maharashtra Government’s Nodal agency, (as reflected in the Petition at paragraph 5 (cc) at page 30) a Cabinet decision and the subsequent GR was taken. It appears to us that, the Respondent No.1 has taken into consideration the plight of the majority of flat occupants while taking the said Cabinet Decision and passing the Resolution. This is evident. The Declarations were submitted sometime in March 2022 the Cabinet decision was taken on 14th February 2024 and the GR was issued thereafter on 23rd February 2024.

13.1) Now, DCR 33(9)(b) read with sub-clause 4 (as highlighted in bold above) is unambiguous and gives rights to the State to develop lands as provided therein. DCR 33(9)(b) provides that MHADA/MCGM, jointly with landowners and/or Co-op Housing Societies of tenants/ occupiers of buildings independently or through a Promoter/Developer may pursue reconstruction or redevelopment of cluster (s) of buildings under the cluster development scheme in the island city of Mumbai.

14) The e-Tender floated by MHADA evidently, was only in furtherance to the object of the GR. The implementation of the Cabinet decision, GR and e-tender were stayed pending filing of Affidavit by State and MHADA by an order dated 17th April 2024.

15) We have noticed, in the Affidavit in reply dated 11th July 2024 that, 692 residents were out of their homes since 2019 and the Petitioners have failed to take steps since 2013. We observe that there is a delay in the Cabinet taking a decision on the representations made by the residents of GTB Nagar. Then a delay in not communicating instructions to their Advocates, delay in filing replies and consequently on account of an injunction by the Court since April 2024. At the end of the day, the citizens have continued to suffer.

16) The tender process for appointing a developer cannot be delayed merely because the Petitioner claims to have obtained consents from individual members to develop the property. These consents were old and, in any case, predated the formation of the societies. We believe that the Petitioners have not approached the Court with full transparency and have presented half-truths, potentially misleading the Court. It is acknowledged that the Petitioners were aware, they would need to obtain development rights from the newly formed societies to have any legitimate claim. This requirement has not been fulfilled.

17) We do not see any valid grounds for the Petitioners to prevent MHADA from issuing a tender for the redevelopment of the property. The Petitioners have produced no documents with sufficient evidentiary value to support their claims and contentions in court. At most, the documents provided could serve as corroborative evidence for the Petitioners’ claimed rights, title, or interest in the subject land, but this would still need to be established before a Civil Court. As things stand, the Petitioners' rights, if any, would pertain only qua the individuals who have signed contracts and allegedly received compensation from the Petitioners. This is evident from the declarations attached and the statements made in the Petition.

18) In such circumstances, the Petitioners notifying their claim to the State does not prevent or restrict the State from acting in the public interest by making a Cabinet decision to propose the redevelopment of the property in accordance with the law and appointing MHADA as the planning authority to oversee this redevelopment. In our view, the provisions under DCR 33(9)(b), read with sub-clause 4, as argued by Advocate General Dr. Saraf, renders the Petitioners’ case entirely untenable. Whether the subject land belongs to the individuals or society, or to the State, is irrelevant to this matter.

19) We see no prejudice being caused to the Petitioners. The Petitioners retain the right to participate in the tender process and if they have indeed secured consents from individuals, this would place them in an advantageous position. We find no merit in Mr. Madon’s argument that MHADA has, in any way, induced or enticed individuals to breach their contracts with the Petitioners.

20) The Petitioners have overlooked the signed representations submitted by individuals to the Government, requesting redevelopment of the subject land through MHADA, the Government-appointed nodal agency. Notably, the buildings were demolished between 2019 and 2022, and at least 692 members have been without housing for over five years, with the remaining members displaced for two years. Out of the 25 societies involved, at least 14 are opposing the Petitioners in this matter and we are informed that, around five societies are currently dysfunctional.

21) We make no comment regarding the Petitioners’ liberty to proceed with the redevelopment of properties for which they allegedly hold valid consents from certain societies. However, the Petitioners have failed to produce supporting documents for their claims, as noted by MHADA on page 440. The State has taken appropriate actions and according to us there is no fault on its part.

22) We are of the view that the Petitioners have not approached the Court with clean hands, as they have presented partial truths that could mislead the Court. The Petitioners claim to have obtained 909 consents; however, on page 278—a tabulated statement attached to the petition— only 798 individuals are shown to have executed documents. Furthermore, in paragraph (cc) on page 30, the Petitioners state that 716 individuals have signed declarations seeking Government intervention for the redevelopment of the subject land. Given that there are 1,200 occupants, there is a clear discrepancy and the Petitioners could not accurately claim to have 909 consents.

23) Secondly, the Petitioners, in paragraph (n)(i) on page 13 and at page 362, claim to have disbursed approximately Rs.9.35 crores as Corpus fund to various occupants. However, upon closer examination of the DA on page 328, it appears that the corpus was to be disbursed as follows: Rs.1,50,000/- was payable on execution of the PAA and Rs.2,00,000/- was payable on procuring the OC. A simple mathematical calculation shows that if Rs.9.35 crores were divided by Rs.3.[5] lakh, the result would be approximately 267. This implies that if the full corpus amount of Rs.3.[5] lakh had indeed been paid to each individual, only approximately 267 people would have received the corpus from a total disbursement of Rs.9.35 crores. Despite the clause in the Development Agreement (DA), the Petitioners have made statements suggesting that they have paid the corpus to all consent-givers, which appears misleading. It seems intended to mislead the Court, as the Court is not expected to verify these claims through calculations.

24) Besides this, in their rejoinder on page 879 the Petitioners have shifted stance, now claiming that a portion of the corpus was paid to the occupants. If that is the case, the Petitioners have not explained the basis on which they paid the corpus to the occupants without executing the PAA. The statements do not complement each other.

25) It is settled law that a Petitioner who fails to disclose information which is within the special knowledge tantamount to fraud as has been held in SP Chengalvaraya Naidu versus Jagannath [(1994) 1 SCC 1]. The Petition could have been dismissed on this ground alone. However, we have dealt with it on merits.

26) In the light of the aforesaid circumstances, the Petitioners if at all have a right to pursue their remedy against individual members in accordance with law. No Writ will lie against MHADA for floating the proposed e-Tender. There is no merit in the Petition and is accordingly dismissed.

27) In view of disposal of Petition, Interim Application (L) No.25969 of 2024, pending herein does not survive and is accordingly disposed off.

28) At this stage, learned Counsel for the Petitioner requested stay of the effect and implementation of present Judgment for a period of four weeks, so as to enable the Petitioner to test the correctness of the present Judgment before the Hon’ble Apex Court.

29) We are unable to accede to such request on account of the fact that aleast 692 flat owners/residents of the said GTB Nagar are out of their legitimate houses for more than five years. Moreover, the Petitioners have not come to the Court with clean hands as observed herein above. Thus, the said request is rejected. (KAMAL KHATA, J.) (A.S. GADKARI, J.)