M.I. BUILDERS PVT. LTD. v. RADHEY SHAY AM SAHU AND OTHERS

The Judgment of the Court was delivered by

D.P. WADHW A, J. These appeals are directed against the judgment D dated August 23, 1994 of a Division Bench of the High Court of Judicature at Allahabad, (Lucknow Bench). By a common judgment in three writ petitions, High Court speaking through Shobha Dixit, J. held that the decision of the Lucknow Nagar Mahapalika ('Mahapalika' for short), also now called Nagar Nigam or Corporation, permitting M.I. Builders Pvt. Ltd. (the appellant herein) E to construct underground shopping complex in the Jhandewala Park (also known as Aminuddaula Park) situated at Aminabad Market, Lucknow, was illegal, arbitrary and unconstitutional. High Court set aside and quashed the relevant resolutions of the Mahapalika permitting such construction and also the agreement dated November 4, 1993 entered into between the Mahapalika and the appellant for the purpose. Writ of mandamus was issued to the F Mahapalika to restore back the park in its original position within a period of !hree months from the date of the judgment and till that was done, to take adequate safety measures and to provide necessary safeguard and protection to the public, users of the park. High Court had noticed that the fact that the park was of historical importance was not denied by the Mahapalika and also G the fact that perseverance or maintenance of the park was necessary from the 91 environmental angle and that the only reason advanced by the Mahapalika ---- for construction of the underground commercial complex was to ease th_e congestion in area. High Court, however, took judicial notice of the conditions prevailing at the Aminabad market. It said it was so crowded that it was bursting from all its seams. Construction of the underground shopping complex H

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A in question would only complicate the situation and that the present scheme would further congest the area. It said that the public purpose, which is alleged to be served by construction of the underground commercial complex, seemed totally illusory.

Aggrieved by the impugned judgment of the High Court, appellant has - B come to this Court. Mahapalika also felt aggrieved and filed appeals (Civil Appeal Nos. 9326-28 of 1994) but these appeals by the Mahapalika were subsequently allowed to be withdrawn by order dated February 6, 1997. There is controversy as to how the Mahapalika which had earlier justified its action later turned round and sought to withdraw the appeals. The order allowing C withdrawal of the appeals by the Mahapalika is as under: - -. "I.A. Nos. 10 TO 12

CIVIL APPEAL NOS. 9326-28 OF 1994 D ·Nagar Mahapalika Appellants

Radhey Shyam Sahu & others Respondents E ORDER

Taken on board.

The learned counsel for the appellant seeks leave to withdraw the F appeals and states that Mr. S.V. Deshpande who appears for the other side has no objection to the withdrawal. The appeals will, therefore, stand disposed of as withdrawn with no order as to costs.

Sd .................en G New Delhi, Sd February 6, 1997 .................,]."

Mahapalika also cancelled the building plans. This action of the Mahapalika was subject matter of criticism by the appellant as to how a duly H sanctioned plan could be revoked without any notice to the appellant. We

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may, at this stage, itself reproduce the relevant portion of the resolution dated A August 6, 1996 of the Mahapalika for withdrawal of its appeals which is as under:- ;

"The Lucknow Bench of Hon'ble High Court of Allahabad has declared the agreement dated 4.1 l. l993 executed between the Nagar Mahapalika, Lucknow and M.I. Builders, Karamat Market Lucknow in respect of construction of underground Palika Bazar and Multistoreyal · parking on Jhandewala Park Aminabad, Lucknow as invalid and not in the public interest vide their judgment dated 23.8.1994.

The Hon'ble High Court rendered the above said Judgment by accepting the writ petitions preferred by several elected sabhasad of the then Nagar Mahapalika and the citizens.

On the directions of the then Nagar Pramukh Shri Akhilesh Das, who wanted to cause undue profit to M.I. Builders against the interest of Nagar Mahapalika now Nagar Nigam Lucknow, the citizens of D Lucknow, the Nagar Nigam Lucknow filed Special Leave Petition No. 17223-25 of 1994 in the Hon'ble Supreme Court against the Judgment of the Hon'ble High Court.

It is proposed that in the interest of the citizen of Lucknow and the Lucknow Nagar Nigam and pending Special Leave Petition No. E 17223-25 of 1994 in the Hon'ble Supreme Court be withdrawn and the Nagar Nigam Lucknow be further directed to oppose the Special Leave Petition filed by Mis. M.I. Builders in the Hon'ble Supreme Court against the Judgment dated 23.8.1994 of Lucknow Bench of Hon'ble High Court of Allahabad. F Unanimously decided that the aforesaid resolution be passed and accordingly the action may be taken."

The letter revoking the sanctioned building plans is dated April 17, 1997 and is as under:- G "To

Mis M.I. Builders (P) Ltd. Karamat Market, Nishatganj, Lucknow H

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A Sir, Vide this office letter No. 223/Sa.Sa.A./95 dtd. 23.1.1995 the building plans for construction of underground shopping and parking complex at Jhandewala Park, Ameenabad were sanctioned.

B After talcing legal advice by the Hon'ble Nagar Pramukh from the standing counsel of the Nagar Nigam and Add. Advocate General the earlier sanctioned building plans has been revoked vide order dated 17.4.97. As such these have no legal sanctity.

Please be informed. c ·Yours faithfully, Sd/- S.K. Gupta Mukhya Nagar Adhikari 17.4.97 D Copy to: The Vice Chairman, Lucknow Development Authority, for information. Sd/- S.K. Gupta E Mukhya Nagar Adhikari" There were three writ petitions before the High Court and during the course of hearing of those petitions High Court had directed maintenance of status quo. At that time, it would appear only digging in some part of the park had been done and there was no construction. When the matter came before F this Court, by order dated December 14, 1994 the Court passed the following order:-

"Exemption from filing official translation is allowed.

Liberty to add the omitted parties in the cause title.

G Leave granted.

We have heard counsel on the question of grant of interim relief.

Printing dispensed with. The operation of the impugned order of the High Court is stayed on the following conditions:

M.I. BUILDERS PVT. LTD. v.•R.S. ·1 SAHU [D.P. WADHWA, J.] 1081 Taking all the facts and circumstances into consideration and having regard to the fact that it may not be possible for this Court to hear the appeal within a short time having regard to the pressure of work and pendency of old cases, we direct that the appellant shall be permitted to construct an under ground shopping complex by ~ising its own funds without collecting any additional funds from individuals or concerns to whom the promise of allotment of shop is made. To clarify the matter, we say that the funds can be raised from agencies other than those to whom the shops are ultimately allotted. It will be made clear to the agencies from whom the funds are raised that they will not be entitled to allotment of shops. The appellant will maintain ~ccounts and file an undertaking to the above effect in this C 1 Court wi*in tw<t-weeks from today. In addition the undertaking will

contain a statement to the effect that in the event the appeals fail, the appellant will not raise questions as to equity or the ground on its having invested a huge amount and will be totally amenable to such ditf.ctions and orders that this Court may make in regard to the m~intenance or otherwise of the shopping complex. In other words, D if the Court directs removal of the shopping complex in the event of _(ailure of the appeals, the shopping complex.will have to be removed •t the. appellant's cost without claiming anything in return. The toristruction will be so carried out that the open space will remain available for the public and the entire complex will be so constructed E ......... that it will be an underground one except for the ingress and egress portions to the complex. The total area to be constructed on the surface of the plot shall not exceed 10% of the plot. SLP (C) Nos. 17223-25/94

Exemption from filing official translation is allowed. F Leave granted. .. Tag on with appeals arising from S.L.P. (C) Nos. 16907-09of1994 in which interim orders have already been made."

It is contended by the appellant that after the aforesaid interim order, G it got necessary building plans sanctioned by the Mahapalika and started construction. Respondents, however, filed an application complaining that construction was in violation of the building plans and was also against the provisions of the U.P. Urban Planning and Development Act, 1973 (for short, the 'Development Act'). To ascertain the nature of construction being carried H

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A out at that time this Court appointed a Local Commissioner. These applicat~ons were then disposed of by passing the following order:-

"I.A. Nos. 10-12

The Commissioner, Mr. Justice Loomba, a retired Judge of the High B Court of Allahabad, has pursuant to this Court's order, submitted his Report dated February 15, 1996. In paragraph 3 of the Report he identifies the points on which the Report was required and then proceeds to indicate the· actual physical condition in regard to the construction of the market and states that the entire market is being constructed underground and not above the ground and that the total c area on the surface of the market for the ingress and egress (with Chabutras) and light purposes etc. 4oes not exceed IO per cent of the plot and is about 9.74 per cent of the area in which the market is being constructed. He, however, notes that the level of the park at the periphery appears to be higher than the estimated average level of the original park by about 3.21 feet= 3 feet 2.5 inches as worked out on D the basis of available old signs and that the same does not appear to be in any manner offensive and is of no consequence. He also points out that the park made on the market area is and will be available for the public in the form of park less the structures made on the surface, which as pointed out above; does not exceed the permissible limit of E IO per cent of the total plot area. He also states that the Chabutras constructed on the back of the structures will also be available to the pubiic and may serve as benches in the park. In view of this Report which precisely indicates the actual physical condition existing on the date of the Report and the plan appended thereto which shows beyond any manner of doubt that the entire construction is F underground, the total surface area does not exceed the permissible limit of IO per cent and the raising of the height on the periphery is - of no consequence because it does not. in any manner affect the surface area. We, therefore, accept the Report of the learned Judge and see no merit in these I.As." - G The Court, however, did not go into other issues raised in the applications. By a subsequent order dated May 7, 1997 the Court stopped further construction.

Before we consider the details of the case we may note in brief the H contentions of the parties.

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Petitioners (now the respondents) in the writ petitions submitted that the park was not only of great historical significance but its maintenance was necessary from the environmental point of view as mandated by law. ...... Admittedly, the park is the only open space in the Aminabad market, which is an over-crowded commercial and residential area of the city. Possession of the park was handed over to the appellant (M.1. Builders) in violation of the provisions of law to construct an underground shopping co1tlplex and _.... underground parking with the ostensible purpose of decongesting the area. It is not that the encroachers would be removed from the area as the underground shops were not allotted to any one of them. They would nevertheless remain at the places occupied by them. Challenge to the action of Mahapalika in allowing construction was on the grounds: - c l. It was against the public purpose to construct an underground market in the garb of the decongesting area of the encroachers to destroy a park of historical importance and of environmental necessity. It would be in breach of Articles 21, 49, 51-A(g) of the Constitution as the existing park which is the only open space D in the busiest commercial area in the heart of the city of Lucknow can be destroyed and the citizens particularly the residents of the area would be deprived of the quality of life to which they are entitled under the law and to maintain ecology of the area. 2 . It is in violation of the statutory provisions as contained in the E U.P. Nagar Mahapalika Adhiniyam, 1959 (now called Uttar Pradesh Municipal Corporation Adhiniyam, 1959 -by Amending Act 12 of 1994) (for short the Act), U.P. Regulation of Buildings Operations Act, 1958 (for short the 'Building Act'), Uttar Pradesh Urban Planning and Development Act, 1973 (for short the F 'Development Act') and also Uttar Pradesh Parks, Playgrounds and Open Spaces (Preservation and Regulation) Act, 1975 (for

- short the 'Parks Act').

3. No tenders were invited by the Mahapalika before entering into the agreement wjth the builder. This was against the established procedure and thus it acted arbitrarily in the matter of disposing G and dealing with its immovable property which was of immense value. The agreement is wholly one sided and gives undue advantage to the builder at the cost of the Mahapalika.

4. The agreement between Mahapalika and the builder smacks of arbitrariness, is unfair and gives undue favour to the builder and H

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A this was done with mala fide motives of personal gain by the authorities of the Mahapalika particularly the Mukhya Nagar Adfiikari (Chief Executive Officer) and the Adhy*sh I (the Mayor). ,

5. The resolution of the Mahapalika by which it has\greed to enter _,, into the agreement with the builder was against me provisions B of the Act which were mandatory.

6. The whole action of the Mahapalika was against public interest. Lucknow Development Authority (for short LDA) which· was constituted under the Development Act and was responsible for development in the area which would mean construction of the c underground shopping complex and underground parking lot was side-lined and no sanction was obtained from the Vice Chairman in accordance with the provisions of the Development Act. The builder as well as the Mahapalika filed their respective counter affidavits in the High Court opposing the writ petitions. No counter affidavit was filed either by the State or by LDA though they were parties in the writ petitions. Chief Executive Officer and the Mayor were imp leaded by name as respondents in the writ petitions and allegations of mala fides and favourtism made against them but none of them choose to file any counter affidavit controverting those allegations. In the High Court a very strange scenario emerged and that was that though the stand of Mahapalika and .LDA as spelled out from documents was at variation with each other, yet both were represented by one counsel. Builder was represented by the Advocate General of the State while State was represented by its standing counsel. Before us though Mahapalika earlier supported the builder as noted above and also filed appeals against the impugned judgment but subsequently it reversed its stand, withdrew its appeals and filed an affidavit supporting the judgment of the High Court. The State Government and the LDA also filed their affidavits supporting the judgment of the High Court with full vigom though as seen earlier before the High Court they were just mute spectators. We may also note that in reply to the applications IA Nos. 10 and I I in this Court the G Mahapalika lent its support to the builder. This action of the Mahapalika changing its stand midstream was subjected to severe critiCism by the appellant and it was stated that there was estoppel by deed in the case and Mahapalika could not go back on its earlier stand.

The impugned judgment has been challenged by the builder on the following grounds: -

M.I. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, J.) 1085 ~ (a) There was no disposal of the property by Mahapalika in favour of the builder and therefore provisions of Section 128 of the Act were inapplicable. Even assuming it was so, provisions of Sections 129 and 132 of the Act stood complied. (b) There was no arbitrariness or unreasonableness vitiating the agreement between Mahapalika and the builder particularly in B _. view of the express finding of the High Court that there was no lack of bona fides and that it was not disputed that the builder was competent to execute the job. This was having regard to special features of the construction and further on account of the fact that no party had come forward at any time to execute the project. In such a situation omission to invite tenders would c not vitiate the agreement particularly when the proposal for construction of the project by the builder was widely known.

(c) In view of its stand before the High Court and in the Special Leave Petition of the builder and its own appeals filed in this Court it is not open to Mahapalika to advance any contention D or take a stand contrary to what had been taken earlier. (d) High Court exceeded its jurisdiction as it did not apply correct parameters of its power of judicial review as laid by this Court in Tata Cellular v. Union of India, [1994] 6 SCC 651 and other cases and the High Court went wrong in going into the question . E of expediency and wisdom of the proposed project. (e) Mahapalika could not revoke the building plan without notice to the builder and without hearing it in the matter.

- This last submission we need not go into the question if cancellation of the sanctioned building plans by the Mahapalika was valid as that was not the issue before the High Court. F

Mahapalika is a body corporate constituted under the Act. The Act provides for various functions of the Mahapalika and how these are to be performed. Its various authorities are described in Section 5 which i's as G under:-

"5. Corporation Authorities.- The Corporation authorities charged with carrying out the provisions of this Act for each city shall be- (a) the Corporation; H

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A (aa) the Ward Committees;

(b) an Executive Committee of the Corporation;

(bb) the Nagar Pramukh;

B (c) a Development Committee of the Corporation;

(d) A Mukhya Nagar Adhikari 'and an Apar Mukhya Nagar Adhikari' appointed for the Corporation under this Act; and

(e) in the eve!lt of the corporation establishing or acquiring electricity C supply or public transport undertaking or other public utility services, such other committee or committees of the Corporation as the Corporation may with the P,.revious sanction of the State Government establish with respect thereto."

Chapter II provides for constitution of various committees and Chapter D III for proceedings of the Mahapalika, Executive Committee, Development Committee and other Committees. In view of the applicability of the Development Act, 1973, the Executive Committee of Mahapalika has ceased· to be in operation to that extent. Under Section 91 falling in this Chapter, a ·;

E list of the business to be transacted at every meeting except an adjourned meeting, shall be sent to each member of the Mahapalika or of other Committees - at least ninety-six hours in the case of a meeting of the Corporation before the date fixed for the meeting and seventy two hours in the case of a meeting < of any such Committee and "no business, except as provided in sub- section (2), shall be brought or transacted at any meeting other than a business of which notice has been given". Sub-section (2) is as under: - F "(2) Any member of the Corporation or ofa Committee referred to in sub- section (1), as the case may be, may send or deliver to the Mukhya Nagar Adhikari notice of any resolution with a copy thereof - proposed to be moved by him at any meeting of which notice has been sent under sub-section (l ). The notice shall be sent or delivered G at least forty-eight hours in the case of a meeting of the Corporation and twenty four hours in the case of a meeting of any committee before the date fixed for the meeting and thereupon the Mukhya Nagar Adhikari shall with all possible despatch cause to be circulated such resolution to every member in such manner as he may think fit. H Any resolution so circulated may, unless the meeting otherwise decides,

M.l. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, I.] 1087

I I , be considered and disposeq of thereat." A Under Section 95 of the Act, the Mahapalika may from time to time by

- special resolution constitute a special committee to enquire into and report upon any matter connected with its powers, duties or functions. Every such special committee shall conform to any instruction that may be given to it by the Mahapalika. The report of the specta.l committee shall, as soon as may be practicable, be laid before the Mahapalika which may thereupon take such action as it thinks fit or may refer backI the matter to the special committee ~

for such further investigation and report as it may direct. Section 97 provides for constitution of sub-committees by the Executive Committee or any committee appointed under clause (e) of Section 5 and any such sub-committee shall possess such powers and perform such duties and functions as the committee appointing it may from time to time delegate or confer. Section 105 of the Act provides that no act done or proceeding taken under this Act shall be called in question in any court on the ground merely of any defect or irregularity in procedure not affecting the substance. Under Section 119 of the Act falling under Chapter V which prescribes duties and powers of the D Mahapalika and its authorities, there is provision for delegation of functions which we reproduce, in relevant part, as under: -

"119. Delegation offunctions,-(l) Subject to the other provisions of this Act and the rules thereunder and subject to such conditions and restrictions as may be specified by the Corporation - . E (a) the Corporation may delegate to the Executive Committee or to the Mukhya Nagar Adhikari any of its functions under this Act other than those specified in Part A of Schedule I." It is not necessary to refer to Part A of Schedule I mentioned in Section F 119 as none of the functions of Corporation on which there is prohibition has been delegated. Under Section 119, reproduced above, delegation can only be to the Executive Committee or to the Mukhya Nagar Adhikari and to no other person or authority or Committee. Sections 421, 422 and 423 of the Act were referred to contend that it is only for the Mahapalika itself to establish private markets. These sections fall in Chapter XVI dealing with regulation of .G markets, slaughter-houses, certain trades and acts, etc.

Chapter VI of the Act deals with property and contracts. Under Section 125 falling in this Chapter, Mahapalika has power to acquire, hold and dispose of property or any interest therein whether within or without the limits of the city. Under sub-section (3) of Section 125 any immovable property which may H

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A be transferred to -the .Corporation by the Government shall be held by it, subject to such conditions including resumption by the Government on the occurrence of a specified contingency and shall apply to such purpose as the Government may impose or specify while making the transfer. Section 128 deals with power of the Mahapalika to dispose of the property. As to what B are the provisions governing disposal of property these are mentioned in Section 129. Sections 128 and 129, in relevant part, are as under: -

" 128. Po~er to dispose of property. - ( 1) The Corporation shall, for the purpose of this Act, and subject to the provisions thereof and rules made thereunder, have power to sell, iet on hire, lease, exchange, mortgage, grant or otherwise dispose of any property or any interest c therein acquired by or vested in the Corporation under this Act.

Provided that no property transferred to the Corporation by the Government shall be sold, let on hire, exchange or mortgaged or otherwise conveyed in any manner contrary to the terms of the transfer except with the prior sanction of the State Government. D

129. Provision governing disposal of property. -With respect to the disposal of property belonging to the Corporation the following provisions shall have effect, namely:

(l) Every disposal of property belonging to the Corporation shall be made by the Mukhya Nagar Adhikari on behalf of the Corporation.

(2) xxx xxx xxx .. ~

(3) The Mukhya Nagar Adhikari may with the sanction of the Executive Committee dispose of by sale, letting out on hire or otherwise any movable property belonging to the Corporation, of which the value does not exceed five thousand rupees; and may with the like sanction grant a lease of any immovable property belonging to the Corporation, including any such right as aforesaid, for any period exceeding one year or sell or grant a lease in perpetuity of any immovable property belonging to the G Corporation the value of premium whereof does not exceed fifty thousand rupees or the annual rental whereof does not exceed ..,. three thousand rupees. (4) the Mukhya Nagar Adhikari may with the sanction of the Corporation lease, sell, let out on hire or ot~erwise convey any H property, movable or immovable, belonging to the Corporation.

M.l. BUILDERS PVT.LTD. v. R.S. SAHU [D.P. WADHWA, J.] 1089

(5) xxx xxx xxx A (6) the sanction of the Executive Committee or of the Corporation under sub-section (3) or sub-section (4) may be .given either generally or any in class of cases or specially in any particular case. (7) the aforesaid provisions of this section and the provisions of B the rules shall apply to every disposal of property belonging to the Corporation made under or for any purposes of this Act."

Sections 131, 13 2 (in relevant part) and 13 3 prescribe the manner of execution of Contract and these are as under: - c "131. Powers of Corporation to the making of contracts.-Subject to the provisions of this Act, the Corporation shaU have power to enter into contracts which may be necessary or expedient under or for any purposes of this Act.

"132. Certain provisions relating to the execution of the contracts.- D (I) All contracts referred to in Section 131 including contracts relating to the acquisition and disposal of immovable property or any interest therein made in connection with the affairs of the Corporation under this Act, shall. be expressed to be made, for and on behalf of the Corporation, and all such contracts and all assurances of property E made in exercise of that power shall be executed, for and on behalf of the Corporation, by the Mukhya Nagar Adhikari Qr by such other officer of the Corporation as may be authorised in writing by the Mukhya Nagar Adhikari either generally or for any particular case or class of cases.

(4) No contract involving an expenditure exceeding five lakh rupees shall be made by Mukhya Nagar Adhikari unless it has been sanctioned by the Corporation." G "133. Manner of execution.-{!) Every contract entered into by the Mukhya Nagar Adhikari on behalf of the Corporation shall be entered into in such manner and form as would bind him if it were made on his own behalf and may in like manner and form be varied or discharged : H

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A Provided that : -

(a) the common seal of the Corporation shall be affixed to every contract which, if made between private persons, would require to be under seal, and

(b) every contract for the execution of any work or the supply of B any materials or goods which will involve an expenditure exceeding two thousand and five hundred rupees shall be in writing, shall be sealed with the seal of the Corporation and shall specify-

(i) the work to be done or the materials or goods to be supplied as c the case may be;

(ii) the price to be paid for such work, materi;ils or goods; and

(fu) the time or times within which the contract or specified portion thereof shall be carried out. D (2) The common seal of the Corporation shall remain in the custody of the Mukhya Nagar Adhikari and shall not be affixed to any contract or other instrument except in the presence of a Sabhasad, who shall attach his signature to the contract or instrument in token that the same was sealed in his presence. E (3) The signature of the said Sabhasad shall be distinct from the signature of any witness to the execution of such contract or instrument.

(4) No contract executed otherwise than as provided in the section shall be binding on the Corporation."

Relevant part of Section 136 on which some arguments addressed, is reproduced hereunder: -

"136. Estimates exceeding rupees fifty thousand-{l) Where a project is framed for the execution of any work or series of works the entire estimated cost of which exceeds fifty thousand rupees-

(a) the Mukhya Nagar Adhikari shall cause a detailed report to be prepared including such estimates and drawings as may be requisite and forward the same to the Executive Committee who shall submit the same before the Mahapalika with its suggestions,

M.I. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, J.] 1091

" if any; (b) the Mahapalika shall consider the report and the suggestions and may reject the project or may approve it either in its entirety or subject to modifications." (By the amending Act 12of1994 w.e.f. 30.5.1994 the amounts in sub- sections (1) and (2) of Section 136 are now respectively 5 lakhs and B 10 lakhs of rupees.)

Part IX of the Constitution was inserted by the Constitution (74th) Amendment Act, 1992. Article 243W under this part prescribes the powers, authorities and responsibilities of Municipalitic;s etc. It provides, in relevant C part, that the legislature of a State may, by law, endow the Committee or the Municipality such powers and authority with respect to performance of functions and the implementation of schemes as may be entrusted to it including those matters listed in the Twelfth Schedule. If we refer to the Twelfth Schedule, Entries 8, 12 and 17 would be relevant and are as under:- D "8. Urban forestry, protection of the environment and promotion of ecological aspects.

12. Provision of urban amenities and facilities such as parks, gardens, play-grounds.

17. Public amenities including street lighting, parking lots, bus stops E and public conveniences."

Keeping this aspect in view, the Act was amended and some of the relevant duties of Mahapalika, which are obligatory as given in Section 114, are as under: F "114. Obligatory duties of the Corporation.-lt shall be incumbent on the Corporation to make reasonable and adequate provision, by any means or measures which it is lawfully competent to it to use or to take, for each of the following matters, namely: -

.. (viii) guarding from pollution water used for human consumption and G preventing polluted water from being so used;

(ix) the lighting of public secrecy, Corporation markets and public buildings and other public places vested in the Corporation;

.(ix-a) the construction and maintenance of parking lots, bus stops and H

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A public conveniences;

(xxx) planting and maintaining trees on road sides and other public ·- places.

(xxxiii-a) promoting urban 'forestry and ecological aspects and protection of the environment;

(xli) providing urban amenities and facilities such as parks, gardens and play-gi:ounds."

The Development Act is in force and it is not disputed that whole of the city of Lucknow has been declared as development area within the meaning of Section 3 of this Act. "Development" is defined in clause (e) of Section 2 of the Act and it is as under:-

"(e) "development", with its grammatical variations, means the carrying out of building, engineering, mining or other operations in, on, over or under land, or the making of any material change in any building or land, and includes re-development."

Lucknow Development Authority (LDA) has been constituted under Section 4 of the Development Act. Chapter III of the Development Act provides for preparatit>n of Master Plan and zonal development plan for the development area. Section 13 provides for the procedure for amendment of the Master Plan or zonal development plan. Section· I4 provides for development of land in development area and this section is as under:-

"14. Development of land in the developed area.--{1) After the declaration of any area as development area under Section 3, no development of land shall be undertaken or carried out or continued in that area by any person or body (including a department of Government) unless permission for such development has been obtained in writing from the Vice-Chairman in accordance with the provisions of this Act.

G (2) After the coming into operation of any of the plans in any development area no development shall be undertaken or carried out or continued in that area unless such development is also in accordance with such plans.

(3) Notwithstanding anything contained in sub-sections (I) and (2), H the following provisions shall apply in relation to developmer..t of land

M.I. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, J.) 1093 by any department of any State Government or the Central Government A · . or any local authority . - (a) when any such department or local authority intends to carry out any development of land it shall inform the Vice Chairman in writing of its intention to do so, giving full particulars thereof, including any plans and documents, at least 30 days before B undertaking such development; (b) in the case of a department of any State Government or the Central Government, if the Vice-Chairman has no objection it should inform such department of the same within three weeks from the date ofreceipt by it under clause (b) of the department's C intention, and ifthe Vice Chairman does not make any objection within the said period the department shall be free to carry out the proposed development; (c) where the Vice Chairman raises any objection to the proposed development on the ground that the development is not in conformity with any Master Plan or zonal development plan prepared or intended to be prepared by it, or on any other ground, such department or the local authority, as the case may be, shall - (i) either make necessary modifications in the proposal for development to meet the objections raised by the Vice- Chairman; or

(ii) submit the proposals for development together with the objections raised by the Vice- Chairman to the State Government for decision under clause (d); F (d) the State Government, on receipt of proposals for development together with the objections of the Vice-Chairman, may either approve the proposals with or without modifications or direct the department or the local authority, as the case may be, to make such modifications as proposed by the Government and G the decision of the State Government shall be final;

(e) the development of any land begun by any such department or subject to the provisions of Section 59 by any such local authority before the declaration referred to in sub- section (I) may be completed by that department or local authority with compliance H

1094 SUPREME COURT REPORTS [1999) 3 S.C.R.

A with the requirement of sub-sections (I) and (2)."

The Development Act also contains provision for penalties and power of the LDA to demolish buildings and to stop development in case of contravention of the provisions of this Act. When the Development Act is in operation, then under Section 59 of this Act, certain functions of the U.P. B Municipal Corporation Adhiniyam, 1959 become inoperative so far as these are relevant for the purpose :

"59. Repeal etc., and Savings.-(l)(a) The operation of clause (c) of Section 5, Sections 54, 55 and 56, clause (xxxiii) of Section 114, sub- section (3) of Section 117, clause (c) of sub-section ( 1) of Section c 119..."

The provisions of the U.P. Regulation of Buildings Operation Act, 1958 also become inoperative by virtue of Section 59 of the Development Act.

The Parks Act provides for preservation and regulation of parks, play- D grounds and open spaces in the State of Uttar Pradesh. The Parks Act applies to an area included in every Nagar Mahapalika under the Uttar Pradesh Nagar Mahapalika Adhiniyam, 1959. It is not disputed that this Act is now in force (w.e.f. February l, 1995). Park has been defined in clause (b) of Section 2 of the Act to mean a piece of land on which there are no buildings or of which E not more than one-twentieth part is covered with buildings, and the whole or the remainder of which is laid out as a garden with trees, plants or flower- beds or as a lawn or as a meadow and maintained as a place for the resort of the public for recreation, air or light. The Act provides for maintenance of parks and prohibits construction of building, except with the previous sanction of the concerned authority, which is likely to affect the utility of the park. F As to how the impugned agreement dated November 4, 1993 came to . be executed between the Mahapalika and the builder we now consider the proceedings of the Mahapalika, the Executive Committee and its sub- committee called the High Power Committee. G I On July 6, 1993 notice was issued for meeting of the Mahapalika for July 12, 1993 with following agenda: .. "l. Discussions on the accepted proposals passed by the Executive Committee on 27.5.1993, and 27.6.1993. H 2 Discussions on the various proposals.

M.I. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, J.] 1095

.,....,, 3. Other subjects, subject to the permission of Presiding Officer." A There were no details regarding agenda item No. 3, which, it is said, pertained to Palika Bazaar, i.e., the underground shopping complex. On that day following resolution constituting the High Power Committee for disposal of the properties of the Mahapalika was passed under aforesaid agenda item N~~ B "The full details, maps, conditions of allotment in respect of Shri Rafi Ahmad Kidwai Nagar Yojna and Rajaji Puram Vistar Yojna may be prepared at the earliest. And for this act a committee may be constituted under the chairmanship of the Nagar Pramukh in which two Hon'ble Sabhasad and three officers be appointed. For nominating the members, the Nagar Pramukh may be authorised. The powers of disposing of the entire land, allotment and transfer in respect of both the schemes shall be vested in the above committee.

It was also decided that the Committee constituted under the Chairmanship of the Nagar Pramukh shall have the rights of disposing of all the properties, allotment, transfer etc. situated within the limits of the Nagar Mahapalika and the above committee shall have the right to give the final shape to the conditions of allotment and agreement

- etc. In this manner this sub Committee is authorised to exercise the aforementioned rights of the Mahapalika conditions of allotment and agreement etc. In this manner this Sub Committee is authorised to E

exercise the aforementioned rights of the Mahapalika."

Meeting of the High Power Committee so constituted under the aforesaid resolution of the Mahapalika, was held on October 13, 1993 and was adjourned to October 19, 1993. In the meeting of the High Power Committee held on F October 19, 1993, presided over by Mr. Akhilesh Das, Nagar Pramukh as Chairman, there is discussion regarding construction of the underground air conditioned Palika Bazar at Aminabad Jhandewala Park on the lines of Palika Bazar in New Delhi. It was recorded that the Vice-Chairman, Lucknow Development Authority by his letter No.279/Architect dated October 16, 1993 intimated that as per the Master Plan, the land use of the Aminabad, Jhandewala G park is commercial. The draft of the contract to be entered into between the Mahapalika and the MI Builders was approved. The minutes ended with the recording as under:

"Amended and final draft of the contract was read by the Advocate before the Committ~e on this, the opinion of the members was asked H

1096 SUPREME COURT REPORTS [1999) 3 S.C.R.

A for by the Chairman on which all the members were unanimous that all the members after discussing over the suggestions and conditions set out by the Mahapalika Advocate took this decision that the prescribed project ma:y got executed by M.I. Builders Pvt. Ltd. And the Mukhya Nagar Adhikari should be authorised for conducting all •. the forthcoming actions and formalities. B The Hon'ble Chairman also directed that the entire proceedings may be presented for information in the meeting of the Executive Committee dated 20. I 0.93 and meeting of the Mahapalika house held on 21.10.93.

c Sd B.K. Singh yadav Sd Sushil Dubey Sabhased Member

Mukhya Nagar Adhikari Member.

D Sd G.C. Goyal Architect Sd D.K. Doal, Member Member, UP Nagar Adhikari.

Sd Akhilesh Dass Sd Laxmi Narain Nagar Pramukh Sabhasad,

Chairman of the Committee Member." E In view of the directions of the High Power Committee the matter was placed before the Executive Committee on October 20, 1993 which passed the following resolution: -

"Resolution Np. (85) As per the decision taken in the meeting dated F 12.7.1993 of the Mahapalika, Sub- Committee constituted under the Chairmanship of the Hon'ble Nagar Pramukh was entrusted with the powers of developing, leasing and to transfer the immovable property of the Mahapalika. In exercise of these powers, the Sub- Committee, keeping in view the grave problem of encroachment and parking in Aminabad Submitted the proposal of the Hon'ble Members namely G Sh. Kalraj Mishra (President Bhartiya Janta Party U.P.) and Shri Ejaj Rijvi, Ex. Minister for the construction of an Air Conditioned Palika Bazar and parking place in the Jandewala park (Aminabad Park) on the pattern of the Delhi Bazar, with a parking place for about 1000 vehicles through Mis. M.I. Builders Pvt. Ltd. Presented before the Executive H Committee for information which was welcomed by all and the proposal

M.I. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, J.] 1097

was approved." A Thereafter, the matter came to be placed before the Mahapalika in its meeting dated October 21, 1993 and the following minutes were recorded: -

"In view of the decision taken by the General House of Mahapalika dated 12.07 .93, a subcommittee under the Chairmanship of Mayor was entrusted to transfer, to develop and to give on lease of immovable properties of Mahapalika. In exercise of these powers, the Sub- committee, keeping in view the grave problem of encroachment and parking in Aminabad submitted the proposal of Sh. Kalraj Misra (President) Bhartiya Janta Party U.P. and Sh. Eagaz Risvi (Ex-Minister) for construction of an air-conditioned Palika Ba~r and parking place in the Jhandewala Park (Aminuddaula Park) on the pattern of Delhi (Air-conditioned) Palika Bazar and a parking in which there should be a provision for parking of about 1000 vehicles through M.I. Builders Pvt. Ltd. presented before the House for information which was welcomed and a unanimous resolution was passed and the Nagar D Pramukh was congratulated for this important work."

It will be advantageous to reproduce the impugned agreement dated November 4, 1993, which is executed between the Mahapalika and the builder:-

"WHEREAS, the party No. I is an absolute owner of the plot of land E \ ' · situated at Aminabad popularly known as Jhandewala Park measuring about 2,45,000 sq.ft. and bounded as below :

NORTII Chhedilal Dharamshala Road

sourn Ganga Prasad Road F EAST Road locating Central Bank oflndia

WEST Road locating Hyder Husain building.

More specifically mentioned in the site- plan attached herewith.

WHEREAS, the party No. I is a body constituted under the UP G Nagar Mahapalika Adhiniyam (Act II 1959), managing the parks, roads street lights and other such maintenance of amenities in the city.

WHEREAS, owing to high increase in urban population (according to 1991 Census, Lucknow Urban agglomeration has a population of 16,69,204) because of the migratory character of Rural Population to H

1098 SUPREME COURT REPORTS [1999] 3 S.C.R.

A Urban Areas which is too congested due to overflow of population, v •. the city is also being faced overwhelmingly with day to day problem of encroachment causing much of acrimony perpetrating high guilts and discrete errors.

WHEREAS, the party No.1 remained ever conscious to kei;:p the B city hygienically sound free from all adverse effects but the problem of ercroachment is no less than a headache for the Lucknow Nagar Mahapalika which has emerged like a growing nightmare and becoming unmanageable by the Lucknow Nagar Mahapalika owing to its limited \and scanty resources and flow of supplementary income. The eagerness .... of Nagar Mahapalika to maintain proper road, construction of new c roads with street lighting and the cleanliness derive during monsoon for removing sand and silt from the nallahs is too often inadequately met by the Local Bodies Department of the Government as the Schedule of New Demands for providing requisite funds are not available timely as well as sufficiently. This is one of the major hindrances in keeping the functioning of the Lucknow Nagar Mahapalika at low ebb.

. WHEREAS, considering the above points Mis. M.I. Builders Private Limited had prepared a viable and constructive proposal keeping in view the interest of Lucknow Nagar Mahapalika in all respects and, the same was submitted to Lucknow. Nagar Mahapalika as it dealt exhaustively the benefits that will be oriented after its implementation to the Lucknow Nagar Mahapalika as well as to the Lucknow Populace. The proposal was found beneficial to the Nagar Mahapalika Lucknow as well as to the general public. The proposal which will be known as PALIKA BAZAR if given affect will be a source of control over the traffic and will reduce the congestion in the vicinity. F WHEREAS, the aforesaid proposal was accepted by the Lucknow Nagar Mahapalika in its Meeting thereby procuring a No Objection Certificate from the Lucknow Development authority under Section 14 ...... ofUrban Building Planning and Development Act, 1973 for constructing the PALIKA BAZAR on the land mentioned above 279/vastuvid G dated 16.10.1993.

NOW this agreement witnesseth as under :-

1Copy pinpoint1. That party no.2 ·shall construct the said PALIKA BAZAR according to the plan (attached herewith) with respect to which No Objection H Certificate has been obtained by party no. I from the prescribed

M.I. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, J.] 1099

·-· authority.

2Copy pinpoint2. That the PALIKA BAZAR shall be constructed by party no.2 at his A

own cost and party no.2 shall be entitled to realise the cost of construction with reasonable profit which in any case shall not be more than 10% with respect to each shop as may fixed by party no.2 in lieu of construction and when the project of Palika Bazar is completed B and cost of construction has been realised the 'PALIKA BAZAR' shall be handed over to the Lucknow Nagar Mahapalika as its owner.

3Copy pinpoint3. That the party no.2 shall also provide air-conditioning facility in the PALIKA BAZAR at his own cost as well as the installation of the plant and construction of the infrastructure in this regard. c

4Copy pinpoint4. That the party no.2 shall have the right to fix the amount of cost of construction while the rent of the shops shall be at the rate of Rs. 2.50 p. only per sq. ft. and 50 p. will be charged as lease rent as 1/ 5th of the rent of covered area and Rs.300 per shop for maintenance subject to enhancement of the air Conditioning plant, maintenance of the complex as well as the electric charges.

5Copy pinpoint5. That party no.2 shall be at liberty to lease out the shops as per its own terms and conditions to the persons of their choice on behalf of party no. I which shall be binding on party no. I but the conditions as mentioned in para 4 as aforesaid in this agreement regarding rent shall remain in force.

6Copy pinpoint6. That the party no.2 shall also have the right to sign the agreement if necessary on behalf of party no. I as person authorised by party no. I on the terms and conditions which the party no.2 may deem fit and proper and the copy of the agreement shall be given to party no. I F after its execution and the terms of the deed shall be binding upon both the parties of this deed provided the party no.2 executes only that much of agreement which number of shops are available in Palika Bazar and in any case shall not exceed the same but the rent of the shops shall remain the same as mentioned above. G

7Copy pinpoint7. That the construction of PALIKA BAZAR shall start within three · months from the date of registration of this agreement and, shall be completed within three years from the date of its start.

8Copy pinpoint8. That party no.2 shall have the right to publicise the project and take advances from the buyers and to give them proper allotment receipts. H

1100 SUPREME COURT REPORTS [1999] 3 S.C.R.

9Copy pinpoint9. That party no.I shall co-operate in all manners in the constructional work activities of party no.2 and shall extend all its co-operation and help as and when needed by party no.2 from time to time.

10Copy pinpoint10. That the party no. l shall be responsible to help and assist party no.2 in completing the project and party no. l shall also be exclusively B responsible for getting the electric sewer and water connection from concerned department for the above project at the cost of party no.2.

I I. That party no. J shall help. the party no.2 in getting the Project completed and meeting all the needs and requirements in completing the project. c I2. That in case there is in any obstruction from Mahapalika or legal proceedings resulting in the non-completion or carrying out the constructional work of the project resulting in the non-completion stoppage of the work, the party no. l shall be responsible for all the losses and damages that may accrue to party no.2. D

13. That party no.2 shall not allot the 5% shops before completion of parking and other services of the complex to e~sure the proper compliance of the agreement and further ensure the quality of construction.

E 14. That party no.2 shall give the bank guarantee ofRs.25,00,000 (Rs. twenty five lacs) for its perf~rmance within 3'111.onths from the date of registration of this agreement' Gut this clause is subject to all necessary co-operation of party no. l.

15. That party no. I shall charge Rs.5,000 per shop for every second F and subsequent transfer of the shops.

I6. That after the completion of the project the party no.2 shall hand over the entire documents in original to the party no. I for keeping the final records. - G ·. 17. That in case of any disputes or differences arising out of the project between the parties to the agreement, the same shall be referred for arbitration to the mutually appointed arbitrator who shall in all cases be the retired justice of Hon'ble High Court or its equivalent and his award shall be binding upon both the parties.

H I8. That the agreement between the party no.2 and the shop keeper

M.I. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, J.] 1101

shall be duly approved by the Nagar Mahapalika Lucknow and· the A party no.2 has made that agreement available to the party no. I and the party no. I has approved the said agreement.

19. That all the legal expenses in executing this agreement shall be borne only by the party no.2. B IN WITNESS WHEREOF, the parties of this deed have signed the deed on the day and the year mentioned herein below in presence of the following witnesses and the terms of this agreement shall be binding upon the legal heirs, successors, assignees and legal representatives. Sd/- c Lucknow : dated Party No.I November4, I993. For M.I. Builders Pvt. Ltd. Sd/- WITNESSES Managing Director Party No. 2 D

1. Sd/- Drafted by: Sd/-

2. Sd /- (Arvind Razdan) Advocate. Civil Court, Lucknow"

Mr. Soli Sorabjee, learned counsel for the builder, submitted that the agreement was not against public interest and could n9t have been revoked E by the Mahapalika. He said the petitioners in the writ petitions did not bring forward any contractor who could say that he was more competent than M.I. Builders to execute the job and at a cost less than that to be incurred by M.I. Builders. He said case of the builder was covered by a judgment of this Court in Mis. Kasturi Lal Lakshmi Reddy and others v. State of Jammu and Kashmir and another, [ 1980) 4 SCC I. In this case the State of J & K awarded F a contract to the second respondent for tapping of IO to I2 lakhs blazes annually for extraction of resin from the inaccessible chir forests in the State '- for a period of I 0 years. This was in accordance with the policy of the State Government and it was agreed upon that a part of resin so extracted would be delivered to the State for running the State-owned industry and the rest G would be retained by the second respondent for establishing and running its own factory in the State. The petitioners in the writ petition assailed the order of the State Government on the following main three grounds:-

"(A) That the order is arbitrary, mala fide and not in public interest, inasmuch as a huge benefit has been conferred on the 2nd H

1102 SUPREME COURT REPORTS [1999] 3 S.C.R.

A respondents at the cost of the State. (B) The order creates monopoly in favour of the 2nd respondents who are a private party and constitutes unreasonable restriction on the right of the petitioners to carry on tapping contract business under Article 19(1 )(g) of the Constitution. B (C) The State has acted arbitrarily in selecting the 2nd respondents for awarding tapping contract, without affording any opportunity to others to complete for obtaining such contract and this action of the State is not based on any rational or relevant principle and is, therefore, violative. of Article 14 of the Constitution as also c of the rule of administrative law which inhibits arbitrary action by the State."

This Court, after examining the whole facts of the case and applying the parameters laid in Ramana Dayaram Shetty v. International Airport Authority of India, [ 1979] 3 SCC 489 negatived all the pleas raised by the petitioners. D Referring to its earlier decision in International Airport Authority of India case this Court had observed that there are two limitations imposed by law which structure and control the discretion of the Government in giving largess. The first is in regard to the terms oh which largess may be granted and the other in regard to the persons who may be recipients of such largess. Then the Court said as under: - !<" E "So far as the first limitation is concerned, it flows directly from the thesis that, unlike a private individual, the State cannot act as it pleases in the matter of giving largess. Though ordinarily a private individual would be guided by economic considerations of self-gain in any action taken by him, it is always open to him under the law to act contrary to his self-interest or to oblige another in entering into a contract or dealing with his property. But the government is not free to act as it likes in granting largess such as awarding a contract or selling or leasing out its property. Whatever be its activity, the government is still the government and is, subject to restraints inherent in its position in a democratic society. The constitutional power confen:ed on the government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good. Every activity of the government has a public element in it and it must therefore, be informed with reason and guided by public interest. Every action taken by the government must be in public interest; the government cannot act arbitrarily and without

M.I. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, J.] 1103

reason and if it does, its action would be liable to be invalidated. If A the government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid." B The Court said that the State of J & K, in view of its policy of industrialization, was interested in the setting up of the factory by the second respondents, particularly since the second respondents had two factories for manufacture of resin, turpentine oil and other derivatives and they possessed large experience in the processing of resin and reprocessing of resin, turpentine oil and other derivatives. The Court considered the nature of the contract and observed that it was obvious that, in view of the policy of the State Government, no resin would be auctioned in the open market and in this situation, it would be totally irrelevant to import the concept of market price with reference to which the adequacy of the price charged by the State to the second respondents could be judged. If the State were simply selling resin, there could be no doubt that the State must endeavour to obtain the highest price subject, of course, to any other overriding considerations of public interest and in that event, its action in giving resin to a private individual at a lesser price would be arbitrary and contrary to public interest. But, where the State has, as a matter of policy, stopped selling resin to outsiders and decided to allot it only to industries set up within the State for the purpose of encouraging industrialization, there could be no scope for complaint that the State was giving resin at a lesser price than that which could be obtained in the open market. The yardstick of price in the open market would be wholly inept because in view of the State policy, there would be no question of any resin being sold in the open market. F

After examining this judgment it is difficult to appreciate the argument of Mr. Sorabjee as to how the principles laid in this case can be applicable to the present case.

To substantiate his argument that there was "estoppel by pleading" G against the Mahapalika Mr. Sorabjee referred to the stand of the Mahapalika as reflected in the proceedings before the High Court as well as in this Court. It was also pointed out that in the counter affidavit filed by the State Government in the High Court it supported the builder. There was no 'disposal of property' by the Mahapalika within the meaning of Section 128 of the Act. H

·1104 SUPREME COURT REPORTS [1999] 3 S.C.R.

A Resolution of Mahapalika to enter into the agreement with the builder was validly passed. The project was the brainchild of M.I. Builders and the nature of the transaction was such that it was unconventional and there is no universal rule that tender be invited in every case. There was no secrecy. Everything was done in open and discussed freely at various stages. In the affidavit dated January 8, 1994 of Mr. B.K. ~·:ngh, Chief Executive Officer of the Mahapalika filed in the High Court he had explained why it was necessary to have the project executed in order to avoid congestion in Aminabad commercial area. In the affidavit dated October 19, 1995 of Mr. T.K. Doval, Upnagar Adhikari which was filed i.n answer to IAs 10-12/95, complaining breach of this Court's order dated Decemb.er 14, 1994, again the earlier stand of Mahapalika was re-affirmed. Mr. Sorabjee criticised the action of the Mahapalika in withdrawing its appeals in this Court on February 6, 1997 on mere mentioning in the Court. He said plan, which had been sanctioned by order dated January 23, 1995, was revoked illegally on April 17, 1997 without any notice to the builder. There is, however, resolution of the Mahapalika dated August 6, 1996 filed by Mr. S.K. Gupta, Mukhya Nagar Adhikari of the D Mahapalika opposing the present appeals by the builder. Mahapalika took a summersault and gave a complete go- bye to its earlier stand. That there could be estoppel by pleadings reference was made to a decision of this Court in Union ofIndia v. Mis Indo-Afghan Agencies Ltd., [1968] 2 SCR 366, approving the earlier decision of the Calcutta High Court in The Ganges Manufacturing E Co. v. Sourujmull and others, (1880) ILR Calcutta 669 at 678). Mr. Sorabjee said a party could not change its stand even if it was legally wrong in its earlier stand as otherwise it could be a negation of everything.

In the Ganges Manufacturing Co. v. Sourujmull & Ors., (1880) 5 ILR Cal 669, a Division Bench of the Calcutta High Court held that "a man may F be estopped not only from giving particular evidence, but from doing any act or relying upon any particular argument or contention, which the rules of equity and good conscience prevent him from using as against his opponent".

In Union of India and others v. Mis. Indo-Afghan Agencies Ltd., [1968] G 2 SCR 366, in a certain scheme called the Export Promotion Scheme incentives were provided to the exporters for woolen goods. Mis. Indo- Afghan Agencies .- Ltd. Exported woolen goods to Afghanistan of F.O.B. value of over Rs.5 crpres. The Deputy Director in the office of the Textile Commissioner, Bombay, issued to them an Import Entitlement Certificate for about Rs.2 crores only. When the representations made to the Government for grant of Import H Entitlement Certificate for full F.O.B. value, it produced no response and writ

M.I. BUILDERS PVT. LTD. v. R.S. SAHU [D.P. WADHWA, J.] 1105

petition under Article 226 of the Constitution was filed in the High Court. A High Court allowed the writ petition. In the appeal filed by Union of India to this Court various contentions were raised. This Court said:-

"Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or B expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen."

And further: - c "The defence of executive necessity was not relied upon in the present case in the affidavit filed on behalf of the Union of India. It was also not pleaded that the representation in the Scheme was subject to an implied term that the Union of India will not be bound to grant the import certificate for the full value of the goods t:xported if they deem it inexpedient to grant the certificate. We are unable to accede to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment. Under our constitutional set-up no person may be deprived of his right or liberty except in due course <>f and by authority of law: if a member of the executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law - common or statute - the Courts will be competent to and indeed would be bound to, protect the rights of the aggrieved citizen." It was also held: -

"We hold that the claim of the respondents is appropriately founded upo~ the equity which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action taken by the respondents acting upon that representation under the belief that the Government would carry out the representation made by it.' On the facts proved in this G

- case, no ground has been suggested before the Court for exempting the Government from the equity arising out of the acts done by the exporters to their prejudice relying upon the representation."

Mr. Sorabjee then referred to Section 128 of the A.;t and to the expression "disposal" and also to Sections 129(4), 131and132 of the Act. According to H

1106 SUPREME COURT REPORTS [1999] 3 S.C.R. I, I

A him there was no disposal of any property and no interest in the land had been transferred by the Mahapalika to the builder. In this connection reference was made to the agreement dated November 4, 1993. Reference was also made to the counter affidavit filed earlier by Mr. B.K. Singh, Mukhya Nagar Adhikari, wherein he had stated that the property vested in Mahapalika and that there B was no disposal or transfer of any interest in the property to the builder. As to what is meant by the expression "disposed of' reference was made to another decision of this Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Mis. Thomas S~ephen and Co. Ltd, [ 1988] 2 SCC 264 at 266. This judgment was of course in context of sale of goods. Reference was also made to a decision of House of Lords (1959 (1) C WLR 465 at 472) to contend that "disposal" means disposal absolutely.

If it was necessary to call tender reference was made to a decision of this Court in G.B. Mahajan and others v. Ja/gaon Municipal Council and others, [ 1991] 3 sec 91, where tender was invited to construct the building but authority was given to the developer to grant occupancy rights. In this case, this Court considered the scope of judicial review in the case of contractual transaction of Government, its policy decision and right of the Government on its instrumentality to evolve any method for execution of the project. In this case respondent Jalagaon Municipal Council entered into a contract with a private developer/builder for construction of a commercial complex. The project contemplated its execution by the developer on self- financing basis subject to handing over the administrative building of the complex to the Municipal Council free of cost and allotting some shops at a fixed rate/free of cost to certain specified persons while having right to dispose of the remaining accommodation at its own discretion and to retain the premia received by way of reimbursement of its financial outlays plus profits. The execution of the project was challenged on the ground that it was unconventional and thus untenable. This Court said that the Government or its instrumentality policy option to adopt any method or technique for management of the project provided the same is within the constitutional and legal· limits. This Court held that the project was not ultra vires the powers of Municipal Council and such a case was not open to judicial review. The following main contentions were raised apprising the project: -

"(a) That the scheme of financing of the project was unconventional and was not one that was, as a matter of policy, open and. permissible to a governmental authority. The municipal authority could either have put up the construction itself departmentally

M.I. BUILDERS PVT.LTD. v. R.S. SAHU [D.P. WADHWA, J.] 1107

or awarded the execution of the whole project to a builditjg contractor. The method of financing and execution of the project are ultra vires the powers of the Municipal authority under the Act.

(b) That the terms of the agreement with the developer that the latter be at liberty to dispose of the occupancy rights in the commercial complex in such manner and on such terms as it may choose would amount to an impermissible delegation of the statutory functions of the Municipal Council under Section 272 of the Act to the developer. . (c) That the project, in effect, amounted to and involved the disposal of municipal property by way of a long term lease with rights of sub-letting in favour of the developer violative of Section 92 of the 'Act'. (d) That the scheme is arbitrary and unreasonable and is violative of Article 14 of the Constitution. The project is patently one intended to and does provide for an unjust enrichment of respondent 6 at public expense."

This Court negatived all these contentions. It said that the project, otherwise. legal, does not become any the less permissible by reason alone that the local authority, instead of executing the project itself, had entered into an agreement with a developer for its financing and execution. This Court did not find any violation of any provisions of the Maharashtra Municipalities Act, 1965 governing the Municipal Council. On the question of reasonableness this Court said that a thing is not unreasonable in the legal sense merely because the court thinks it is unwise. Then this Court said: - F "The contention regarding impermissible delegation is not tenable. The developer to the extent he is authorised to induct occupiers in respect of the area earmarked for him merely exercises, with the consent of the Municipal Council, a power to substitute an occupier in his own place. This is not impermissible when it is with the express consent G of the Municipal Council. It would be unduly restrictive of the statutory powers of the local authority if a provision enabling the establishment of markets and disposal of occupancy rights therein are hedged in by restrictions not found in the statute."

Reference was then made to a decision of this Court in Tata Cellular H

A v. ll08 SUPREME COURT REPORTS [1999} 3 Sf.~,R.

Union of India, [1994] 6 SCC 651, where this Court considered the ~cope ' of judicial review and adduced the following principles: -

"( l) The modem trend points to judicial restraint in administrative action.

B (2) The court does not sit as a court of appeal but merely reviews the - manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own deeision, without the necessary expertise C which itself may be- fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. D More often than not, such decisions are made qualitatively by experts.