ITC LTD. v. STATE OF UTTAR PRADESH & ORS.
Tools
- Court
- Supreme Court of India
- Decided
- (year only)
- Bench
- R. V. RAVEENDRAN and B. SUDERSHAN REDDY
- Citation
- [2011] 7 S.C.R. 66
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Headnote — Supreme Court Reports (editorial summary, not part of the judgment)
s.41(3) rlw ss.12 and 14 -Allotment of commercial plots in commercial area for construction of 5 star, 4 star and 3 star hotels on 90 years lease - Plots allotted at industrial rates - D Later on, allotments cancelled as the same were made without following the procedure of auction, and the allotment on fixed industrial rates caused loss to government exchequer -
Held
Under private law, a lease governed exclusively by the provisions of Transfer of Property Act could be cancelled only by filing a civil suit for its cancellation or for a declaration that it is illegal, null and void and for the consequential relief of delivery back of possession - Where the grant of lease is governed by a statute or statutory regulations, and if such statute expressly reserves the power of cancellation or revocation to the lessor, it will be permissible for an Authority, as the lessor, to cancel a duly executed and registered lease deed, even if possession has been delivered, on the specific grounds of cancellation provided in the statute - In the instant case, NO/DA is a statutory authority and it has not alleged or made out any default in payment or breach of conditions of the lease or breach of rules and regulations - Nor is it the case of NO/DA that any of the allottees is guilty_ of any suppression or misstatement of fact, misrepresentation or fraud - Therefore, the allotment of commercial plots by NO/DA to the allottees H 66
Catchwords
ss. 41(3) - Allotment of plots - Cancellation of-
Held
8 When valuable rights had vested in the a/lottees, by reason of the allotments and grant of leases, such rights could not be interfered with or adversely affected, without a hearing to the affected parties - Natural justice - Opportunity of hearing.
Catchwords
Administrative Law: c Allotment of commercial plots for hotels - Cancellation order - Judicial review of -
Held
In the instant case, the · allotments of plots for hotel projects were challenged in writ petitions and in compliance with the direction of the High D Court, the state government had a relook at the matter and found some irregularities in allotment - The decision of the state government in revision, is not based on any different policy, but based on its finding that the existing regulations and policies of NO/DA were violated - The policy of the state government cannot override the NO/DA Regulations - If any policy is made, intending to give different meaning to the words 'commercial use' and 'industrial use', that can be given effect only if the regulations are suitably amended - The fact that the tourism or hotels have been given the status of 'industry' F will not convert them into industries, for the purpose of allotment of plots, nor will the use of land by such tourism or hotel industry, will be an industrial use - Allotment of plots for hotels in a commercial area is wholly in consonance with the NO/DA Regulations and Master plan which earmarks areas for specific land uses like industrial, residential, commercial, institutiona·I, public, semi-public, etc - Therefore, the allotment of plots situated in commercial areas earmarked for commercial use, to hotels did not violate any provisions of the Act or the NO/DA Regulations - NO/DA (Preparation
Running a hotel/boarding house/restaurant -
Held
Is c a commercial activity - By no stretch of imagination, use of a plot for a hotel can be considered as use of such land for an industrial purpose - It was not necessary for NO/DA to change the land use of plots_ to be allotted to hotels, from commercial to industrial use. D Urban Development:
Catchwords
Allotment of commercial plots for 5 star, 4 star and 3 star hotels - Requirement of inviting tenders - Commercial plots in commercial area allotted at fixed industrial rate without inviting tenders -
Held
Allotment of commercial plots is governed by the NO/DA Policies and Procedures for Commercial Property Management, 2004 - Under the said policy, commercial properties of NO/DA can be allotted only on sealed tender basis or by way of public auction - The allotment of commercial plots at fixed rate was, therefore, clearly contrary to the said regulations of NO/DA - The failure to follow the procedure prescribed in the NO/DA Commercial Property Management Policy is a violation of the policy and such violation has resulted in loss to the public exchequer - G Therefore, the state government can certainly interfere under its revisiona/ jurisdiction - As the allotment is of commercial plots governed by NO/DA Commercial Property Management Policy, and as the reserve rate itself was Rs.300001- per sq.m., allotment at Rs. 7,400 per sq.m. caused loss and violated the regulations and policy of NO/DA - However, the violation
Held
1. The High Court rightly set aside the orders dated 1.8.2007 of the State government, because no hearing was given to the appellants as required u/s 41(3) of the 1973 Act. Even otherwise, when valuable rights had vested in the allottees, by reason of the allotments and grant of leases, such rights could not be interfered with or adversely affected, without a hearing to the affected parties. The High rightly directed the state government to decide the matter afresh after hearing the appellants. This court reiterated the said direction in its interim order dated 18.7.2008. Therefore, there is no need to interfere ~ith the final order of the High Court. [para
Reporter's headnote (continued) and case details
A (Civil Appeal No. 4561 of 2008) JULY 5, 2011 B
Uttar Pradesh Urban Planning and Development Act, c 1973:
ITC LTD. v. STATE OF UTIAR PRADESH & ORS. 67 for setting up hotels is valid -There is no violation of the A regulations or policies of NO/DA in allotting commercial plots for hotels - Therefore, cancellation of allotment is unsustainable.
68 SUPREME COURT REPORTS [2011] 7 S.C.R.
A and Finalisation of Plan) 1991 Regulations, 1991 - Policy dated 22.5.2006 of Government of Uttar Pradesh - Uttar Pradesh Urban Planning and Development Act, 1973.
Public law - Breach of statutory provisions or procedural irregularities - Allotment of plots for hotels on 90 years lease 8 - Cancellation of - Remedial action - Explained.
TOURISM:
69 occurred on account of a mistake on the part of the officers of NO/DA in misinterpreting the government policy dated 22.5.2006 - The a/lottees are given the option to continue their respective leases by paying the premium (allotment rate) at Rs. 70,0001- per sq.m. (with corresponding increase in yearly rent/one time lease rent}, without any location benefit charges 8 - NO/DA Policies and Procedures for Commercial Property Management, 2004 - Uttar Pradesh Urban Planning and Development Act, 1973 - s.41.
Words and Phrases: c Expression 'industry' used in the context of tourism/hotel - Connotation of.
Keeping in view the Common Wealth Games 2010 and pursuant to a meeting with the Secretary, Sports and o Youth Affairs, Government of India, the NOIDA, on 17.10.2006, invited applications for allotment of plots of industrial land at industrial rates of Rs. 7,4001- per sq. mts. plus location charges for 5 star, 4 star and 3 star hotels on 90 years lease ha.sis. Allotments of 9 plots for 5 star E hotels 2 plots for 4 star hotel and 3 plots for 3 star hotels were made on 12.01.2007. The Government scheme dated 22.05.2006 was approved on 05.06.2006 and the lease deeds were registered in two cases and in other cases, the registration was kept pending on the ground of under valuation stating that as against circle rate of F Rs.70,0001- per sq. mt., the premium for the sale was only Rs. 7,400 per sq. mts. Writ petitions were filed in the High Court on the ground that the allotment of the said plots was at a very low price. Pursuant to the direction of the High Court to the State Government to exercise its power G of revision u/s.41(3) read with s.12 of the U. P. Urban Planning and Development Act, 1973, the Government concluded that the allotments made were irregular for (i) allotments of commercial plots had been made for H
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A industrial purposes at industrial rates without getting the land use changed from commercial to industrial in accordance with the regulations and without obtaining the consent of the state government; and (ii) the plots earmarked for commercial use in a commercial area were B allotted at rates applicable to industrial plots, without calling for competitive bids/tenders and without the permission of the state government. It, therefore, directed on 01.08.2007 NOIDA to cancel the allotments and initiate action against the officers of NOIDA responsible for the c irregularities. Consequently, the NOIDA issued cancellation letters dated 3.8.2007 canceling the allotments and consequential leases granted in favour of the appellants; and the said writ petitions were dismissed as withdrawn. D The allottees filed writ petitions before the High Court challenging the cancellation of allotment of plots and the leases by communications dated 3.8.2007. A Division Bench of the High Court allowed the writ petitions. It quashed the order dated 1.8.2007 of the State E Government and the cancellation orders dated 3.8.2007 passed by NOIDA on the ground that they were opposed to principles of natural justice for want of opportunity of hearing as required under proviso to s.41(3) of 1973 Act. The High Court, therefore, remanded the matters to the F State Government for taking decision afresh.
In the instant appeals filed by the allottees, it was contended for the appellants that the High Court, having quashed the order of the State Government dated G 1.8.2007 and the consequential orders of cancellation dated 3.8.2007 passed by NOIDA, ought to have upheld the allotments and the leases and should not have remanded the matter to the state government for consideration. H
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On 9.7.2008 the Court directed status quo regarding possession. On 18.7.2008 the Court, while granting stay of dispossession of the appellants from the respective sites allotted to them, directed the State Government to give a hearing to the appellants and pass a reasoned order in accordance with law. The state government accordingly passed individual orders dated 8.9.2008 in the case of each of the appellants, holding that the allotment of plots to them was bad. It cancelled the allotments and directed action to be taken against the erring officers of NOIDA. c · The questions for consideration before the Court were: (1) "Where allotment has been followed by grant of a lease (which is duly executed) and delivery of . possession in favour of the less-ee, whether the leases could be unilaterally cancelled by the lessor?" (2) D "Whether the cancellations were on account of change in policy as a consequence of change of government, or on account of new government's desire to nullify the actions of previous government?" (3) "Whether the allotments of plots to appellants suffer from any irregularity or illegality?" Disposing of the appeals, the Court
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A 16) (107-C-D-F-G]
Whether completed lease can be cancelled:
2.1. Two lease deeds have been duly registered. In regard to other lease deeds, which were presented for registration, though there is no objection for registration, registration formalities are kept pending in view of a · demand by the registration authorities for deficit stamp duty and registration charges on the basis of circle rate and the issue is pending before the registration officer concerned or in cpurt. As far as NOIDA is concerned, execution and registration of the leases were complete.d, and, consequently, possession of the plots was delivered to the allottees/lessees in April and May, 2007. Each appellant has also incurred considerable amount for preliminary expenditure for the hotel project (in addition to the premium, location benefit charges, rent, stamp duty and registration charges) as they were expected to execute the projects in a time bound manner. [para 19] [110-H; 111-A-D] E 2.2. Under private law, a lease governed exclusively by the provisions of Transfer of Property Act, 1882 could be cancelled only by filing a civil suit for its cancellation or for a declaration that it is illegal, null and void and for the consequential relief of delivery back of possession. F Unless and until a court of competent jurisdiction grants such a decree, the lease will continue to be effective and binding. Unilateral cancellation of a registered lease deed by the lessor will neither terminate the lease nor entitle a lessor to seek possession. This is the position under private law. [para 21) [111-G-H; 112-A] 2.3. But, where the grant of lease is governed by a statute or statutory regulations, and if such statute expressly reserves the power of cancellation or revocation .to the lessor, it will be permissible for an
73
Authority, as the lessor, to cancel a duly executed and registered lease deed, even if possession has been delivered, on the/ specific grounds of cancellation provided in the statute. [para 22] [112-B]
2.4. In the instant case, NOIDA is an authority 8 constituted under the Uttar Pradesh Industrial Area Development Act, 1976, for development of an industrial and urban township (also known as Noida) in Uttar Pradesh under the provisions of the Act. Section 7 empowers the authority to sell, lease or otherwise transfer whether by auction, allotment or otherwise, any land or building belonging to it in the industrial development area, on such terms and conditions as it may think fit to impose, on such terms and conditions and subject to any rules that may be made. Section 14 empowers the Chief Executive Officer of the Authority to resume a site or building which had been transferred by the Authority and forfeit the whole or part of the money paid in regard to such transfer, in the following two circumstances : (a) non-payment by the lessee, of consideration money or any installment thereof due by the lessee on account of the transfer of any site or building by the Authority; or b) breach of any condition of such transfer or breach of any rules or regulations made under the Act by the lessee. Thus, if a lessee commits default in paying either the premium or the lease rent or other dues, or commits breach of any term of the lease deed or breach of any rules or regulations under the Act, the Chief Executive Officer of NOIDA can res1,Jme the leased plot or building in the manner provided i~ the statute, without filing a civil suit. The authority to resume implies and includes the authority to unilaterally cancel the lease. [para 23] [112-C-H; 113-A]
2.5. NOIDA has not alleged or made out any default in payment or breach of conditions of the lease or breach H
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A of rules and regulations. Nor is it the case of NOIDA that any of the appellants is guilty of any suppression or misstatement of fact, misrepresentation or fraud. Neither the cancellation of the allotment and the lease by NOIDA by letter dated 3.8.2007, nor the orders dated 1.8.2007 or B 8.9.2008 made by the state government refer to any of these grounds. Therefore, the allotment of commercial plots by NOIDA to the appellants for setting up hotels is valid. There is no violation of the regulations or policies of NOIDA in allotting commercial plots for hotels. c Therefore, cancellation of allotment is unsustainable. The cancellation cannot be sustained with reference to the grounds mentioned in s. 14 of the Act. The grounds mentioned for cancellation are mistakes committed by NOIDA itself in making allotments and fixing the premium, 0 in violation of the Regulations and policies of NOIDA by officers of NOIDA. These are not grounds for cancellation u/s 14 of the Act. [para 25 and 58] [113-F-H; 114-A; 141- D] 2.6. Section 41 (3) of the U.P. Urban Planning and E Development Act, 1973 shows that the State government, can examine the legality or propriety of any order of NOIDA and pass appropriate orders. If the state government in exercise of its revisional jurisdiction finds the allotments were irregular or contrary to the F regulations or policies of NOIDA and directs cancellation, the allotments become invalid and leases also become invalid. Consequently, NOIDA can resume possession, without intervention of a civil court in a civil suit. [para 27] [116-B-D] G State of Haryana vs. State of Punjab - 2002 (1) SCR 227 = 2002 (2) sec 507 and State of Karnataka vs. All India Manufacturers Organisation - 2006 (1) Suppl. SCR 86 = 2006 (4) sec 683 - held inapplicable. H
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Whether cancellation was on account of change in A Government?: 3.1. This is not a case where as a consequence of change in government, the new government has reviewed the decision relating to hotel site allotment, 8 merely because it was a decision of the previous government. Nor is it a case of new policy of the new government being at variance with the policy of. the previous government. In the instant case, the allotments of plots for hotel projects were challenged in two writ C petitions and in compliance with the direction of the High Court, the state government had a relook at the matter, found some irregularities in allotment and, by letter dated 1.8.2007, directed NOIDA to take action to remedy the irregularities found in the allotments. The orders dated 8.9.2008 were made in view of the final order of the High D Court and the interim order of this Court directing reconsideration. The decision of the state government in revision, is not based on any different policy, but based on its finding that the existing regulations and policies of NOIDA were violated. [para 29] [118-B-D-G-H] E Whether the allotments violate the regulations/policies of NOIDA?
4.1. In the instant case, no amendment was made changing the land use of the plots in question from commercial to industrial. The state government on examination of all the facts in ·its revisional jurisdiction found that the hotel plots allotted to appellants were part of Sectors 96, 97 and 98 (for five star plots) and other sectors (for plots for 4 star and 3 star hotels) which were earmarked for commercial use under the NOIDA Master Plan. It was of the view that in view of tourism/hotels being declared as an "industry" and the government policy requiring allotment of plots for tourism/hotels at industrial rates,. if any plot had to be allotted for a hotel, H
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A the land use of the· said plot had to be changed to industrial use in the Master plan by adopting the prescribed procedure under the regulations, before making the allotment. It was also of the view that if the plots were allotted for hotel industry, then the B construction should be as per the NOIDA building regulations and directions applicable to industries in regard to FAR, ground coverage, height, setbacks, construction of building etc. It was also of the view thJt if plots in commercial areas are to be allotted it could be c only in accordance with the NOIDA Commercial Property Management Policy which required all commercial plots to be allotted on sealed tender or public auction basis. As NOIDA did not alter the land use of the plots in question from commercial use to industrial use in the 0 Master Plan nor did it amend the definitions of commercial use and industrial use in the 1991 Regulations so that hotels would no longer be a commercial use, but an industrial use, the state government held that statutory regL.lations and directives E of NOIDA had been violated in making the hotel plot allotments. [para 31] [120-D-H; 121-A] ·
Whether plots earmarked for commercial use in commercial area could be allotted for hotels?:
F 5.1. The NOIDA Building Regulations and Directions of 2006 make it clear that FAR and the permissible height of the building is far more advantageous in the case of commercial hotel buildings when compared to industrial buildings. It may be mentioned that even when the 1986 G Building Regulations were in force till 4.12.2006, the provisions for FAR and height of building were far more advantageous to commercial buildings, when compared to industrial buildings. [Para 36] [126-E-F]
5.2. Running a hotel or boarding house or a H
77 restaurant is a commercial activity and use of a land or building for hotel is commercial use. By no stretch of imagination, use of a plot for a hotel can be considered as use of such land for an industrial purpose. An industrial building is defined in Regulation 3.12(e) of the 2006 Building Regulations as a building in which products or materials of all kinds and properties are manufacture, fabricated, .assembled or processed. As per the 1991 Regulations, use for a hotel is a commercial use. [para 37) [126-F-H]
5.3. Having regard to the provisions of the NO.IDA c (Preparation and Finalisation of Plan) 1991 Regulations, 1991 use of land for hotel cannot be considered as an industrial use, but will continue to remain a commercial use. The policy of the state government dated 22.5.2006 cannot override the NOIDA Regulations. If any policy is D made, intending to give different meaning to the words 'commercial use'· and 'industrial use', that can be given effect only if the regulations· are suitably amended. [para 38] [127-F-G] E 5.4. When tourism is given the status of an industry, it does not mean tourism involves manufacturing, fabrication, processing or assembling, but it refers to a service industry. By giving the status of 'industry', the policy enabled a particular service activity (iii the instant F case tourism and hotels) to secure ·certain benefits in allotment of land at concessional prices and certain tax exemptions. Therefore, the fact that the tourism or hotels have been given the status of 'industry' will not convert them into industries, for the purpose of allotment of plots,· G nor will the use of land by such tourism or hotel industry, will be an industrial use. It does not also mean that all the hotels and tourist offices should be shifted from commercial areas to industrial areas or that hotels or tourist offices cannot operate in commercial areas, or that H
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A they cannot get allotment of land or building earmarked for commercial use. Allotment of plots for hotels in a commercial area is wholly in consonance with the NOIDA Regulations and Master plan which earmarks areas for specific land uses like industrial, residential, commercial, B institutional, public, semi-public, etc. Therefore, the allotment of plots situated in commercial areas earmarked for commercial use,. to hotels did not violate any provisions of the Act or the NOIDA Regulations. It was not necessary for NOIDA to change the land use of c plots to be allotted to hotels, from commercial to industrial use. [para 39-40] [127-H; 128-B-H]
Whether allotment of hotel sites by NOIDA should have been by inviting tenders/holding auctions?
D 6.1. Allotment of commercial plots is governed by the NOIDA Policies and Procedures for Commercial Property Management, 2004. Under the said policy, commercial properties of NOIDA can be allotted only on sealed tender basis or by way of public auction. For \his purpose NOIDA E has to fix a reserve rate and the person who gives the highest bid/offer above the reserve rate, who is otherwise eligible, is allotted the plot. The said policy in regard to the procedure for allotment of commercial properties was not amended or modified to provide for allotment of F commercial properties for hotels at fixed prices. The allotment of commercial plots at fixed rate was, therefore, clearly contrary to the said regulations of NOIDA. [para 44] [131-F-H; 132-A] Home Secretary v. Darshj!t Singh Grewal 1993 (4) SCC G 25 - relied on Brij Bhusan vs. State of Jammu & Kashmir - 1986 (2) SCC 354, Sachidanand Pandey vs. State of West Bengal 1987 (2) SCR 223 =1987 (2) SCC 295, and MP Oil Extraction H
ITC LTD. v. STATE OF UTIAR PRADESH & ORS. 79 vs. State of MP 1997 (1) Suppl. SCR 671 =1997 (7) SCC A 592 - distinguihsed 6.2. The state government policy dated 22.5.2006 or its adoption by tJOIDA on 5.6.2006 did not amend to the regulations, instructions, policies and procedures of B NOIDA. If the said Tourism/Hotels development policy dated 22.5.2006 contained any procedure which was at variance with the existing regulations or procedures of NOIDA; such procedures in the policy dated 22.5.2006 could come into effect only by NOIDA amending its regulations and Property Management Policies. As per the 1991 Regulations ahd 2006 Building Regulations, hotel buildings are commercial buildings and use of land for hotels is commercial use and any plot allotted for hotels is a commercial property. Therefore, any allotment of a plot for hotels should comply with the NOIDA Commercial Property Management Policy, 2004. Unless the said Policy was amended, providing for allotment at fixed rates, in regard to any sub-category of commercial plotS, allotment of a commercial property belonging to NOIDA otherwise than by sealed tender basis or auction basis will be an allotment in violation of and contrary to, the regulations directives and policies of NOIDA. [para 48] [134-D-G]
6.3. The failure to follow the procedure prescribed in the NOIDA Commercial Property Management Policy is a violation of the policy and such violation has resulted in loss to the public exchequer. The violation of the regulations and policies of NOIDA may be unintentional and a bonafide mistake on account of a mis-reading of the requirement of the policy dated 22.5.2006. Nevertheless it is a violation. If there is a violation of the regulations and policies of NOIDA in making allotments, the state government can certainly interfere under its revisional jurisdiction. [para 49-50] [135-A-F-G] H
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A (cl Whether the rate charged was erroneous and has led to any loss? 7.Mere earmarking of particular land for allotment to hotels which is a commercial activity at industrial plot prices, does not mean there is a loss in respect of an 8 amount equal to the difference between the rate of commercial plots and rate of industrial plots. Any decision to allot plots to hotels at industrial rates, by itself, did not cause any loss, as such a decision was intended to be an incentive to attract investment. But there will be a c 'IOSS' I if a plot Which is earmarked for Commercial USe, allotted for a commercial purpose, which is required to be allotted at commercial rates by tender or auction, is erroneously charged either at a residential plot rate or an industrial plot rate. The regulations and policies of NOIDA D require the allotment of commercial plots to be by sealed tender or by public auction. As the allotment is of commercial plots governed by NOIDA Commercial Property Management Policy, and as the reserve rate itself was Rs.30000/- per sq.m. it has to be held that E allotment at Rs.7,400 per sq.m. caused loss and violated the regulations and p~licy of NOIDA. [para 53 and 55] [138-D-F; 139-C-E-F] IV. What should be the consequence of the violation? F 8.1. The violation occurred on account of a mistake on the part of the .officers of NOIDA in misinterpreting the government policy dated 22.5.2006, which has resulted in lesser allotment price. The allottees were in no way to be blamed for the mistake. Nor were the allottees guilty of any suppression, misstatement or misrepresentation of facts, fraud, collusion or undue influence in obtaining the allotments at Rs. 7,400/- per sq.m. According to respondents, the rate of premium ought to have been Rs.70,000/- per sq.m. being the market rate, even though the reserve rate was only Rs.30,000/- per sq.m. The
ITC LTD. v. STATE OF UTIAR PRADESH & ORS. 81 mistake was found out by the state government, in exercise of revisional jurisdiction. But by "then the allotment was followed by payment of premium, execution of the lease deed, and delivery of possession. By the time the state government decided that the allotment should be cancelled the transaction was complete in all respects. The fact that the registration of some of the leases was kept 'pending' in view of a dispute relating to valuation would not be relevant for this purpose. [para 58) [141-E-G]
8.2. In public law, breach of statutory provisions, c procedural irregularities, arbitrariness and mala fides on the part of the Authority (transferor) will furnish grounds to cancel or annul the transfer. But before a completed transfer is interfered on the ground of violation of the regulations, it will be necessary to consider: whether the transferee had any role to play (fraud, misrepresentation, undue influence etc.) in such violation of the regulations, in which event cancellation of the transfer is inevitable. If the transferee had acted bona fide and was blameless, it may be possible to save the transfer but that again would depend upon the answer to the further question as to whether public interest has suffered or will suffer as· a consequence of the violation of the regulations:
(i) If public interest has neither suffered, nor likely to suffer, on account of the violation, then the transfer may be allowed to stand as then the violation will be a mere technical procedural irregularity without adverse effects.
(ii) On the other hand, if the violation of the G .regulations leaves or likely to leave an everlasting adverse effect or ·impact on public interest (as for example when it results in environmental degradation or results in a loss which is not reimbursable), public interest should prevail and the H
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A transfer should be rescinded or cancelled. (iii) But where the consequence of the violation is merely a short-recovery of the consideration, the transfer may be saved by giving the transferee an opportunity to make good the short-fall in consideration. [para 63.1] [145-F-H; 146-A-D] 8.3. If the government or its instrumentalities are seen to be frequently resiling from duly concluded solemn transfers, the confidence of the public and international community in the functioning of the government will be shaken. To save the credibility of the government and its instrumentalities, an effort should always be made to save the concluded transactions/ transfers wherever possible, provided (i) that it will not prejudice the public interest, or cause loss to public exchequer or lead to public mischief, and (ii) that the transferee is blameless and had no part to play in the violation of the regulation. [para 63.2] [146-E-G] E 8.4. If the concluded transfer cannot be saved and has to be cancelled, the innocent and blameless transferee ~i..ould be reimbursed all the payments made by him and all expenditure incurred by him in r~gard to the transfer with appropriate interest. If some other relief can be granted on grounds of equity without harming F public interest and public exchequer, grant of such equitable relief should also be considered. [para 63.3] [146-H; 147-A-B] Syed Abdul Qadir vs. State of Bihar 2008 (17) SCR 917 G =2009 (3) sec 475 - relied on. 8.5. In the instant case, the allotment of commercial plots to appellants is valid and legal. The violation is in making such allotment on fixed allotment rate which is less than the rate the plots would have fetched by calling
ITC LTD. v. STATE OF UTIAR PRADESH & ORS. 83 for tenders or by holding auctions. The violation of the guidelines in regard to disposal of commercial plots has resulted only in a loss of revenue by way of premium and if this could be made up, there is no reason why the leases should not be continued. According to the State Government, the commercial plots would have fetched a B premium at rate of Rs.70,000 per sq.mat the relevant time (October 2006 to January 2007) and NOIDA had been denied the benefit of that allotment rate, by reason of allotment of the plots at Rs.7400/- per sq.m. Therefore, the equitable solution is to give an opportunity to the lessees c to pay the difference thereby in consideration which arose on account of wrong interpretation instead of cancelling the leases and if the appellants are wiling to pay the balance of premium as claimed by respondents, . the leases need not be interfered; [para 65-661 [148-B-G] 0 8.6. Therefore, if the appellants (2006-2007 allottees) are to be extended the benefits offered to allottees under the 2008 scheme, the rate of Rs.70,000/- per sq.m. (the rate of 2008 scheme was 10% more than Rs.70,000/- per sq.m.) claimed by the respondents becomes logical and E reasonable. Therefore, there is no reason to reject the claim of respondents that the allotment rate should be Rs.70,000/- per s.q.m. The appellants are granted an opportunity to save the leases by paying the difference in premium at Rs.62600/- per sq.m. to make it upto F Rs.70,000/- per sq.m. [para 69] [151-D-F]
(i) The order of the High Court setting aside the revisional order dated 1.8.2007 of the State Government and the consequential orders of G cancellation of allotment of plots dated 3.8.2007 by NOIDA, is affirmed. (ii) The revisional orders dated 8.9.2008 passed by the State Government cancelling the allotments of plots to appellants, are set aside. H
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A (iii) The appellants are given the option to continue their respective leases by paying the premium (allotment rate) at Rs.70000/- per sq.m. (with corresponding increase in yearly rent/one time lease rent), without any location benefit charges. The 8 appellants shall exercise such option by 30.9.2011. Such of those appellants exercising the option will be entitled to the benefits which has been extended in regard to the allottees under 2008 allotment scheme of NOIDA: c On exercise of such option, the lease shall continue and the period between 1.8.2007 to 31.7.2011 shall be excluded for calculating the lease period of 90 years. Consequently, the period of lease mentioned in the lease deed shall stand extended by D a corresponding four years period, so that the lessee has the benefit of the lease for 90 years. An amendment to the lease deed shall be executed between NOIDA and the lessee incorporating the aforesaid changes. E (iv) If any appellant is unwilling to continue the lease by paying the higher premium as aforesaid, or fails to exercise the option as per para (iii) above by 30.9.2011, the allotment and consequential lease in its favour shall stand cancelled. In that event, NOIDA shall return all amounts paid by such appellant to NOIDA towards the allotment and the lease, and also reimburse the stamp duty and registration charges incurred by it, with interest at 18% per annum from the date of payment/incurring of such amounts to date of reimbursement by NOIDA. If NOIDA returns the amount to the appellant within 31.12.2011, the rate of interest payable by NOIDA shall be only 11% per annum instead of 18% per annum. [para 70] [151- G-H; 152-A-C-E-H; 153-A-C] H
85
Case Law Reference: A 2002 (1) SCR 227 held inapplicable para 28 2006 (1 ) Suppl.SCR 86 held inapplicable para 28 1986 (2) ~cc 354 distinguished para 42 B 1987 (2) SCR 223 distinguished para 42
1993 (4) sec 25 distinguished para 47
1997 (1) Suppl. SCR 671 distinguished para 52 para 64 c 2008 (17) SCR .917 distinguished
CIVIL APPELLATE JURISDICTION : Civil Appeal No . . 4561 of 2008.
From the Judgment & Order dated 13.5.2008 of the High D Court of Judicature at Allahabad in SLP No. 15375 of 2008.
WITH C.A. Nos. 4562, 4563, 4564, 4565, 4566, 4567, 4566, 4569, 4570, 4571, 4572 & 4968 of 2008. E
Gopal Subramanium, SG, T.R. Andhyarujina, Harish N. Salve, Ranjit Kumar, Maninder Singh, P.P. Rao, S.K. Agarwal, K.K. Venugopal, Satish Chandra Mishra, Ratnakar Dash, Ravinder Srivastava, Fakhruddin, Harish Malhotra, Shail Kumar F Dwivedi, AAG, L.K. Bhushan, Swaty Malik (for Dua Associates), Ruby Singh Ahuja, Meenakshi Grover, Manu Aggarwal, Abeer Kumar, R.N. Karanjawala, _Manik Karanjawala, Simran Brar, Vedanta Verma (for Karanjawala & Co.), Abhinav Mukerji , Gaui'av Sharma, Surbhi Mehta, Bindu Saxena, Aparajita Swarup, Shailendra Swarup, Neha Khattar, D. Bhadra, Hashmi, G Ravinder Agarwal, Arun K. Sinha, Rakesh Singh, Sumit Sinha, Dheeraj Malhotra, Aslam Ahmed, Babit Singh Jamwal, Gagan Gupta, D. Bhattacharya, M.K. Singh, Pramod B. Agarwala, Rajul Shrivastav, Abhishek Baid, Antara, Ameet Singh, H
86 SUPREME COURT REPORTS [2011] 7 S.C.R.
A Pareena Swarup, Praveen Swarup D. Mehta, Ameet Singh, Nikhil Majithia, Anuvrat Sharma, M.K. Choudhary, Tanuj Khurana, S.K. Verma, R.K. Yadav, Ashutosh Srivastava for the appearing parties.
Judgment
The Judgment of the Court was delivered by B R.V.RAVEENDRAN, J. 1. The appellants in these appeals are the lessees of plots allotted by the New Okhla Industrial Development Authority (for short 'the Authority' or 'NOIDA') for construction of 5 star, 4 star and 3 star hotels in C Noida, District Gautam Budh Nagar, Uttar Pradesh. The said Authority was constituted under the provisions of the U.P.lndustrial Area Development Act, 1Q76 ('Act' for short) for development of an Industrial and Urban Township of Noida in Uttar Pradesh, neighbouring Delhi. D
22. Tourism was granted the status of an "industry" by the state government during 1997-98, by extending certain concessions and facilities available to industries. However as tourism •. in particular hotel industry, had not received the required encouragement, the state government with the intention E of attracting capital investment in tourism industry came up with a policy, as per its communication dated 22.5.2006 addressed to the Director General of Tourism, Uttar Pradesh. Relevant portions of the said policy are extracted below :
F (1) Land should be earmarked for hotels by the concerned Development Authorities while preparing the Master Plan with the cooperation of the Tourism Department and such land should be provided for hotels. Where the Master-Plan stands finalized. the G said procedure has to be followed in respect of surplus land. In regard to Development Authorities which have not finalised the Master Plan, steps may be taken for reserving land for hotels to the extent possible, near tourist spots/places of tourism with the assistance of the Tourism Department. H
ITC LTD. v. STATE OF UTTAR PRADESH & ORS. 87 -·-~·.
[R.V. RAVEENDRAN, J.] Whenever the Master Plans of Authorities are revised, the land should be earmarked for hotels with the assistance of the Tourism Department. The lands earmarked will be kept reserved for tourism/ hotels for five years from the date of publicizing the scheme. If no hotel entrepreneur comes forward in five years, the authority shall be free to alter its land use.
(2) If change in land use by the Authority is necessary for giving the earmarked plot to hotel industry, such change in land use shall be done by the Authority c in accordance with the rules and the prescribed procedures on a 'case to case' basis by the · competent authority.
(3) D & (4) xxxxx (5) Since Tourism including Hotels, has been given the E status of Industry, in regard to hotels also plots shall be earmarked as in the case of industries, and shall be allotted at industrial rates as in the case of industrial plots. This policy shall be implemented in every district of the State. F (6) xxxxx
(7) They shall be given cent-percent rebate in Sukh Sadhan Tax for five years from the date of starting of new hotels. Other concessions shall be G admissible as per industrial policy.
(8) The earmarked land for Hotel industry, shall be allotted only to Tourism entrepreneurs. H
88 SUPREME COURT REPORTS [2011) 7 s. C.R. A (10) Land shall be made available to hotel entrepreneurs by all Authorities including the Housing and Industrial Development Departments, at industrial rates. To ensure that hotel entrepreneurs may get the benefit of this provision, all the above Authorities 8 shall ensure the necessary arrangements/ amendment in their rules so that it may be possible to rr.ake available the land to hotel entrepreneurs on industrial rates.
(11) Only in areas where there are Authorities, the c estimation of category wise requirement, determination of number of plots and star category wise determination of hotels will be made by the concerned Authorities. In other areas the Tourism Department shall assist in this exercise. D xxxxx
(15) After earmarking the land for hotels, applications will have to be invited for allotment to hotel/tourist entrepreneurs on industrial rates. The condition of eligibility for applicant shall be as follows:- x x x
(16) Where there is industrial lands, and more than one applicant, the Development Authorities shall allot the industrial land on the basis of suitability of the applicants, in accordance with the current procedure."
(emphasis supplied)
33. At the 135th meeting of the Board of Directors/Members G of NOIDA (for short 'NOIDA Board') held on 5.6.2006, the said State Policy dated 22.5.2006 to attract more capital investment in tourism/hotel industry was considered. The NOIDA Board resolved to implement the said policy in the areas falling within its jurisdiction and apply the rates applicable to its Industrial H area (Phase I) to the plots to be allotted to the hotel industry.
ITC LTD. v. STATE OF UTIAR PRADESH & ORS. 89 [R.V. RAVEENDRAN, J.] The rate referred was the reserve rate of Rs.7400/- per sq.m. A applicable to Industrial Area (Phase I) plots, fixed by the NOIDA Board at its meeting held on 20.3.2006. The resolution also mentioned that the implementation of the said policy should ensure ·construction of sufficient hotels before the Commonwealth Games to be held in Delhi, which were B scheduled to commence in October, 2010. Having regard to the importance of the matter, the Principal Secretary, Tourism, the Commissioner, Meerut Circle and the Director of Industries of the U.P. Government, attended the said meeting as special invitees. c
44. At a meeting held by the Circle Commissioner, Meerut on 2.7.2006 with officials of NOIDA, he communicated the direction that construction of Hotels should be completed before the commencement of the Commonwealth Games. At the said meeting the following 14 plots were identified as being D suitable for allotment as hotels/plots: (a) six plots each measuring 40000 sq.m. for 5 star hotels in Sectors 96, 97 and 98; (b) five .plots each me~suring 20000 sq.m. for 4 star hotels in Sectors 72, 101, 105, 124 and 135; and (c) three plots for 3 star hotels (measuring 20000, 20000 & 10000 sq.m.) in E Sectors 62, 63, and 142. In view of the Government's Policy dated 22.5.2006 and the decisions taken at the meeting chaired by the Commissioner, Meerut Circle on 6.7.2006, the NOIDA Board took the following decisions at its 136th meeting held on 14.7.2006 : (i) It approved the proposal for making provision for hotels in reserved commercial area - Zone C 3 (as hotels had not been permitted in commercial areas C-1 and C-2 of the master plan reserved for wholesale and retail activities and as there was demand for hotels due to Commonwealth Games 2010) and directed inclusion thereof in the approved proposed NOIDA Master Plan 2021 and reference to the State Government for its approval. (ii) It decided to launch the Hotel Plot Allotment Scheme and authorized the CEO to finalise the terms and conditions for H
90 SUPREME COURT REPORTS [2011] 7 S.C.R.
A allotment, so as to ensure construction of hotels by the allottees before the commencement of the Commonwealth Games. In pursuance of the said decision, NOIDA sent a communication dated 20.7.2006 to the State Government seeking approval of its decision to make a provision for hotels in commercial 8 areas under Zone 3 and inclusion of it in NOIDA Master Plan, 2021.
55. The Secretary, Sports & Youth Affairs, Government of India, held meetings with NOIDA officials on 28.7.2006 and 22.8.2006 in connection with preparations for Commonwealth C Games scheduled in October, 2010. At those meetings, the Secretary, Sports & Youth Affairs stressed the Government of India's request for earmarking 25 hotel plots in NOIDA. Therefore it was decided to reduce the area of 5 star hotels to 24000 sq.m. (instead of 40,000 sq.m. earlier proposed), the area of 4 star hotels to 12500 sq.m. (instead of 20000 sq.m.) and the area of 3 star Hotels to 7500 sq.m. (instead of 10000 sq.m.) and thereby convert the 14 plots into 25 plots made up of 10 plots for 5 star hotels, 5 plots for 4 star hoteils and 10 plots for 3 star hotels. At the meeting held on 28.8.2006 under the chairmanship of the Circle Commissioner, Meerut, the said decision to increase the number of plots for hotels from 14 to 25 by reducing the plot measurements, in the following manner:
(i) Ten plots for 3 star hotels - (area 7500 sq.m. each) F Plot Nos. SDC/H1 and SDC/H2 in sector 62, plot Nos.A-155/B and A-155/C in sector 63, plot No. SDC/H 2 in sector 72, plot No.124A/2 in sector 124, plot No.SDC/H-2 in sector 103, plot No.SOC/ G H-2 in sector 105, SDC/H-2 in sector 135 and plot No.14 in sector 142.
(ii) Five plots for 4 star hotels: (area: 12.500 sq.m. each) H
ITC LTD. v. STATE OF UTTAR PRADESH & ORS. 91 [R.V. RAVEENDRAN, J.] Plot No.SDC/H-1 in sectors 72, 103, 105 and 135 A and plot No.124A/1 in sector 124.
(iii) Ten plots for 5 star hotels : (area 24.000 sq.m.)
Plot Nos.H-1 to H·10 in sectors 96, 97 and 98. B The proposal for approving the increase in number of plots and reductions in their size was placed before the NOIDA Board at the 137th meeting on 1.9.2006. The NOIDA Board approved the proposal. The terms and conditions for allotment drawn by the CEO were also approved with a modification that they c should provide for obtaining Hotel Completion Certificate by December 2009 (with authority to CEO to grant extension of time). ·
66. In pursuance of the said decision, NOIDA published the Hotel Site Allotment Scheme on 17.10.2006, by advertisements in newspapers and by issue of information brochures containing detailed terms. and conditions, inviting applications for allotment of plots for 5 star, 4 star and 3 star hotels in NOIDA on 90 years lease basis. Applications were made available between 17.10.2006 and 1.11.2006 (extended till 10.11.2006). We extract below the relevant information from the Brochures. The following eligibility criteria were prescribed:
Eligibility criterion for selection (extracted from clauses 8 to 11 of Brochures) F
Minimum experience in 10 years for 5 star and 4 star; 5 Hotel business years for 3 star Average turnover during Rs.100 crores, Rs. 75 crores & the last three years Rs.50 crores respectively for G five star, four star and three star, Net worth Positive
Allotment of hotel sites among the eligible applicants shall H
92 SUPREME COURT REPORTS (2011] 7 S.C.R.
A be done on the basis of their experience, turnover and net worth. Allotment of hotel site to the eligible applicants shall be made in descending order, of the plot applied for, on the basis of their evaluation. In case same marks are obtained by more than one applicant, then allotment B amongst them shall be made on the basis of draw of lots.
For each hotel that has a tie up/collaboration with international chain of hotels or in case the applicant company/institution is itself an international chain, then three additional marks shall be awarded for each hotel in c the 3/4/5 star and above/equivalent rating category owned/ managed by the applicant.
"Rate of Allotment, that is premium payable (Clause 13 of the Brochure) D (a) The current rate of allotment is Rs.7,400/- (Rupees Seven Thousand Four Hundred Only) per square metre. ·
(b) Besides, Location benefit charges as stated below E shall be charged in addition to above allotment rate at the following rates :-
(i). 2.5% of above rate if plot is on 18 mtr. but less than 30 mtr. wide road. ' F (ii) 5% of above rate if plot is on a road having width of 30 mtr. or above.
(iii) 2.5% of above rate if plot is facing/abutting green belt or park. G (iv) 2.5% of above rate if plot is a corner plot.
The maximum location charges would not exceed 10% of the total allotment amount of the plot.
H (c) The land rate stated above is subject to change
ITC LTD. v. STATE OF UTTAR PRADESH & ORS. 93 [R.V. RAVEENDRAN, J.]
without giving any notice. The rate prevailing on the A date of issue of allotment letter would be applicable."
Payment of annual rent : (extracted from clause E in the Brochures) B
In addition to the amount paid/payable for the allotment of plot, allottee shall have to pay yearly lease rent in the manner given below :
(a) The lease rent will be 2.5% of the total amount paid c for the plot and will be payable annually.
(b) On expiry of every ten years from the date of execution of the lease deed, lease rent would be enhanced by 50% of the annual rent payable at the D time of such enhancement.
xxxxxx
(e) Allottee has the option to pay lease rent equivalent to 11 years of the current lease rent as "One Time E Lease Rent" unless the Authority decides to withdraw this facility. On payment of One Time Lease Rent, no further annual lease rent would be required to be paid for the balance lease period. This option may be exercised at any time during the F lease period, provided the allottee has paid the earlier lease rent due and lease rent already paid will not be considered in One Time Lease Rent option."
Norms of development (extracted from Clause (I) in the G Brochures): (a) Ground coverage and floor area ratio is as under : Maximum ground coverage 25% [for 5/4 star] 30% [for 3 star] H
94 SUPREME COURT REPORTS [2011] 7 S.C.R.
A Maximum FAR 2 [for 5/4 star] 1.5 [for 3 star] Maximum height & set backs as per building bye-laws (b) Other norms: B i. 5% of the FAR can be used for Commercial space.
ii. Basement below the ground floor to the maximum extent of ground coverage shall be allowed and if use for parking and services would not be counted c in the FAR. Basement used for parking will be permitted upto the setback line of the plot. n
"Transfer (Clause J of the Brochures)
D 1. The allotted plot shall not be transferred before the allotted premises is declared functional by the Authority. In case the allottee wants to transfer the plot after the hotel is declared functional, the allottee will have to seek prior permission from the E Authority. Authority may refus.e to allow transfer without giving any reason. However, in case the transfer is permitted, transfer charges shall be . payable as per policy of the Authority and all terms and conditions of transfer memorandum shall be binding jointly and severally on the transferee and transferor.
2. No change in shareholding pattern of the members in the Consortium shall be permih "'!d till the project is completed and functionality certificate is obtained from the Authority.
3. In no circumstances, the sub-division of plot will be allowed by the Authority.
4. The allottee shall not be allowed to use any land other than allotted premises and shall also ensure
ITC LTD. v. STATE OF UTTAR PRADESH & ORS. 95 [R.V. RAVEENDRAN, J.] to keep the allotted premises, environment neat & A clean.
Cancellation (Clause (o) of the Brochures)
(i) lfit is discovered that the allotment of the plot has . been obtained by suppression of any fact or B misstatement or misrepresentation or fraud the allotment of the plot shall be cancelled and the entire deposited amount shall be forfeited to the Authority._ c (ii) If there is any breach in the terms of allotment, or if the allottee does not abide the terms and conditions of the building rules or any rules framed by NOIDA, the allotment may be cancelled by the Authority and the possession of the demised premises shall be taken over by the Authority from the allottee. In such an event, allottee will not be entitled for any compensation whatsoever and refund of any amount credited or is in arrears/ overdue as Revenue Receipt(s) if any, may be refunded after forfeiting the amount as per rules. However, total forfeited amount would not exceed the total deposits.
77. The number of applications received under the said scheme published on 17.10.2006 and the allotments made after processing and evaluation, are as under : Category of No. of plots No. of Number of Hotel Plots offered for applications allotments allotment received made G 5 star 10 15 9 4 star 5 5 2 3 star 10 11 3 Total 25 31 14 H
96 SUPREME COURT REPORTS [2011) 7 S.C.R.
A It is stated by NOIDA that the eval~ation of applications and recommendations for allotment were made by an independent Screening Committee (U.P.lndustrial Consultants Ltd.) and the recommendations for allotmer1ts were approved by the CEO · of NOIDA. The allotments were made on 12.1.2007 and the allottees were required to pay the premium for the leases at the rate of Rs.7400/- per sq.m. plus location charges. At the 142nd meeting held on 9.2.2007, the Board of Directors of NOIDA approved the CEO's acceptance of the recommendations of the Screening Committee relating to allotment and directed that the remaining.11 unallotted plots (7 plots in 3 star category, 3 plots in 4 star category and 1 plot in 5 star category) be re-advertised.
88. At the 143rd meeting held on 9.3.2007, the Board of NOIDA perused the relevant agenda and noted the allotments made to the allottees, the payments received by way of premium from the allottees and the proposals for execution of lease deeds in favour of the allottees of the hotel plots, under the government scheme dated 22.5.2006 approved on 5.6.2006. In pursuance of the above, lease deeds have been executed and presented for registration in March, April -and May, 2007. In two cases the lease deeds have been registered. In other cases, it is stated that the registration is pending in view of proceedings for under-valuation on the ground that as against the circle rate of Rs.70,000 per sq.m., the premium for the lease was only Rs.7,400 per sq.m.
99. At that stage, two writ petitions (Civil Misc. W.P. No.24917/2007 and PIL W.P. No.29252/2007) were filed in the High Court of Allahabad, challenging the allotment of the hotel sites by NOIDA on the ground that the allotment was at a very low price. The first writ petition was filed on 22.5.2007, hardly within one month from date of execution of the lease deeds. In the said writ petition, a division bench of the High Court made a reasoned interim order on 22.5.2007 directing the state government to exercise its power of revision under section H
ITC LTD. v. STATE OF UTIAR PRADESH & ORS. 97 [R.V. RAVEENDRAN, J.]
41(3) of the U.P. Urban Planning & Development Act, 1973 (for short '1973 Act') read with section 12 of the Act and take a relook in regard to the allotments made in favour of the appellants by NOIDA and take an independent decision. In pursuance of the said application, the state government examined the matter and concluded that the allotments made to the appellants were irregular on two grounds. Firstly allotments of commercial plots had been made for industrial purposes at industrial rates without getting the land use changed from commercial to industrial in accordance with the regulations and without obtaining the consent of the state government. c Secondly, the plots earmarked for commercial use in a commercial area were allotted at rates applicable to industrial plots, without calling for competitive bids/tenders and without the permission of the state government. It therefore directed NOIDA to cancel the allotments and initiate action against the officers of NOIDA responsible for the irregularities.
1010. NOIDA implemented the said direction dated 1.8.2007 issued by the State Government by issuing cancellation letters dated 3.8.2007 cancelling the allotments and consequential leases granted in favour of the appellants. NOIDA informed the allottees that action was being taken as per rules to refund the money being paid by them and called upon them to return the possession of the plots. Letters of cancellation stated that as per the NOIDA Development Area Building Regulations and Directions, 1986 and 2006. (published in the Gazettes dated F 01.12.1986 and 05.12.2006 respectively), hotels fall under commercial category and therefore the Government Policy dated 22.05.2006 was null and void; and that even if the government policy dated 22.5.2006 was valid, the following mistakes in the allotment could not be legally rectified and G therefore the allotments were being cancelled:
(i) F.A.R. of the plots is fixed at 2.00 in the Brochure whereas F.A.R. of industrial plots is 0.60.
(ii) The Government Order dated 22.05.06 issued by H
98 SUPREME COURT REPORTS [2011] 7 S.C.R.
A the Tourism department does not refer to 5% of F.A.R. being used for commercial activities. But NOIDA's hotel scheme contained in the Brochures shows that 5% of F.A.R. is fixed for commercial activities, B (iii) According to the Building byelaws of the Authority published in the Gazette dated 16.12.2006, 'hotel' is kept in commercial category. All the allotted plots are shown for commercial use in NOIDA Master Plan. According to the current policy of the c Authority, the disposal of commercial plots has to · be done by inviting bids/tenders. But the said procedure was not adopted.
(iv) The allotment of plots is made at industrial rates. D The then prevailing reserved rates in Industrial Area Phase-I was Rs.7,400/- per sq.mt. And its allotment should be made on the basis of bids/tenders. But in the allotment of hotei, the bids/tender procedure along with the above rates were not followed. E (v) All the plots allotted in the cases in question are shown for commercial purpose. Before including these plots in hotel scheme, according to Para 2 of the Government Order dated 22.05.06 it was necessary to change. the use of the land from F commercial to industrial, for which permission from N.C.R. Planning Board was necessary which was not complied with in the case at hand."
1111. The state government also filed an affidavit before the G High Court on 2.8.2007, in the writ petitions challenging the allotments, referring to its aforesaid decision and the consequential direction issued to the NOIDA on 1.8.2007. The relevant portions of the said affidavit are extracted below :
"3·. That after receipt of the orders of this Hon'ble Court the H
ITC LTD. v. STATE OF UTIAR PRADESH & ORS. 99 [R.V. RAVEENDRAN, J.] matter was examined by the infrastructure and A Development committee in consultation with concerned Officers including chairman & CEO, NOIDA and found that without changing the land use of land in question, the commercial land was given for industrial purpose and opined that the allotment of land by NOIDA does not appear to be justified and seems liable for cancellation in accordance with law."
"4. That the recommendations of Infrastructure and Industrial Development Commissioner was considered by the State Government and a decision was taken in exercise of the power vested under section 41(1) of the U.P.Urban Planning and Development Act, 1973 to direct NOIDA Authority to take action in accordance with law. It was also decided to direct the NOIDA Authority to identify the guilty officials and send the recommendation to the D Government."
In view of the affidavit filed by the State Government, and the cancellation of allotments by NOIDA. the writ petitioners sought leave to withdraw the writ petitions. The High Court by a E detailed order dated 10.8.2007, dismissed the writ petitions as withdrawn, as the reliefs sought had been granted.
1212. Thereafter the appellants filed writ petitions before the High Court challenging the cancellation of allotment of plots and the leases by communications dated 3.8.2007. The said writ petitions were allowed by a Division Bench of the Allahabad High Court by a common order dated 13.5.2008. The High Court quashed the order dated 1.8.2007 of the State Government and the cancellation orders dated 3.8.2007 passed by NOIDA on the ground that they were opposed to principles of natural justice for want of opportunity of hearing as required under proviso to section 41 (3) of 1973 Act. The High Court therefore remanded the matters to the State Government for taking a fresh decision, after affording an opportunity of hearing H
p. 100
A to the writ petitioners, keeping in view the following observations of the High Court:
"The question as to whether the rates were fixed in the advertisement whereas the same were meant to be only a reserved price, would lead to the conclusion that a B minimum price had been fixed and that offers for higher amount could be made but at the same time, it is to be noted that in spite of this price which was indicated in the advertisement, only 14 plots could be settled as against the 25 plots which had been advertised. This clearly c indicates that in spite of adequate advertisement having been made, the authority was unable to fetch investors for almost half of the plots. This clearly reflects that the stringent conditions which had been imposed in the advertisement, detracted prospective investors to a great extent. Even before this Court, there is no challenge by way of any such prospective investor to the said advertisement or the procedure adopted by the authority except for two petitions filed as a PIL which were also ultimately withdrawn by the petitioners therein. Thus, in these circumstances, it cannot be readily inferred that the deal was a ma/a fide deal or was some sort of underhand dealing merely because plots had been sold at much higher rates in the nearly commercial area. This, in our opinion, would be comparing uncomparables inasmuch as the terms and conditions in the present allotment are far more stringent and curtail much of the rights as against those plots which have been settled by NOIDA at higher rates on different terms and conditions. In the instant case, the authority has come up with the plea that there was a G mistake in the implementation of the policy on account of an incorrect interpretation with regard to the industrial rates to be applied at the time of allotment. It is surprising as to how the authority has termed it as a mistake when extensive deliberations had taken place and conscious decisions-had-been implemented followed by execution of H
ITC LTD. v. STATE OF UTIAR PRADESH & ORS. 101 [R.V. RAVEENDRAN, J.] lease deeds and registration thereof. A
Admittedly no misrepresentation had been made by petitioners, on the contrary, it is a clear case of misrepresentation by the NOIDA that land would be allotted at fixed price of Rs.7,400/- per sq. mtr. Not a single 8 person has come forward to offer any higher price for · either of the plots. No doubt, statutory rules have been violated but such violations appear to be more technical than contrary to public interest.
It is not in dispute that once the NOIDA had adopted the C · policy decision dated 22nd May, 2006 in toto, regulations could be amended and if same had not been done, the State Government could have asked the NOIDA to make the amendments for giving effect to the policy decision d*dn~M~.2006. D The question as to whether the rules and regulations require amendment for the purposes of justifying the advertisement, has not all been considered by the State Government or NOIDA while passing the impugned order. This has vitally affected the rights which accrued in favour of the petitioners on account of the action of the parties in altering their position after the allotment was made. Whether the implementation ·of the policy without bringing an amendment in the rules and regulations would be fatal, should have been the subject matter of deliberations by the State Government while passing the impugned order inasmuch as we do not find any such reason reflected therein. Even otherwise, if this irregularity did exist, then it was still open to the State Government to have considered the implementation of any such amendment looking to the fact that the hotels were very much urgently required and the work was required to be finished by 2009. It is nobody's case that there was no fair advertisement indicating the terms and conditions on which the allotment was to be made. The policy to invoke the industrial rates H
p. 102
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