Dismissed

Nand Gopal Associates and Anr. v. the Municipal Corporation of Greater Mumbai and 10 Ors.

Bombay HC23 Sept 2010WP/1137/2010

Case brief

AI extract

What is this about?

In this writ petition challenging the Corporation's approval of a new developer after the Society terminated an agreement, the High Court dismissed the petition. The Court held that the hearing grievance did not prejudice the petitioners as the Corporation had no power to interfere in the Society's termination decision, which was sub judice.

What did the court decide?

The petition was dismissed with the direction that the civil court seized of the termination dispute shall decide the matter independently.

Nand Gopal Associates and Anr. Vs the Municipal… — Service and Employment | Bombay HC (2010)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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WRIT PETITION NO.1137 OF 2010

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1.	Nand Gopal Associates, a	)
	registered partnership firm,	)
	having its office at, B-3 New	)
	Natraj Co-operative Housing	)
	Society Limited, Pestom Sagar	)
	Road, No.6, Chembur, Mumbai	)
	– 400 089, through its Partner,	)
	Nandkishore Bhandari.	)
2.	Nandkishore Bhandari, an	)
	adult, Indian Inhabitant,	)
	residing at B-3, New Natraj Co-	)
	operative Housing Society	)
	Pestom Sagar Road No.6,	)
	Chembur, Mumbai – 400 089.	) ... Petitioners

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Versus

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The Municipal Corporation of ) Greater Mumbai, a Municipal ) Undertaking, having its office ) at, Mahapalika Marg, Mumbai ) – 400 001. )

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The Deputy Municipal ) Commissioner, Zone II, F South ) Ward Office, B.M.C. Parel, ) Mumbai. )

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The Ward Officer, F South ) Ward Office, B.M.C. Parel, ) Mumbai. )

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4.	The Deputy Chief Engineer,	)
	BMC Building Proposal	)
	Department, Byculla, Mumbai.	)
5.	The Assistant Municipal	)
	Commissioner (Estate), BMC,	)
	Shivaji Mandi, M.R.A. Marg, Mumbai – 400 001.	) )
6.	The Additional Municipal	)
	Commissioner (Project), BMC,	)
	3^rd Floor, Municipal Head	)
	Office, Municipal Corporation	)
	of Greater Mumbai,	)
	Mahapalika Marg, Mumbai – 400 001.	) )
7.	The Executive Engineer,	)
	Building Proposal Department,	)
	BMC, Byculla, Mumbai.	)
8.	The Deputy Chief Engineer	)
	(P&I Cell), 5^thFloor, Municipal	)
	Head Office, Municipal	)
	Corporation of Greater	)
	Mumbai, Mahapalika Marg,	)
	Mumbai – 400 001.	)
9.	Pawanputra Co-operative	)
	Housing Society Limited, a	)
	Society Registered as per the	)
	Maharashtra Co-operative	)
	Societies Act, having its office	)
	at, Parsi Chawl, Parmar Guruji	)
	Marg, Parel, Mumbai – 400 012.	) )

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10 Gopal Ram Prit Singh, adult, ) Indian Inhabitant, residing at ) 203, “A” Wing, Yamuna ) Building, Vasant Sagar, Thakur ) Village, Kandivali East, ) Mumbai – 400 101. )

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11 M/s. GRS Shelters Private ) Limited, a private limited ) company, incorporated as per ) the provisions of the ) Comapnies Act, 1956, having ) its office at 203, Yamuna ) Building, Wing A, Vasant ) Nagar, Thakur Village, Kandivli ) (East), Mumbai – 400 101. ) ... Respondents

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Mr. Jai Chinai, senior counsel i/b Mr. Anand Kumar and Mr. D.A. Jahangir for petitioners.

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Mr. A.Y. Sakhare, senior counsel for respondent 1.

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Mr. A.S. Khandeparkar with Mr. D. Brijesh for respondent 9.

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Mr. J. Rais for respondent 11.

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CORAM: MRS. RANJANA DESAI & R.V. MORE, JJ.

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DATE ON WHICH THE ORDER IS RESERVED : 9TH SEPTEMBER, 2010.

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DATE ON WHICH THE ORDER IS PRONOUNCED: 23RD SEPTEMBER, 2010.

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ORDER :- (Per Smt. Ranjana Desai, J.)

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Petitioner 1 claims to be a partnership firm of which petitioner 2 is a partner. The petitioners claim that they carry on business as builders, developers and contractors.

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Respondent 1 is the Mumbai Municipal Corporation (for short, “ the Corporation ”) of which respondents 2 to 8 are officers. Respondent 9 is a Co-operative Housing Society (for short, “ the Society ”) comprising tenants / occupants of property known as Parsi Chawl situate at Parel. Respondent 10 is stated to be a partner in the 1^st petitioner firm along with the 2^nd petitioner. Respondent 11 is a private limited company formed by the wife and son of respondent 10, which is seeking to redevelop the Parsi Chawl property.

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The case of the petitioners needs to be shortly

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stated :

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(a) Petitioner 2 and respondent 10 had

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entered into a partnership which was registered under the Indian Partnership Act, 1932 and was known as M/s. Nand Gopal Associates. The said partnership firm entered into a Development Agreement dated 21/8/2004 with the Society for the development of Parsi Chawl under DC Regulation 33(7). The 2^nd petitioner put his own finances into the partnership. He constructed transit accommodation and shifted the tenants. The petitioners incurred total costs of Rs. 91,48,461/- towards the development work for the period 1/4/2004 to 31/3/2007.

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(b) Respondent 5 issued Letter of Intent (for short, “ LOI ”) dated 22/8/2006 to the Chief Promoter of the Society.

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came to know that respondent 10 was not acting in the interest of M/s. Nand Gopal Associates of which he was a partner but in connivance with the office bearers of the Society, he was trying to usurp to himself development benefits. The 2^nd petitioner, therefore, filed Arbitration Petition No.465 of 2007 in this court. Learned Single Judge of this court by his order dated 15/4/2008 restrained respondent 10 from selling, transferring, mortgaging or in any way creating any third party rights in the said property. The matter was referred to the Arbitral Tribunal. Learned Arbitrator accepted the undertaking of the 10^th respondent on 7/1/2009 and by consent of the parties order of learned Single Judge was continued till disposal of the arbitral reference.

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(d) On 8/1/2008, the Society terminated the Redevelopment Agreement executed

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between the Society and the petitioners dated 21/8/2004. The petitioners filed a suit against the Society in this court being Suit No.2502 of 2009 for specific performance of the Redevelopment Agreement dated 24/8/2004. It is an admitted position that no interim relief has been granted by this court in favour of the petitioners.

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(e) The petitioners came to know that respondent 10 who was their partner had set up another partnership firm of which he and his son were partners. The said partnership firm bears the same name Nand Gopal Associates and the Society had entered into Agreement dated 28/4/2008 with the said new firm for redevelopment

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of the Parsi Chawl.

(f) The petitioners sensing that the Society and respondent 10 had cheated them filed a criminal complaint being Criminal Complaint No.62/SW/2009 in Metropolitan Magistrates 34^th Court at Vikhroli against the Society, its office bearers and respondent 10.

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(g) The petitioners made an application to the Corporation for information on the status of the redevelopment of the Parsi Chawl under the Right to Information Act, 2005. The petitioners came to know in or about January, 2010 that the Corporation had approved the development of the said Parsi Chawl through the new developer namely respondent 11. The approval was recorded by respondent 6 - The Additional Municipal

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Commissioner (Project) of the Corporation

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vide his order dated 7/12/2009. The petitioners have challenged the said order in this petition.

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We have heard Mr. Chinai, learned senior counsel for

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the petitioners at some length. Mr. Chinai submitted that the Corporation had approved the petitioners as developers and LOI was issued in favour of the Society. The petitioners have put in approximately 92 lakhs for construction of transit accommodation and other expenses. Counsel contended that the Corporation without taking into consideration these facts gave permission to the Society to change the developer. Counsel submitted that the impugned order is passed in violation of principles of natural justice. Counsel submitted that it was necessary for the Corporation to give a hearing to the 2^nd petitioner. Counsel drew our attention to the Administrative Guidelines issued for the Redevelopment and Reconstruction of Old Municipal

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Properties by Municipal Tenants Co-operative Housing Society on the Land Owned by the Corporation under Regulation No.33(7) of the Development Control Regulations for Greater Mumbai, 1991 (for short, “ the said Guidelines ”). Counsel drew our attention to Appendix 1 of the said Guidelines which refers to “Procedure for Formation of Proposal”. Guideline at Serial No.2 states that the Society will have the right to appoint developer for the redevelopment scheme only once and the Society will have no right to change the developer unless the Corporation wishes to do so for genuine reasons. Counsel submitted that the Corporation overlooked this guideline and permitted the Society to change the developer. Counsel submitted that the Guidelines have a binding force. The Corporation could not have ignored them. In this connection, counsel relied on the judgment of learned Single Judge of this court in Nalini Ganpat Malpekar v. Municipal Corporation of Greater Mumbai & Ors. 2010 (1) All MR 132 .

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Counsel submitted that not only was no hearing given to

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the petitioners but the 6^th respondent passed a cryptic non-speaking order which gives no clue to the petitioners as to why permission to change the developer was granted. Counsel submitted that in the circumstances, the impugned order must be set aside.

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Mr. Sakhare, learned senior counsel appearing for the Corporation submitted that the termination of contract is a matter between the petitioners and the Society in which the Corporation cannot interfere. The Corporation cannot prevent the Society from terminating the contract. Counsel submitted that the petitioners have challenged the termination by filing a suit which is pending in this court where no interim relief is granted to the petitioners. Arbitration proceedings are pending between the parties. The petitioners have also filed a criminal complaint against the office bearers of the Society. Through this petition, the petitioners are raising the issues which are raised in the pending suit and are trying to challenge revocation of contract which is not permissible. Counsel

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submitted that since the Society had revoked the contract and changed the contractor, the Corporation had no option but to approve the proposal of the new developer because the development was already delayed. The Corporation cannot stop the Society from revoking the contract. Counsel drew our attention to the note dated 26/11/2009 which preceded the impugned order and submitted that the decision to approve the proposal for change of developer is taken after due deliberation and at the highest level. Counsel submitted that grant of permission being the inevitable result of termination of the contract by the Society, there was no question of giving hearing to the petitioners. Counsel submitted that the petition is, therefore, liable to be dismissed.

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Mr. Khandeparkar, learned counsel for respondent 9 supported Mr. Sakhare, learned senior counsel for the Corporation. He submitted that in any case, the first petitioner firm is dissolved. The firm does not exist and, therefore, the 2^nd petitioner does not have any right to file

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the instant petition.

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Mr. Rais, learned counsel for respondent 11

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submitted that there was no contract between the Corporation and the petitioners. The Corporation cannot enforce the development agreement. Counsel submitted that the impugned order is an administrative order. Counsel drew our attention to the judgment of this court in Sopan Maruti Thopte & Anr. v. Pune Municipal Corporation & Anr. 1996(1) Mh.L.J. 963 . where this Court was dealing with Section 351 of the Bombay Provincial Municipal Corporation Act. Mr. Rais submitted that under that Section, the Commissioner of the Corporation can issue notice calling upon a person to remove a structure after giving notice to him. The question was whether personal hearing is required to be given to a person in all cases. Counsel submitted that this court answered the question in the negative. Mr.

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Rais submitted that if personal hearing can be done away with in case of quasi judicial authority, in case of

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administrative order, it cannot be insisted upon. Counsel submitted that when the statute does not provide for hearing, the authority is not bound to give hearing. In this connection, he relied on Diwanchand Gupta v. N.M. Shah, AIR 1972 Bom. 316. Counsel further submitted that the said Guidelines merely reflect the policy of the Corporation and have no force of law and they confer no legal right on the petitioners. In this connection, reliance was placed on New India Assurance Company v. Nusli Neville Wadia & Ors. 2008 (3) SCC 279 . Counsel submitted that Guidelines are merely in the nature of instructions for the guidance of the officers of the Corporation. They have no statutory force. If there is any breach of the Guidelines, that will not vitiate the impugned order. Counsel submitted that in the circumstances, the petition deserves to be dismissed.

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It is an admitted position that the Society has terminated the Redevelopment Agreement dated 21/8/2004 which it had entered into with the petitioners

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for development of Parsi Chawl on 8/1/2008. It is also admitted that the petitioners have challenged the said termination by filing a suit for specific performance of the Re-development Agreement dated 21/8/2004 being Suit No.2502 of 2009. The petitioners have narrated all the facts which they have narrated in this petition in the plaint of that suit. The plaint states that the petitioners have spent an amount of Rs.91,48,461/-; that there is a valid, binding and subsisting agreement for development between the petitioners and the Society and that the Society is trying to wriggle out of the said agreement dishonestly. It is contended therein that the dishonest conduct of the Society is evident from the development agreement which it has sought to enter into with a different partnership firm despite the existence of a valid development agreement with the Society. The termination of contract is attacked as being done with ulterior motive. The petitioners have prayed for specific performance of the Redevelopment Agreement dated 21/8/2004. In the alternative, they have prayed for

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damages in the sum of Rs.91,48,461/- along with interest thereon at 18% per annum from the date of filing of the suit till payment. It is pertinent to note that till date, the petitioners have not got any interim relief in the said suit.

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As we have already noted the 2^nd petitioner has filed arbitration petition in this court and the matter is referred to the Arbitral Tribunal and by consent of the parties order passed by learned Single Judge restraining the 10^th respondent from creating any third party rights in the said property is continued till disposal of the arbitral reference. The petitioners have also filed a criminal complaint against the Society and its office bearers in the Metropolitan Magistrate's 34^th Court at Vikhroli.

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The petitioners' submissions need to be examined against the backdrop of the above facts. If so examined, we feel that the present petition cannot be entertained.

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The question is whether the petitioners can by filing

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this petition get any relief about the termination of the agreement by the Society which is their basic grievance when the civil court is seized of the matter. Obviously, this court cannot give any relief to the petitioners. It is contended that the grievance of the petitioners is about the Corporation's conduct of permitting the Society to change the developer without giving hearing to the petitioners and by passing a cryptic order. But, if we see the prayers made in the petition, it is very clear that the petitioners are trying to get the same reliefs indirectly. The petitioners have prayed that the Corporation be directed to continue and allow the development of the Parsi Chawl through the petitioners and fresh approval granted to the Society for development of Parsi Chawl through respondent 11 be quashed and set aside. If this court grants this relief, that would mean that this court has set aside the termination of the development agreement. Such order cannot be passed. Besides, the termination of the development agreement is a matter between the Society and the petitioners. The Corporation

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cannot compel the Society to resile from the termination of the agreement nor can we issue a direction to the Corporation to do so. The Corporation cannot permit the petitioners to develop the Parsi Chawl when the Society has terminated the development agreement, nor can this court issue such a direction. Civil court which is seized of the petitioners' suit will have to decide the basic issue of termination of development agreement and parties will have to abide by the decision of the civil court.

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The pendency of arbitration proceedings and the criminal complaint are also important circumstances. The petitioners having adopted all the available legal proceedings cannot invoke this court's writ jurisdiction to get the same reliefs, indirectly.

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In any case, though we are not impressed by the petitioners' submission that they are not really approaching this court for reliefs against termination though their prayers suggest so, but they are really

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aggrieved by the Corporation's conduct in not giving them hearing and passing a cryptic order, we will examine that grievance also.

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The Corporation's order dated 17/12/2009 which is impugned in this petition is annexed at Ex-6. Subject is described as redevelopment of the Parsi Chawl. It makes a reference to detailed remarks dated 30/12/2009 regarding the subject. Copy of the Note dated 19/11/2009 of the Deputy Law Officer of the Corporation and copy of the remarks dated 26/11/2009, which preceded the impugned order and which the petitioners have obtained under the Right to Information Act are annexed to the petition. It appears from these documents that the decision to approve the Society's proposal for change of developer has been taken after proper application of mind.

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While considering the grievance of the petitioners about denial of opportunity of hearing, certain facts will

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have to be kept in mind. The Society entered into Redevelopment Agreement with the petitioners on 2/8/2004. The Society's proposal for redevelopment was sanctioned by the Improvement Committee of the Corporation on 8/8/2006. Differences and disputes arose between the petitioners and the Society which led to the 2^nd petitioner filing an Arbitration Reference in this court in 2007. Arbitration proceedings are pending. On 8/1/2008, the Society terminated the Redevelopment Agreement dated 21/8/2004. The petitioners filed criminal complaint against the Society in 2009. In August, 2009, the petitioners filed Suit in this court challenging the termination against the Society. That suit is pending. According to the petitioners, in the meantime, the Society entered into an Agreement with respondent 10 on 5/11/2007 and thereafter with respondent 11 on 28/4/2008. It is also necessary to note that during all this period, redevelopment of Parsi Chawl was not possible because all the tenants / occupants, except seventeen tenants / occupants of the Parsi Chawl shifted to the

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transit accommodation. The development activities were stalled. The dispute reached this court. Learned Single Judge of this court vide his judgment and order dated 1/10/2009 dismissed the petition filed by the tenant / occupants and directed them to vacate the tenements in their possession in Parsi Chawl. He gave a further direction that if the tenants fail to do so, the Corporation may forcibly remove them with police help if necessary. It appears from these facts that redevelopment of Parsi Chawl did not progress at all. The Corporation's action of approving the Society's proposal for change in developer without procrastination appears to be prompted by the above facts. Besides, at the cost of repetition, it must be stated that the Corporation could not have stopped or set aside the termination of the petitioner's contract it being a matter between the petitioners and the Society more so when civil court is seized of the matter.

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The impugned order is an administrative order and no hearing is prescribed under any statute. In this

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connection, several judgments have been cited before us. It is not necessary to refer to all of them. We may only refer to Sopan Maruti Thopte . There even in the case of quasi judicial order, this court held that hearing was not necessary. This court quoted relevant judgments of the Supreme Court and observed as under:

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“13. With regard to the principles of natural justice, it has been repeatedly made clear by the Supreme Court that audi alteram partem principle is a part of the principles of natural justice and doctrine of hearing is not extended in every case. Requirement of natural justice cannot be of an uniform made and cannot be laid down on any straight jacket formula. It it also held that order may not contain the detailed reasons like the Court's order and the principles of natural justice should not be stretched to make the law lifeless, absurd, stultified as self defeating. In the case of ( Union of India v. W.N. Chadha)3, AIR 1993 SC 1081 , dealing with similar contention with regard to principles of natural justice and audi alteram partem, the Court held as under :

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81. Thus, there is exclusion of the application of audi alteram partem rule to cases where nothing unfair can be inferred by not affording an opportunity to present and meet a case. This rule

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cannot be applied to defeat the ends of justice or to make the law lifeless, absurd, stultifying and self-defeating or plainly contrary to the common sense of the situation and this rule may be jettisoned in very exceptional circumstances where compulsive necessity so demands.”

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82. Bhagwati, J. (as learned Chief Justice then was) in ( Maneka Gandhi v. Union of India)4, AIR 1978 SC 597 speaking for himself, Untawalia and Murtaza Fazal Ali, JJ. Has stated thus :

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“Now, it is true that since the right to prior notice and opportunity of hearing arises only by implication from the duty to act fairly, or to use the words of Lord Morris of Borth-Y-Get, from fair play in action, it may equally be excluded where, having regard to the nature of the action to be taken its object and purpose and the scheme of the relevant statutory provision, fairness in action does not demand its implication and even warrants its exclusion.”

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It is true that the dividing line between an administrative power and a quasi judicial power is quite thin and is being gradually obliterated ( A.K. Kraipak v. Union of India, 1970 SC 150 ). Yet, as held by the Supreme Court in W.N. Chadha , audi altrem partem

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principle is not extended in every case and as held by the Supreme Court in Maneka Gandhi's case , it may equally be excluded having regard to the nature of the action taken. In this case, since the Corporation has no power to set aside the termination of contract or permit the petitioners to continue with the redevelopment of Parsi Chawl despite termination of the agreement by the Society which issue is subjudice before a civil court, no purpose would have been served by giving hearing to the petitioners. The petitioners can get the necessary relief of specific performance of the contract or damages from the Society in their civil suit and if the petitioners get the relief, the parties will have to abide by the civil court's order. Hence, this is not a case where doctrine of audi altrem partem should be extended. No prejudice is caused to the petitioners because no hearing was given. Consequently, the impugned order also cannot be set aside because it is not a reasoned order ( Sopan Thopte's case ).

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That takes us to the said Guidelines. It is contended

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that Guideline 4(h) states that the Society will have a right to appoint a developer only once and, therefore, it will have no right to change the developer unless the Corporation wishes to do so for genuine reasons only. It is contended that by changing the developer, the Society has committed breach of this Guideline. It is true that this Guideline states that the Society will have a right to appoint a developer only once. But, this is qualified b y further rider that the developer can be changed if the Corporation wishes for genuine reasons. The fact that the Corporation has accepted the proposal indicates that it has found the proposal to be feasible and there were genuine reasons.

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But, assuming there is a breach of the said Guidelines, that does not vitiate the Corporation's action. It is well settled that the Guidelines are advisory in character and they confer no legal right ( New India Assurance Co.'s case ). In J.R. Raghupathy v. State

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of A.P., 1988 (4) SCC 364 , the Supreme Court was

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dealing with a case where the High Court had interfered with the orders of the Government regarding locating of Mandal Headquarters. The Supreme Court held that the Guidelines issued by the State Government had no statutory force and they were merely in the nature of executive instructions for the guidance of the Collector. The Supreme Court held that the High Court was not justified in interfering with the orders of the Government regarding location of Mandal Headquarters because even though the Government acted in breach of the Guidelines, the orders were purely administrative in nature. Reliance placed by the petitioners on learned Single Judge's judgment in Nalini Malpekar (supra) to contend that the said Guidelines are mandatory is misplaced. There is no such conclusion recorded in the said judgment.

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Applying the ratio of the above judgments to the facts of the present case, we are of the opinion that in the circumstances of the case, the breach of the said

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Guidelines, if any, does vitiate the Corporation's action.

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There is one important aspect of the case which must be stated. Admittedly, the 1^st petitioner firm is dissolved. The present petition is, therefore, not maintainable.

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For all the above reasons, we are of the opinion that

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there is no merit in this case. The petition will have to be dismissed. Needless to say that the court which is seized of the suit filed by the petitioners will deal with it independently and in accordance with law without being influenced by the observations, if any, made by us touching the Society's conduct of terminating the Development Agreement entered into by it with the petitioners. The petition is dismissed.

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[MRS. RANJANA DESAI, J.]

Nand Gopal Associates and Anr. v. the Municipal Corporation of Greater Mumbai and 10 Ors.

Case brief

What is this about?

What did the court decide?

Nand Gopal Associates and Anr. v. the Municipal Corporation of Greater Mumbai and 10 Ors.

Case brief

What is this about?

What did the court decide?

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