Partly allowed

Susme Builders Private Limited v. Chief Executive Officer and Anr.

Bombay HC14 Aug 2012WP/2589/2012

Case brief

AI extract

What is this about?

The High Court held that the presence of the Chief Executive Officer (CEO) in the High Power Committee hearing the appeal against the CEO's own order to remove a developer created a reasonable apprehension of bias. Consequently, the appeal before the High Power Committee was set aside and remanded for fresh consideration.

What did the court decide?

The order of the High Power Committee dated 18 June 2012 was quashed and set aside, and the matter was remanded to the High Power Committee for fresh consideration within six weeks.

Susme Builders Private Limited Vs Chief Executive… — Company and Corporate | Bombay HC (2012)

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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 (Lodging) NO.1718 OF 2012

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Susme Builders Private Limited a company incorporated under the provisions of the Companies Act, 1956, and having its registered office at Unit No.F-1 1^st floor, Shanti Nagar Industrial Estate Ltd., Vakola, Santacruz (East), Mumbai 400 055 … Petitioner

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VERSUS

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Chief Executive Officer Slum Rehabilitation Authority having his office at Anant Kanekar Marg, Bandra East, Mumbai 400 050.

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High Power Committee having its office at Anant Kanekar Marg, Bandra East, Mumbai 400 050.

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Om Namo Sujalam Sufalam Co-operative Housing Society, a Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960, Having its registered office at Shivaji Nagar Shree Chhatrapati Shivaji Maharaj Marg, Vakola Bridge, Santacruz (E) Mumbai 400 055.

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Mr.Aspi Chinoy, Senior advocate with Mr.Pradeep Sancheti, Senior advocate, Mr Aniruddha Joshi, Mr.Rohan Cama, Mr. H.A.Thakore i/by M/s Thakore Jariwala Asso., for petitioner

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Mr.Ravi Kadam, Senior advocate with Mr.G.D.Uttangale and Mr.B.V.Phadnis i/b Uttangale & Co., for respondents No.1 & 2. Mr.P.K.Samdani, Senior advocate with Snehal Shah, Mr.Naushad Engineer & Ms Dipti Panda i/by Narayan & Narayan, for respondent No.3. Mr.V.R.Dhond, Senior advocate i/b. Rakesh Agarwal, for the Intervenors.

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CORAM : MOHIT S. SHAH, C.J. & N.M. JAMDAR J.

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JUDGMENT RESERVED ON : 27 JULY 2012 JUDGMENT PRONOUNCED ON : 14 AUGUST 2012

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JUDGMENT: ( Per N.M.Jamdar J.)

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Rule. Returnable forthwith. Respondents waive service. By consent taken up for final hearing.

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The petitioner-Company which is a developer was selected by the respondent-Co-operative Society in the year 1986 for redevelopment of its property. In June 2011 the Society made a representation to the Chief Executive Officer of the Slum Redevelopment Authority, Mumbai for removal of the petitioner as a developer on the ground that in 26 years petitioner had done only a fraction of the work assigned. The Chief Executive Officer (CEO) permitted the Society to remove the petitioner as their developer. The petitioner thereafter filed an appeal before the High Power Committee which included the CEO. The Committee rejected the appeal by its order dated 18 June 2012. The consequence of the impugned orders is that the petitioner has been removed as a developer appointed for implementation of the Slum Re-development Scheme in question and is

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substituted by a new developer selected by the Society. By way of the present Writ Petition the petitioner has thus challenged these two orders, first passed by CEO, SRA and the second passed by High Powered Committee.

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Though the dispute between the parties relates back two decades and parties have urged several points, we propose to restrict the scope of this judgment to only one issue: Whether the participation of the CEO, Shri. S. S. Zhende in the High Power Committee deciding the appeal arising from his own decision has vitiated the appeal proceedings. Thus the facts narrated hereinafter are only for the purpose of providing the background in which the impugned proceedings took place, to test the argument of bias.

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The land in question over which the slum rehabilitation scheme is being implemented is owned by the Society. The land is situated at C.T.S No.7627, 7627/1 to 852 of village Ovale Kalyan at Shivaji Nagar, Santa Cruz (East), Mumbai. The Society was registered in the year 1985. On 27 December 1986, the Society entered into an agreement with the petitioner for development of the property. As per the agreement, members of the Society were entitled to 190 sq. ft carpet tenement in the rehab building with an option to purchase additional area at an agreed rate. The petitioner through its architect submitted a proposal for implementation of slum rehabilitation scheme to the authorities. The Additional Collector (TMC / REM) and Competent Authority issued an Annexure on 21 June 1993. On 3 May 1995, the Additional Collector issued Supplementary Annexure. On the basis of the said Annexures, Slum Rehabilitation Development Committee approved the scheme and issued Letter of Intent (LOI) on 5 April 1995 for rehabilitation of the slum dwellers, and for construction of

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15 rehab buildings. The IOD and commencement certificate for 2 rehab buildings was issued by SRD Committee on 15 January 1996 and 20 April 1996. After the amendment to Maharashtra Slum Areas (Improvement, Clearance, Re-development) Act 1971 (hereinafter referred as “the Slum Act”), the SRD scheme was converted into SR (Slum Rehabilitation) scheme. Further LOI was issued on 27 January 1998. The petitioner completed work of two rehab buildings from 1996 to 1998. The occupancy certificate for those buildings was issued on 3 November 1998.

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A Writ Petition No.13017 of 1999 filed by Shivaji Nagar Residents Association i.e. some of the residents of the plot was disposed of by Division Bench of this Court on 13 December 1999 and challenge raised to the slum rehabilitation scheme sanctioned by the authorities in favour of the respondent / Society was repelled. After the permission was granted by Slum Rehabilitation Authority, the petitioner constructed transit camps. But upon a complaint that the transit camps were constructed on CRZ affected area, the Authority issued stop work notice to the petitioner. The petitioner and the Society filed a Writ Petition No.2269 of 2001 in which an order of status-quo was passed on 7 August 2002. Since subsequently, the Urban Development Department approved the transit camp, the petition was withdrawn.

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By 2009 only two Rehab buildings were constructed out of 15 buildings. The Society filed a representation on 5 April 2009 to the CEO of the Slum Rehabilitation Authority placing on record that the Society has passed a resolution on 22 February 2009 for dis-continuance of the petitioner as its developer. The petitioner submitted its say before the SRA and after considering the representation, the SRA directed the Deputy Chief

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Engineer to hold a joint meeting of the office bearers of the Society and the petitioner. In said meeting the petitioner submitted that it will complete the work within stipulated period and will provide good quality construction to the Society and a change of developer is not warranted.

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A meeting was again convened by the CEO on 7 July 2009 between the petitioner and the office bearers of the Society but it did not result in resolution of the dispute. A show cause notice was issued to the petitioner on 8 September 2009 under the provisions of the Slum Act. In the meanwhile, a complaint made by one Shri N.D.Balan in respect of the project before the Anti Corruption Bureau was referred to the High Power Committee, pursuant to the directions of this Court in Public Interest Litigation No.156 of 2004. Initially, the High Power Committee granted an order of status-quo in respect of the entire scheme. But thereafter by an order dated 25 May 2011, the status-quo was confined to 79 claimants whose names were alleged to be bogus and rest of the project was given a go ahead. During pendency of the proceedings before the High Power Committee, the show cause notice issued by the CEO was kept in abeyance.

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After the High Power Committee passed an order on 25 May 2011 modifying the status-quo, architect of the petitioner made an application on 4 June 2011 to the SRA for grant of further approvals. In view of these developments a fresh representation against the petitioner was made by the Society on 2 June 2011 . A show cause notice was again issued on 11 August 2011 under the Slum Act for discontinuance/change of the petitioner as the developer.

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In the meanwhile Arbitration Petition No.885 of 2009 came to be

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filed by the petitioner in this Court. During the hearing a statement came to be made by the counsel for the Society that the resolution to be passed on 1 November 2009 for ratification of the appointment of new developer will not be given effect to. This statement is in force till today and the arbitration proceedings are now converted into a Civil suit.

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Pursuant to the show cause notice, hearing was given by CEO Shri S.S.Zende to the Society and the petitioner. Parties filed their pleadings and presented their case by engaging advocates. Parties raised several contentions and produced voluminous record. The Society contended that the petitioner has miserably failed to carry out the scheme and in 26 years only two out of fifteen buildings have been constructed. It was contended that the petitioner does not have and never had the consent of the 70 % eligible slum dwellers. The control and management of the petitioner company has changed on several occasions and the Society does not have any confidence in the petitioner. The petitioner on the other hand stated that the Society has passed a resolution removing the petitioner as a developer only because the Society intends to give the work to some other developer which is backed by powerful politicians. Though work of only two buildings was carried out since last 26 years, according to the petitioner it was because of the constant opposition and obstacles raised by certain factions of the Society, which have now come in power after elections in the Society, and at the behest of certain political persons have passed the present Resolution. The question whether the petitioner has 70 % consent has, according to the petitioner, been concluded by the order passed by this Court in Writ Petition No.1301 of 1999. The petitioner stated that the request for change of developer is malafide.

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The CEO heard the advocates of the petitioner and the Society and considered the representations made by the respective parties and documents produced on record. The CEO came to the conclusion that the petitioner has failed and neglected to take any positive steps for at least 13 years from the year 1998 and there is an inordinate delay on its part for implementation of the slum rehabilitation scheme. The CEO found that the petitioner has committed breach of the terms and conditions of the agreement executed with the Society and the SRA. The CEO noted that the resolution passed by the Society has not been stayed or set aside by any competent Court. The assurance made by the petitioner that it will start the rehab work cannot be trusted in view of the past conduct of the petitioner. The CEO thus found that interest of slum dwellers and speedy rehabilitation would be subserved by removing the petitioner and entrusting the work of development to a new developer M/s J.G.Developers Pvt. Ltd. who was selected by the General Body of the Society. CEO found that the statement made by the Society in Arbitration proceedings will not prevent the CEO from proceeding with the matter. Thus the CEO held that petitioner is not fit and trustworthy to continue the project. The CEO accordingly, by the impugned order dated 24-2-2012, approved the removal of the petitioner and selection of the new developer namely M/s J.G.Developers Pvt. Ltd. as per Society's agreement dated 14-9-2009.

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Thereafter the petitioner filed an application / appeal bearing No.39 of 2012 before the High Powered Committee set up by the State government to decide validity of the order passed by the CEO. The petitioner sought to explain the delay in implementation of the slum rehabilitation scheme by giving explanations for different periods of time and placed on record the details of the the litigations that took place

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between the parties in the intervening years. The petitioner reiterated that the issue regarding consent of 70% of slum dwellers cannot be re-opened in view of the order passed by the High Court earlier. The petitioner alleged malafides on the ground that the action is at the behest of political persons and sought to place on record the documents, extracts of pamphlets distributed by the Society in furtherance of this submission. The petitioner also questioned the applicability Chapter I A of the Slum Act. The Society appeared before the High Power Committee and filed its reply. The Society urged that the petitioner never had consent of 70% members and in fact the Society has by resolution of the General Body decided to discontinue the petitioner and it is their prerogative to do so as the land in question is owned by the Society. The Society denied the allegations of political influence and in turn alleged fraud on the part of the petitioner. The petitioner filed a rejoinder and both the parties filed their written arguments before the High Power Committee.

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The High Power Committee, consisting of the CEO heard the advocates of the petitioner and the Society. During the course of arguments the advocate for the parties advanced arguments on the lines indicated above. Petitioner raised an objection that the CEO should not participate as a member of the High Power Committee as it would amount to the CEO sitting in appeal against his own order. The High Power Committee overruled the objection, the CEO refused to recuse himself and the Committee proceeded to examine the issue on merits. On merits the High Power Committee found that the order passed by the CEO was proper and in the interest of the speedy implementation of the scheme. Accordingly, by order dated 18 June 2012, the High Power Committee rejected the application / appeal filed by the petitioner. It needs to be noticed at this

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stage that, as it appears from the order of the Committee placed on record, out of five members of High Power Committee, two members were absent, thus the decision was taken by three members of the Committee, of which one was the CEO. The petitioner is thus before us assailing both the orders.

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We have heard Mr.Pradeep Sancheti, learned Senior advocate for the petitioner. Mr.Pravin Samdani, learned Senior advocate for the Society and Mr.Ravi Kadam, learned Senior advocate for Slum Rehabilitation Authority. In view of the Chamber Summons filed by the intervener M/s. J.G.Developer, we permitted Shri V.R.Dhond, learned Senior advocate to address us on its behalf .

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Mr.Sancheti urged: (a) Participation of the CEO in the High Power Committee has vitiated the proceedings as he has acted as a judge to decide the legality of his own order which is clearly in breach of the principles of natural justice. Such course of action is not permissible and inspite of an objection been taken at the outset, the CEO did not recuse himself and the Committee proceeded to pass the impugned order. Out of the five members of the committee, two members were absent and thus out of three present members, one was the CEO whose order itself was under challenge. Such position cannot be in countenanced in law and has resulted in complete failure of justice. Since the order of CEO was challenged on the ground of malafides and since the action of the Society was at the behest of a political leader the CEO, Shri Zende should have recused himself.

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(b) On merits , CEO has traversed far beyond the scope of the show cause notice. The ground of delay urged as a factor for removal of the petitioner

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is unfair as the petitioner has invested time and financial resources for the project and is unable to complete the work due to the continuous opposition by persons who are now the current managing committee members of the Society and who are backed by political persons. As per the law laid down by this Court a developer duly selected cannot be changed at the whims and fancies of every successive managing committee. There were orders of status-quo granted by this Court as well as by the High Power Committee which hindered the work of redevelopment. In the past, in a petition challenging the entrustment of redevelopment work to the petitioner, the Society itself had filed an affidavit supporting the petitioner and it is only because of the change of management in the Society which is backed by political persons that a change of developer is being sought. The petitioner is ready and willing to complete the project and give additional benefits to the Society if it is allowed to construct without any hindrance.

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(c) Chapter 1A is not applicable to the present case as the property is not declared as Slum Rehabilitation Area under the Slum Act. In absence of declaration under sec.3(C) (1), SRA does not have jurisdiction to exercise powers under the Slum Act. The power under sec.13(2) (Chapter 1-A) has to be exercised by SRA and not by the CEO. In absence of any delegation in favour of the CEO by the SRA which is contemplated under sec.3(s) the order of the CEO is bad in law and without jurisdiction.

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Mr.Kadam, learned senior advocate appearing for respondent No.1 (CEO, SRA) and respondent No.2 (High Power Committee) contended :

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(a) The High Power Committee is constituted by the Government in deference to the observations of Full Bench of this Court in Tulsiwadi

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Navnirman Co-op Housing Society Ltd. and another vs. State of Maharashtra and others¹ and it is not a statutory tribunal in strict sense. The CEO is made part of the Committee as per resolution constituting the Committee as the CEO knows the technical aspects of the matter, and therefore his presence is necessary. The order passed by CEO being administrative in nature he is not disqualified from participating in the appeal proceedings. Assuming that the CEO should have recused himself from participating and the order of Committee on that count is bad in law, the matter need not be remanded back to the High Power Committee, as the order can be ignored and the validity of the order of the CEO can be directly tested by this Court in the present petition. The High Power Committee is merely a filter to aid and assist this Court and it need not be elevated to the status of a tribunal where the matters can be remanded when they are found to be decided in breach of principles of natural justice. As per the Judgment of full bench in the case of Tulsiwadi (supra) and the resolution laid down the composition, the CEO had to preside over the High Power Committee hearing the appeal as a matter of necessity.

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(b) As far as the interpretation of section 13(1) in Chapter 1-A is concerned, Mr.Kadam submitted that the phrase “Slum Rehabilitation Authority” will have to be read as “CEO”. Since the work of change of developer being purely administrative, it can be undertaken by this CEO on behalf of the Slum Rehabilitation Authority and for such functions specific delegation is not required.

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Mr.Samdani for the Society contended : (a) The argument in respect of the participation of the CEO in the High Power Committee is not

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1- 2008(1) B.C.R.1 pg.49

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available to the petitioner as the petitioner attended the appeal proceeding on 17 March 2012 and 5 May 2012 without raising any objection. This Court in Advani Builders Vs SRA and others² - has considered this aspect. Similar objection in respect of the very same authority and the very same CEO was raised and it was held that the petitioner in that case was not entitled to raise objection regarding the inclusion of CEO in the proceedings of the High Power Committee, as petitioner had participated in the proceeding without demur.

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(b) On merits, Mr.Samdani submitted that the petitioner has no case as it has admittedly constructed only two rehab buildings out of 5, in last 26 years. The arguments regarding the applicability of Chapter 1A cannot be raised for the first time before the High Power Committee and this Court, as they were not raised before the CEO. The petitioner never had consent of 70% members which is clear from several documents brought on record by way of an affidavit in reply and which were suppressed in the petition. In the present case the Society is the owner of the plot and it does not wish to get its property re-developed by the petitioner looking at its conduct in the past. The arguments regarding political influence cannot be looked into as the concerned persons not having been made parties to the petition. The petitioner’s composition has changed several times and thus, the entire transaction is merely speculative one for the petitioner, where being incharge of a project is itself a transferable commodity which has been encashed from time to time by different persons joining the management of the petitioner. The decision of the CEO is in interest of the slum dwellers and the Committe was right in confirming it.

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2 -Writ Petition No.2437 of 2011 decided on 30^th March 2012

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Though the learned counsel for the parties have addressed us on several aspects relating to the merits of the dispute between them, we are at this stage concerned with the point of bias raised by the petitioner i.e. the participation of the Chief Executive Officer Mr.Zhende in the proceedings of the High Power Committee to decide the validity of the order passed by the CEO. According to us, this point as to whether his participation would vitiate the proceedings before the committee cannot be brushed aside as it relates to the credibility of the proceedings of the High Power Committee. Thus we propose to take up this issue first without entering into the merits of the dispute between the parties.

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We have narrated the above events leading to the petition for the purpose of giving a background to appreciate the contention regarding bias. Whatever maybe the merits of the dispute, certain position is clear. The litigation is being fought for the last 26 years. There exists a sense of hostility, acrimony and distrust between the parties. Allegations of political influence, authorities acting under dictate and showing favoritism are made. The project is of a large magnitude and the stakes are high for the parties. It is in this background that the challenge to the impugned orders on the ground of apprehension of bias is required to be examined.

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We will first deal with the submission regarding the nature of the proceedings before the High Power Committee and the status of the High Power Committee - whether it is merely a filter or a full-fledged alternate efficacious remedy. For that purpose, the constitution and the nature of the High Power Committee will have to be noticed. Establishment of the High Power Committee was first indicated by Full bench of this Court in Tulsiwadi Navnirman case (supra). Full bench was constituted to deal with

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litigation emanating from the social transformation the City of Mumbai is going through. As a result of re-development of slum areas being undertaken on a large scale, this Court was flooded with writ petitions raising variety of disputes involving slum dwellers, developers, housing societies and government authorities. There were no effective remedies for redressal of such disputes and the litigants resorted to filing writ petitions under Article 226 of the Constitution of India. The Courts were required to delve into complicated questions of facts in its writ jurisdiction merely because governmental agencies were involved in over-seeing the implementation of the schemes. The Writ Courts had to invest large amount of judicial time to decide what were essentially private disputes. Thus, by a detailed order passed in Writ Petition No.1326 of 2007 on 27 July 2007, group of petitions were placed before a Full Bench constituted to find a solution to this problem. The Full Bench considered the limitations of the writ jurisdiction and non-existance of effective alternate remedy. Considering several aspects of the matter, the Full Bench held as under-

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Absence of adequate administrative, executive or quasi judicial process or forum would naturally tilt in favour of invoking jurisdiction under Article 226 of the Constitution but the nature of the dispute would indicate that by proper exercise of power or authority vested in these departments as afore-indicated would help of reduction in litigation and expeditious resolution of disputes or problems, which might have arisen because of lack of coordination and systematic administrative approach of various departments involved in the entire process of planning and rehabilitation of slum development scheme, and sanctioning development scheme, and sanctioning developments of various projects under the scheme.

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Compared with the dimensions of the litigation generated and lack of adequate and proper remedy within the statute compels us to observe that the State may consider objectively

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legislative amendment to Maharashtra Slum Area (Improvement, Clearance and Redevelopment) Act, 1971, MHADA, MRTPA, not only to provide for appropriate forum for remedying the grievances of the persons but also to some extent collective working of these authorities.

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During the interregnum period constitution of the authority would serve the ends of justice and would result in reducing avoidable litigation.

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We have actually not nor should it be understood that we have in any way expressly or implied restricted the scope of applicability of Article 226 of the Constitution to such cases. We have only indicated certain cases where inter or intradepartmental mechanism may be invoked in consonance with the scheme of the Act before approaching this Court. Such classification is not exhaustive but is merely an indication of class of cases where the Court in its discretion may require the parties to take recourse to such remedy. These principles are neither innovative nor new percepts but are re-appreciation of well accepted principles.

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Compelling the parties to file suits would neither be efficacious, alternate remedy nor would meet the ends of justice in all cases. The controversies in such cases are best resolved at the administrative level itself as the cause of action is founded on the inaction, incorrect action or colourable exercise of powers by the authorities. The records of the authorities and their action based upon such matters can best be corrected in accordance with the established percepts of administrative functioning and executive action at different levels of the departments within the frame work of the Statute.

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Till such time as the Legislature or the State Government makes changes or amendments, it would be just, fair and proper to direct that a Monitoring Agency/mechanism should be set up by the State so that the power to supervise and issue directions available in the Slum Act can be exercised effectively. The State Government as also the Slum Rehabilitation Authority has not opposed this course during oral arguments. Hence, we are of the view that the State should immediately establish a monitoring agency. It is necessary to do so for the following reasons:

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The Full Bench recorded the statement of the Learned Advocate General that the suggestions given by the Court would be implemented and directions will be issued. The suggestions made by the Full bench were as under -

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a) Considering that the Eligibility criteria is determined by the District Collectorate and in cases of land belonging to public body by the Competent Authority thereof, the scheme works with cooperation and coordination of these 122 Authorities. It is, therefore, of utmost importance that the SRA acts as a Chief Coordinator and the Government, being the ultimate and final body, which establishes authority like SRA and sets up public authorities like MHADA, MMRDA etc. should have a final word.

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b) The Government and all such bodies have a duty to undertake and implement these projects. The implementation is not restricted only to sanction and approval of plans and grant of permission. The Government must see to it that the purpose of establishing SRA is achieved and slum dwellers are rehabilitated, so that the government and private lands are slum free. Equally the pavements, which are meant for use of residents and tax payers are cleared. In other words, if the Government does not 123 want proliferation of slums, then it has to take steps to ensure Coordination and Harmony amongst the Agencies and Authorities.

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c) It would be of utmost importance that the Government sets up high power committee, consisting of a person, preferably a Principal Secretary, to be nominated by the Secretary, who shall be assisted by Chief Executive Officer/SRA, CEO/Vice President of MHADA and CEO/Vice President of MMRDA and Commissioner of Municipal Corporation, Gr. Mumbai.

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d) That any complaint about eligibility of slum dwellers, eligible slum dwellers being denied tenement, developers not undertaking and completing the project as per the permission and approval so also within the stipulated time frame, transit accommodation being unavailable or not provided for etc. shall be addressed to

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this Committee and grievances be looked into by it accordingly. The Courts cannot be approached straightway unless and until above mentioned Committee is first moved by the aggrieved person in the form of an application/complaint in writing. If the grievance is not redressed or complaint / representation is not attended to, then and in that event this Court can be approached under Article 226 of the Constitution and not otherwise. Ordinarily, no person can approach this Court directly without exhausting the above remedy.

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In clause (c) the Court suggested that the government should consider setting up a High Power Committee consisting of a Principal Secretary, Chief Executive Officer / SRA, CEO/ Vice President of MHADA and CEO / Vice President of MMRDA and Commissioner of Mumbai Municipal Corporation. In clause (b) the Court indicated that such Committee shall be treated as alternate remedy and no person will be permitted to approach the Court directly without exhausting this remedy.

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The State Government thereafter by issuing government resolution on 15 November 2007 constituted a High Power Committee. Constitution of this Committee was challenged in Writ Petition No.3068 of 2009 in Dr.D.R.Patil Vs State of Maharashtra³ This Petition was dismissed by the Full Bench. The Full Bench made it clear that the High Power Committee is not constituted only on the basis of observations of the Full Bench but on account of statement of the learned Advocate General. The challenge of similar nature was raised and was dealt with by another Division Bench of this Court in Indira SRA Co-operative Housing Society V/s Shivkripa Builders and Developers and others⁴ . The Division Bench observed that the object of constituting the High Power

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3 2010 (1) Mh.L.J. (F.B.) 765

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4 2012 (1) Mh.L.J. 107

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Committee was to minimise the litigation in the High Court as well as provide a speedy remedy to the parties. The Division Bench observed as under -

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“15. The second submission of Mr.Grover that the Full Bench decision in Tulsiwadi's case (supra) does not contemplate an appeal before the High Power Committee against an order passed by the SRA while exercising quasi judicial power under Section 13(2) of the Slum Act is also without any merit. Clause (D) of paragraph 118 of Tulsiwadi's case (supra) reads as follows:

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"D) As far as disputes and questions involving the slum dwellers and Slum Rehabilitation Authority/Public Body/State, Cooperative Housing Society of Slum Dwellers and Developers, Registered Co-operative Housing Society of Slum Dwellers on one hand and proposed Co-operative Society on the other, Developers and S.R.A./State, a writ petition under Article 226 of the Constitution of India would not lie or would be entertained unless and until the parties exhaust the remedy of approaching the High Powered Committee referred to above."

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A reading of the above clause makes it abundantly clear that the dispute between the parties to the present appeals is also covered under the above said clause, and therefore, the High Power Committee, in our considered opinion, can entertain the dispute between the parties to this petition.

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Let us now consider the decision relied upon by Mr.Grover and which are not referred above in C. N. Rudramurthy's case (supra). the Apex Court held that when the law as declared by the Supreme Court contradicts what has been stated in another case, that case stood impliedly overruled. There is no dispute regarding the proposition laid down in the said case by the Apex Court. However, in the present case, we find that the High Power Committee is constituted by the Government in view of the statement made by learned Advocate General in deference to the observations made by the Full Bench in Tulsiwadi's case (supra). We also find that the source of power of the State Government is under Section 3(K) of the Slum Act. In Tulsiwadi's case (supra), the Full Bench has not taken away the jurisdiction of the High Court under Article 226 of the Constitution of India. In that view

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of the matter, ratio of this case cannot be made applicable to the present case. The Apex Court in Director of Settlements' case (supra) considered the provisions of Article 141 of the Constitution of India. The Apex Court defined the ratio as " principle found out on reading of the judgment in the light of question before Court." The Apex Court further held that the ratio of decision, and not any finding of facts, has binding force. There is no dispute about the above proposition. We also agree with the ratio of decision in The Secretary Sh.A.P.D.Jain Pathshala's case (supra). The High Court in exercise of its powers under Article 226 of the Constitution of India or the State Government by executive fiat cannot create quasi judicial forum. However, in the present case, we have already observed that the High Power Committee is not constituted in pursuance of the direction of the High Court, and so far as the State Government is concerned, we refer to the provisions of Section 3(k) of the Slum Act as a source of power of the Government to constitute the High Power Committee. The Apex Court's decision, therefore, will not be applicable to the facts and circumstances of the present case.

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The Divison Bench thus relegated the petitioners in that case to the High Power Committee holding that the High Power Committee is an alternate remedy available to the petitioners.

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The observations of the Full Bench as well as the Division Bench would show that the High Power Committee is not set up merely to act as a formality before a party approaches the High Court for redressal of its grievances. The Committee is invested with powers to decide and set aside the orders of the SRA and the CEO. If a party approaches the High Power Committee and if its grievance is redressed and is acceptable to all parties then the litigation can come to an end at that stage. The Committee does not make mere recommendations nor simply makes a report. It has been invested with powers to pass orders to nullify the orders passed by the Slum Rehabilitation Authority (SRA) and CEO. Thus, the Committee

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cannot be considered as a mere filter as contended by Mr.Kadam, learned Senior advocate for SRA.

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The remedy of an appeal before the High Power Committee is thus alternate efficacious remedy available to a litigant. The Committee decides questions involving slum dwellers, co-operative societies, developers and the Slum Rehabilitation Authority and if its decision is not challenged, the decision attains finality. The purpose of setting up the High Power Committee was to minimise the litigation, to curtail the flow of petitions coming to the High Court and at the same time to provide speedy remedy to the litigants. Thus, we are not in agreement with the submission made by Mr.Kadam learned Senior advocate for SRA that even if there is breach of principles of natural justice during the proceeding of the High Power Committee, we may ignore its order and should proceed to consider the validity of the order passed by the CEO directly. Such course of action will defeat the purpose for which the High Power Committee is set up, as this argument can be made in every case. It will lead to reverting back to the situation before the Committee was established. If the order of the High Power Committee is vitiated on account of breach of principles of natural justice, the litigant will lose a valuable right of getting its dispute decided by the Committee. In such circumstances, it will be necessary to set right the failure of justice by giving back such opportunity to the party to get its dispute decided by the Committee afresh.

¶118

The question then would be whether there was any breach of principles of natural justice in the present case. The contentions raised by the petitioner in the petition in this regard are as under-

¶119

¶120

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“(b) Respondent No.2 (HPC) comprises of Respondent No.1(CEO, SRA). Objection was raised to the presence of the Respondent No.1 participating in the proceedings. In spite of the objection, the Respondent was allowed to participate. Respondent No.1 could not have judged his own order as part of Respondent No.2. Thus, the action of Respondent No.2 is biased and malafide and this objection has been raised by the petitioner at the earliest and has been completely disregarded.

¶122

(c) Respondent No.2 has erroneously relied on the hearings dated 17^th March, 2012 and 5^th May, 2012 for justifying the presence of Respondent No.1 as a part of Respondent No.2. The matter was not heard on these dates and there was no occasion for the petitioner to raise the objection of the Respondent No.1's participation.

¶123

(d) Respondent No.2 failed to appreciate that on 16^th June, 2012 while making an attempt to press for hearing by the petitioner's Counsel, the Objection of Respondent No.1's participation was mentioned on the first available opportunity and there was no waiver by the petitioner.

¶124

(e) Respondent No.2 failed to appreciate that the judgement in the matter of Writ Petition No.2437 of 2011 (Advani Builders V/s. SRA and Others) has no application to the present case as the facts in said matter are different. In the said matter, the objection to the participation of Respondent No.1/CEO, SRA was not raised before Respondent No.2 (HPC) and was for the first time raised before this Hon'ble Court and in the said context this Hon'ble Court declined to interfere under Article 226 of the Constitution of India. On the other hand the objection was raised by the petitioner at the first given opportunity in the present proceedings before Respondent No.2.

¶125

(f) Respondent No.1's participation as a member of Respondent No.2 amounts to judging his own order in Appeal and the same is ex-facie arbitrary.”

¶126

Firstly we will consider if the petitioner is entitled to raise such a challenge in view of the contention that the petitioner did not raise any

¶127

¶128

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objection at the initial hearings on 17 March 2012 and on 5 May 2012 and thus are precluded from raising the challenge. The petitioner had admittedly raised this contention before the High Power Committee during the hearing. The High Power Committee in the impugned decision dated 18 June 2012 dealt with the objection as under-

¶130

“6) Considering the aforesaid facts of this case, this Committee does not accept the contention raised by the Applicants regarding the participation of the CEO/SRA, who is one of the member of this Committee, in the present hearing. This matter was kept for hearing before this Committee on 17.03.2012 and 05.05.2012; however, on the said dates the Applicant has not raised the said issues at all. Even, the Applicant has not taken the said contention in the Application filed before this Committee and also in the Stay Application moved before this Committee.

¶131

The Full Bench of Hon'ble High Court at Bombay while passing an order dated 01-11-2007 in W.P.1326 of 2007 (Tulsiwadi Navnirman CHS V/s. MCGM and Ors) has considered all the aspects and clearly observed that the CEO, SRA should be one of the member of this Committee. In view of the said order dated 1-11-2007, the Government of Maharashtra issued Resolution dated 15-11-2007 and constituted this Committee in which the CEO, SRA is also one of the member. Further, the CEO, SRA is participating in this hearing not in his individual capacity as the CEO, SRA, but he is acting as one of the members of this Committee”.

¶132

Thus according to the Committee the petitioner having not raised the argument on two earlier dates and in the application was precluded from raising the said challenge, and also since Chief Executive Officer was specifically mentioned in the Judgment in the case of Tulsiwadi (supra) and that the CEO was not presiding over in his personal capacity, there was no question of him recusing from the proceeding. Reliance was placed by the Committee and the learned counsel appearing on behalf of the Society on the judgment of the Division Bench of this Court in Advani Builders

WPlodg1718-12

(supra).

In the case of Advani builders (supra) also a challenge raised made regarding the participation of the CEO- Shri S.S.Zhende in the proceedings before the High Power Committee challenging the validity of the order passed by the CEO. The Division Bench did not entertain the challenge as the Division Bench held that the petitioner was not entitled to raise such a challenge, having not taken any objection before passing of the order. The Division Bench came to the conclusion that the petitioner who was represented by an advocate throughout the proceedings never took any objection in respect of the presence of the Chief Executive Officer in the Committee before passing of the final order. Division bench noted that presumably because petitioner had no apprehension of bias as the first order of remand was in its favour and also since the High Power Committee had granted stay in its favour. Thus the petitioner in that case, according to the Division Bench, consciously took a chance and raised an objection only because the order went against it. This decision however does not lay down a proposition that the participation of the CEO in the appeal against its own orders does not vitiate the proceedings even if a grievance is made before passing of the order by HPC.

¶137

As held by the Division bench in the above case a litigant who has never raised any objection regarding the impartiality of the authority till the decision goes against him is not to be permitted to raise a challenge at later stage on the ground of bias when the decision goes against him. The Courts have deprecated such “cards -up- the-sleeve” tactics employed by the litigants. If objection is taken before the hearing the authority has an option to continue or to refrain from further hearing of the matter, and has

¶138

¶139

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an opportunity to clear the impression of bias.

¶141

But in the present case an objection was raised by the petitioner at the hearing itself and before passing of the order. We do not find that the fact that the petitioner did not raise an objection on two earlier dates is fatal to the petitioner's case. The petitioner has placed on record that the matter was not heard on those dates and therefore, there was no occasion for the petitioner to raise an objection. The petitioner had infact squarely raised the objection regarding the participation of the CEO at the time of hearing and much before the impugned order was passed. In fact, in the past the Committee had modified the order of status-quo in favour of the petitioner and had permitted the petitioner to carry on construction, even then the petitioner raised the objection at the final hearing of the appeal. Thus, it cannot be said that the petitioner took a chance, waited till the decision went against it and then took the objection regarding bias. The objection regarding bias was squarely raised during the hearing, and before the final hearing was concluded and the order was passed. The petitioner is not precluded from raising a challenge on the ground of apprehension of bias. Thus we now examine the challenge.

¶142

It is trite to say that it is not enough that the authority gives a fair decision but must appear to give a fair decision. How a litigant or a reasonable man perceives the conduct of a proceeding is a factor which cannot be ignored. There are several judgments of the Apex Court as well as commentaries of learned authors on Administrative Law regarding the tests to be applied in the cases where the reasonable apprehension of bias is alleged. The Apex Court in a recent judgment in the case of N.K.Bajpai vs

¶143

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¶145

Union of India⁵ has reviewed earlier case law on the subject and has observed as follows:

¶146

The general principles of bias are equally applicable to our administrative and civil jurisprudence. Members of the Tribunals, called upon to try issues in judicial or quasi-judicial proceedings should act judicially. Reasonable apprehension is equitable to possible apprehension and, therefore, the test is whether the litigant reasonably apprehends that bias is attributable to a member of the Tribunal.

¶147

Repelling the apprehension of bias in administrative action, the Courts have taken the view that in the case where a remote relationship existed, separated by six degrees, which was the foundation of challenge of selection to a post of clerk in the Gram Panchayat High School, the challenge was not sustainable. It is difficult to rule out the possibility of a reasonable apprehension in the minds of the litigants who approach the -Tribunal for justice, if the reasonable restriction introduced in Section 129(6) of the Customs Act is not enforced. Reference can be made to the judgments of this Court in the case of Manak Lal v. Dr. Prem Chand [AIR 1957 SC 425] and Rasmiranjan Das v. Sarojkanta Behera [(2000) 10 SCC 502].

¶148

This Court in the case of Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant and Ors. [(2001) 1 SCC 182], having regard to the changing structure of the society, stated that modernization of the society with the passage of time had its due impact on the concept of bias as well.

¶149

The courts have applied the tests of real likelihood and reasonable suspicion. These doctrines were discussed in the case of S. Parthasarathi v. State of Andhra Pradesh [(1974) 3 SCC 459]. The Court found that real likelihood' and reasonable suspicion' were terms really inconsistent with each other and the Court must make a determination, on the basis of the whole evidence before it, whether a reasonable man would, in the circumstance, infer that there is real likelihood of bias or not. The Court has to examine the matter from the view point of the people.

¶150

5 (2012) 4 Supreme Court Cases 653

¶151

¶152

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¶153

The term 'bias' is used to denote a departure from the standing of even ended justice. After discussing this law, another Bench of -this Court in the case of State of Punjab v. V.K. Khanna [(2001) 2 SCC 330], finally held as under:-

¶154

“8. The test, therefore, is as to whether there is a mere apprehension of bias or there is a real danger of bias and it is on this score that the surrounding circumstances must and ought to be collated and necessary conclusion drawn therefrom. In the event, however, the conclusion is otherwise that there is existing a real danger of bias administrative action cannot be sustained. If on the other hand allegations pertain to rather fanciful apprehension in administrative action, question of declaring them to be unsustainable on the basis therefor, would not arise”.

¶155

The word 'bias' in popular English parlance stands included within the attributes and broader purview of the word malice', which in general connotation, means and implies spite' or `ill will'. It is also now a well settled proposition that existence of the element of 'bias' is to be inferred as per the standard and comprehension of a reasonable man. The bias may also be malicious act having some element of intention without just cause or excuse. In case of malice or ill will, it may be an actual act conveying negativity but the element of bias could be apparent or reasonably seen without -any negative result and could form part of a general public perception.

¶156

The Apex Court has reiterated that a bias on the part of a tribunal need not be readily inferred merely because a litigant has a vague suspicion that the tribunal could be biased but whether a man of reasonable prudence would form an opinion as to whether the authority could be biased. The Apex Court has also reiterated the principle that there is a legitimate expectation on the part of the litigant before a tribunal that there will not be any possibility of justice being denied or being not done fairly.Thus, we will have to consider whether in the fact situation as in the present case it could be said that a man of reasonable prudence would consider participation of the CEO in the appeal over his own judgment as a facet of bias.

¶157

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¶159

To ascertain whether the participation of the CEO in the proceeding of the Committee gave a reasonable apprehension of bias, one needs to look at the nature of proceedings before the CEO. In the present case CEO has removed petitioner, which in the opinion of the CEO, had failed to perform the project of redevelopment. CEO has also given the task of implementing the project to another developer. Generally the developers invest substantial capital, time and energy in the projects. Quite often when the developer is changed and another developer, a rival in the business, is appointed, such changes occur in acrimonious circumstances, as has happened in the present case. Impact of such decision on a developer who is removed is quite often substantial. The psychological impact of such decision cannot be ignored especially when the perception of bias is to be considered. The high prices of land in Mumbai and bitter rivalries amongst developers are some of the ground realities which surround such decisions. Such facts have been pleaded in the present petition too. Thus even though the CEO may take a decision regarding the change / removal of developer for the benefit of speedy execution of the schemes, the same is perceived by the losing developer as a decision made against it alone.

¶160

In the present case, the petitioner was a developer for the society for 26 years till it got replaced by the impugned order of the CEO. While removing the petitioner as a developer, the CEO came to the conclusion that the petitioner was not competent to undertake or willing to complete the project of redevelopment any further. The CEO thus had made up his mind after considering the facts regarding the competence and willingness or otherwise of the petitioner before removing it as a developer. The CEO thus did not remove the petitioner as a developer only on legal grounds but

¶161

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by a conscious decision that continuance of the petitioner as a developer is not in the interest of the redevelopment scheme, and that the petitioner is not competent and willing to carry on the project.

¶164

An authority sitting in appeal over its own decision is generally not desirable. In this context we may reproduce a passage from the book - Judicial Review of Administrative Action⁶ ,

¶165

“12-017. Normally there will be a breach of natural justice where an adjudicator takes part in the determination of an appeal against one of his own decisions, unless he is expressly authorised to do so by statute. At best he is likely to incline towards affirming his earlier decision; at worst he can be depicted as a judge in his own cause. In both cases there is likely to be a real danger of bias. Yet the superior judges declined to apply such a principle to the exercise of their own appellate functions. In general, however, a decision-maker must not participate or indeed give the impression of participating in such an appeal.”

¶166

The passage quoted above does state 'unless expressly provided by the statute'. It is also the argument of Mr. Kadam, that since the Full bench Judgment and the Government Resolution specifies the composition of the Committee which includes the CEO, presence of CEO is a matter necessary. Though the Government Resolution and the Judgment of Full bench in Tulsiwadi Navnirman case (supra) provide for presence of the CEO, there is no express direction that the CEO must preside irrespective of the objection taken regarding his participation on the ground that he has passed the impugned order. Apart from the mention of CEO in the Resolution, it has not been shown to us that each member of the Committee is an indispensable part of the proceedings and the Committee cannot take a decision without presence of all the members. Nothing special has been

¶167

6 -de Smith, Woolf & Jowell, Judicial Review of Administrative Action 5^th Edn.pg.530 para 12-017.

¶168

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indicated or shown to us from the Full bench Judgment and the resolution that presence of CEO is more indispensable than presence of other members or the Committee is powerless to pass a valid order without his presence even though circumstances warrant his recusal. The doctrine of necessity thus cannot be invoked in the present case. In fact as can be seen from the impugned order of the High Power Committee itself, during the hearing two members out of five members were not present and still the committee heard the appeal. Therefore, it appears to us that the committee does pass orders even though all members are not present. Thus, it was possible for the CEO to recuse himself from the proceeding. There was a choice with the CEO either to continue to preside over the forum hearing the appeal or to recuse himself. The grounds given by the Committee for the CEO not recusing himself are thus not tenable.

¶171

The order passed by the CEO had serious impact on the petitioner, when we consider the perception of bias on its part. Reliance on the judgment of the Division Bench in the case of Advani Builders (supra) by the Committee was misplaced. Not only the petitioner but any reasonable person would carry an impression that a CEO who has passed the impugned order will tend towards confirming his own order. The committee had an option of the CEO stepping aside during the proceedings of the appeal, but chose to go forward with the appeal with the same composition. According to us, this was not desirable in the interest of justice, and has resulted in miscarriage of justice

¶172

Once there is a mechanism set up for redressal of grievances, it is necessary to ensure that the mechanism works in a fair and transparent manner. The concern regarding maintaining confidence in the mind of

¶173

¶174

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litigating public that the redressal proceedings will be fair, goes beyond an individual case. If the High Power Committee is set up as an alternate remedy to reduce the burden on the Courts then it is essential to inculcate a sense of confidence in the effectiveness and impartiality of such alternate remedy. If litigating public gets disillusioned about the fairness of such remedy then the entire object of setting up such a mechanism will be lost. Thus our concern at this stage is regarding maintenance of public confidence in proceedings of the High Power Committee. The High Power Committee exercises vast powers and deals with issues having social, economic and emotive overtures and it is of utmost necessity that public should not lose confidence in the functioning of the High Power Committee. The litigant before it must not get a sense of pre-determination or bias, or political influence. It is for this reason that we propose to set aside the order and remand the matter back to the High Power Committee for fresh consideration.

¶176

Before concluding we wish to make a few issues clear. We have not cast any aspersions on the members of the Committee. We have not commented on the allegation of actual bias on the part of the CEO and have only examined the issue of 'reasonable apprehension of bias'. These two issues are separate. We have also not concluded whether the power exercised by the CEO is judicial or administrative one. That facet was considered only in relation to the argument regarding bias. We have not decided the merits of the dispute.

¶177

Accordingly we hold that the participation of the CEO, Shri Zende in the High Power Committee entertaining an appeal challenging his own order of removing the petitioner as a developer, inspite of a specific

¶178

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objection, created a reasonable apprehension of bias in the mind of the petitioner and on this count the order passed by the High Power Committee is vitiated. In the result, the impugned order passed by the High Power Committee dated 18 June 2012 is quashed and set aside and the High Power Committee is directed to decide the appeal filed by the petitioner, keeping in mind the observations made above, within six weeks from today. All other points on merits are expressly kept open.

¶180

Petition is disposed of accordingly.

¶181

CHIEF JUSTICE

¶182

N.M.JAMDAR, J.

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Mlns

Susme Builders Private Limited v. Chief Executive Officer and Anr.

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Susme Builders Private Limited v. Chief Executive Officer and Anr.

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