# CITY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING DIRECTOR v. PLATINUM ENTERTAINMENT AND OTHERS

- **Citation:** [2014] 10 S.C.R. 704
- **Court:** Supreme Court of India
- **Decided:** 2014-09-26
- **Case number:** Civil Appeal No. 9264 of 2014
- **Bench:** M.Y. Eqbal, Pinaki Chandra Ghose
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/city-industrial-development-thr-its-managing-director-v-platinum-entertainment-29514
- **Pages:** 38

## Headnote

Town Planning - Government action - Allotment of
C government land by the State or its agencies - Requirement
of fairness and equity -
Three plots of Government land
allotted by appellant-CIDCO (City and Industrial Development
Corporation) - Cancellation of the allotment - Validity - Held:
Authorities of CIDCO showed undue favour and managed to
D allot the Government land in favour of one person knowing
fully well that the proprietor of the Company, in different
capacity and in dummy names, sought allotments of plots -
Arbitrariness had a role to play in the matter -Action on the
part of CIDCO was nothing but favouritism based on nepotism
E and was irrational and unreasonable and functioning in a
discriminatory manner -
Order passed by the CIDCO
cancelling the allotments made in favour of the respondents
accordingly upheld -
Maharashtra Regional and Town
Planning Act, 1966 -
New Bombay Disposal of lands
F Regulations, 1975 - New Bombay Road Disp·osal Rules,
1975 - Constitution of India, 1950 - Art. 14.
Allowing the appeals, the Court
HELD:1. State and its agencies and instrumentalities
G cannot give largesse to any person at sweet will and
whims of the political entities or officers of the State.
However, decisions and action of the State must be
founded on a sound, transparent and well defined policy
which shall be made known to the public. The disposal
H
704
CllY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
705
DIRECTOR v. PLATINUM ENTERTAINMENT
of Government land by adopting a discriminatory and
A
arbitrary method shall always be avoided and it should
be done in a fair and equitable manner as the allotment
on favoritism or nepotism influences the exercises of
discretion. Even assuming that if the Rule or Regulation
prescribes the mode of allotment by entertaining
B
individual application or by tenders or competitive
bidding, the Rule of Law requires publicity to be given
before such allotment is made. CIDCO authorities should
not adopt pick and choose method while allotting the
Government land. [Para 49] [738-E-G]
c
2. It is more evident and clear that arbitrariness had a
role to play in the matter while allotting the three plots in
favour of one group of persons which certainly would
come within the meaning of arbitrariness on the part of
CIDCO and against the public policy. Such an action on
D
the part of CIDCO is nothing but a favouritism based on
nepotism and was irrational and unreasonable and
functioning in a discriminatory manner. [Para 51] [739-DE]
E
3. The authorities of CIDCO showed undue favour to
the respondents and managed to allot the Government
land in favour of one person knowing fully well that the
aforesaid proprietor of the Company, in different capacity
and in dummy names, sought allotments of plots. CIDCO
F
was thus justified in cancelling all the allotments made in
favour of the respondents. [Paras 54, 55] [740-F-G; 741-8]
Raman Dayaram Shelly vs. International Airport Authority
of India & Ors. (1979) 3 SCC 489: 1979 (3) SCR 1014; Akhil
Bhartiya Upbhokta Congress vs. State of Madhya Pradesh
G
& ors. (2011) 5 SCC 29: 2011 (5) SCR 77; Kasturi Lal
Lakshmi Reddy & Ors. vs. State of Jammu and Kashmir &
Anr. (1980) 4 SCC 1: 1980 (3) SCR 1338; State of Haryana
vs. Jage Ram (1983) 4 SCC 556: 1983 (3) SCR 917;
Sachidanand Pandey & Anr. vs. State of West Bengal & Ors.
H
706
SUPREME COURT REPORtS
[2014) 10 S.C.R.
A (1987) 2 SCC 295: 1987 (2) SCR 223; Padma vs. Hiralal
Motilal Desarda (2002) 7 SCC 564 and Centre for Public
Interest Litigation vs. Union of India (2012) 3 SCC 1: 2012
(3) SCR 147 and Humanity and Anr. vs. State of West
Bengal and Ors. (2011) 6 SCC 125: 2011 (8) SCR 653 -
B relied on.
Popcorn Entertainment & Anr. vs. City Industrial
Development Corpn. & Anr. (2007) 9 SCC 593: 2007 (3)
SCR 17; Kasturi Lal Laxmi Reddy vs. State of Jammu &
C Kashmir 1980 (4) SCC 1: 1980 (3) SCR 1338; Chairman .
and MD, BPL Ltd. vs. S.P. Gururaja and others 2003 (8) SCC
567: 2003 (4) Suppl. SCR 587 and Sunil Pannalal Banthia

## Text

_Characters 0–39,910 of 73,395. This is a partial read: ask again with offset=39910 for what follows._

A
B
[2014] 10 S.C.R. 704
CITY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
DIRECTOR
v.
PLATINUM ENTERTAINMENT AND OTHERS
(Civil Appeal No. 9264 of 2014)
SEPTEMBER 26, 2014
[M.Y. EQBAL AND PINAKI CHANDRA GHOSE, JJ.]
Town Planning - Government action - Allotment of
C government land by the State or its agencies - Requirement
of fairness and equity -
Three plots of Government land
allotted by appellant-CIDCO (City and Industrial Development
Corporation) - Cancellation of the allotment - Validity - Held:
Authorities of CIDCO showed undue favour and managed to
D allot the Government land in favour of one person knowing
fully well that the proprietor of the Company, in different
capacity and in dummy names, sought allotments of plots -
Arbitrariness had a role to play in the matter -Action on the
part of CIDCO was nothing but favouritism based on nepotism
E and was irrational and unreasonable and functioning in a
discriminatory manner -
Order passed by the CIDCO
cancelling the allotments made in favour of the respondents
accordingly upheld -
Maharashtra Regional and Town
Planning Act, 1966 -
New Bombay Disposal of lands
F Regulations, 1975 - New Bombay Road Disp·osal Rules,
1975 - Constitution of India, 1950 - Art. 14.
Allowing the appeals, the Court
HELD:1. State and its agencies and instrumentalities
G cannot give largesse to any person at sweet will and
whims of the political entities or officers of the State.
However, decisions and action of the State must be
founded on a sound, transparent and well defined policy
which shall be made known to the public. The disposal
H
704
CllY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
705
DIRECTOR v. PLATINUM ENTERTAINMENT
of Government land by adopting a discriminatory and
A
arbitrary method shall always be avoided and it should
be done in a fair and equitable manner as the allotment
on favoritism or nepotism influences the exercises of
discretion. Even assuming that if the Rule or Regulation
prescribes the mode of allotment by entertaining
B
individual application or by tenders or competitive
bidding, the Rule of Law requires publicity to be given
before such allotment is made. CIDCO authorities should
not adopt pick and choose method while allotting the
Government land. [Para 49] [738-E-G]
c
2. It is more evident and clear that arbitrariness had a
role to play in the matter while allotting the three plots in
favour of one group of persons which certainly would
come within the meaning of arbitrariness on the part of
CIDCO and against the public policy. Such an action on
D
the part of CIDCO is nothing but a favouritism based on
nepotism and was irrational and unreasonable and
functioning in a discriminatory manner. [Para 51] [739-DE]
E
3. The authorities of CIDCO showed undue favour to
the respondents and managed to allot the Government
land in favour of one person knowing fully well that the
aforesaid proprietor of the Company, in different capacity
and in dummy names, sought allotments of plots. CIDCO
F
was thus justified in cancelling all the allotments made in
favour of the respondents. [Paras 54, 55] [740-F-G; 741-8]
Raman Dayaram Shelly vs. International Airport Authority
of India & Ors. (1979) 3 SCC 489: 1979 (3) SCR 1014; Akhil
Bhartiya Upbhokta Congress vs. State of Madhya Pradesh
G
& ors. (2011) 5 SCC 29: 2011 (5) SCR 77; Kasturi Lal
Lakshmi Reddy & Ors. vs. State of Jammu and Kashmir &
Anr. (1980) 4 SCC 1: 1980 (3) SCR 1338; State of Haryana
vs. Jage Ram (1983) 4 SCC 556: 1983 (3) SCR 917;
Sachidanand Pandey & Anr. vs. State of West Bengal & Ors.
H
706
SUPREME COURT REPORtS
[2014) 10 S.C.R.
A (1987) 2 SCC 295: 1987 (2) SCR 223; Padma vs. Hiralal
Motilal Desarda (2002) 7 SCC 564 and Centre for Public
Interest Litigation vs. Union of India (2012) 3 SCC 1: 2012
(3) SCR 147 and Humanity and Anr. vs. State of West
Bengal and Ors. (2011) 6 SCC 125: 2011 (8) SCR 653 -
B relied on.
Popcorn Entertainment & Anr. vs. City Industrial
Development Corpn. & Anr. (2007) 9 SCC 593: 2007 (3)
SCR 17; Kasturi Lal Laxmi Reddy vs. State of Jammu &
C Kashmir 1980 (4) SCC 1: 1980 (3) SCR 1338; Chairman .
and MD, BPL Ltd. vs. S.P. Gururaja and others 2003 (8) SCC
567: 2003 (4) Suppl. SCR 587 and Sunil Pannalal Banthia
vs. City & Industrial Development Corpn. of Maharashtra Ltd.
(2007) 10 SCC 674: 2007 (3) SCR 798 - referred to.
D
Case Law Reference:
2007 (3) SCR 17
1980 (3) SCR 1338
referred to
referred to
E
2003 (4) Suppl. SCR 587 referred to
F
2007 (3) SCR 798
1979 (3) SCR 1014
2011 (5) SCR 77
1980 (3) SCR 1338
1983 (3) SCR 917
1987 (2) SCR 223
G
c2002) 1 sec 564
2012 (3) SCR 147
2011 (5) SCR 77
H
2011 (8) SCR 653
referred to
relied on
relied on
retied on
relied on
relied on
relied on
relied on
relied on
relied on
Para 13
Para 20
Para 21
Para 23
Para 37
Para 38
Para 39
Para 40
Para 41
Para 42
Para 43
Para 50
Para 53
CITY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
707
DIRECTOR v. PLATINUM ENTERTAINMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
A
9264 of 2014.
From the Judgment & Order dated 01.09.2009 of the High
Court of Judicature at Bombay in Writ Petition No. 9468 of
2005.
B
WITH
C.A. Nos. 9265 & 9266 of 2014.
B.H. Marlapalli, A.S. Bhasme for the Appellant.
Vikas Singh, J.P. Cama, Venkatesh, Deepika Kalia,
Kapish Seth, Dhruv Chopra, Anuj Agarwala, Lakshmi Raman
Singh, Shankar Chillarge, Aniruddha P. Mayee, Asha Gopalan
Nair for the Respondents.
The Judgment of the Court was delivered by
M.Y. EQBAL, J. 1. Leave granted.
c
D
2. These appeals are directed against the common
E
judgment and final order dated 01.09.2009 passed by the High
Court of Judicature at Bombay whereby Division Bench of the
High Court has allowed three Writ Petitions being W.P.Nos.
9467, 9468 of 2005 and 3423 of 2006 preferred respectively
F
by M/s. Popcorn Entertainment Corporation (in short, 'M/s.
Popcorn'), M/s. Platinum Entertainment (in short, 'M/s.
Platinum') and M/s. Platinum Square Trust (in short, 'M/s.
Platinum Square'). By way of these writ petitions, the writ
petitioners had challenged orders of appellant- 'The City &
Industrial Development Corporation' (in short 'CIDCO') by
G
which allotment of plot of lands to M/s. Popcorn and M/s.
Platinum Entertainment for erecting entertainment complex in
Navi Mumbai and the allotment of plot of land to Mis. Platinum
Square for establishment of country club were cancelled.
3. The facts giving rise to aforesaid writ petitions and
H
708
SUPREME COURT REPORTS
[2014] 10 S.C.R.
A consequently present appeals are almost similar. However, for
the sake of clarity factual matrix of each appeal has been
mentioned here separately.
4. The respondent- M/s. Popcorn Entertainment (SLP (C)
B No.1290 of 2010) in the appeal by special leave arising out of
Writ Petition No.9467 of 2005, by way of an application made
a request for allotment of plot in Airoli for setting up multiplexcum-audito ri um-cum-entertainment centre. On CIDCO's
instructions, respondent submitted detailed project report.
C CIDCO, by their letter of intent, requested the respondent herein
to pay an Earnest Money Deposit of Rs.20,77,000/- within 15
days from the receipt of the letter to enable the Board to
consider the allotment in favour of the respondent. The
respondent, accordingly made EMO on 29.6.2004. On
0
29.7.2004, CIDCO approved the allotment of a plot in favour
of thei appellant as the Board had not got any response for
similar plots in public tender. The total lease premium in respect
of the plot was Rs.2,07,70,000/- and the respondent was
directed to pay the balance amount of Rs.1,86,93,000/- by
E 14.9.2004. The allotment was allegedly made in terms of the
New Bombay Land Disposal Regulations, 1975 and also in
terms of the Land Pricing and Disposal Policy of CIDCO under
which the land could be allotted to any person by considering
individual application at the reserved price fixed by CIDCO.
F Thereafter, by making balance payment including additional
amount due to the marginal increase in the demarcation of the
plot, M/s. Popcorn Entertainment made a total payment of
Rs.2,98,22,420/- being the full and final payment in respect of
allotment in favour of the respondent as demanded by CIDCO.
G An agreement to lease was entered into with CIDCO in respect
of the plot allotted to the respondent.
5. However, on 1.8.2005, appellant CIDCO issued a show
cause notice to the respondent regarding the plot at Airoli
seeking cancellation of the agreement to lease executed in
H favour of the respondent. The respondent submitted reply to the
CITY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
709
DIRECTOR v. PLATINUM ENTERTAINMENT [M.Y EQBAL, J.]
show cause notice and also sought information from CIDCO
A
under the Right to Information Act regarding allotment to various
parties and the details thereon. The Agreement of Lease was
repudiated and rescinded, against which the respondent
approached the High Court by way of a writ petition.
6. The respondent- Mis. Platinum Entertainment in the
appeal by special leave (SLP(C)No.1117/2010) arising out of
Writ Petition No.9468 of 2005, by way of an application made
B
a request for allotment of plot for construction of a multiplex at
Kharghar Railway Station. Upon being asked by the appellant c
CIDCO, Mis. Platinum deposited EMO of Rs.20 lakh being 10%
of the tentative price of the plot in order to consider the
application of the respondent. Thereafter, CIDCO approved the
allotment in favour of the respondent considering the fact that
there was no multiplex in the area and the earlier effort of 0
CIDCO to advertise for such plots had met with no response.
CIDCO issued allotment letter in favour of the respondent
asking the petitioner to pay Rs. 1,80,00,000/- being the balance
price of the plot. The respondent made two separate payments
of Rs.90 lakh each towards the balance price of the plot on
E
16.8.2004 and 19.8.2004. The respondent paid a sum of
Rs.20,00,600/- being the other charges demanded by the
appellant. The respondent was asked to pay a further sum of
Rs.65,096/-, which the respondent paid immediately. CIDCO
unilaterally decided to ask the respondent to pay a further sum
F
of Rs.20 lakh by enhancing the rate at which the plot was to be
allotted to the respondent from Rs.2500/- per square meter as
demanded in the allotment letter to Rs.2750 per square meter
because the plot of the respondent was on a 24 meter road.
The respondent herein on 17.11.2004 paid a further payment
of Rs.20 lakh along with Rs.2,96,078/- plus Rs.4957/- being the
G
additional cost and the other charges. On 14.1.2005, the
respondent paid a further sum of Rs.19,828/- being the sum
demanded. The respondent on 17.1.2005 entered into an
agreement to lease with the appellant for the altotment of plot.
H
710
SUPREME COURT REPORTS
[2014] 10 S.C.R.
A On 28.2.2005, CIDCO being the development authority of the
area issued commencement certificate to the respondent
permitting the respondent to start construction. However, on
14.7.2005, the respondent received a show cause notice
seeking cancellation of the allotment in favour of the responder.!
B on the ground that the allotment was void in view of Section 23
of the Contract Act as being opposed to public policy. The main
ground in the show cause notice was that the allotment was
without issuance of tender and was opposed to public policy.
The respondent submitted reply to the show cause notice. On
c 16.122005, CIDCO issued an ordef-l"ancelling the agreement
to lease and sought to resume the possession of the plot,
against which the respondent approached the High Court by
way of writ petition.
0
7. The respondent- M/s. Platinum Square Trust in the
appeal by special leave petition (SLP(C)No.1215/2010) arising
out of Writ Petition No.3423 of 2006, by way of an application
made a request for allotment of plot of land admeasuring 80,000
sq.mtr. at Kharghar hill for establishment of country club. CIDCO
E having a plot of land earmarked for similar purpose, considered
the request of the respondent and called upon the respondent
to pay Rs.39.52 lakh on or before 20th April, 2004 constituting
10% of the value of the plot as EMD so as to enable the CIDCO
to place the proposal of the respondent before the Board of
Directors. CIDCO further requested the respondent to submit
F registration certificate either under the Trust Act or the Society
Registration Act before allotment/ possession of the land so
that the case of the respondent could be considered for
allotment at subsidized rate in terms.of the policy; otherwise
commercial rates were to attract for such allotment. The
G respondent in terms of the letter of CIDCO deposited a sum of
Rs.39.52 lakh with them.The respondent got its trust deed
registered on 14th May, 2004; wherein six Trustees were
appointed. Amongst others, objectives of the Trust are to
establish and support, maintain and run sports club,
H
CllY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
711
DIRECTOR v. PLATINUM ENTERTAINMENT [M.Y EQBAL, J.]
gymnasium, health club, amusement park, yoga centre, water
A
sports etc. and to carry out activities relating thereto.
8. The respondent herein was allotted 50,350 sq.mtr. land
by CIDCO for a total sale consideration of Rs. 3,43,70,800/-.
8
Out of the said amount of consideration, the respondent had
already deposited Rs.39.52 lakh as such the appellant was
directed to deposit Rs. 1,52,09,400/- in two installments i.e. on
30th July, 2004 and 29th August, 2004 being the balance lease
premium payable in respect of the subject plot. In the allotment
letter, it was specifically mentioned that payment of lease c
premium in a stipulated period is an essence of concluded
contract. It was further provided in the allotment letter that
extension of time could be granted which would be up to 3
months for payment of the first installment and up to 16 months
for the payment of the second installment. It was provided
D
therein that up to 3 months the respondent would be charged
13% interest and beyond 3 months the respondent would be
charged 16% interest for the extended period of time. The
respondent on 15th September 2004, paid the first installment
of Rs.1,52,09,400/- within the extended time permitted under
E
the allotment. The respondent on 3rd May, 2005, wrote letter
to the CIDCO for extension of time for making payment of
second installment up to December, 2005. Clearly in terms of
the allotment letter, the respondent could ask extension of
second installment up to 29th December, 2005. The respondent
Trust was registered under the Bombay Public Trust Act, 1950
F
on 19th April, 2005. The respondent submitted documents to
CIDCO on 25th May, 2005 evidencing registration of the Trust.
However, on 20th July, 2005 the respondent received show
cause notice seeking cancellation of the allotment made in
G
favour of the respondent on the basis of Shankaran Report.
9. The respondent, on 3rd August, 2005, submitted its
detailed reply to the show cause notice challenging the
cancellation of allotment of plot, reiterating that the allotment
was in accordance with law as such it could not be cancelled.
I l
712
SUPREME COURT REPORTS
[2014] 10 S.C.R.
A The respondent, on 29th December, 2005, wrote letter to the
Marketing Manager of CIDCO requesting him to accept
payment of second installment being the last date up to which
the extension could be granted under the allotment. However,
CIDCO refused to accept the payment. The respondent on the
B same date wrote another letter recording the fact that CIDCO
has refused to accept the second installment and that the
respondent would not be liable to pay any further interest from
th~ said date and that the allotment could not be cancelled on
the ground that the payment has not been made by the
c respondent.
10. The respondent was served with the order dated 28th
April, 2005 cancelling allotment of plot made in favour of the
respondent. Being aggrieved by the aforesaid order of
D cancellation, the respondent herein approached the High Court
by way of writ petition filed under Article 226 of the Constitution
of India.
11. With the aforesaid factual matrix, it is also necessary
to note that State of Maharashtra, who is having ultimate
E authority and power to control and regulate the activities of
planning and development under the Maharashtra Regional and
Town Planning Act, 1966 (in short, 'MRTP Act'), in 1971
appointed appellant-CIDCO as new town planning authority for
the new town - Navi Mumbai. In exercise of powers conferred
F by sub-clause (a) of clause (1) of section 159 of the MRTP Act,
the CIDCO has with the previous approval of the State
Government published in July 1979 the New Bombay Disposal
of Lands Regulations, 1975 (in short, 'the Regulations'). The
aforesaid regulations, inter alia, provide for the demarcation of
G plots vested in the Government by CIDCO into disposable plots
having regard to their size and use. The said regulations also
make provision for conditions of lease, mode of disposal and
for grant of land for religious, educational, charitable and public
purposes. For the present purpose, relevant one is Regulation
H 4 of Chapter IV, according to which the Corporation may
CITY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
713
DIRECTOR v. PLATINUM ENTERTAINMENT [M.Y. EQBAL, J.]
dispose of plots of land by public auction or tender or by
A
considering individual applications as the Corporation may
determine from time to time.
12. It is the case of the appellant Cl DCO that the aforesaid
contesting respondents had been made allotment of lands by
8
the appellant pursuant to a direct application being made to the
office of the then Chief Minister and in other similar cases a
number of public interest litigation were filed in the High Court.
Accordingly, the Government, to ascertain whether the
allotments made were bonafide, directed the then Additional
C
Chief Secretary to conduct an enquiry to find out whether the
Board of Directors of CIDCO disposed of lands in accordance
with law. Enquiry was conducted by the Additional Chief
Secretary and submitted the report (called Shankaran Report).
The enquiry inter alia revealed that subject allotment was illegal,
arbitrary and the appellant had suffered a financial loss in
crores. Therefore, the appellant issued notice to the contesting
respondents and ultimately cancelled the subject allotments,
which led to filing of the writ petition. The writ petitions were
dismissed by the High Court on the ground that alternative
D
E
, remedy was available to the writ petitioners by filing suits and
therefore writ jurisdiction cannot be invoked.
13. Aggrieved by the decision of the High Court,
respondents approached this Court by way of appeals by
special leave. Those Civil Appeals being Civil Appeal Nos.
F
940-941 of 2007 were disposed of by this Court remitting the
matters back to the High Court for deciding the writ petitions
on merits. The said order is reported in Popcorn Entertainment
& Anr. vs. City Industrial Development Corpn. & Anr., (2007)
9 sec 593. In the order of remand this Court made some
G
observations with regard to the merits of the case. For better
appreciation, para 41 and 47 are reproduced herein below:-
"41. At the time of hearing, it was suggested by the learned
Senior Counsel for the respondent that the allotment was
H
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, -
....,-..-- -... __ _
A
B
c
D
E
F
G
714
SUPREME COURT REPORTS
[2014] 10 S.C.R.
made without any justification and that there was a huge
demand for such plot, it is submitted by learned counsel
for the appellant that the appellant has sought information
from CIDCO under the Right to Information Act as to
whether there was no application pending with them for
allotment of the said plot prior in time to the application of
the appellant. CIDCO in reply has clearly stated that there
was no application prior to the application of the appellant.
Even the allotment in favour of the appellant was a
reasoned allotment taking into consideration the lack of
entertainment facilities in the area and the said issue was
also discussed in the board meeting before the allotment
and these facts are clear from the information provided to
the appellant under the Right to Information Act. Our
attention was also drawn to the noting in the file while
considering the case ofthe appellant and before making
the allotment that
(1) "There is no cinema/multiplex facility available _
today for the residents of CBD Belapur, Kharghar and
Kalamboli residents.
(i1) From accessibility and land use compatibility
point of view, Plot No. 1, Sector 2, Kharghar admeasuring
about 8000 sq m is an ideal location for multiplex.
(iii) This building will be visible from highway and will
add to the image of the city.
(iv) Adjoining Plot 1 of Sector 1 attached to railway
station admeasuring 5600· m~ (not demanded yet) is
earmarked for city mall."
47. We have given our careful consideration to the rival
submissions made by the respective counsel appearing
on either side. In our opinion, the High Court has
committed a grave mistake by relegating the appellant to
H
the alternative remedy when clearly in terms of the law laid
Cl1Y INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
71 5
DIRECTOR v. PLATINUM ENTERTAINMENT [MY EQBAL, J.]
down by this Court, this was a fit case in which the High
A
Court should have exercised its jurisdiction in order to
consider and grant relief to the respective parties. In our
opinion, in the instant case, 3 of the 4 grounds on which
writ petitions can be entertained in contractual matter were
made out and hence it was completely wrong of the High
B
Court to dismiss the writ petitions. In the instant case, 3
grounds as referred to in Whirlpool Corpn. (1998) 8 SCC
1, have been made out and accordingly the writ petition
was clearly maintainable and the High Court has
committed an error in relegating the appellant to the civil
C
court."
14. However, this Court took the view that the matter needs
to be remanded back to the High Court, so that the High Court
will consider all the submissions made by the parties and
0
dispose of the same afresh.
15. The High Court on receipt of the remand order
proceeded with the hearing of the writ petitions and after hearing
both the parties allowed the writ petitions by passing the
impugned order and quashed the orders passed by the
E
appellant-CIDCO cancelling the allotment. The High court while
passing the impugned order has gone through the merits of the
case of both the parties but held that the observations made
by this Court in the remand order (41, 43, 47, 48 and 49)
relating to non-observations of rule and regulations causing
substantial loss to the CIDCO operate as obiter and is binding
on the High Court and, therefore, the High Court has to fall in
line with the view expressed by this Court. Para 97 of the
impugned order is quoted hereinbelow.
"97. As already stated hereinabove, so far as categorical
F
G
and unequivocal observations made by the Apex Court
revolving around the issues relating to non-observation of
rule and regulations causing substantial loss to the CIDCO
since no tenders were invited and interpretation of Section
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716
SUPREME COURT REPORTS
[2014] 10 S.C.R.
A
23 of the contract Act are concerned, they operate as
obiter binding on us as such we have to fall in line with the
view expressed by the Apex Court."
16. We have heard learned counsel on either side at length.
8 Mr. B.H. Marlapalli, learned senior counsel appearing for the
appellant-CIDCO, contended that the High Court has
misconstrued and misinterpreted order passed by this Court
in the case of Popcorn Entertainment (supra) in the first round
of litigation whereunder the matter was remanded to the High
C Court for fresh consideration on merits keeping all contentions
open. However, the High Court chose to restrict itself to
consider only the ground for cancellation of the allotment taken
in the final show cause notice and recorded in the final order.
The High Court would have considered the matter on merits
D without being fettered or constrained by any observation of the
Apex Court. It has been further contended on behalf of the
appellant that this Court has declared the law that the disposal
of the State owned or public property by auction or tenders is
a rule and such disposal by private negotiation is an exception
E to be carved for cogent and compelling reasons to be recorded
in writing at the time of disposal. The law so declared is
mandatory in its application, warranting absolute and implicit
adherence thereto at the peril of any act or commission in
contravention thereof being illegal and non est.
F
17. Mr. B.H. Marlapalli, learned senior counsel further
submitted that in order to find out whether the Board of Directors
of CIDCO disposed off its lands in Navi Mumbai in accordance
with law, the State Government had directed the then Additional
Chief Secretary- Dr. D.K. Shankaran to hold a discreet enquiry
G in the affairs of CIDCO. The CIDCO cancelled the allotments
due to the arbitrary manner in which the plots were allotted and
the loss caused to CIDCO, and the basis for computing the loss
was the report of Dr. Shankaran, which has referred to several
allotments in the vicinity and the offer made to BARC and as
H such, in the writ jurisdiction, the High Court cannot decide the
CITY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
717
DIRECTOR v. PLATINUM ENTERTAINMENT [MY EQBAL, J.]
price prevailing in the area at the time of allotment. It is further
A
contended on behalf of the appellant that as per Shankaran
Report it was necessary to allot the plots by inviting tenders and
testing the market. Had it been done so, these plots would have
fetched at least five times greater value than the actual value
received. Further Mr. Nilesh Gala, who is the proprietor of M/s.
B
Platinum Entertainment, has used the same modus operandi
for obtaining allotment of plots for country club at Kharghar and
another multiplex plot in Kharghar and the CIDCO was found
to have suffered a loss of Rs.10 crores in this case. Show
cause notice was issued mentioning three grounds, viz.
C
favoritism, non-issuance of tender and loss caused to the
Corporation. It is further urged that the order of cancellation of
the allotment specifically states that the Board of Directors of
the Corporation found itself in substantial concurrence with the
findings recorded by Dr. Shankaran.
o
18. Learned senior counsel sought to justify the action of
Cl DCO on the basis of Sections 154 and 118 of MRTP Act
contending that the purpose of constituting CIDCO·is to develop
a town by making allotment, and in case the allotments are
allowed to be made in arbitrary manner and if such allotments
are sustained, then it amounts deviation from the purpose of
the Act. It is further urged that Section 23 of the Contract Act
also envisages cancellation on account of the allotment/
agreement, if it is opposed to public policy and this Court may
sustain the cancellation being opposed to public policy. The
allotment made without inviting tenders leads to presumption
E
F
of nepotism etc. and it can only be justified by citing compelling
reasons. Whereas in the present case, no reasons were
mentioned and allotments were made surreptitiously to one
G
person.
19. Rival submissions have been made by Mr. Vikas
Singh and Mr. J.P. Cama, learned senior counsel appearing
on behalf of contesting respondents, contending that the
allotment made in favour of these respondents was cancelled
H
718
SUPREME COURT REPORTS
[2014] 10 S.C.R.
A by the appellant by issuing show cause notices referring to
Shankaran report and alleging that CIDCO had suffered losses
and mentioning the ground that there was non-issuance of
tender before making allotment, the same being void under
Section 23 of the Contract Act was opposed to the public
B policy. According to them, the Apex Court, while remanding the
matter in the first round of litigation, in para 48 of the judgment
reported in (2007) 9 sec 593 (supra) set aside the order of
CIDCO seeking to resile from a concluded contract in favour
of the contesting respondents. It is submitted on behalf of the
c respondents that the New Bombay Land Disposal Rules are
the specific rules governing the disposal of land to be done by
CIDCO. Rule 4 of the said Rules clearly provided that CIDCO
has the authority to dispose plots of land by public auction or
tender or by considering individual application as the
o Corporation may determine from time to time. Mr. Vikas Singh,
learned senior counsel contended that once an allotment is
made in favour of a party, CIDCO has no right to cancel the
allotment on the ground that no tenders had been invited. A.
development authority while allotting land can allot plot of land
E without calling for tender or without inviting offers from the
general public if the statutory regulations regarding disposal of
land by public authority permit the authority to do so. It is further
urged that CIDCO has been relying upon the aforesaid rule to
justify, in various cases, the allotments made in favour of
F commercial complexes, societies as well as sports complexes
saying that such allotment made without issuance of tender were
justified as being within the power vested in CIDCO under Rule
4 of the aforesaid Rules.
20. In support of his contention, Mr. Vikas Singh cited the
G portion of a paragraph of the decision of this Court in Kasturi
Lal Laxmi Reddy vs. State of Jammu & Kashmir, 1980 (4)
sec 1, which is reproduced here:
"22 ........ We do not think the State is bound to advertise
H
and tell the people that it wants a particular industry to be
CITY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
719
DIRECTOR v. PLATINUM ENTERTAINMENT [M.Y. EQBAL, J.]
set up within the State and invite those interested to come
A
up with proposals for the purpose. The State may choose
to do so, if it thinks fit and in a given situation, it may even
turn out to be advantageous for the State to do so, but if
any private party comes before the State and offer!:) to set
up an industry, the State would not be committing breach
B
of any constitutional or legal obligation if it negotiates with
such party and agrees to provide resources and other
facilities for the purpose of setting up the industry. The
State is not obliged to tell such party: "Please wait I will
first advertise, see whether any other offers are forthcoming c
and then after considering all offers, decide whether I
should let you set up the industry."
21. Referring to the case of Chairman and MD, BPL Ltd.
vs. S.P. Gururaja and others, 2003 (8) SCC 567, Mr. Singh
contended that non-floating of tenders or not holding of public
D
auction would not in all cases be deemed to be the result of
the exercise of the executive power in an arbitrary manner. The
power of cancellation under Section 23 of the Contract Act is
only available to the Court and on the concept of separation of
E
power the said power is not exercisable by executive
unilaterally without referring to the Court. It has been further
contended that although through the impugned order the High
Court had quashed the cancellation order, only CIDCO has
preferred appeal whereas the State of Maharashtra accepted
F
the impugned order and has no grievance with the quashing
of the order cancelling the contesting respondents' allotment.
22. It has further been contended that the rules provide for
three methods of disposal i.e. by tender, by public auction or
by considering individual applications and CIDCO vide various
G
board resolutions have specifically provided the exact method
cif disposal for various types of plots. CIDCO has accordingly
framed the Land Pricing and Land Disposal Policy as approved
by various board resolutions wherein various categories of plots
are mentioned. In the case of commercial plots where FSI 1.5
H
720
SUPREME COURT REPORTS
[2014] 10 S.C.R.
A is permitted the land price rate determined under the policy is
450% of the reserve price and the method of disposal is by
tender and in the alternative at fixed rate. Similarly for allotment
of multiplex, the rate specified under the policy is at reserve
price and the method of disposal is upon request at fixed rate
B or by competitive bidding. The two different methods of
disposal between a commercial allotment and the allotment for
multiplex is significant because in the case of commercial
allotment, by tender is the first method of disposal prescribed
and at fixed rate is the alternative method of disposal
C prescribed whereas in the case of allotment for multiplex/
auditorium on request at fixed rate is the first method and by
competitive bidding is the alternative method of allotment.
Furthermore, allotment in the case of M/s. Platinum Square
Trust the land price of open area/running track is specified to
o be 10% of the reserve price and of area used for construction
is to be at 50% of the reserve price and the method of disposal
is only upon request at fixed rate from the registered trust/
registered under the Public Trust Act. Learned senior counsel
contended that allotments in favour of the respondents were
E clearly in conformity with the rules and also in conformity with
the Land Pricing and Land Disposal Policy framed by CIDCO
for allotment of various types of land in the Navi Mumbai area.
23. It has been submitted that in a similar case where
F allotment had also been cancelled on the only ground that the
same had been made without inviting tenders, the Apex Court
in Sunil Pannalal Banthia vs. City & Industrial Development
Corpn. of Maharashtra Ltd., (2007) 10 SCC 67 4, has held that
once an allotment had been made in favour of a party, CIDCO
G has no right thereafter to cancel the allotment on the ground that
no tenders had been invited. CIDCO had power to make
allotment without calling for tender under Rule 4 and it could not
be said that the allotment in favour of Sunil Pannalal Banthia
was in any manner contrary to the rules for making such
allotment.
H
CITY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
721
DIRECTOR v. PLATINUM ENTERTAINMENT [MY EQBAL, J.)
24. It has also been contended on behalf of the contesting
A
respondents that according to the information provided to the
respondents under the Right to Information Act, a public utility
plot has never been put to tender by CIDCO during the period
when aforesaid allotments had been made in favour of the
respondents. According to the information provided, allotment
B
to 56 allottees have been made without inviting tenders as per
Land Pricing and Land Disposal Policy and the price charged
is as per the policy as approved by Board resolutions. These
allotments were not scrutinized by Dr. Shankaran and not
formed part of the enquiry report. Furthermore, Shankaran
C
report had been prepared ex-parte i.e. without issuing notice
to the respondents. Copy of said report was not furnished to
the respondents either along with show cause notice or before
cancellation order was passed although demanded by the
respondents in their reply, in which it was specifically mentioned
D
that the final reply could be given only after the entire report was
given to them along with the methodology used by Shankaran
to arrive at the alleged losses. It is contended that the
cancellation order is vitiated being in violation of principles of
natural justice, for having been passed without giving a copy
E
of the Shankaran report, which had been prepared behind the
back of the contesting respondents.
F
25. Upon perusal of notice it is clear that its contents are
similar in all these appeals. The appellant CIDCO referred the
Shankaran Report in which it was observed that the allotments
were made in favour of the respondents in an arbitrary manner
without calling upon to show cause as to why such allotment
should not be repudiated having become void on the thrust of
Section 23 of the Indian Contract Act, 1872. For better
G
appreciation para 14 of the show cause notice is reproduced
hereinbelow:-
"The Board of Directors of the Corporation at its
meeting held on 6th June, 2005 considered the
recommendations of Dr. D.K. Shankaran, the then
H
722
SUPREME COURT REPORTS
[2014] 10 S.C.R.
A
additional Chief Secretary and directions of the State
government and as directed me to call upon you to show
cause why the Corporation should not rescind or repudiate
such allotment having become void on the thrust of Section
23 of Contract Act 1872 which declares that an Agreement
s
having its object or consideration to defeat provision of the
law or opposed to public policy as declared by the Hon'ble
Supreme Court as aforesaid is vitiated by illegality and is
liable to be declared void".
C
26. Section 23 of the Indian Contract Act, 1872 reads as
under:-
D
E
F
"What consideration and objects are lawful, and what
not.-The consideration or object of an agreement is
lawful, unless -
\
It is forbidden by law; or
is such of such a nature that, if permitted, it would
defeat the provisions of any law; or is fraudulent; or
involves or implies, injury to the person or property
of another; or
the Court regards it as immoral, or opposed to
public policy.
In each of these cases, the consideration or object
of an agreement is said to be unlawful. Every agreement
of which the object or consideration is unlawful is void."
27. Before dealing with the legality and validity of the notice
G aforesaid, we shall first wish to mention some of the relevant
facts:-
H
A. Indisputably applications were made by the respondents
to the then Chief Minister for allotment of plots of land in
question.
CITY INDUSTRIAL DEVELOPMENT THR. ITS MANAGING
723
DIRECTOR v. PLATINUM ENTERTAINMENT [MY EQBAL, J.]
B. On the application submitted on behalf of M/s. Platinum
A
Entertainment, through its proprietor Nilesh Gala, for the
allotment of plot for constructing multiplex at Kharghar
railway Station, the appellant was allotted the plot at
Kharghar Railway Station;
B
C. The said person Nilesh Gala as proprietor of M/s
Popcorn Entertainment Corporation made another
application for allotment of plot for the construction of
multiplex-cum-entertainment centre at Airoli. The appellant
CIDCO acceded to the request of Mr. Nilesh Gala and
C
allotted the plot followed by lease agreement;
D. The same person Nilesh Gala formed a Trust called
Platinum Square Trust through one of its Trustees Damji
Kunwarji Gala and made a third application for allotment
of plot at Kharghar Hill for the construction of country club
D
and paid part of the amount fixed for such allotment and
rest of the amount was to be paid in instalments. The
matter is pending and final lease deed has not been
executed.
28. Now the important question that needs consideration
is as to whether the allotments of valuable land by CIDCO to
one person in different capacity for the purposes mentioned
above, that too by entertaining private applications, are
arbitrary, illegal and fraudulent and against the public policy as
contemplated under Section 23 of the Indian Contract Act.
E
F
29. In the course of argument, Mr. Vikas Singh, learned
senior counsel appearing for the respondents in all the three
appeals filed a compilation of different documents including
Rules and Regulations.
G
30. Regulation 4 lays down the mode and manner of
disposal of land by the Corporation. The said provision
empowers the Corporation to dispose of lands by public
auction or tender or considering individual applications as the
H
724
SUPREME COURT REPORTS
[2014] 10 S.C.R.
A
Corporation may determine from time to time. Regulation 4
reads as under:-
B
"Manner of disposal of land - The Corporation may
dispose plots of land by public auction or tender or by
considering individual applications as the Corporation may
determine from time."
31. The land Pricing and Land Disposal Policy of CIDCO
would show that the commercial plots with FSI 1.5, that is plots
for offices, shop, restaurant, showrooms etc., is to be disposed
C of by tender/at fixed price.