In the recent times, the Bombay High Court declared that Thane Municipal
Corporation could not avail itself of the "considerable financial benefit" of
receiving Rs 420 million from a builder, along with the builder's development of a
public amenity (a fire brigade station), without honouring its commitment under a
buy-back policy. The High Court set aside as “manifestly arbitrary” the
Corporation’s July 2023 refusal to grant the builder development permission with
additional developable space as provided in a 2020 regulation, for its free sale
building. It was a policy, subjected to conditions, for the buy-back of lands
acquired under Development Control Regulations (DCR) and of plots reserved under
the sanctioned Development Plan for public use.
To this, the TMC opined that the rejection was based on the ground that the
buyback policy (BBP) was kept in abeyance as there was an enquiry after a
question was raised in the State legislative assembly over the policy last May.
Sheth Developers, the builder had challenged the rejection before the HC, as
arbitrary and in violation of principles of legitimate expectations and doctrine of
promissory estoppel. Doctrine of promissory estoppel is a legal principle to ensure
that a promise made is enforceable by law.
On 1st October 2003, the builder acquired development rights over 28 acres of
land from Voltas Ltd. On 2nd May 2016, the Maharashtra Government notified an
‘Accommodation Reservation Policy’. This policy was intended to transfer the
burden of developing reserved plots to private landowners or developers in lieu of
incentives. Having fulfilled its end of the agreement the builder legitimately
expected the TMC to hour the policy.
The TMC argued that since a query was raised about the policy allegedly violating
the provisions of the Municipal Corporation Act it was purportedly in abeyance.
The HC said when the builder had paid 125 percent of the ready reckoner rate to
the TMC for the rights how could it be held to be violative. Besides, the HC stated,
“doctrine of promissory estoppel is firmly part of the jurisprudence in this
country.”
The dispute before the HC was over TMC’s decision to keep in “abeyance” its
proclaimed Buy-Back Policy. The builder assailed not only the general direction to
keep this policy in abeyance but the failure of the TMC to honour its terms after it
received benefits under it and after the builder was prejudiced having acted on its
assurances.
The HC analysed the law and provisions of the UDCPR 2020 and said they are not in
any material manner distinct from the 2016 policy. “It is, therefore, not possible
for the TMC to refuse to apply the policy.
On November 1, the HC bench of Justices said the rejection violates the
established legal principles against unreasonableness and the doctrine of
proportionality in administrative action. It also doesn’t stand the “test of non-
arbitrariness in administrative action mandated by Article 14 (right to equality).’’
The HC said,
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