Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 7608 OF 2009

Powai Panchsheel Co­op Hsg.  Society & Anr.           ….Appellant(s)

VERSUS

Maharashtra Housing Area  Development Authority (MHADA) & Ors.           …Respondent(s)

J U D G M E N T

Abhay Manohar Sapre, J.

1. This appeal is directed against the final judgment

and order dated 26.03.2008 passed by the High Court

of Bombay in Writ Petition No.2017 of 2003 whereby

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the High Court dismissed the Writ Petition filed by the

appellants.

2. In order to appreciate the issues involved in this

appeal, it is  necessary  to  set  out  the  facts in detail

hereinbelow.

3. The  appellants  herein  were the  writ  petitioners

whereas the respondents herein were the respondents

in the writ petition out of which this appeal arises.

4. Respondent no.1 is a statutory authority created

under the Maharashtra Housing & Area Development

Authority Act, 1976 (for short called “MHADA Act”).  It

is known as Maharashtra Housing and Area

Development Board (for short “Board”). One of the

objects of the Board is to make housing schemes for

the benefit of different sections of the people and

provide them the houses at reasonable costs. The

Board is, therefore, a State within the  meaning of

Article 12 of the Constitution of India.

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5. On 26.6.1995, the Board issued an

advertisement for sale of 1924 flats (1673 non­deluxe

and 251 deluxe) at the rate of Rs.2,995/­ per square

feet at Powai (Mumbai)­called (Powai Project).   To

execute and supervise this project, the Board

appointed M/s. Kamath Constructions & Estate

Consultants (as their  sole  selling/commission agent)

[for short hereinafter called "M/s Kamath

Constructions")].

6. For some reasons, only 123 flats could be sold,

out of 1924, by the Board. The Board, therefore, from

1995 to 1999 issued seven advertisements for sale of

remaining flats, pursuant to which 1597 flats (which

included sale of 123 flats) could be sold leaving still

327 flats unsold. The Board, therefore, decided to

reduce the price from Rs.2995/­ per sq. feet to

Rs.2200/­ per sq. feet for sale of remaining 327 flats

so as to enable it to sell the said unsold flats.

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7. It is, with these background facts, the Board

issued 8th advertisement in local newspapers for sale

of remaining unsold flats (which included 251 deluxe

flats with a area of 893 sq. feet in Powai Project) and

also some other flats situated in other location in

Mumbai at the rate of Rs.2200/­ per sq. feet on the

terms and conditions set out in the

advertisement/booklet.   The Board, however, again

claimed that they did not receive good response.

8. On 10.02.2003, 11.02.2003 and 12.02.2003,

three  Co­operative  Societies  namely (1) Shree Amey

Co­operative Housing Society (2) Shri Guru Krupa Co­

operative Housing Society and (3) Shree Sai Shraddha

Co­operative Housing Society (respondent nos.4, 5 and

6 in Writ Petition No. 2017 of 2003 respectively before

the High Court) (hereinafter referred to as “three

societies”) made their offers in writing for allotment of

500 flats in Powai Project on the terms offered by each

of them in their respective offers.

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9. So far as appellant No.1 herein is concerned, it is

also a co­operative housing society and they also

applied on 03.03.2003 (Annexure P­6) to M/s Kamath

Constructions and offered to purchase 110 flats of

Powai  Project for  Rs.17 crores.  Appellant  No.1 also

simultaneously applied to the  Board  on  03.03.2003

requesting them to supply all necessary details

regarding the Powai Project to enable them to book the

said flats.  

10. On the same day, M/s. Kamath Construction, on

their part, forwarded the offer of appellant No.1 to the

Board along with three other offers, which they

received from Andhra Bank, Canara Bank and Bank of

Baroda.

11. The Board on 10.05.2003/14.5.2003 held

meetings to consider several matters. Amongst them,

one matter was regarding sale of flats of Powai Project

with which we are concerned here in this appeal and

the offers made by the three societies and the

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appellant No.1 for purchase of the flats of Powai

Project.

12. The Resolution No.192 which dealt with this

matter reveals that the Board considered only the

offers made by the three societies and eventually

accepted their offers  with some  modifications.   The

Board, however, did not consider the offer of appellant

No.1  at all.   The  Resolution  No.192  accepting the

offers of the three societies reads as under:­  

“                       Annexure P­7 O. No.Dir.

Mktg./M.B./105/2003 Dated: 10/5/03 14.05.03

Office Note:­

Subject: In the matter of sale in nature of lumpsum of unallotted Delux and  non­Delux tenements at Powai.

In the Meeting of the Authority held on 10.05.2003, discussion was held on the Item Note No. 192/20 of the above subject and the Authority did not give approval in the form as it is to the Resolution no. 16/2402 dated 25.02.2003 passed by the Board. Approval was not granted as proposed by the Administration in the  above Item Note.  By carrying out necessary changes therein, the Authority has granted approval.  

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While according approval to the Resolution, a discussion to this effect has been taken that if the  amount is  not  paid within the time­limit, interest at the rate of 14.5 be charged on the arrears of the amount.   A decision was also taken that if the Chief Promoters of the societies have not paid the sale price of the tenements within the period,   allotment should be cancelled and amount of 10% of the sale price be forfeited. It shows inconsistency therein it does not become clear as to how and when allotment shall be  cancelled if the interest has to be charged on the amount of arrears and as to when 10% of the sale price shall be forfeited.  Hence  it is  necessary that  there should be clarity in this respect.  

As  per the  notes taken by  me  in the meeting of the Authority, a draft is submitted herewith. However, after confirming the minutes in connection with the business of the meeting, an authorized Resolution be kindly  made available so that it would be convenient for taking further action thereon.  

As the implementation of this Resolution has to be implemented  without waiting for its confirmation,  the Resolution of the Authority be kindly  made available with necessary amendments in the enclosed draft resolution. Hence this request.  

Sd/­ Director, Marketing/M.B.

Sd/­ Joint Chief Officer/M.B.

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Sd/­ Chief Officer/M.B.

As there is inconsistency with each other shown in “A” the Resolution is submitted for correcting the same.  

Secretary C.O./M.B.

DRAFT RESOLUTION NO. 192 Dt. 10.5.2003

1) Chief Promoters of all these three Societies should pay the deposit amount at the rate of Rs. 25,000/­ per tenement to the Board within 90 days from the date of receipt of the allotment letter. So also a list of Members of the Society should be submitted to the Board within 90 days.  

2) Amount of 25 per cent of the sale price of the tenements should be paid within 190 days from the receipt of the allotment letter. However, 5% amount of 25% be paid within 120 days, 10 per cent amount be deposited within  150  days  and  the remaining  10  per cent amount be paid within 180 days.

3) The payment of the remaining amount of the sale­price be made by the Chief promoters of the Society within 270 days from the receipt of the allotment letter.

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4) If the payment is not made within the above period, interest at the rate of 13.5 per cent on the amount of arrears be paid.

5) Within a period of 270 days, the Chief promoters of the Society can effect change in the list of their Members by paying charges at the rate of Rs.500/­ per member. However, thereafter in case of change in membership, amount to the extent of 1 per cent of the sale price of the tenement shall be deducted from the deposit  amount of  the original  member and besides that, transfer fee shall be charged to a new member to the extent of Rs.5,000/­ per tenement.

6) At least allotment of 100 tenements be allotted to each one of these three societies so that it would be possible to give them 15 per cent concession on the sale­price. However, out of the above societies, 10 per cent concession instead of 15 per cent of the sale price shall be payable to the society which will purchase less than 100 tenements.

7) As all the unallotted tenements at Powai are allotted to the above Societies and these are stray tenements located in the buildings where it will be binding on the members  of the  above  Societies to  become members of the existing co­operative housing societies registered or being registered in future in respect of those respective buildings. Hence unless they submit affidavits to that effect, they shall not be eligible for tenements to be allotted to them.

8) If the Chief promoters of the Society do not pay installments of Sale­price of tenements as per the above time­table, 10

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per cent of the sale price for the tenements should be forfeited.

9) Repair work of the unallotted tenements should be taken in hand immediately.

10) Whatever allotment letters have been given to the applicants and 51 deluxe tenements in B.No.4 to the Bank Baroda, allotment of tenements be  made to them. Thereafter, sale of tenements be stopped.

Implementation of this Resolution be implemented without waiting for its confirmation.

(True translation in English) Item No. 192/20

Subject: In the matter of sale in the nature of lump­sum of unallotted deluxe and non­delux tenements at Powai.  

Reference: 1 Letter dated 12.02.2003 from the Chief Promoter, Shri. Saisraddha Co­op. Hsg. Socy (Proposed) addressed in writing to the Chairman/Mumbai Board.  

2. Letter dated 11.02.2003 from the Chief Promoter,  Shri.  Gurukripa Co­op.  Hsg.  Socy (Proposed), addressed in writing to the Chairman/Mumbai Board.

       3. Letter dated 10.02.2003 from the Chief Promoter Shri. Ameya Co­op. Hsg. Socy(Proposed),  addressed in  writing to the Chairman/Mumbai Board.

       4. Letter dated nil written by Pooja Estate Consultant & Construction dated nil to  the

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Vice­president/Au. to the Chairman/Mumbai Board.

5. Authority Resolution No. 178/5715 dated 21.07.2001.”

13. Appellant No.1, therefore, felt aggrieved and filed writ

petition before the High Court of Bombay out of which this

appeal arises and challenged therein the Board's decision in

accepting the offers of three societies and not considering

along with them the offer of appellant No.1 in the meetings

held by the Board on 10.05.2003/14.05.2003. The

challenge was founded inter alia on the ground of mala fides

attributed to the officials for extending undue favour to the

three societies in accepting their offers, including the

manner in which their offers were accepted.  The challenge

was also founded on legal grounds.  

14. The Board and the three Societies contested the writ

petition. In substance, the Board while defending its

resolution dated  10/14.05.2003  inter  alia  contended  that

appellant  No.1  never  submitted  its  offer  but  what it  had

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actually submitted was one letter dated 03.03.2003

addressed to  the  Board and M/s.  Kamath Constructions,

wherein appellant No.1 made an inquiry to get more details

from the Board about the sale of flats of Powai Project.   It

was contended that the Board received appellant No.1’s

letter on 03.03.2003 late as compared to the offers of the

three societies on 10.02.2003/11.02.2003/12.02.2003. It

was, therefore,  contended  that  due to these  reasons, the

Board did not entertain appellant No.1’s offer and

considered only the offers made by the three societies.   So

far  as  the allegations of  mala  fides  were concerned, they

were denied by the Board.

15. So far as the three societies are concerned, they

justified the stand taken by the Board and supported their

offers made to the Board for purchase of the flats as being

just, reasonable and proper, calling no interference in the

decision of the Board in their favour on 10/14.05.2003.

16. By impugned order, the High Court dismissed the writ

petition finding no fault in the Board's decision taken in the

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meetings on 10/14.05.2003, which gave rise to filing of this

appeal by way of special  leave to appeal in this Court by

unsuccessful writ petitioners.

17. So the short question, which arises for consideration

in this appeal, is  whether the decision of the  Board in

accepting the offers of the three societies  for  purchase of

flats (Building No.8) of Powai Project and exclusion of

appellant No.1’s offer in their meetings held on

10/14.05.2003, is justified.  

18. In other words, the question arises for consideration in

this appeal is whether the High Court was justified in

upholding the decision of the Board contained in their

Resolution No.192 in relation to sale of flats of Powai Project

(Building  No.8) to the three  societies  without  considering

appellant No.1’s offer.

19. Having heard the learned counsel for the parties and

on perusal of the record of the case, we are inclined to allow

the appeal, set aside the impugned order, allow the

appellants’  writ  petition,  out  of  which  this  appeal  arises,

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and issue writ of certiorari to quash the decision of meetings

dated 10/14.5.2003 and further issue a writ of mandamus

against the respondents­Board  and  the three  societies to

ensure its compliance as directed hereinbelow in detail.

20. The law on the question as to how and in what manner

the  State  should deal  with  its largesse at the time of its

disposal amongst the citizens is now a well settled principle

laid  down by this  Court in series  of  decisions  beginning

from  the case  of  R.D.  Shetty  vs.  International  Airport

Authority (1979) 3SCC 497.

21. A three Judge Bench speaking through Justice

Bhagwati (as His Lordship then was and later became CJI)

in  R.D. Shetty 's  case (supra) approved the observation of

Justice  Mathew (as  His  Lordship then  was the  Judge  of

Kerala High Court and later became a Judge of this Court)

which the learned Judge made in  V. Punnan Thomas  vs.

State of Kerala (AIR 1969 Ker 81).  In Para 12 at page 505

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of  R.D. Shetty’s  case (supra) Justice Bhagwati said in the

following words:­

 “We  agree  with the  observations  of Mathew, J, in V. Punnan Thomas vs State of Kerala that:

The Government, is not and should not be as free as an individual in selecting the recipients for its largesse. Whatever its activity, the Government is still the Government and will be subject to restraints, inherein in its position in a democratic society.   A democratic Government  cannot lay  down arbitrary and capricious standards for the choice of persons with whom alone it will deal.”

    22. Since then the Courts have been consistently following

the aforesaid dictum of law, which is later explained by this

Court in  several cases  whenever the  question relating to

disposal of  State largesse amongst the citizens  arose for

consideration for deciding the rights of the parties qua each

other and the State.   It is, however, not necessary to

mention these cases which have reiterated this principle as

it will only burden our order.

23. Keeping in view the aforementioned principle of law,

when  we examine the facts of this case,  we are of the

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considered opinion that the Board was not justified in

considering only the offers  made by the three societies

without considering appellant No.1’s offer dated 03.03.2003

on its merit.

24. In our view, the Board was under a legal obligation to

consider  also  appellant  No.1’s  offer  which  appellant  No.1

had made to the Board through M/s. Kamath Constructions

vide its letter dated 03.03.2003 for purchase of the flats of

Powai Project along with the other offers made by the three

societies in their meetings held on 10/14.05.2003.  

25. This we say for the reasons that firstly, M/s. Kamath

Constructions was the authorized agent appointed by the

Board itself for sale and disposal of the flats of Powai

Project: Secondly, M/s. Kamath Constructions on receipt of

appellant No.1’s offer on 03.03.2003 rightly forwarded it to

the Board on 03.03.2003 for its consideration; Thirdly, the

appellant's offer dated 3.3.2003 was, therefore, very much

available to the  Board for its consideration prior to the

meetings held on 10/14.05.2003.  In other words, the date

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on which the Board was considering the offers of the three

societies in its meeting on 10/14.05.2003, the offer of

appellant No.1 dated 03.03.2003 was with the Board for its

consideration.

26.  Fourthly, the very fact that M/s Kamath Constructions

entertained appellant No.1’s offer on 03.03.2003 and

forwarded it to the Board was indicative of the fact that offer

to purchase the flats of Powai Project could be made by any

party either to the Board or to M/s. Kamath Constructions

and had to be considered as being a valid offer made to the

Board only.

27. Fifthly, reading of appellant No.1’s letter dated

03.03.2003 to  M/s.  Kamath  Constructions  would clearly

indicate that it was essentially an offer made by appellant

No.1 to the Board for purchase of 110 flats for Rs.17 crores.

In other words, it could not be treated as letter for soliciting

some information from the Board as contended by the

Board for its consideration.

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28. In our view, keeping in view these five factors which

were admittedly present in the case, the Board was under a

legal obligation to consider all the four offers (appellant No.1

and the three societies) in their meetings held on

10/14.05.2003 with a view to decide as to which one out of

the four offers was the best one for its acceptance.

29. Indeed, exclusion of appellant No.1’s offer dated

03.03.2003 and keeping appellant no.1 out from the zone of

consideration by the Board in its meetings held on

10/14.05.2003 and only confining the consideration of the

offers made by the three societies vitiates the entire decision

of the Board taken on 10/14.05.2003.  

30. In our view, appellant No.1 had a legitimate right and

so the expectation that it would get equal treatment from

the Board like the other three societies because all four were

similarly situated while considering the issue of sale of flats

of Powai Project.  Indeed, there was no valid reason for the

Board to exclude appellant No.1’s case/offer from the zone

of consideration.  

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31. The reason given by the Board for non­consideration of

appellant No.1’s case/offer namely that appellant No.1’s

letter dated 03.03.2003 was not an offer and, therefore, it

was not considered, had no basis for three reasons.  

32. First, the so­called reason ought to have been

deliberated and reduced in writing by the Board in its

Minutes of Meetings held on 10/14.05.2003.   It was,

however, not done; Second, the Board had no right to

disclose the reason for the first time in the return in the

High Court.  It was not legally permissible; Third, the reason

given for its non­ consideration also had no basis because

as held above, the appellant No.1’s letter dated 03.03.2003

was in fact an offer to purchase the flats quoting therein the

price for purchase and, therefore,  it was capable of being

considered on its merits treating it as an offer to purchase

the flats along with the offers of the three societies in the

meetings held by the Board on 10/14.05.2003.  

33. In the light of the foregoing discussion, we are of the

considered view that the decision to sale/dispose of the flats

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of Powai Project taken by the Board in its meetings held on

10/14.05.2003 (Resolution No.192) is vitiated as being

unreasonable, arbitrary and violative of principles enshrined

in Article 14 of the Constitution of  India.  It  is not  legally

sustainable and has to be, therefore, set aside.  

34. Since we have set aside the impugned Resolution on

legal grounds, we need not go into the challenge made by

the appellants against the officials on the ground of  mala

fides.  It is not necessary.  

35. The appeal  thus succeeds and  is allowed.  Impugned

order is set aside. The writ petition filed by the appellants

out of which this appeal arises is allowed.  

36. The impugned Resolution No.192 dated

10/14.05.2003 (Annexure  P­7 of  SLP  at  page  52) of the

respondent­Board insofar as it relates to the decision taken

by the Board for sale/disposal of flats of Powai Project in

favour of the three societies is concerned, the same is

hereby quashed by issuance of writ of certiorari.  The Board

is at liberty to proceed in the matter in accordance with law.

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…...…...................................J.  [ABHAY MANOHAR SAPRE]

...…...……..............................J.            [S. ABDUL NAZEER]

New Delhi; October 12, 2018  

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