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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6962 of 2005

R.K. Mittal & Ors. … Appellants

Versus

State of U.P. & Ors.        …  

Respondents

WITH

CIVIL APPEAL NO.6963 OF 2005

AND

CIVL APPEAL NOS.10535 &10536  OF 2011 (Arising out of SLP (C) No.24029 of 2005 and 9150 of 2007)

J U D G M E N T

Swatanter Kumar, J.

1. Leave granted in both the Special Leave Petitions.

2. The  ambit  and  scope  of  power  of  New  Okhla  Industrial  

Development Authority (for short, the ‘Development Authority’)  

to  permit  users,  other  than  residential,  in  the  sectors  

specifically earmarked for ‘residential use’ in the Master Plan of  

the  New  Okhla  Industrial  Development  Area  (for  short,  the

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‘Development  Area’)  is  the  basic  question  that  falls  for  

consideration  of  this  Court  in  this  bunch  of  appeals.  These  

appeals  demonstrate  some  of  the  instances  of  widespread  

violation  of  statutory  provisions  and  somewhat  arbitrary  

exercise  of  power  by  the  Development  Authority.   Lack  of  

adoption  of  uniform application  of  law has  resulted in  large  

number of cases of violation of law all over the State of Uttar  

Pradesh  going  unnoticed.   The  time  has  come  for  the  

Development  Authorities  to  change  their  style  of  functioning  

and act vigilantly and uniformly, that too, strictly in accordance  

with law, keeping in view the larger public interest.

Introductory Facts

3. This judgment shall dispose of the above referred four civil  

appeals and the applications for intervention therein.  Out of  

the  four  appeals,  in  Civil  Appeal  No.  6962 of  2005and Civil  

Appeal arising out of SLP(C) No. 24029 of 2005, the lease deed  

in favour of the parties had been cancelled by the Development  

Authority while in other two appeals, Civil Appeal No. 6963 of  

2005 and Civil Appeal arising out of SLP (C) No.9150 of 2007,  

after giving notice, it had passed an order requiring the parties  

concerned to stop the misuse within the stipulated time, failing  

which  appropriate  action  in  accordance  with  law,  including  

cancellation of the lease deed, would be taken.  The facts and

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circumstances  in  all  the  appeals  and  even  the  intervention  

applications are somewhat similar.  In any case, the common  

question of law arising in all  the appeals and applications is  

whether the residential premises can be, wholly or partly, used  

by the original allottee or even its transferee, for any purpose  

other than residential?  We do not consider it necessary to refer  

to the facts of each case in greater detail, except the facts of the  

lead case, i.e., Civil Appeal No.6962 of 2005, R.K. Mittal v. State   

of U.P.  However, wherever reference to certain additional facts  

is called for, we would notice the same in the other cases as  

well.

4. The Development Authority executed a lease deed dated 2nd  

April,  1988  in  favour  of  Shri  Rajendra  Kumar  Srivastava  in  

relation  to  Plot  No.778,  Block  A,  Sector  XIV,  New  Okhla  

Industrial Development Area, District Ghaziabad, admeasuring  

about 274.37 square meters as per the boundaries described in  

the deed.  Upon the plot, the lessee raised some construction  

which  remained  unfinished.   The  lessee  thereupon  actually  

transferred  the  plot  in  question  along  with  unfinished  

superstructure vide Transfer Deed dated 20th August, 1999 in  

favour  Shri  R.K.  Mittal,  Shri  Ashok  Garg  and  Shri  Sanjeev  

Gupta, the appellants herein.  The original lease deed contained  

specific  stipulations  in  regard  to  the  lessee  being  obliged  to

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obey  all  the  Rules,  Regulations  and  Directions  made  by  the  

lessor.  The lessee was to raise construction as per approved  

plans and to use the premises only for the purpose for which it  

was committed in terms of the lease and as per law.  These  

clauses of the lease deed read as under :

“(d) That the lessee will  obey and submit to all  Directions  issued  or  Regulations  made  by  the  Lessor now existing or hereafter to exist so for as  the  same  are  incidental  to  the  possession  of  immovable  property  or  so  far  as  they  effect  the  health,  safety  or  convenience  of  the  other  inhabitants of the place.

(e) That the Lessee will at his own cost erect on  the  demised  premises  in  accordance  with  the  plans, elevation and design and in a position to be  approved by the lessor or any officer authorised by  the  lessor  in  that  behalf  in  writing  and  in  a  substantial  and  workman  like  manner,  a  residential  building  only  with  all  necessary,  sewers, drains and other appurtenances according  to  the  Directions issued or  Regulations  made in  respect  of  buildings,  drains,  latrines  and  connection with sewer.

XXX XXX XXX

(h) That  the  lessee  shall  use  the  demised  premises  only  for  the  purpose  of  constructing  a  building  for  residential  purpose  of  customary  home occupation or residential cum medical and  surgical clinic or dispensary or professional office  and for no other purpose without the consent of  the Lessor and subject to such terms & conditions  as Lessor may impose and will not do or suffer to  be done on demised premises or any part thereof,  any act  or  thing which may be or grow to be a  nuisance, damage, annoyance, or inconvenience to  the  Lessor  or  the  owners,  occupiers  of  other  premises in the neighbourhood.”

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5. The Transfer Deed executed by the original lessee in favour  

of  the  appellants  also  contained  similar  conditions  and  in  

addition thereto provided that the conditions of the lease deed  

shall be binding upon the appellants.  The relevant clauses of  

the Transfer Deed read as under :

“10. That  the  Transferees  shall  complete  the  construction  of  plot  and  shall  obtain  Occupancy Certificate  of  Plot  from Building  Cell,  Noida  within  balance  construction  period  as  per  terms  of  lease  deed  of  plot  which is upto 23.2.2000.  Extension of time  for  construction  of  plot  and  for  obtaining  occupancy certificate will  be granted as per  terms of lease deed of plot and as per then  prevailing extension policy of NOIDA.

11. That  the  Transferee  shall  be  bound by  the  terms  and  conditions  of  lease  deed  of  plot  executed  on  2.4.88,  subject  to  the  amendments  indicated  in  the  Transfer  Memorandum.   

    XXX XXX XXX 15. That the Transferees shall put the property in  

the  use  exclusively  for  residential  purpose  and shall  not  use  it  for  any purpose  other  than residential.

XXX XXX XXX 17. That the terms and conditions amended by  

the  NOIDA  AUTHORITY  from  time  to  time  shall  be  binding  on  the  Transferees  aforesaid.”

6. After completing the construction, the appellants appear to  

have  rented  out  the  premises  to  Andhra  Bank  and  Akariti  

Infotech.  As such, both the bank and the company had been  

carrying on their business from the premises in question.  The

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Development  Authority,  on  18th January,  2001  and  22nd  

February, 2001 issued notices to both Andhra Bank and Akariti  

Infotech to stop commercial use in the said premises within 30  

days, failing which action would be taken as per the lease deed.  

In these notices, it was also stated that there was encroachment  

in violation of the prescribed building byelaws and the use of  

residential plot for commercial purpose was in violation of the  

provisions of the lease deed of the plot.  Invoking the provisions  

of  the U.P. Industrial  Area Development Act,  1976 (for short,  

‘the Act’),the Development Authority gave them opportunity to  

file objections.  To these notices, the appellants not only filed  

objections but also appeared before the Development Authority  

and contended that the Development Authority, in furtherance  

to the proposal to permit running of consulting clinics, banks  

and guest houses in the residential areas, had permitted such  

use  on  the  main  roads,  on  payment  of  30  per  cent  of  the  

existing residential  rate on per square meter area of  plot per  

annum and had invited suggestions from the  general  public.  

Reliance  was  also  placed  on certain  press  reports.   Noticing  

these  facts  and obviously  taking  the  view that  there  was no  

legal sanctity to the alleged change of user, the Development  

Authority rejected the objections and required the misuse to be  

stopped and the violation of the building byelaws to be removed

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within four months.  A part of the said order reads as follows :

“The  terms  and  conditions  of  lease  deed  and  transfer  deed  of  plot  clearly  states  that  allotted  plot  shall  be  used  exclusively  for  residential  purposes.  The petitioner changed the land use of  plot  without  intimating to the Authority  and did  not  bother  to  seek  any  clarification  or  obtain  permission from the Authority for such change.  It  is a well known fact that this Authority does not  permit commercial activity in the residential plots.  This  is  a  classic  case  of  violation  of  law by  the  most educated enlightened class of  the Country.  This class in Noida has tried to change not only  the character of  Noida but have for  self  interest  destroyed the peace of the Neighbours.  It is also  possible that the then Bank staff also colluded in  the matter and did not bother to see the conditions  contained in the lease deed and did not even try to  approach the Authority for clarification.

In view of  the above stated facts  and after  listening  to  the  petitioner,  it  is  ordered  that  representation pleadings of the petitioner Allottee  of  Residential  Plot  No.A-778,  Sector-19  stand  rejected  and  the  petitioner  is  also  directed  to  ensure vacation of bank branch and infotec office  from  the  residential  premises  and  restore  the  building according to prescribed building bye-law  within 4 months (Four Months) from the date of  service of this order. 7. As the Petitioner has evaded compliance of  terms of lease deed for nearly five months on one  pretext or the other,  he is also informed that in  case of failure to restore the land use of plot within  stipulated  period,  the  Authority  shall  be  free  to  take further action under law WITHOUT FURTHER  NOTICE.

Orders  regarding  penalty  for  misuse  of  premises will be passed separately.”

7. Aggrieved from the aforesaid order,  the appellants filed a  

writ petition before the High Court of Judicature at Allahabad.  

The  writ  petition  preferred  by  the  appellants  came  to  be

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dismissed vide order dated 19th January, 2002.  It was noticed  

by  the  High  Court  and  rightly  so,  that  the  Development  

Authority had invited some suggestions for change of user of  

residential plots to commercial or mixed user on certain terms  

and conditions, by bringing certain changes/amendments in its  

byelaws and policy decisions. This remained at an interim stage  

and no final decision was taken by any competent authority in  

accordance  with  the  provisions  of  the  Act.  The  Development  

Authority  had  not  undertaken  any  exercise  for  the  said  

amendment in accordance with law and had not even sought  

the approval of the State Government, as required under the  

law, for change of user or amendment of the byelaws, Master  

Plan, etc.  In fact, the provisions directing forfeiture of property  

under  Section  14  of  the  Act  and  imposition  of  penalty  for  

misuse in terms of Section 15 of the Act were in force.  Relying  

upon  judgment  of  this  Court  in  Munshi  Ram v.  Union  of  

India[(2000) 7 SCC 22], the High Court not only dismissed the  

writ  petition  but  also  directed  the  Development  Authority  to  

take  immediate  and  strong  action  against  those  who  have  

started  using  residential  plots,  wholly  or  partially,  for  other  

non-residential uses.  The appellants, feeling dissatisfied by the  

judgment of the High Court, have preferred the present appeal  

before this Court.  In order to complete the factual matrix of the

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case, we may notice that the appellants have placed on record  

Annexure P-7, a copy of the public notice  dated 30th March,  

2000 indicating that there was proposal to grant permission for  

mixed use consulting clinics, bank branch and guest houses on  

18 A.M. wide roads on the conditions stated therein.  These  

conditions  also  included  the  provision  that  fees  payable  on  

grant of permission for mixed use of land would be 30 per cent  

of existing residential rate, on per square meter area of plot, on  

yearly basis.  To this proposal, public opinion was invited and it  

was stated that objections/suggestions in this regard may be  

filed in writing in the office of the Additional Chief Executive  

Officer of the Development Authority.  Even hearing was to be  

granted.   In  the  affidavit  filed  on  behalf  of  the  respondent-

Development  Authority  on  8th October,  2002,  it  has  been  

specifically  averred  that  21  banks  were  functioning  in  

residential  sector  in  the  Development  Area  under  private  

arrangements with the lessees of the concerned plots and these  

banks have not obtained any permission or authorization from  

the Development Authority.  Two banks, namely, Oriental Bank  

of  Commerce,  Sector  27,  Noida and Vijaya Bank,  Sector  19,  

Noida had obtained such permission for a period of five years  

and  three  years  respectively  since  1995  and  1994.   These  

banks had not obtained any permission or renewal thereafter.

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Show cause notices had been issued to all the banks to wind  

up their activities from these areas.  In para 10 of the affidavit,  

it had been stated that the Development Authority ‘has taken a  

firm decision to evict all the banks from the residential sectors  

and notices have  been issued to all  these 21 banks without  

exception’.   A  definite  averment  has  also  been made  in this  

affidavit  that  the  functioning  of  the  banks in the  residential  

sectors caused inconvenience and disturbance to the public at  

large  and the  Development Authority  has  earmarked specific  

areas for making land available to the banks to carry on their  

commercial activities.  They have allotted land to several banks  

in  commercial-cum-institutional  and  commercial  portion  of  

industrial and institutional sectors.  Option was given to the 21  

banks to function in these areas and that if they would apply  

for the same, the Development Authority shall  consider their  

cases sympathetically.  The Development Authority, specifically  

and with emphasis, reiterated that banking activities cannot be  

allowed in residential plots of the residential sector.  Another  

affidavit  was filed on behalf  of  the Development Authority  in  

March 2011, wherein a clear stand was taken that as per the  

Master Plan, Sector 19 of the Development Area is a residential  

sector,  where  the  land  use  is  residential  alone,  neither  

commercial nor mixed.  List of 43 properties in Sector 19, Noida

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was  filed  as  Annexure-1,  where  non-residential  activities,  

including banking and medical clinics, were being carried on  

while Annexure-2 related to other 11 properties being used for  

other non-residential purposes in Sector 19 itself.   There are  

institutional plots in Sector 19, which had been allotted by the  

Development  Authority  for  running  of  nursing  homes  or  

commercial activity.  An office order was issued on or about 14th  

May, 2009, in relation to Guest Houses, by the Chief Executive  

Officer  of  the  Development Authority.   However,  the same is  

stated to have been withdrawn immediately thereafter.  In other  

words,  according  to  the  respondents,  there  is  no  order  or  

sanction operative and binding as of now, which permits any  

user other than residential in the residential sector.

8. Having stated the facts, we may now examine the relevant  

provisions of law.  The State of Uttar Pradesh had enacted the  

law to provide for creation of an Authority for development of  

certain areas of the State into industrial and urban townships  

and  for  matters  connected  therewith.   ‘Authority’  had  been  

defined under Section 2(b)  of  the  Act to mean the Authority  

constituted under Section 3 of the Act.  Section 3 required the  

State Government to constitute, for the purposes of the Act, an  

authority for any industrial Development Area in terms of that  

Section.   Section  6  of  the  Act  related  to  functions  of  the

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Authority while Section 7 mentions the powers of the Authority  

in  respect  of  transfer  of  land.   In  terms  of  these  statutory  

provisions,  the  object  of  the  Authority  was  to  secure  the  

planned development of industrial Development Area and the  

Authority was required to perform certain functions in terms of  

Section 6(2), which reads as under:

“2)  Without  prejudice  to  the  generality  of  the  objects  of  the  Authority,  the  Authority  shall  perform the following functions—

(a)  to  acquire  land in  the industrial  development  area,  by  agreement  or  through proceedings  under the Land Acquisition Act, 1894 for the  purposes, of this Act;  

(b) to prepare a  plan for the development of the  industrial development area;

(c) to demarcate and develop sites for industrial,  commercial  and  residential  purposes  according to the plan;

(d) to  provide  infra-structure  for  industrial,  commercial and residential purposes;

(e) to provide amenities;

(f) to allocate and transfer either by way of sale  or  lease  or  otherwise  plots  of  land  for  industrial,  commercial  or  residential  purposes;

(g) to  regulate  the  erection  of  buildings  and  setting up of industries; and

(h) to  lay  down  the  purpose  for  which  a  particular site or plot of land shall be used,  namely  for  industrial  or  commercial  or  residential  purpose  or  any  other  specified  purpose in such area.”

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9. In terms of Section 8 of the Act, for the purposes of proper  

planning and development of the industrial development area,  

the Authority had the power to issue directions, as it consider  

necessary,  regarding  the  factors  stated  therein,  including  

restriction of use on any site for a purpose other than for which  

it has been allocated.  Every transferee in whose favour the land  

was transferred was bound to comply with the directions issued  

as  expeditiously  as  possible  and  was  obliged  to  erect  the  

building or to take such necessary steps to comply with the  

directions in accordance with Section 8(2) of the Act.  No person  

could  raise  construction,  erect  or  occupy  the  building  in  

contravention of the building regulations.   The Authority has  

been  vested  with  the  powers  to  make  regulations  with  the  

previous approval of the State Government in terms of Section  

19 of the Act, while the State Government may, by notification,  

frame Rules for the purposes of the Act as contemplated under  

Section 18 of the Act.

10. Section 2(d) of the Act defines ‘Industrial Development Area’  

to  be an area declared as such by the State  Government by  

notification.  Section 6(2)(b) requires the Authority to prepare a  

plan  for  the  development  of  an  industrial  development  area  

while  Section  6(2)(h)  enjoins  the  Authority  to  lay  down  the

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purpose for which a particular site or plot of land shall be used,  

namely for industrial or commercial or residential or any other  

specified purpose.  The power to transfer lands is also given to  

the Authority.  In terms of Section 19 read with Section 6 of the  

Act, the New Okhla Industrial Development Area was notified  

and the Authority framed the regulations for the purposes of  

proper  planning  and  development  of  that  area.   These  were  

called the New Okhla Industrial Development Area (Preparation  

and Finalization of Plan) Regulations, 1991 [hereafter referred to  

as ‘the Regulations’].  Regulation 2 of the Regulations defines  

various kinds of uses including ‘Land Use’.  ‘Land Use’ under  

Regulation 2(g) means the use of any land or part thereof in the  

industrial  development  area  for  industrial,  residential,  

institutional,  commercial,  public  water  bodies,  organized  

recreational  open  spaces,  public  and  semi-public  buildings,  

agriculture and other like purposes.  In contradistinction to the  

‘Commercial Use’, ‘Industrial Use’ ‘Institutional Use’ and ‘Public  

Use’, the ‘Residential Use’ has been defined under Regulation  

2(1)(k) which reads as under: -

“(k) ‘Residential Use’ means the use of any land or  building or part thereof for human habitation and  such other uses incidental to residential uses.”

11. The expression ‘Sector’ has also been defined in Regulation

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2(l)  to mean any one of the divisions in which the industrial  

development  area  or  part  thereof  may  be  divided,  for  the  

purposes of development under the Act.  Regulation 3 enjoins  

upon the Authority a duty to prepare a Draft Plan for industrial  

development areas in terms of Regulation 3(1) to 3(6).  Under  

Regulation 4, the Plan has to include sector plans into which  

such industrial area has been divided.  It should also depict the  

residential use by allocating the area of land for housing, for  

different  and  defined  densities  and  plotted  development  for  

different categories of households in terms of Regulation 4(1)(b)

(ii).  Similarly, it should also state the commercial use, public  

use, agricultural use and other purposes as the Authority may  

deem fit.  The procedure for finalization of the Draft Plan is also  

contemplated  under  Chapter  III,  Regulations  5  to  11  of  the  

Regulations.   The  Regulations  postulate  that  the  Authority,  

after  preparation  of  the  Draft  Plan,  shall,  by  public  notice,  

invite  objections  and suggestions  to  be  filed  before  the  date  

notified  but  not  earlier  than  30  days  from  the  date  of  

publication.   A  proper  enquiry  and  hearing  is  contemplated  

whereafter  the  Draft  Plan  is  to  be  finalized  in  terms  of  

Regulation 9 and the date of commencement of the Plan is to be  

specified  in  terms of  Regulation  10.   The  Authority  has  the  

power to amend the Plans but this power to amend is restricted

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in its scope.  Regulation 11 empowers the Authority to do so,  

but no such amendment can be made which would result in  

important alteration in the character of the Plan and which do  

not relate to the extent of land use or standards of population  

density.  Even thereafter, it is required to follow the prescribed  

procedure.  Regulation 11 reads as under: -

“11.   Amendment  of  the  Plan.  -   (1)  The  Authority may make such amendments in the Plan  which  do  not  effect  important  alteration  in  the  character of the Plan and which do not relate to  the extent of land use or standards of population  density.

(2)   Before  making  any  amendment  in  the  Plan  under sub-section (1), the Authority shall publish  a  notice  in  at  least  one  newspaper  having  circulation  in  the  development  are  inviting  objections  and  suggestions  from  any  affected  person  with  regard  to  the  proposed  amendment  before such date as may be specified in the notice  and  shall  consider  all  objections  that  may  be  received.

(3)   Every amendment made under this Regulation  shall be published in any of the manner specified  in  Regulation  5  and the  amendment  shall  come  into  operation  either  on  the  date  of  the  first  publication or on such other date as the Authority  may fix.

(4)    The  Authority  shall  not  make  during  the  specified  period  in  which  the  Plan  is  to  remain  effective,  such  amendment(s)  in  the  Plan  which  affects important alteration in the character of the  Plan and which relates to the extent of the land  sue or standards of population density.”

12. It  is  not  in  dispute  before  us  that  the  Development

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Authority had finalized the Master Plan in accordance with the  

provisions of the Act and the Regulations, which was titled as  

‘Master Plan, NOIDA, 2001’.  This Plan is in force and is binding  

on all concerned.   

13. Besides the above provisions of the Act and the Regulations  

framed  thereunder  by  the  Development  Authority,  the  

Development  Authority  has  also  framed  building  regulations  

and directions, which are termed as ‘The New Okhla Industrial  

Development Area Building Regulations and Directions,  2006  

(for  short  ‘Regulations  2006)’.   These  have  been  primarily  

framed as byelaws in relation to the constructions, restrictions  

thereof  and  type  of  user.   Under  Regulation  3.12  (h),  a  

residential building is explained as under: -

“(h)  ‘Residential building’ refers to any building in  which  sleeping  accommodation  is  provided  for  normal  residential  purpose  with  or  without  cooking  or  dining  or  both facilities  and includes  one  or  two  or  multi  family  dwelling,  lodging  or  rooming  houses,  dormitories,  apartment  houses,  flats and hostels.”

14. In  distinction  to  the  ‘residential  building’,  an  ‘industrial  

building’ is the building or part thereof, in which product or  

materials  of  all  counts  and  properties  are  fabricated,  

assembled, manufactured etc. An ‘institutional building’ refers  

to a building or a part of a building which is used for purposes

18

such as medical or other treatment or care of persons suffering  

from  physical  or  mental  illness,  disease  or  infirmity  and  

includes  hospital,  institutions  and  sanitaria  etc.  while  a  

‘business building’  refers to  a building  or  part  of  a  building  

which  is  used  for  transaction  of  business  like  Banks,  

Commercial office, etc.   In other words, each building proposed  

to  be  used  for  a  definite  purpose  has  to  meet  different  

standards,  FAR  (Floor  Area  Ratio)  and  byelaws.    These  

purposes are incapable of  being confused with each other or  

even  used  interchangeably.   Respective  purposes  have  been  

defined in unambiguous terms in the byelaws, having distinct  

implications.  

15. It does not appear to be the scheme of the provisions of the  

Act,  the  Regulations  and  the  bye  laws,  including  the  

Regulations, 2006 that each of these purposes or buildings can  

be  understood  or  used  interchangeably.    In  fact,  each has  

distinct features and it does not lie in the jurisdiction of the  

Development  Authority  to  permit  such  conversion  in  users,  

beyond  the  scope  of  the  Master  Plan,  the  byelaws  and  the  

statutory provisions.   Regulation 3.22 of the Regulations, 2006  

explain  the  word  ‘conversion’  to  mean  the  change  of  an  

occupancy  or  change  in  building  structure  or  part  thereof,  

resulting  into  change  of  space  or  use  requiring  additional

19

occupancy certificate.

16. The change in user of  the building is, therefore, violative  

not only of the Regulations, byelaws and the provisions of the  

Act, but is also contrary to the law governing erection of the  

building.  The legislative purpose that emerges from the scheme  

of the Act and other relevant provisions is to keep a residential  

building separate from commercial and other buildings.   This  

would  necessarily  imply  that  the  jurisdiction  of  the  

Development Authority to permit different user in violation of  

this statute and the Regulations is not contemplated in law.

Contentions

17. On  behalf  of  the  appellants/lessees/users,  in  the  cases  

before us, it has been contended that the activity of banking or  

running of clinics is being carried on by them for a long period.  

Thus,  this has been impliedly permitted by the Development  

Authority.   It is also their contention that a public notice had  

been issued by the Development Authority,  permitting mixed  

user  and,  thus,  the  appellants/lessees/users  are  bonafidely  

carrying on activities of running banks/nursing homes/other  

commercial activities in the residential sectors.   Reliance has  

been placed upon Public Notice dated 30th March, 2000 and  

also  that  vide  notification  dated  4th December,  2010  plots

20

allotted  in  the  developed  sector  to  farmers  under  a  

Rehabilitation  Scheme had  permitted  establishment  of  guest  

houses,  restaurants,  banks,  professional  offices,  day  care  

centres etc. vide notification dated 4th December, 2010.

18. It is also the contention of the appellants that neither the  

byelaws,  rules  and  regulations  nor  the  layout  plan  of  the  

Development Authority,  in any manner,  impede or place any  

kind of bar on carrying out banking activity in the residential  

sectors.

19. While relying upon the judgments of this Court in the case  

of Hari Rao Vs. N. Govindachari & Ors.  [(2005) 7 SCC 643], and  

Dev Brat Sharma Vs. Jagjit  Mehta  [(1990) Supp. SCC 724], it  

was contended that such use does not amount to change of  

user as it  is  permissible to carry out  professional  or  clinical  

activity in the residential houses and, therefore, the notice of  

termination  issued  and/or  cancellation  of  the  lease  deeds,  

being arbitrary and without application of mind, was vitiated in  

law.

20. Lastly,  it  was  contended  that  as  there  is  inadequacy  of  

space  for  banks,  clinics  and other  commercial  offices  in  the  

Development Area, the present user is need-based and is in the  

larger public interest.  According to the appellants, the number  

of plots for the banks is not sufficient to meet the needs of the

21

public in the residential sectors and no alternative spaces are  

available for relocation of the banks.  The lease rent and other  

charges payable to the Development Authority for both these  

categories  have  a  considerable  difference.   Thus,  it  has  the  

impact  of  creating  heavy  liability  and  inconvenience  to  the  

appellants, particularly if they are forced to shift to commercial  

or institutional sectors/pockets.

21. On the contra, the contention on behalf of the Development  

Authority  is  that  banking  activity  is  impermissible  in  the  

residential  sectors.   It  causes  inconvenience  to  public  and  

disturbance to the residents.  Referring to the Meeting dated  

17th December, 2002 of the Committee of the Officers, the stand  

taken  is  that  banking  activity  cannot  be  allowed  in  the  

residential portions of the residential sectors and to this effect,  

a notice was also published.    

22. Further,  the  contention  is  that  the  power  of  the  

Development Authority to demarcate and develop sites, to lay  

down the purpose for which a particular site or plot of  land  

shall be used, is controlled by the specific provisions of the Act  

and the Regulations framed thereunder.  Sections 6(2)(b) and 7  

of the Act are stated to be the source of power in this regard.  It  

is  also  the  contention  that  in  the  Master  Plan,  2001,  

subsequent Plans and the Zoning Regulations,  all  residential

22

sectors  are  marked  in  yellow  colour.   Sector  19  of  the  

Development  Area,  where  the  subject  matter  of  this  case  is  

located, is a residential sector.  Thus, it can only be used for  

the residential purpose.

23. The  learned  counsel  appearing  for  the  lessee/transferees  

had relied upon the judgments of  this Court in the cases of  

Hari  Rao  (supra)  and  Dev Brat  Sharma  (supra).   Both these  

judgments have no application to the present case, on facts or  

in law.  These were cases of eviction under the respective Rent  

Restriction Acts.  In one case, this Court held that putting up of  

a clinic in a part of the house by a doctor was not change of  

user, while in the other, where the premises had been rented  

out for a commercial purpose of selling of leather goods, change  

of  the  industry  to  a  garment  and  cloth  business,  was  not  

considered as change of user.  We are unable to understand as  

to how the lessees in the present case can derive any benefit  

from these judgments.  In the present case, we have a clear law  

in  force  and  that  law  is  neither  similar  in  purpose  nor  

linguistically  identical  to  the  Rent  Restriction  Acts  of  the  

respective States.  The change of user, in the case in hand, has  

to be seen in light of the Master Plan, the Regulations and the  

provisions of the Act.  What may not be change of user under  

the Rent Restriction Act, as the rights of the parties therein are

23

governed by the contract between the parties and the grounds  

of eviction taken by them, may be a change of user within the  

scope of development Plan and the Regulations.

24. In  light  of  the  contentions  raised,  first  of  all,  it  will  be  

appropriate for this Court to examine the scheme of the Act and  

the Regulations in question.  Under the provisions of the Act,  

the  Development  Authority  is  obliged  to  notify  an  industrial  

development  area.   The  very  object  of  the  Development  

Authority  is  to  secure  the  planned  development  of  the  

industrial development area and the first and foremost step in  

this  direction  is  to  prepare  a  Plan  for  development  of  the  

industrial  development  area.   This  development  Plan  is  to  

demarcate  and  develop  sites  for  industrial,  commercial  and  

residential  purposes.   The  land  which  falls  within  the  

jurisdiction  of  the  Development  Authority  and is  part  of  the  

development Plan can be transferred in terms of Section 7 of  

the Act by auction, allotment or otherwise, on such terms and  

conditions as the Development Authority may state and subject  

to any rules that  may be made thereunder.   No person can  

erect or occupy any building in an industrial development area  

in  contravention  to  any  building  Regulation.   Under  Section  

6(2)  of  the  Act,  the  Development  Authority  is  empowered to  

make Regulations to regulate the erection of the buildings and

24

Section  6(2)(b)  specifically  authorizes  the  Development  

Authority to make regulation providing for the layout Plan of  

the  building,  whether  industrial,  commercial  or  residential.  

The  transfer  of  the  land  has  to  be  as  per  the  terms  and  

conditions  contained  in  the  lease  deed  executed  by  the  

Development Authority in favour of the transferee.  But this all  

has  to  be  subject  to  the  provisions  of  the  Act  and  the  

Regulations framed thereunder.  It has to be clearly understood  

that  the  lease  deed  has  to  be  in  consonance  with  law  and  

cannot be in conflict with the provisions of the law.  Section 14  

of the Act empowers the Development Authority to resume the  

site or building so transferred and further forfeit whole or any  

part of the money paid in respect thereof, if the lessee commits  

breach of the terms and conditions of the lease.  No provision of  

the Act has been brought to our notice which provides for the  

manner  and  method  to  be  adopted  by  the  Development  

Authority  for  preparation  of  the  development  Plan  in  

accordance with the provisions of the Act.  This is where the  

Regulations come into play.  Under Regulations 3 and 4 of the  

Regulations,  the  Draft  Plan  has  to  be  prepared  by  the  

Development Authority for development of an industrial area,  

which will include a sector plan.  The meaning of ‘residential  

use’ under the Regulations is a restricted one and is incapable

25

of being given a wide connotation.  It means the use of any land  

or building or part thereof for human habitation and such other  

uses incidental  to the residential  use.  The very language of  

Regulation 2(1)(k) of the Regulations clearly depicts the intent  

of the framers that the expression ‘residential use’ is not to be  

understood in its wider sense, in fact, it would require strict  

construction  because  all  other  uses  have  been  separately  

defined.   The  different  kinds  of  uses,  therefore,  have  to  be  

understood only in terms of the explanation or meaning given  

to  them under  the  Regulations.   If  unduly  wide  meaning  is  

given to the expression ‘residential  use’,  then it  is  bound to  

cause  overlap  between  the  other  uses.   It  would  cause  

unnecessary confusion.  Thus, each use has to be understood  

as  per  its  plain  language  and  there  is  no  need  for  the  

Development Authority or, for that matter, even for the courts,  

to  expand  the  meaning  given  to  such  expressions.   The  

expression  ‘such  other  use  incidental  to  residential  use’  in  

Regulation 2(1)(k)  has to take its colour from the use of  the  

building for human habitation.  In other words, the latter part  

of the Regulation has to be read ejusdem generis to the earlier  

part of that Regulation.

25. The  development  Plan has  to  be  prepared in accordance  

with  the  provisions  of  the  Act  and  the  Regulations  framed

26

thereunder.    As already noticed,  the Development Authority  

has to prepare the Draft Plan, give public notice thereof, invite  

objections and thereupon conduct an inquiry and hearing as  

contemplated  under  the  law,  before  preparing  a  final  

development Plan.   This final development Plan is a statutory  

requirement which has to be prepared as ordained under the  

provisions of Section 6(2)(b) of the Act read with Regulations 5  

to 11 of the Regulations.   This Plan necessarily provides for a  

particular use or purpose of any area/site, namely industrial,  

commercial  institutional  or  residential.    The  notified  

development Plan has a legal sanction and provisions contained  

therein are mandatory in nature.   They are incapable of being  

altered or varied without following the due process prescribed  

in law.   Reference can be made to the judgment of this Court  

in the case of NOIDA Entrepreneurs Association v. NOIDA & Ors.   

[(2011) 6 SCC 527].  Further, this Court, in the case of NDMC &  

Ors.  v.   Tanvi  Trading  and  Credit  Private  Limited  and  Ors.   

[(2008) 8 SCC 765], not only took the view that even the interim  

guidelines  issued  in  relation  to  Luytens’  Building  Zone  till  

finalization of the Master Plan for Delhi would have statutory  

force and be treated mandatory, but also that such guidelines,  

so far as consistent with the Master Plan, would continue to be  

binding even after coming into force of the Master Plan.   

27

26. It has to be noticed at this stage that the development Plan  

prepared in accordance with the Regulations take the statutory  

colour in terms of Section 6(2)(b) of the Act and, therefore, its  

alteration by an executive order would be impermissible.   Even  

when a Master Plan is  to be amended, the entire prescribed  

procedure must be followed.  The power to amend should be  

exercised only in consonance with the settled norms without  

going beyond the original power of the Development Authority  

to make such Plan in accordance with the provisions of the Act.  

The power to amend cannot be used to frustrate the provisions  

of the statute.   Regulations, being subordinate legislation must  

fall in line with the principal provisions of the Act and in no  

way should be detrimental to the provisions and the legislative  

scheme of the Act.  

27. In the case of M.C. Mehta v. Union of India & Ors. [(2004) 6  

SCC 588] dealing with the question of unauthorized industrial  

activity in residential area in Delhi, the plea raised for  in situ  

regularization of areas with 70 per cent industrial use was not  

accepted by this Court, holding that regularization would have  

adverse impact on the law abiders.  This Court also held that  

the  land  cannot  be  permitted  to  be  used  contrary  to  the  

stipulated user except by amendment of Master Plan, after due  

consideration  of  the  provisions  of  the  Act  and  the  Rules.

28

Inaction by the Government authorities means permitting the  

unauthorized use, contrary to law.

28. The  authorities  while  reconsidering  such  matters  are  

expected to act  reasonably  and cautiously.    They deal  with  

larger public interest and, therefore, have a responsibility to act  

with  greater  degree  of  sensitivity  and  proper  application  of  

mind.   If the Development Authority aids the violation of the  

statutory provisions, it will be a perversity in the discharge of  

statutory obligations on the part of the Development Authority.  

The public interest, as codified in the statutory regulations and  

the  provisions  of  the  Act,  should  control  the  conduct  of  the  

Development Authority and its decision making process, rather  

than  popular  public  demand  guiding  the  exercise  of  its  

discretion,  that  too,  in  a  somewhat  arbitrary  manner.  To  

illustrate the dimensions of exercise of such powers, we may  

refer to the judgment of  this Court in the case of  Bangalore  

Medical  Trust  v.  B.S.  Mudappa  &  Ors.  [(1991)  4  SCC  54],  

wherein this Court was concerned with the provisions of the  

Bangalore  Development  Authority  Act,  1976  with  particular  

reference to  Sections 33,  38 and 38(A)  of  that  Act.    A  site  

intended for a public park was sought to be converted into a  

hospital/nursing  home,  under  the  garb of  the  latter  being a  

‘civic  amenity’.  This  Court  formed  the  view  that  such

29

conversion of an open space reserved under the scheme for a  

public park into a civic amenity site by constructing hospital  

and allotment of the site to persons or body of persons, was  

opposed to the objects of the Act and would be  ultra vires the  

same.  This Court held as under:-

“46. …….No one howsoever high can arrogate to  himself  or  assume  without  any  authorisation  express or implied in law a discretion to ignore  the  rules  and  deviate  from  rationality  by  adopting a strained or distorted interpretation  as it renders the action ultra vires and bad in  law. Where the law requires an authority to act  or decide, ‘if it appears to it necessary’ or if he is  ‘of opinion that a particular act should be done’  then  it  is  implicit  that  it  should  be  done  objectively,  fairly  and  reasonably.  Decisions  affecting public interest or the necessity of doing  it in the light of guidance provided by the Act  and rules may not require intimation to person  affected yet the exercise of discretion is vitiated  if  the  action  is  bereft  of  rationality,  lacks  objective and purposive approach. The action or  decision must not only be reached reasonably  and  intelligibly  but  it  must  be  related  to  the  purpose  for  which  power  is  exercised.  The  purpose for which the Act was enacted is spelt  out from the Preamble itself which provides for  establishment of the Authority for development  of  the  city  of  Bangalore  and  areas  adjacent  thereto.  To  carry  out  this  purpose  the  development  scheme  framed  by  the  Improvement  Trust  was  adopted  by  the  Development  Authority.  Any  alteration  in  this  scheme could have been made as provided in  sub-section (4) of Section 19 only if it resulted  in improvement in any part of the scheme. As  stated  earlier  a  private  nursing  home  could  neither be considered to be an amenity nor it  could be considered improvement over necessity

30

like  a  public  park.  The  exercise  of  power,  therefore, was contrary to the purpose for which  it is conferred under the statute.”

29. The above decision of the Court was given in light of the  

provisions of  Section 19(4)  of  that  Act  which empowered the  

Authority  to  alter  the  scheme,  where  it  appeared  to  the  

Authority that an improvement could be made in the scheme.  

In  other  words,  the  power  given  to  the  Authority  has  to  be  

construed  in  strict  terms  and  it  cannot  be  exercised  in  a  

manner which will run contrary to the scheme of the Act and  

which  would  defeat  the  very  object  of  the  Act  and  the  

Regulations.    

30. The  jurisdiction  of  the  Development  Authority  has  to  be  

seen on the touchstone of proper exercise of power within its  

legal  limitations  while  giving  full  effect  to  the  statutory  

provisions.  This Court in the case of  S.N. Chandrashekar  &  

Anr. v. State of Karnataka & Ors.  [(2006) 3 SCC 208], referred  

with approval  to judgments of  the High Courts,  applying the  

rule of  strict  construction to the terminology used and while  

interpreting the words ‘commerce’ and ‘commercial’  held that  

intra category changes could be permitted only in accordance  

with law and Section 14-A of that Act.   Even if the change of  

user is consented to by the residents of the area, it would be no

31

ground to permit such a change in violation of the Regulations.  

This Court stated the law as follows:-

“27. The Planning Authority has no power to permit  change  in  the  land  use  from  the  Outline  Development Plan and the Regulations. Sub-section  (1)  of  Section 14,  as it  then existed,  categorically  stated, that every change in the land use, inter alia,  must conform to the Outline Development Plan and  the  Regulations  which  would  indisputably  mean  that it must conform to the Zoning Regulations.

28. The provisions of the Act are to be read with the  Regulations,  and  so  read,  the  construction  of  Sections 14 and 15 will lead to only one conclusion,  namely,  such  changes  in  the  land  use  must  be  within  the  Outline  Development  Plan  and  the  Zoning  Regulations.  If  running  of  a  hotel  or  a  restaurant was not permissible both under clauses  (a) and (b) of the Zoning Regulations in a residential  area, such change in the land use could not have  been permitted under Section 14 read with Section  15 of the Act. It is precisely for that reason, Section  14-A was introduced.”

31. Even in the case of ITC Ltd. v. State of Uttar Pradesh & Ors.   

[(2011) 7 SCC 493], this Court declined to accept the contention  

that where the State Government had treated the hotels as an  

‘industry’ even in such cases, the same could not be treated as  

‘industry’ under the Act because the byelaws continued to treat  

the  hotels  to  be  a  commercial  activity  and  that  had  alone  

covered such industry.  This Court held as under:-

“38.  The  learned  counsel  for  the  respondents  submitted that the lease was terminated by the  State  Government,  in  exercise  of  revisional  jurisdiction under Section 41 of the U.P. Urban

32

Planning and Development Act, 1973 read with  Section 12 of the Act on the ground that there  were irregularities and violations of  regulations  and policies of  Noida Authority in allotting the  hotel plots to the appellants. It is submitted that  the State Government has such power to cancel  the allotment and as a consequence the lease.”

32. Reference can also be made to the judgment of this Court in  

Dr. G.N. Khajuria & Ors. v. Delhi Development Authority & Ors.   

[(1995) 5 SCC 762]. In that case, the Plan had provided for a  

public park and the Delhi Development Authority had taken the  

decision to  establish  a  nursery  school  for  the  benefit  of  the  

children of  the  colony.   Rejecting  the  contention,  this  Court  

observed that within the framework of law and the provisions  

made in the Master Plan, the authorities could only establish a  

public  park  and  nothing  else,  as  such  conversion  would  

amount to misuse of power.

33. All the above judgments clearly show that it is not merely at  

the  discretion  of  the  Development  Authority  concerned  to  

designate  user  of  a  site  and  then  alter  the  same  without  

following due process of law.   Even where such an exercise is  

required to be undertaken by the Development Authority, there  

also it is expected of the Development Authority to act for the  

betterment of  the  public  and strictly  in  accordance with the  

Plans and the statutory provisions.    It cannot take recourse to  

its powers and use its discretion contrary to such provisions

33

and that too, to frustrate the very object of the Act.   Exercise of  

power ought not to be destructive of the provisions of the Act  

and the Plans, having the force of law.  We would hasten to add  

that even where the requisite prescribed procedure is followed,  

still the discretion should be exercised sparingly for achieving  

the object of the statute and not to completely vary or destruct  

the purpose for which the sector has been earmarked.    

34. A decision which is sought to be taken by the Development  

Authority  in  the  garb  of  a  policy  decision  matter,  if  not  in  

conformity to the Master Plan, the Regulations and provisions  

of  the  Act  in  force,  would  be  an  action  extra  jus.  The  

Development Authority is to act in adherence to the provisions  

of the law regulating such user or construction.  The laconic  

result  of  a  collective  reading  of  the  afore-referred  statutory  

provisions  is  that  the  Development  Authority  or  its  officers,  

have no power to vary the user and spaces prescribed in the  

Master Plan,  except by amending the relevant laws and that  

too, for a proper object and purpose.  Any decision, as a policy  

matter or otherwise, for any extent of public convenience, shall  

be vitiated, if it is not supported by the authority.  The Courts  

would  examine  what  is  the  sensible  way  to  deal  with  this  

situation, so as to give effect to the presumed purpose of the

34

legislation. The provisions in question should be construed on  

their plain reading, supporting the structure of the legislative  

intent and its purpose.  The rule of  schematic interpretation  

would  come into  play  in  such situations  and the  concerned  

Development Authority  cannot  be permitted to overreach the  

procedure  prescribed  by  law,  with  designs  not  acceptable  in  

law.

35. The  Development  Authority  is  inter  alia  performing  

regulatory functions.   There has been imposition of statutory  

duties  on  the  power  of  this  regulatory  authority  exercising  

specified  regulatory  functions.    Such  duties  and  activities  

should  be  carried  out  in  a  way  which  is  transparent,  

accountable,  proportionate  and  consistent.   It  should  target  

those  cases  in  which  action  is  called  for  and  the  same  be  

exercised free of arbitrariness.   The Development Authority is  

vested  with  drastic  regulatory  powers  to  investigate,  make  

regulations,  impute  fault  and  even  to  impose  penalties  of  a  

grave  nature,  to  an  extent  of  cancelling  the  lease.    The  

principles  of  administrative  justice  squarely  apply  to  such  

functioning  and  are  subject  to  judicial  review.    The  

Development Authority, therefore, cannot transgress its powers  

as stipulated in law and act in a discriminatory manner.   The

35

Development Authority should always be reluctant to mould the  

statutory provisions for individual, or even public convenience  

as this would bring an inbuilt element of arbitrariness into the  

action  of  the  authorities.   Permitting  mixed  user,  where  the  

Master Plan does not so provide, would be glaring example of  

this kind.

36. In  the  case  of  Shabi  Construction  Company  v.  City  &  

Industrial  Development Corporation & Anr.  [(1995) 4 SCC 301],  

this Court held that,  prior sanction of the State Government  

being the sine qua non for a final development Plan, as also for  

minor modifications thereof, under Sections 31 and 37 of the  

Maharashtra  Regional  and  Town  Planning  Act,  1966,  the  

agreement entered into with the Planning Authority so far as it  

relates to increased Floor Space Index (FSI) did not and could  

not  bestow  any  legal  right  upon  the  appellant.   To  put  it  

conversely,  only on sanction by the State Government, could  

the inchoate right under the agreement crystallize into a legally  

enforceable right in favour of the appellant.

37. Still, in another case of  K.K. Bhalla v. State of M.P. & Ors.  

[(2006) 3 SCC 581], this Court did not approve and attach any  

validity to the action of the Chief Minister directing and calling  

for  a proposal  from the said Development Authority to make

36

allotment for development of an industrial area on concessional  

terms and held that the purpose for which the allotments were  

made  might  be  well-meaning,  but  the  allotments,  being  

contrary to the mandatory provisions of the Act and the Rules  

were void and of no effect, being illegal.

38. Similarly,  in  the  present  case,  the  action  of  the  

Development  Authority  in  permitting  mixed  user  was  in  

apparent  violation  of  the  statutory  provisions  in  the  Master  

Plan.

39. Establishment  of  banks  and  nursing  homes  in  the  

residential  sectors  meant  for  residential  use  alone  is  

unequivocal violation of the statutory provisions in the Master  

Plan.

40. Reverting to the case in hand, we may notice that the lease  

deed executed in favour of the predecessor-in-interest of R.K.  

Mittal  and  the  other  appellants  had  contained  specific  

stipulations  that  the  lessee  will  obey  and  submit  to  all  

directions issued, existing or thereafter to exist, as obeyed by  

the  lessor.   The  erection  of  the  structure  was  also  to  be  in  

accordance with the approved plans.   Clause (h) of the lease  

deed specifically provides that the constructed building shall be  

used  only  for  the  purpose  of  residential,  residential-cum-

37

medical  or surgical clinic and for no other purpose, that too  

subject to such terms as are imposed by the lessor.

41. The  transfer  deed  which  was  executed  in  favour  of  the  

present  appellants,  with  the  approval  of  the  Development  

Authority, also contained similar clauses and also provided that  

the terms and conditions imposed by Development Authority  

from time to time shall be binding on the transferee.   Clause  

15 of the transfer deed stipulated that the transferee shall put  

the property to use exclusively for residential purpose and shall  

not use it for any purpose other than residential.   After raising  

the  construction  on  the  plot  in  question,  admittedly,  the  

appellants have put the property to a different use other than  

residential.    The  property  was  rented  out  to  two  different  

commercial undertakings, i.e., Andhra Bank and a company by  

the  name ‘Akariti  Infotech’.    It  is  not  even the  case  of  the  

appellants  before  us  that  the  Development  Authority  had  

granted any specific permission to them to use the property for  

any purpose other than residential.

42. The appellants,  in fact,  have relied upon an agenda note  

where there was a proposal put forward by the Development  

Authority to grant permission for nursing home, guest house,  

lodging house, banks etc. on a 100 metres wide road on such  

terms and conditions as may be imposed by the Development

38

Authority.    This  also  provided for  levying  certain additional  

charges for granting such permission.  Based on this proposal,  

it is stated that a public notice was issued and objections were  

invited.

43. The matter rested at that.  This was not finalized.   In other  

words,  no  final  decision  was  taken  by  the  Development  

Authority  in  consonance  with  the  provisions  of  the  Act  to  

permit such user in the residential sector.   We, in fact, are  

unable  to  understand  why  such  action  was  initiated  by  the  

authorities concerned, in face of the statutory provisions of the  

Act, Regulations and the Master Plan in force.   It is a settled  

position of law that no authority can exercise the power vested  

in it, contrary to law.   In the present case, there appears to be  

no  proper  data  collected  or  study  carried  out  by  the  

Development Authority even for mooting such a proposal, much  

less amending the Plan or the Regulations.   It is a matter of  

regret  that  the  Development  Authority  is  dealing  with  such  

serious matters in such a casual manner.   Either way, this  

certainly affected the rights of the parties adversely.    It is not  

only the rights of individuals which are to be examined by the  

authorities concerned, but also the effect of such amendment  

on the residential sector as a whole which is one of the relevant  

factors to be considered.

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44. The  running  of  a  bank  or  a  commercial  business  by  a  

company in the residential sector is certainly not permissible.  

In fact, it is in patent violation of the Master Plan, Regulations  

and the provisions of the Act.   We see no power vested in the  

Development  Authority  to  permit  such  user  and  ignore  the  

misuse for such a long period.

45. We may notice that only in two cases i.e. Oriental Bank of  

Commerce  (Sector  27,  Noida)  and  Vijaya  Bank  (Sector-19,  

Noida),  the permission for  running a bank in the residential  

sector was granted for a period of five years and three years,  

respectively.  This permission came to end few years back and  

was admittedly never renewed or extended.  Even this initial  

grant of permission is a case of lack of legal authority and is  

contrary to the provisions of law.  It is not the case of anyone  

before  us  that  the  Development  Authority  had  granted  

permission for running a bank/commercial activity or nursing  

home in the residential sector.  A survey had been conducted  

under the orders of the Court dated 3rd March, 2011.  As per  

this survey, a number of banks and nursing homes were being  

run in the residential sector, which was not permissible.

46. The conduct of  the authorities, prior to institution of the  

writ  petitions  in  the  High  Court,  showed  uncertainty  and  

wavering of mind in its decision-making processes.  In fact, it

40

was expected of the Development Authority to take a firm and  

final  decision  and  put  at  rest  the  unnecessary  controversy  

raised by its proposal.  However, once the writ petitions were  

filed, thereafter,  the stand of  the Development Authority has  

been consistent  and  unambiguous.   In  the  counter  affidavit  

filed in this Court, it has been stated that even in case of grant  

of permission to the above stated two banks, no extension was  

granted and in fact show cause notices have been issued to all  

the banks in the residential sector to wind up their activities  

and move out of the residential sector.  It is the definite case of  

the  Development  Authority  that  banking  activity  is  a  

commercial activity and therefore, cannot be carried on in the  

residential sector, more particularly on the plots in question.  

In regard to Sector 19, a specific averment has been made in  

the affidavit of the Development Authority that the land use is  

residential alone and is neither commercial nor mixed.  As per  

the Master Plan, its primary use is ‘residential’ where plots are  

planned  for  residential  purpose  alone.   It  is,  therefore,  

abundantly clear from the pleadings on record that commercial  

activity of any kind in the residential sector is impermissible.  

These pleadings are in conformity with the statutory provisions  

and the Master Plan.

47. All  the  cases  where  banks,  nursing  homes  or  any

41

commercial  activity  is  being  carried  on,  particularly  like  the  

appellants’ case, where a bank and company are running their  

offices in  the  residential  sectors would amount  to  change of  

user  and  thus  be  impermissible.   The  officers  of  the  

Development  Authority  should  refrain  from  carving  out  

exceptions to the implementation of the Master Plan and the  

Regulations in force, that too without the authority of law.  For  

taking  up  any  exercise  for  change  of  user  or  such  similar  

conditions,  amendment  to  the  relevant  Regulations,  Master  

Plan and if  needed, the provisions of  the Act,  is  a condition  

precedent.   It  should  be  ensured  that  such  exercise  would  

further  the  cause  and  object  of  the  Act  and  would  not  be  

destructive  to  the  scheme of  the  development.   We  have  no  

hesitation in our minds in holding that no such jurisdiction or  

authority vests in the officers of the Development Authority to  

permit change of user in its discretion and in violation of the  

law in force.

48. Another  important  aspect  is  that  the  Development  

Authority  had  taken  a  policy  decision  and  had  earmarked  

specific areas where land was made available to the banks to  

carry on their commercial activities in the commercial pockets  

of the industrial or institutional sectors.  This land was being  

provided at a concessional  rate and a number of  banks had

42

taken advantage  of  this  scheme  to  get  the  lands  allotted  to  

them in the appropriate sectors.  They have been given lands in  

the  commercial  and  even  in  the  commercial  pockets  of  the  

industrial  or  institutional  sector.   However,  the  21  banks  

functioning  in the residential  sectors have not  even opted to  

apply  under  the  said  scheme.   If  they  would  apply,  the  

Development  Authority  has  taken onto  itself  to  consider  the  

same sympathetically.  This Scheme was opened on 20th June,  

2011 and closed on 11th July, 2011.  26 commercial plots were  

offered for allotment under this Scheme in different sectors and  

plots were even reserved to be used as banks.  In other words,  

the  Development  Authority  has  provided  due  opportunity  to  

these banks to shift their activities to the appropriate sectors,  

however, to no effect.  Despite issuance of show cause notices  

and offer to allot alternative plots, the unauthorized use by the  

appellant  -  banks  and nursing  homes have  persisted in  the  

residential sectors.

49. Another case which is required to be noticed by us from  

amongst the number of cases listed, is the case of  Chairman  

and Chief Executive Officer, New Okhla Industrial  Development   

Authority  & Anr.  v.  Mange Ram Sharma & Anr.,  SLP (C) No.  

24029/2005.  In  this  case,  according  to  the  Development  

Authority, the lessee is running a 20 bedded hospital with all

43

modern and diagnostic facilities, admitted by the lessee and his  

family members in a letter Annexure P-7 to the authorities.   In  

this letter they had claimed that the hospital is being run from  

the  premises  in  question  and  had  all  the  modern  facilities.  

However, these facts are not admitted by the lessee who have  

tried to explain that letter by stating that in a three-storeyed  

building  of  400  square  metres,  they  are  carrying  on  

professional activity of medical consultancy only in an area of  

28.42  square  metres  on  the  ground  floor  and  rest  of  the  

premises is being used entirely for residential purposes. It is  

also denied that any hospital is being run from the premises.  

According  to  them,  the  order  dated  15th October,  1994  

terminating  the  lease  is  contrary  to  law and  they  have  also  

submitted an undertaking that the premises will not be used  

for  any  purpose  other  than  residential.  According  to  the  

applicant/respondent in terms of the lease deed, such a user is  

permissible.   The respondents being doctors, are carrying out  

their professional activity in a limited portion and as such, they  

have also placed on record a list of  hospitals being operated  

from residential  blocks which have even been empanelled by  

the  appellant  Development  Authority.   The  Development  

Authority is acting arbitrarily and not taking any action against  

those persons, though they have executed the lease deed with

44

the same terms and conditions as the appellant’s.  In this case,  

this  Court  had  appointed  a  local  Commissioner  to  visit  the  

premises.    As  per  report  of  the  Commissioner  dated  

20thSeptember, 2003, the premises in question is a corner plot  

in front of 30 metres wide road and had two gates.   There is a  

sign  board  displaying  ‘Sharma  Clinic  and  Medical  Surgical  

Centre’.  Names of the doctors have also been displayed on the  

sign  boards  on  the  boundary  wall.    There  is  a  reception  

counter which is attended to by a nurse.  On ground floor, the  

basement  was  still  under  construction.   Major  part  of  the  

ground floor was being used as medical clinic.   There were four  

cabins used by different doctors of  different specialties.   The  

first floor is being used for residential purposes.  The second  

floor is being partly used for residential purposes while there is  

also  an office  on  that  floor.    None  of  the  parties  had  filed  

objections  to  this  report  of  the  Local  Commissioner  and,  

therefore,  there is  no reason for  us not  to  accept  the  same.  

Even as per the report of the Local Commissioner, the house is  

being used for medical-cum-surgical clinic and is not merely a  

consultant’s clinic.   Use of a major part of the ground floor for  

running  the  medical  centre  obviously  is  not  permissible  in  

accordance with the provisions of the Act and the Regulations.  

The Development Authority is expected to take proper action at

45

the  earliest.    Even  if  we  reject  the  case  of  the  appellant  

Development Authority that a 20 bedded hospital is being run  

from the  premise,  still  the  fact  stands established on record  

that practically the entire ground floor and part of the second  

floor is being used for activities other than residential.

50. According  to  the  respondents,  they  had not  been served  

with the show cause notice, though according to the appellant,  

show cause  notice  dated 29th August,  1992 was  issued  and  

thereafter,  the order of  termination/cancellation of  lease had  

been passed against the respondents.  This order had been set  

aside by the High Court and the Development Authority has  

come up in appeal before this Court.

51. In the light of what we have discussed above, even on facts  

of this case, running of a hospital or even a medical clinic of  

this dimension cannot be permitted in a residential area.   It  

would  be  different  if  a  doctor  uses  permissible  part  of  the  

premises  for  clinical  purposes  i.e.  to  meet  or  examine  his  

patients  in  any  portion.  For  surgery  or  specific  treatments,  

such patients  would have  been addressed to  proper  nursing  

homes or regular hospitals.  Therefore, doctors cannot carry on,  

in the garb of a medical clinic, a regular medical and surgical  

activity on a commercial scale.  Thus, we find that action of the  

Development Authority was justifiable.

46

52. One of the allegations against the Development Authority is  

that they have acted arbitrarily and discriminatorily in issuance  

of notices, in passing of orders of cancellation of the lease deed  

and/or even in imposing other  restrictions in relation to the  

properties in question.  It is their contention that commercial  

activity,  nursing  homes  and  banks  are  operating  in  a  large  

number of  residential  houses but the Development Authority  

has  adopted a  policy  of  pick and choose  and has not  acted  

uniformly even in that  regard.   Certain instances have been  

mentioned.   Instances of  banks have been mentioned in the  

case  of  R.K.  Mittal (supra),  while  nursing  homes  have  been  

mentioned in the case of Mange Ram (supra).   We are unable to  

grant approval to this discriminatory policy of the Development  

Authority.   They are expected to act fairly and judiciously in  

such matters. The action of the Development Authority should  

be free of  arbitrariness and must be applied uniformly.  The  

ground of  legitimate expectation taken by the lessees on the  

premise that public notice had been issued by the Development  

Authority  proposing  to  permit  mixed  user  in  the  residential  

sector  binds  the  Authority.   Firstly,  the  action  of  the  

Development  Authority  in  issuing  the  notices  is  not  in  

accordance with law.  Secondly, this argument is without any  

substance  and  is  misconceived.  The  doctrine  of  reasonable

47

expectation has no applicability to the present case and there  

cannot be any waiver of statutory provisions as well.   The user  

of  a  sector  is  provided  under  the  Master  Plan  and  in  

furtherance to Regulations and the provisions of the Act.  It is  

incapable of being administratively or executively altered.  The  

lessees, who have changed the user contrary to law, are liable  

to be proceeded against as per the terms of the lease deed and  

the provisions of the Act.

53. The Master  Plan and the  Zonal  plan specify  the  user  as  

residential  and therefore  these  plots  cannot  be used for  any  

other purpose. The Plans have a binding effect in law.  If the  

scheme/Master Plan is being nullified by arbitrary acts and in  

excess  and  derogation  of  the  power  of  the  Development  

Authority under law, the Court will intervene and would direct  

such  authorities  to  take  appropriate  action  and  wherever  

necessary even quash the orders of the public authorities.  This  

Court in the case of K. Ramadas Shenoy v. Chief Officer, Town   

Municipal  Council,  Udipi  and  Others  [(1976)  1  SCC  24] was  

concerned with the resolution of the Municipal Committee to  

construct  a  cinema  theatre  at  place  where  earlier  the  

permission was  granted  for  construction  of  Kalyan  Mandap–

cum-Lecture Hall and the contention before the Court was that  

town planning scheme forbade any cinema building at the place

48

asked for and therefore,  the resolution of the committee was  

invalid.   This Court accepted the contention and while setting  

aside the resolution observed that an illegal construction of a  

cinema building materially  affected the right  to enjoyment of  

the property of the persons residing in the residential area and  

there  being  unauthorized  construction,  the  Court  would  

intervene and quash the resolution of the Municipality.   This  

view was followed in the case of M.I. Builders  v.  Radhey Shyam  

Sahu  [(1999)  6  SCC  464], wherein  this  Court  even  directed  

demolition  of  unauthorized  constructions.   At  this  stage,  we  

may also  refer  to  the  judgment of  this  Court  in  the  case  of  

Virender Gaur & Ors. v. State of Haryana & Ors. [(1995) 2 SCC  

577], wherein this Court was concerned with the issue whether  

Dharmshala should be permitted to be constructed upon the  

land which was reserved as open space under the plan.   This  

Court,  while  noticing  the  impact  on  environment,  right  to  

hygienic environment and protection of the residents, observed  

as under:-

“11. It is seen that the open lands, vested in the  Municipality, were meant for the public amenity to  the  residents  of  the  locality  to  maintain  ecology,  sanitation,  recreation,  playground and ventilation  purposes. The buildings directed to be constructed  necessarily affect the health and the environment  adversely,  sanitation  and  other  effects  on  the  residents  in  the  locality.  Therefore,  the  order  passed by  the  Government  and the  action taken

49

pursuant thereto by the Municipality would clearly  defeat the purpose of the scheme. Shri D.V. Sehgal,  learned Senior Counsel, again contended that two  decades  have  passed  by  and  that,  therefore,  the  Municipality  is  entitled  to  use  the  land  for  any  purpose.  We  are  unable  to  accept  the  self- destructive  argument  to  put  a  premium  on  inaction.  The  land  having  been  taken  from  the  citizens for  a public  purpose,  the  Municipality  is  required  to  use  the  land  for  the  protection  or  preservation  of  hygienic  conditions  of  the  local  residents in  particular  and the  people  in  general  and not for any other purpose. Equally acceptance  of the argument of Shri V.C. Mahajan encourages  pre-emptive  action  and  conduct,  deliberately  chartered out to frustrate the proceedings and to  make  the  result  fait  accompli.  We  are  unable  to  accept  the  argument  of  fait  accompli  on  the  touchstone of prospective operation of our order.”

54. An ancillary question that comes up for consideration is as  

to how much area can be permitted to be used by a doctor to  

run his clinic or by a lawyer or architect to run their offices in  

the residential sector.   If other conditions are satisfied, then as  

the law stands today, according to the Development Authority,  

they can be permitted to use 30 per cent of the Floor Area Ratio  

(FAR) of the ground floor for their clinics/offices.   Reference  

can also be made to the judgment of this Court in the case of  

Delhi Pradesh Citizen Council Vs. Union of India & Anr. [(2006) 6  

SCC 305] wherein similar directions were issued.  We are not  

only relying upon the precedents of  this Court,  but such an  

approach would also be permissible in face of the Regulations,

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terms and conditions of the lease deed executed by the parties  

and the Master Plan.   It would, therefore, be suffice if 30 per  

cent of the ground floor area is permitted to be used for office of  

an architect/lawyer and for clinic simplicitor by a doctor.

55. From  the  above  dictum  of  this  Court,  it  is  clear  that  

environmental  impact,  convenience  of  the  residents  and  

ecological  impact  are  relevant  considerations  for  the  Courts  

while deciding such an issue. The law imposes an obligation  

upon the Development Authority to strictly adhere to the plan,  

regulations and the provisions of the Act. Thus, it cannot ignore  

its  fundamental  duty  by  doing  acts  impermissible  in  law.  

There is not even an iota of reason stated in the affidavits filed  

on behalf of the Development Authority as to why the public  

notice  had  been  issued  without  amending  the  relevant  

provisions that too without following the procedure prescribed  

under  law.  The  concept  of  public  accountability  and  

performance of public duties in accordance with law and for the  

larger public good are applicable to statutory bodies as well as  

to the authorities functioning therein. We find no justification,  

whatsoever,  for  the  respondents to  act  arbitrarily  in  treating  

equals who are similarly placed as unequals.  There is also no  

justification for  the  Development  Authority  to  issue  a  public

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notice in the fashion in which it has done.   A few officers of the  

Development Authority cannot collectively act in violation of the  

law and frustrate  the very object and purpose of  the Master  

Plan in force, Regulations and provisions of the Act.

56. For  the  reasons  afore-recorded,  we  would  dispose  of  the  

appeals  of  the  Development  Authority,  the  

appellants/occupiers/  lessees,  interveners  and  occupants  in  

the following terms:-

1. That banking or nursing homes or any other commercial  

activity is not permitted in Sector 19 and for that matter,  

in  any  sector,  in  the  Development  Area  earmarked  for  

‘residential use’.

2. That  the  21  banks  and  the  nursing  homes,  which  are  

operating  in  Sector  19  or  any  other  residential  sector,  

shall  close their activity forthwith,  stop misuse and put  

the premises to residential use alone, within two months  

from the date of pronouncement of this judgment.   

3. That lessees of the plots shall ensure that the occupant  

banks, nursing homes, companies or persons carrying on  

any commercial  activity in the  residential  sector  should  

stop such activity and shift the same to the appropriate  

sectors  i.e.  commercial,  commercial  pockets  in

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industrial/institutional  area  and  specified  pockets  for  

commercial  use  within  the  residential  sector,  strictly  

earmarked  for  that  activity  in  the  development  Plan,  

Regulations and provisions of the Act.

4. That the Development Authority shall consider the request  

for allotment of alternative spaces to the banks and the  

persons  carrying  on  other  commercial  activities,  with  

priority and expeditiousness.

5. That the Doctors, Lawyers and Architects can use 30 per  

cent of the area on the ground floor in their premises in  

residential sector for running their clinics/offices.

6. That  for  such  use,  the  lawyers,  architects  and  doctors  

shall be liable to pay such charges as may be determined  

by the Development Authority in accordance with law and  

after granting an opportunity of being heard.  The affected  

parties would be at liberty to raise objections before the  

Development  Authority  that  no  charges  are  payable  for  

such users as per the law in force.

7. In the event the lessee or the occupant fails to stop the  

offending activity and/or shift to alternate premises within  

the  time  granted  in  this  judgment.   The  Development

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Authority shall  seal the premises and proceed to cancel  

the lease deed without any further delay, where it has not  

already cancelled the lease deed.

8. Wherever the Development Authority has already passed  

the orders cancelling the lease deeds, such orders shall be  

kept in abeyance for a period of two months from today. In  

the event the misuse is not stopped within a period of two  

months in terms of this judgment, then besides sealing of  

the  premises,  these  orders  of  cancellation  shall  stand  

automatically revived and would come into force without  

further reference to any Court.  In the event the misuse is  

completely stopped in all respects, the orders passed by  

the  authorities  shall  stand  quashed  and  the  property  

would stand restored to the lessees.

9. These orders shall apply to all cases, where the order of  

termination of lease has been passed by the Development  

Authority  irrespective  of  whether  the  same  has  been  

quashed  and/or  writs  of  the  lessees  dismissed  by  any  

Court of competent jurisdiction and even if such judgment  

is in appeal before this Court.

10. The orders in terms of this judgment shall be passed by  

an  officer  not  below the  rank  of  Commissioner.    This

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order shall be passed after giving an opportunity to the  

parties of being heard by such officer.  This direction shall  

relate only to the determination of charges, if any, payable  

by  the  lessee  or  occupant  for  the  period  when  the  

commercial activity was being carried on in the premises  

in question.

57. The appeals are disposed of in the above terms, with no  

order as to costs.

...….…………................J.                     (Swatanter Kumar)

...….…………................J.                         (Ranjana  Prakash  Desai)    New Delhi; December 05, 2011