R.K. MITTAL & ORS. versus STATE OF UTTAR PRADESH & ORS.

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 haa 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 revisionai jurisdiction under Section 41 of the U.P. Urban 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 C 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, D 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 F 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 and that too, to frustrate the very object of the Act. Exercise of power G 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. R.K. MITTAL & ORS. v. STATE OF UTIAR PRADESH 913 & ORS. [SWATANTER KUMAR, J.]

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 }us. 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 statut0ry 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 C 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 legislation. The provisions in question should be construed on their plain reading, supporting the structure of the legislative intent and its D 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 G 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 Development Authority should A 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 C 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 ii conversely, only on sanction by the State Government, D could the inchoate right under the agreement crystallize into a ~egally enforceable right in favour of the appellant.

37. Still, in another case of K.K. Bhalla v. State of MP. & Ors. [(2006) 3 SCC 581], this Court did not approve and attach E any validity to the action of the Chief Minister directing and calling for a proposal from the said Development Authority to make 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 F 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 '-omes in the residential sectors meant for residential use alone is unequivocal violation of the statutory provisions in the Master Plan. R.K. MITIAL & ORS. v. STATE OF UTIAR PRADESH 915 & ORS. [SWATANTER KUMAR, J.]

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-medical or surgical clinic and for no other purpose, that too subject to such terms as are imposed by the lessor. c

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 D 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 lnfotech'. It is not even the case of the appellants before us that the Development Authority had granted any specific pennission 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, G guest house, lodging house, banks etc. on a 100 metres wide road on such terms and conditions as may be imposed by the Development 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 B concerned, in face of the statutqry 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 c 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 D 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.

44. The running of a bank or a commercial business by a E 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, Naida) and Vijaya Bank (Sector-19, Naida), the permission for running a bank in the residential sector was granted for a period of five years and three years, G 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 rJnning a bank/commercial activity or nursing R.K. MITIAL & ORS. v. STATE OF UTIAR PRADESH 917 & ORS. [SWATANTER KUMAR, J.] home in the residential sector. A survey had been conducted A 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 B wavering of mind in its decision-making processes. In fact, it 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 C 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 D 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 E 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 commercial activity is being carried on, particularly like the appellants' case, where a bank and company are running their G 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 A 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 B 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 · D provided at a concessional rate and a number of banks had 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 E 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 F 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 G 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 R.K. MITIAL & ORS. v. STATE OF UTIAR PRADESH 919 & ORS. [SWATANTER KUMAR, J.] Chairman and Chief Executive Officer, New Okhla Industrial A 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 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 hac! all the modem 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 0 tenninating 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 pennissible. 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 block.s which have even been empanelled by the appellant Development Auth<;>rity. The Development Authority is acting arbitrarily and not taking any action against those persons, though they have executed the lease deed with 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 G 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 . A 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 B 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 C 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 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 E 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 pf the premises for clinical purposes i.e. to meet or exaf'!li~e his G 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 R.K. MITIAL & ORS. v. STATE OF UTIAR PRADESH 921 & ORS. [SWATANTER KUMAR, J.] Development Authority was justifiable.

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 olMange 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 D 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 E 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 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 Jaw, are liable to be proceeded against as per the terms of the lease deed and the G 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 A excess and derogation of the power of ihe 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, B 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 Mandarr cum-Lecture Hall and the contention before the Court was that c town planning scheme forbade any cinema building at the place 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 0 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 E 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 undtr the plan. This F 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 localify. Therefore, the order R.K. MITIAL & ORS. v. STATE OF UTTAR PRADESH 923 & ORS. [SWATANTER KUMAR, J.) passed by the Government and the action taken pursuant theret(}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 either 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, 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 A environmental impact, convenietrce 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 8 its fundamental duty by doing acts impermissible in law. There is not even an iota of reason stated in the affidavits filed o~­ 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 C concept of public accountability and performance of public duties in accordi;mce 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 D Development Authority to issue a public 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. R.K. MITIAL & ORS. v. STATE OF UTTAR PRADESH 925 & ORS. [SWATANTER KUMAR, J.] 3. 4. 5. 6. 7. That lessees of the plots shall encure 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 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. 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. 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. 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. In the event the lessee or the occupant fails to stop the offending activity and/or shift to alternate premises within tf:te time granted in this judgment. The Development A4thority shall seal the premises and proceed to can~~he lease deed without any further delay, where it has not already cancelled the lease deed. c 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 t< 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 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. B.B.B. Appeals disposed of.