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Municipal Corporation cannot cancel Occupation Certificate for developer’s failure to obtain NOC from land-owning authority

In the matter of M/s. Satra Plaza Premises Co-operative Society Limited (“Petitioner”) vs. Navi Mumbai Municipal Corporation and Ors[1]., a Division Bench of the Hon’ble Bombay High Court (“BHC”) has, inter alia, held that incorporation of a condition in the Occupancy Certificate (“OC”) by the Navi Mumbai Municipal Corporation (“NMMC”) to obtain a no-objection certificate (“NOC”) from the City and Industrial Development Corporation (“CIDCO”) was illegal and without any authority of law. Further, it quashed and set aside the order of the Municipal Commissioner cancelling the OC and the revised Commencement Certificate (“CC”) due to non-obtainment of NOC from CIDCO.

Brief facts:-

CIDCO had allotted two buildings along with the plot on which these buildings were constructed and also the adjacent plot to NMMC for its use as Head Office. As these two plots (“Plots”) and buildings (“Earlier Buildings”) were found to be unsuitable, NMMC after following a tender process for transfer/ assignment of the Plots with the Earlier Buildings, executed an Agreement to Lease in favour of the highest bidder viz. M/s. Om Housing Company Pvt. Ltd. (“OHCPL”) in 2005. After charging additional premium from NMMC, CIDCO gave the go ahead for utilisation of the additional Floor Space Index (FSI),  amalgamation of the Plots and transfer and assignment of the Plots with the Earlier Buildings to OHCPL. Eventually, pursuant to a tripartite agreement executed between CIDCO, NMMC and OHCPL in 2006, (leasehold rights in) the Plots and the Earlier Buildings stood vested in OHCPL. Subsequently, OHCPL got amalgamated with M/s. Satra Properties (India) Limited (“Developer”). Thereafter, the Developer demolished the Earlier Buildings and sought permission from NMMC to develop the Plots. The NMMC by its letter dated March 7, 2007, granted development permission to the Developer and issued CC, and also approved the construction plans for a commercial building (“New Building”).

The Developer constructed the New Building as per the plans approved by the NMMC and also sold various shops and offices in the New Building while it was under construction and executed Agreements for Sale in favour of  several persons who agreed to acquire shops/ offices in the New Building. On completion of the construction of the New Building, the Developer made an application to NMMC for OC issuance. The NMMC granted the OC on February 9, 2012 [which was not as per Form 19 of the Development Control Regulations for Navi Mumbai Municipal Corporation 1994 (“DCR”) as Form 19 does not contemplate any condition attached to it] and also addressed a covering letter to the Developer, which inter alia, set out the conditions in respect of the OC and more particularly condition No. 4, stating that it would be binding to produce NOC from CIDCO within a year, otherwise the OC would be cancelled.

Thereafter, the Developer addressed many letters to CIDCO for issuance of its No-Dues Certificate. CIDCO, vide its letter dated January 3, 2013, stated, inter alia, that the Developer would have to bear for some time as it was to, inter alia, obtain compliance from NMMC in regard to the lease of the Plots, incidental to the grant of change of usage of land and enhanced FSI. The NMMC issued two show cause notices to the Developer, first one on January 22, 2014, and the second one on December 20, 2016. However, none of the two notices were issued to the Petitioner (being the co-operative society of the office/ shop purchasers in the New Building). Despite the Petitioner’s request vide its letter/ email, NMMC did not give any notice of hearing to the Petitioner and proceeded with the hearing on December 27, 2016. Consequent to the said hearing, NMMC passed an impugned order (“Impugned Order”) cancelling the OC and also the revised CC, declaring the New Building illegal/ unauthorised. The Impugned Order was communicated to the members of the Petitioner. Hence, a writ petition was filed by the Petitioner before the BHC to, inter alia, declare that (i) condition no. 4 appended to the OC, requiring the Developer to furnish NOC from CIDCO was/ is ultra-vires the provisions of the Maharashtra Regional Town Planning Act, 1966 (“MRTP Act”), the Maharashtra Municipal Corporation Act, 1949  [which substituted the Bombay/ Maharashtra Provincial Municipal Corporation Act, 1949] and DRC and hence liable to be quashed and set aside; and (ii) the NMMC has no jurisdiction in law to cancel the OC and the Impugned Order is liable to be quashed.

Principal submissions of the Petitioner:-

The Petitioner submitted that the Impugned Order was patently illegal and a nullity as it was passed without an opportunity of being heard, in violation of the principles of natural justice. It was further submitted that a serious prejudice was caused to the members of the Petitioner as it could never be contemplated that OC could be revoked for a legally constructed building, in which premises were purchased by third parties, thereby creating a situation that made it impossible for members of the Petitioner to deal with their premises and consequently violated the rights of the members of the Petitioner guaranteed under Article 19(i)(g) of the Constitution of India, affecting their business, and right to property guaranteed under Article 300A of the Constitution of India, apart from the Impugned Order being patently arbitrary, unreasonable and in violation of Article 13 of the Constitution of India. Further, it was been submitted that in the present case, there was no reason to invoke a power conferred under Section 51 of the MRTP Act since it can be exercised only when the planning authority is of the opinion that the permission needs to be revoked or modified having regard to the Development Plan prepared or under preparation. Further, Section 51 requires observance of the principles of natural justice, which in this particular case has been breached as no hearing was granted to the Petitioner before passing the Impugned Order. It was also submitted that CIDCO under the New Bombay Disposal of Land Regulations, 1975, can recover lease premium or any other charges from the Developer as provided under Regulation 3.

Principal Submissions of NMMC and CIDCO:-

NMMC relied upon a Government Order dated December 16, 1994, issued under Section 154 of the MRTP Act, conferring powers on the Municipal Corporation as the planning authority in respect of developed nodes. It was further contended that under the aforesaid Government Order, NMMC had to mandatorily insist that the Developer obtain NOC from CIDCO before issuing a development permission, and at the time of issuing OC. Hence, the grant of the development permission was made subject to CIDCO issuing NOC. It was also contended to be a requirement under Regulation 6.3.17 of the DCR, necessary for utilisation of additional FSI, change of user, mixed user, amalgamation, redevelopment, etc. It was further contended that since the Developer had failed to complete the construction work within the stipulated time, it was liable to pay charges to CIDCO for condonation of such delay and it ought to have complied with its undertaking to make such payment. In its response to NMMC’s letter, requesting its decision on the NOC, CIDCO in its reply dated November 25, 2016, had stated that the matter was placed before the Board of CIDCO in 2013 and the Board had sought clarification on various issues pertaining to the legality of the sale of Plots to NMMC, grant of permission to transfer, change of user, etc., and hence an NOC cannot be granted to the Developer.

It was also contended that under CIDCO regulations and the NOC granted by it to undertake development of the Plots as well as the agreement entered into between the Developer and NMMC, CIDCO was entitled to recover the amounts due and payable by the Developer. CIDCO’s principal contentions were that the issuance of OC and its cancellation were matters concerning just the NMMC and whatever amounts, which are legitimately due and payable to CIDCO, CIDCO should be entitled to recover it as permissible by law.

Key Highlights of the BHC Verdict:

The power of revocation of OC is governed by Section 51 (comprised under Chapter IV of the MRTP Act, dealing with “Control of Development and Use of Land included in Development Plans”). The relevant portion of Section 51 is reproduced herein below for the sake of brevity:-

Sec 51. Power of revocation and modification of permission to development:-(1) If it appears to a Planning Authority that it is expedient, having regard to the Development plan prepared or under preparation that any permission to develop land granted [or deemed to be granted] under this Act or any other law, should be revoked or modified, the Planning Authority may, after giving the person concerned an opportunity of being heard against such revocation or modification, by order, revoke or modify the permission to such extent as appears to it to be necessary:

Provided that–

(a) where the development relates to the carrying out of any building or other operation, no such order shall affect such of the operations as have been previously carried out; or shall be passed after these operations have substantially progressed or have been completed;

(b) …..


(3) ……”

The Division Bench (comprising Justices G. S. Kulkarni and Kamal Khata) of the BHC has, inter alia, observed that the breach of condition No. 4 of OC (i.e. non obtainment of NOC) is no ground for revocation of OC under Section 51(1) of the MRTP Act as such reason assigned by NMMC has nothing to do with the  Development Plan or any proposed Development Plan and hence, based on the clear implication of Section 51(1) provisions, the Impugned Order cancelling the OC is rendered illegal. The BHC also observed that an arbitrary approach was taken by the NMMC by proceeding completely on an erroneous premise that the Developer alone (and not the Petitioner society/ its members) was the concerned person, who had to be given a personal hearing. Hence, the Impugned Order not only falls foul of Section 51(1), but would be required to be held non-est and illegal being in breach of the principles of natural justice qua the Petitioner. Further, the BHC has also observed that the NMMC had failed to justify anything either under the MRTP Act or under the DCR framed by CIDCO that it was permissible for CIDCO to issue a conditional OC of the nature as issued in the present case and thus the issuance of conditional OC was unjustified. In view thereof, BHC has, inter alia, held that incorporation of a condition in the OC by NMMC for obtainment of NOC from CIDCO was illegal and without any authority of law and the order of the Municipal Commissioner cancelling the OC and the revised CC due to non-obtainment of NOC, was quashed and set aside.


(i) A development permission/ CC and/ or OC cannot be revoked or modified using the powers under Section 51 of the MRTP Act due to any breach of such permission/ certificate, including but not limited to non-obtainment of NOC or a no dues letter of any authority;

(ii) The concerned person to whom the opportunity of being heard needs to be given under Section 51(1) of the MRTP Act, would not only be the developer/ promoter but also the third parties in whose favour rights have been created in the building, such as the purchasers/ owners of flats/ premises therein;

(iii) Going by the proviso to Section 51(1), even if there is a fit case for exercising the powers under the aforesaid Section, the same cannot be exercised if the development/ construction of the building has already been carried out or substantially progressed/ completed; and

(iv) The above judgement of the BHC primarily deals with the revocation power under Section 51 of the MRTP Act. This needs to be distinguished from the revocation powers of the Planning Authorities under the concerned Municipal Acts/ Development Control Regulations on specific grounds of false/ fraudulent statement or material misrepresentation having been made in the applications/ intimations/ notices filed with them.

[1] Writ Petition No. 1374 of 2017 in the Bombay High Court