Holding

An increase in FSI to 2 without State Government sanction is ultra vires, and promissory estoppel cannot be used to compel a public authority to honour a representation contrary to law; therefore the appellant has no enforceable right and the writ is dismissed.

Summary

The appellant, Mis. Shabi Construction Co., entered into a lease agreement with the New Town Development Authority (CIDCO) for a commercial plot, the agreement stipulating a maximum Floor Space Index (FSI) of 2. While the agreement was pending, the State Government issued a notification increasing the permissible FSI for business use to only 1.5, and the Authority’s earlier resolution to fix FSI at 2 had not received State approval. The appellant sought a writ of mandamus to enforce the higher FSI, invoking promissory estoppel against the Authority. The Supreme Court held that fixation of FSI is an administrative act that acquires legal force only after sanction by the State Government under section 159 of the Maharashtra Regional and Town Planning Act, 1966, and that any modification without such sanction breaches sections 31(6) and 37(2) of the Act. Consequently, the doctrine of promissory estoppel cannot compel a public body to honour a representation that is contrary to law, and the appellant had no enforceable right to the higher FSI. The Court dismissed the appeal and the writ petition.

Issues considered

The increase in FSI to 2 without prior approval of the State Government is valid or ultra vires.
Whether the doctrine of promissory estoppel can be invoked to enforce a public authority’s promise that contravenes statutory provisions.
Whether the lease agreement confers a legally enforceable right on the appellant to construct with FSI 2.
The availability of a writ of mandamus to compel the Authority and the State to withdraw the notification and honor the agreement.

Legislation cited

Companies Act, 1956s. 617
Indian Evidence Act, 1872s. 115
Maharashtra Regional and Town Planning Act, 1966s. 159, s. 21, s. 22(m), s. 31(6), s. 37(2)

Subjects

Floor Space IndexFSIDevelopment planMaharashtra Regional and Town Planning Actpromissory estoppelpublic authoritymandamuslease agreementadministrative decisionstatutory sanction

Judgment

A MIS. SHABI CONSTRUCTION COMPANY
v.
CITY AND INDUSTRIAL DEVELOPMENT
CORPORATION AND ANR.

APRIL 19, 1995
B
[J.S. VERMA, N.P. SINGH AND M.K. MUKHERJEE, JJ.]

Maharashtra Regional and Town Planning Ac4 1966/General Develop-
ment Control Regulations for New Bombay, 1975: ss. 21,22(m), 31, 37 and
C 159/Regulations 3.11 and 16.3.1-Township of New Bombay-Town Develop-
ment Authority-f'ower to prescribe Floor Space 1nd~eld, fixation of FSI
is an in-house exercise of Development Authority, but it gets legal sanctity only
when State Government grants approval theret&-lncrease in FSI without ob-
taining prior· approval of State Government would amount to breach of
D ss.31(6) and 37(2) of the Act.
Doctrine of Promissory estoppeHfeld, cannot be invoked to compel
public bodies or Government to cany out representation or promise made
contrary to law.

E The Government of Maharashtra, by Notification dated 23.3.1971
issued under s.113(1) of Maharashtra Regional and Town Planning Act,
1966, delineated and designated certain area for development as a site for
a new town to be known as New Bombay, and also declared respondent No.
1, a Government Company, to be the new Town Development Authority for
the township. Respondent No. 1, with the approval of the State Govern-
F ment, framed the General Development Control Regnlations for New
Bombay, 1975, Regnlation 16.3.1 whereof provided that the Floor Space
Index (FSI) for diverse land use should not exceed 1. (Regulation 3.11
defined FSI to mean the ratio of the gross Door area of all the storeys of
a building on a plot to the total area of the plot). Lftter, the Board of
G Directors of respondent No. 1 passed a resolution to amend Regnlation
16.3.1 by fixing different FSls for diverse land uses and for land use for
business and commercial purposes maximum permissible FSI was fixed
at 2. The said resolution was sent on 21.10.1981 for approval of the State
Government.

H While the matter was awaiting approval and final decision of the
534
i

SHABI CONSTRUCTION CO. v. CITY AND INDL. DEV. CORPN. 535

Government, respondent No. 1 issued a public notice in Angnst 1985 invit- A
ing offers for lease of a commercial plot. The maximum permissible limit of
FSI was shown as 2. The olTe.r of the appellant was accepted and It was
allotted the said plot. The agi-eement entered into between the parties on
21.1.1987 provided that the maximum permissible FSI would be 2.

Meanwhile, on 10.10.1986 the State Government issued a notification B
in the official gazette sanctioning increase in FSI in res,.ct of use for
business purpose to 1.50. The allottee wrote to respondent No. 1 stating
that the Notification had no hearing upon its construction plan as in its
case FSI was to be as per the plan. Respondent No. 1 communicated to the
allottee that the plan could not be approved as there was discrepancy in C
the FSI mentioned in the agreement and the FSI actually approved by the
Government. The allottee filed a writ petition challenging the Notification
dated 10.10.1986. The High Court dismissed the writ petition holding that
the agreement between the parties was contrary to the Regnlatlons and the
law. Aggrieved, the allottee filed the appeal by special leave.
D
It was contended for the appellant that the prescription of FSI was
not a statutory prescription but .an administrative decision required to be
taken by respondent No. 1 from plan to plan under the provisions of
s.22(m) of the Act and since respondent No. 1, as the Planning Authority,
took a decision to increase the FSI to 2 and entered into an agreement with E
the appellant on that basis, it was estopped from repudiating the co~iract.

Dismissing the appeal, this Court

HELD : 1.1. Though fll<ation of FSI is an in-house exercise of
respbndent No. 1, it gets legal sanctity only when the State G~"rnment p
grants its approval thereto under section 159 of the Maharashtra Regional
and Town Planning Act, 1966. After the FSI is so fixed to comply with the
requirements of section 22(m), it becomes a part and parcel of the Develop-
ment plan which is to be submitted by the Planning Authority to the State
Government under section 21. Once the State Government grants approval°
to the Development plan it becomes the final Development Phm and binds G
the Planning Authority under section 31(6) of the Act. Therefore, any
breach or violation of any of the terms or contents of the final Development
plan or modification in respect thereof without prior sanction of the State
Government would amount to a breach of sections 31 and 37, as the case
may be, of the Act. [543-C to E] H
536 SUPREME COURT REPORTS (1995] 3 S.C.R.

A 1.2. Accordingly, in the instant case, the increase in the FSI to 2
mthout obtaining approval or the State Government, is not only a breach
or section 159 but also or sections 31(6) and 37(2) or the Act. In that view
or the matter and in view of the well settled law that the doctrine of
promissory estoppel cannot be invoked to compel the public bodies or the
B Government to carry out the representation or promise which is contrary
to law or which is outside their authority or power, the claim of the
appellant cannot be entertained. [543-E, Fl

1.3. When respondent No. 1 issued the public notice in August, 1985
inviting oilers for lease of the plot, the maximum permissible FSI for
C diverse land uses according to the final development plan was 1 and the
minor modification proposed by it in respect thereof was awaiting sanction
of the State Government. Before execution of the agreement by the appellant
and the respondent No. 1, the State Government had issued the notification
in accordance mth section 37(2) of the Act sanctioning increase in the FSI
D to 1.50 and not to 2 as proposed by respondent No. 1. The 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 respective-
ly, the agreement so far as it related to FSI did not, and could not, bestow
any legal right upon the appellant; and only on such sanction could the
inchoate right under the agreement crystallize into a legally enforceable
E right in favour of the appellant. [541-G, H, 542-A, BJ

2. The reliefs sought for in the writ petition are not available to the
appellant for it is trite that before one can seel< a writ of mandamus he
has to prove that he has a legally protected and judicially enforceable right.
(543-G)
F
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4487 of
1990.

From the Judgment and Order dated 22.2.89 of the Bombay High
G Court in W.P. No. 3682 of 1987.

P .N. Duda, Arnn Tripathi, Pradeep Kumar and Sarwa Mitter for the
Appellant. ........
I

K.T.S. Tulsi, Additional Solicitor General and A.S. Bhasme for the
H Respondents.
SHABI CONSIRUCTION CO. v. CITY ANDINDL DEV. CORPN. (MK MUKHERJEE,J.J 537

The Judgment of the Court was delivered by A
J
M.K. MUKHERJEE, J. This appeal by special leave is directed
against the judgment and order dated February 22, 1989 rendered by the
High Court of Bombay in W.P. No. 3682 of 1987. Facts leading to the
appeal and relevant for its disposal are as under.
B

,., The appellant is a firm registered under the Partnership Act and
carries on business as builders and developers, while the respondent No.
1 is a Government Company within the meaning of section 617 of the
Companies Act, 1956. On March 23, 1971, the Government of Maharashtra
issued a notification under sub-section (1) of section 113 of the c
Maharashtra Regional and Town Planning Act, 1966 ('Act' for short)
delineating and designating certain area for development as a site for a
new town to be known as New Bombay. Concurrently, it declared, in
accordance with sub-section {3A) thereof, the respondent No.1 to be the
New Town Development Authority for that township. Consequent upon D
such declaration the respondent No. 1 assumed, by virtue of sub-section
i {8) of the said section, all the powers and duties of a Planning Authority
under the Act including those under Chapter [1] and IV thereof. In due
course the respondent No. 1 framed, in exercise of powers conferred by
· section 159 of the Act and with the previous approval of the State Govern-
ment, a set of Regulations called the General Development Control E
Regulations for New Bombay, 1975 ('Regulations' for short). Regulation
16.3.1 of the said Regulations initially provided that the Floor Space Index
('FSI' for short) for divers land use should not exceed 1. On August 24,
1981 the Board of Directors of the respondent No. 1 passed a resolution
/ to amend the above regulation by fixing different FSis for divers land uses; F
and for land use for business and commercial purposes the maximum
permissible FSI was fixed at 2. By its letter dated October 21, 1981 the
respondent No. 1 forwarded the resolution to the State Government for
approval in accordance with section 159 of the Act. Instead of approving
the proposed amendment the State Government wrote back to the respon-
dent No. 1 on November 30, 1982 to resubmit the same after following the G
procedure laid down in section 37 of the Act to enable it (the State
Government) to effectuate the marginal or minor modification to the final
Development plan "~ New Bombay. Pursuant thereto and in compliance
thereof respondent No. 1 issued and published a notice dated August 29,
1983 in the Official Gazette inviting objections and suggestions with regard H
538 SUPREME COURT REPORTS (1995) 3 S.C.R.

A to the proposed amendment by way of a minor modification to the final
Development plan. As no objection wa received to the proposed amend-
ment the Board of Directors of the respondent no. 1 considered and
approved of the proposed amendment and authorised its Chief Ad-
ministrative Officer to resubmit it to the State Government. Accordingly,
the Chief Administrative Officer wrote a letter to the State Government
B on March 5, 1984 seeking its approval to the amendment as required under
section 37(1) of the Act.

While the matter was awaiting final decision of the State Govern- '
ment, the respondent No. 1 issued a public notice in August, 1985 inviting
C offers for lease of commercial plot No. 4 of the District Business Centre
in Sector 17 of Vashi. New Bombay on terms and conditions set out in a
booklet published for the purpose. In the booklet the maximum permissible
limit of FSI for the successful lessee was shown as 2. Amongst others, the
appellant responded to the notice and ultimately succeeded in getting
allotment of the plot for which a formal lease agreement was entered into
D by and between the appellant and the respondent No. 1 on January 21,
1987 for a consideration of Rs. 64,19,250. Clause 3 (aa) (i) of that agree- \
ment provides that the maximum permissible FSl as defined by the Regula-
tions shall be 2.

E In the meantime - on October 10, 1986 to be precise - the State
Government had issued a notification in the Official Gazette in accordance
with section 37(2) of the Act sanctioning increase in FSI in respect of use
for business purpose to 1.50 only. On getting information about the same
the appellant wrote a letter to the respondent No. 1 pointing out that the
notification had no bearing upon its construction plan as the maximum
F permissible built up area granted under the agreement had been fixed at
3200 sq. metres (on the basis that FSI was 2). Without prejudice to its
above contentions, it prayed for provisional permission to construct about
2000 sq. metres. as per the plan submitted by them. In reply thereto the
respondent No. 1 communicated to the appellant by its letter dated May
G 15, 1987 that its plan could not be approved since there was discrepancy.
in the FSI mentioned in the agreement and the FSI actually approved by
the Government. Aggrieved thereby the appellant filed a petition in the
High Court for a writ of mandamus compelling the respondent No. 1 and
the State of Maharashtra (the respondent No. 2) to forthwith withdraw
and/or cancel the impugned notification dated October 10, 1986 and the
H letter dated May 15, 1987 and to forbear and desist them from in any
•

SHABI CONSJRUCTION CO.'· CITY AND INDL DEV. CORPN. (MK MUKHERJEE, J.] 539

manner implementing or enforcing or taking any action on the basis A
thereof. The high Court dismissed the writ petition with an observation that
as the appellant had with open eyes and possibly in collusion with the
officers of respondent No 1 ·had entered into an agreement which was
contrary to the Regulations and the law, it was not permissible for it to
claim writ of mandamus to enforce illegalities.
B
To appreciate the points involved in this appeal it will be imperative
· at this stage to take a close look into the relevant provisions of the Act.
The Act was brought in the statute book in 1966 to make provisions for
planning the development and nse of land in notified regions and creating
new towns through Planning Authorities and Development Authorities to C
be constituted and declared for the purpose. Chapter III of the Act
comprises a fasciculi of sections which relate to preparation, submission
and sanction of Development plan and procedures to be followed therefor.
Section 21 thereof requires that within the period prescribed therein every
Planning Authority shall prepare draft Development plan for the area to
be developed and ~ubmit the same to the State Government for sanction. D
Section 22 provides that a Development plan shall generally indicate the
manner in which the use of the land in the area of a Planning Authority
shall be regulated and also indicate the manner in which the development
of land therein· shall be carried out. The section then says that in particular,
it shall provide, so far as may be necessary, for _all or any matters as
· enumerated in the clauses therein. Clause (m) thereof, which is material E
for our purposes, reads as under :

22(m) Provisions for permission to be granted for controlling and
regulating the nse and development of land within the jurisdiction
of a local anthority including imposition of conditions and restric-
tions in regard to the open space to be maintainetl about buildings, F
the percentage of building area for a plot...........

(emphasis supplied)

Sections 23 to 30 lay down. the procedure to be followed in preparing G
a draft Development plan and section 31 which relates to the sanction to
the draft Development plan reads as under :

31 (1) Subject to the provisions of this section, and not later than
one year from the date of receipt of such plan, from the Planing
Authority, or as the case may be, from the said Officer, the State H
r

540 SUPREME COURT REPORTS [1995] 3 S.C.R.

A Government may, after consulting the Director of Town Planning
by notification in the official Gazette sanction the draft Develop-
ment plan submitted to it for the whole area, or separately for any
part thereof, either without modification, or subject to such
modifications as it may consider proper, or return the draft
Development plan to the Planning Authority, or as the case may
B be, the said Officer for modifying the plan as it may direct, or refuse
to accord sanction and direct the Planning Authority or the said
Officer to prepare a fresh Development plan:
'
xxx xxx xxx
c (2) xxx xxx xxx

(3) xxx xxx xxx

(4) The State Government shall fix in the notification under sub-
D section (1) a date not earlier than one month from its publication
on which the final Development plan shall come into operation.

(5) xxx xxx xxx

(6) A Development plan which has come into operation shall be
E called the ''final Development plan" and shan subject to the
provisions of this Act, be binding on the Planning Authority."

(emphasis supplied)

Section 35 provides that if any Planning Authority has prepared a Develop-
F ment plan which has been sanctioned by the State Government before the
commencement of the Act then such Development plan shall be deemed
to a final Development plan sanctioned under the Act.Section 37 of the
Act which relates to the mode and manner of making minor modifications
to the final Development plan is extracted below :

G "(1) Where a modification of any part of or any proposal made in,
a final Development plan is of such a nature that it will not change
the character of such Development plan, the Planning Authority
may, or when so directed by the State Government shall, within
sixty days from the date of such direction, publish a notice in the
H Official Gazette and in such other manner as may be determined
SHABI CONSTRUCTION CO. v. CITY AND INDL DEV. CORPN. (M.K MUY.HERJEE, J.J 541

by it inviting objections and suggestions from any person with A
respect to the proposed modification not later than one month
from the date of such notice: and shall also serve notice on all
persons affected by the proposed modification and after giving a
hearing to any such persons, submit the proposed modification
with amendments, if any, to the State Government for sanction.
B
(IA) xxx xxx xxx

(2) The State Government may, after making such inquiry as it may
consider necessary after hearing the persons served with the notice
and after consulting the Director of Town Planning by notification C
in the Official Gazette, sanction the modification with or without
such changes, and subject to such conditions as it may deem fit, or
refuse to accord sanction. If a modification is sanctioned, the final
Development plan shall be deemed to have been modified accord-
ingly." •
D
(emphasis supplied)

Section 159 empowers the Regional' Board, Planning Authority and
Development Authority to make, with the prior approval of the State
Government, Regulations consistent with the Act and the Rnles made E
thereunder to carry out the purpose of the Act and without prejudice to
the generality of the power, lays down the specific fields in which it can
make Regulations.

That brings us to the relevant provisions of the Regulations. Regula-
tion 3.11 defines FSI to mean the ratio of the gross floor area of all the F
storeys of a building on a plot to the total area of the plot. Regulation 16
enumerates the various terms and conditions which are to govern develop-.
men! of buildings for the various land use and regulation 16.3.1 (a) thereof
prescribes the maximum permissible FSI.

From the facts of the instant case as recorded earlier it is evident G
that wllen the respondent No. 1 issued the public notice in August, 1985
inviting offers for lease of the plot in question the maximum permissible
FSI for divers land uses according to the final Development plan was in
and the minor modification proposed by it in respect thereof was awaiting
sanction of the State Government. It is also evident, that before execution H
542 SUPREME COURT REPORTS [1995) 3 S.C.R.

A of the agreement by the appellant and the respondent No. 1, the State
Government had issued the impugned notification in accordance with
section 37(2) of the Act sanctioning increase in the FSI to 1.50 and not to
2 as proposed by the respondent No. 1. The prior sanction of the State
Government being the sine qua nor for a final Development plan as also
for minor modifications thereof under section 31 and 37 respectively, the
B agreement so far as it related to PSI did not, and could not, bestow and
legal right upon the appellant. To put it conversely, only on such sanction
could the inchoate right under the agreement crystalli>.e into a legally
enforceable right in favour of the appellant. "'-..

C Building his argument on the doctrine of estoppel, the learned
counsel for the appellant submitted that the prescription of PSI was not a
statutory prescription but an administrative decision required to be taken
by the respondent No. 1 from plan to plan under the provisions of section
22 (m) of the Act. He argued that since in the instant case the respondent
D No. 1, as the Planning Authority, took a decision to increase the FSI to 2
for business use of land and entered into a contract with the appellant on
the basis thereof with open eyes it was estopped from repudiating the
contract under section 115 of the Evidence Act as also the general equi-
table doctrine of estoppel. He next contended that regulation 16 of the
Regulations made under section 159 of the Act providing for FSI was ultra
E vires because the matters which could be hrought within the ambit of the
Reg'u!ations were serialised in the enabling section. According to the
learned counsel when FSI has been specifically mentioned to be made a
part of each Development plan under section 22(m) the fixation of FSI
cannot be brought within the ambit of regulation making power of the
F Development Authority and it had to be provided for by their executive
orders to be determined in their discretion. The learned counsel contended
that respondent No. 1 could not resile from their contractual obligations
by taking shelter behind a regulation which was ultra vires. He lastly
contended that, assuming but without admitting, that FSI could fall within
the ambit of regulation made under section 159 of the Act, the fixation
G thereof was not a statutory prescription but the expression of an in-house ·
policy declaration, which if deviated from by the holder of the Authority
could not be used as a shield to retract from their contractual obligations.
It was at best, according to the learned counsel, a violation of a rule and
the proposition that there cannot be any estoppel against statute did not
H extend thereto.
. SHABI CONSl'RUCTION CO.'· CITY AND !NOL DEV. CORPN. (M.K. MUKHERJEE,J.( 543

Having regard to the schemes of the Act as reflected in the various A
provisions of the Act and the Regulations referred to earlier we are unable
to accept the above contentions. Amongest various matters required to be
included in a Development plan under section 22 of the Act, a provision
for permission to be granted for controlling and regulating the use and
development of land including imposition of conditions and restrictions in B
regard to the open space to be maintained about buildings and percentage
of building area for a plot is required to be made under clause (m) thereof.
To conform io the ~ords "percentage of building area for a plot" appearing
in that clause the FSI has been defined in the Regulations and maximum
permissible limit foced. Undoubtedly, to start with, fJXation of FSI is an
in-house exercise of respondent No. 1, but it gets its legal sanctity only C
when the State Government grants its approval thereto under section 159
of the Act. After the PSI is so foced to comply with the requirements of
sections 22 (m), it becomes a part and parcel of the Development plan
which is to be submitted by the Planning Authority to the State Govern-
ment under section 21. Once the State Government grants approval to the D
Development plan it becomes the final Development plan and binds the
Planning Authority under section 31(6) of the Act. Therefore, any person
or violation of any of the terms or contents of the final Devdopment plan
or modification in respect thereof without prior sanction of the State
Government would amount to a breach of sections 31 and 37, as the case
may be, of the Act. That necessarily means, that in the instant case the E
increase in the FSI to 2 without obtaining approval of the State Govern-
ment, is not only a breach of regulation 159 but also of sections 31(6) and
37(2) of the Act. In that view of the matter and in view of the well settled
law that the doctrine of promissory estoppel cannot be invoked to compel
the public bodies or the Government to carry out the representation or p
promise which is contrary to law or which is outside their authority or
power, none of the contentions raised on behalf of the appellant can be
entertained.

On the conclusions as above, we hold that the reliefs sought for in
the writ petition are not available to the appellant for it is trite that before G
one can seek a writ of mandamus he has to prove that he has ·a legally
protected and judicially enforceable right. The appeal is accordingly dis-
missed but without any order as to costs.

R.P. Appeal dismissed.