Holding

MHADA acted within its statutory authority under the Act and its regulations, and the High Court’s order quashing the Letter of Intent was erroneous.

Summary

The Maharashtra Housing and Area Development Authority (MHADA) constructed 165 flats but received negligible public response to its advertisements. Consequently, MHADA adopted a "Bulk Purchase Scheme" and issued a Letter of Intent on 25 October 2004 to the sole applicant, Powai Plant Co‑operative Housing Society (the appellant). Pooja Estate Consultant, a former MHADA agent, had applied for 100 flats on 9 September 2004 and challenged the LOI, arguing that its offer should have been considered. The Bombay High Court quashed the LOI and ordered re‑advertisement of the flats; this order was upheld in a review petition. On appeal, the Supreme Court held that MHADA acted within the powers conferred by the Maharashtra Housing and Area Development Act, 1976 and its regulations, which permit special disposal methods when public demand is inadequate, and that the High Court erred in setting aside the LOI. The Court set aside the High Court’s order and remitted the matter for fresh consideration, allowing the appeals.

Issues considered

Whether MHADA, under the Maharashtra Housing and Area Development Act, 1976 and its regulations, was required to consider the offer of Pooja Estate Consultant alongside the cooperative society's application under the Bulk Purchase Scheme.
Whether the High Court was justified in quashing the Letter of Intent issued to the cooperative society and directing re‑advertisement of the flats.
Whether the first respondent, having ceased to be an authorised agent of MHADA in 2003, had locus standi to challenge MHADA's decision.

Legislation cited

Maharashtra Housing and Area Development Act, 1976s. 184, s. 185

Subjects

statutory authoritybulk purchase schemehousing allocationletter of intentpublic advertisementregulatory discretionlocus standicooperative housing societyMaharashtra Housing and Area Development Act

Judgment

A POWAI PLANT CO-OPERATIVE HOUSING SOCIETY (PROPOSED) ~·-
v.
POOJA ESTATE CONSULTANT AND CONSTRUCTION AND ORS.

MAY 14, 2007
B [C.K. THAKKERAND TARUN CHATIERJEE. JJ.)

Maharashtra Housing and Area Development Act, 1976-Mass Housing
~
Project-Offer for allotment of flats-No response from public-Authority
c decided to allot flats to Cooperative Societies-Offer made by appellant-
society--First respondent-estate agent also made an offer-Letter of intent
issued to Cooperative Society--High Court set aside the order of allotment
for non consideration of offer of First respondent-Held, not correct-Matter
remitted to High Court for reconsideration-Maharashtra Housing and Area
Development (Estate, Management, Sale, Transfer and Exchange of Tenements)
D Regulation, 1981.

MHADA, a statutory authority constituted under the Maharashtra T

llousing and Area Development Act, 1976, took up a Mass Housing Project
and constructed several flats in Mumbai in 1995.
E
MHADA in accordance with the provisions of law released public
advertisements for sale of 165 Non-Deluxe Flats. Between 1995 and 2002,
eight such advertisements were released in several leading newspapers for
allotment of flats, but there was practically no response from public. In 2003,
as also in 2004, two more advertisements were issued but again there was
F n~gligible response from public. MHADA also considered appointment of
E~tate/Property Agents to boost up sa!e and disposal of flats since huge amount
.,..
okrores of rupees had been blocked up. First respondent was appointed as
an authorised property agent of MHADA. But it also could sell only 12 flats.
The agency of first respondent came to an end on October 7, 2003 which was
G not renewed thereafter. A policy decision was then taken to make allotment
of flats through Co-operative Housing Societies under the "Bulk Purchase
Scheme'. As per the said decision, an offer was made by appellant and since
it was the only society, which had applied, a decision was taken to sell flats to
the appellant subject to the terms and conditions mentioned in the Resolution
pas~ed by MHADA. The terms and conditions were accepted by the appellant-
"' -
H
550
POWAi PLANT CO-OP. HOUSING SOCTY. (PROPOSED) v. POOJA ESTATE CONSULTANT AND CONST. 551
society and a Letter of Intent was issued on October 25, 2004. A
When first respondent came to know about the resolution passed by
MHADA to sell flats to the appellant-society, it approached the High Court
complaining against the said action on the ground that since they applied on
September 9, 2004 and the decision was taken by MHADA and Letter oflntent
was issued thereafter on October 25, 2005, it was clear that when the decisio? B
was taken application of the appellant-society as also of the first respondent
were before MHADA.

The High Court allowed the petition observing that it was left "with no
option but to quash the Letter of Intent dated 25th October, 2004" issued in C
favour of the appellant-society. The Court directed MHADA to re-advertise
sale of flats and after receiving all the offers, consider all offers in accordance
with law and take an appropriate decision. A Review Petition filed against the
aforesaid decision was summarily rejected. Hence the present appeal.

Disposing of the appeal and remitting the matter to High Court, the D
Court
.,.
... HELD: 1. MHADA is a statutory authority. It is required to exercise its
powers, perform its functions and discharge its duties in consonance with
law. Under the Act, it is required to provide housing accommodation throughout
the State and to dispose of its property in accordance with law. MHADA had
E
also framed regulations for the purpose of management, sale, transfer and
exchange of tenements. The regulations also provide for allotment of
residential tenements by laying down procedure for such allotment. Though
normally tenements are to be disposed of by issuing notices, inviting offers
and drawing lots by determining eligibility, they also deal with situation where F
there is no adequate response from public at large.
-y [Para 16] (557-D, E, F]

2. Several attempts were made by MHADA to dispose of flats by issuing
public advertisements. 10 advertisements had been issued in various
newspapers in different languages like English, Marathi, Hindi, Gujarati, etc.
G
But there was no proper response from public. Records show that initially no
public members came forward and even after several advertisements, few flats
could be disposed of. Thus, on the one hand, construction of flats was complete
.,..,. and the residential accommodation was available but not opted by general public
and on the other hand, there was block up of huge amount of MHADA, · H
552 SUPREME COURT REPORTS (2007) 6 S.C.R.

A depriving it from undertaking other functions which were required to be
undertaken by it under the Act It, therefore, considered the question and in
an Office Note dated October 12, 2004, opined that disposal offlats could be
made under the 'Bulk Purchase Scheme'. In the said Note, it was mentioned
that there were 214 flats. Deducting the flats for which response was received
(10 flats), flats allotted to Amey CHS (53 flats) and applications received from .
B public (37 flats), 114 flats were still 11acant which could be allowed to a proposed
co-operative society in exercise of power by MHADA. Terms and conditions
were also laid down and the proposal was submitted for orders. Accepting the
said proposal, Letter of Intent was issued by MHADA on October 25, 2004 to f
the first-respondent-society whi1:h was the only eligible society onder the
'Bulk Purchase Scheme'. Provisional Offer Letter was, therefore, sent to the
C appellant by MHADA on November 17, 2004.
[Para 18) [558-C, D, E, F, G)

3. It was not a case of inviting tenders/offers from general public and
the High Court was in error in proceeding on the basis as if offers were invited
' from public at large. [Para 18) [558-G, H]
D
4. Prima facie, MHADA acted within four corners of law and in exercise
of power under the regulations, particularly, Regulation 16B, it considered
the offer of the first respondent The basis on which the High Court proceeded
was not well-conceived or well-founded and on that ground alone, the decision
deserves to be set aside. (Para 18) (559-A, BJ
E
5. The High Court has not considered other questions and on a short
ground (non-consideration of om~r of first respondent, allowed the petition.
[Para 20) (559-E)

6. The matter was, therefore, remanded to the High Court to be decided
F . on merits. [Para 21) [559-F)
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2506 of2007.

From the Final Judgment and Order dated 25.02.2005 of the High Court
of Judicature at Bombay in Writ Petition No. I0243 of 2004.
G'
WITH
C.A. No. 2507 of2007.

Mukul Rohtagi, R.P. Bhat, S.B. Sanyal, Sushil K. Tekriwal, Rajiv Pandey,
H Venkateswara Rao, Anumolu, Mukesh Kumar, Mahima C. Shroff, Chirag M.
Shroff, Varun Thakur, A.S. Bhasme and John Mathew for the appearing
POWAi PLANT CO-OP. HOOSING.SOCTY, (P1t01'0$!!.D) v. POOJ'A ESTATE CONSUL't'ANT AND CONST. ICK.. n11,l{Kf.R. J.J 553
i
_.. ).~
parties . A
.The Judgment of the Court was delivered by

C.K. THAKKER, J. I. Leave granted.

2. Present appeals have been filed against the judgment and order dated B
February 25, 2005 passed by a Division Bench of the High Court of Judicature
at Bombay in Writ Petition No. 10243 of2004 and an order dated April 25, 2005
• -( in Review Petition No. 56 of2005 .

3. To appreciate the controversy raised in the present appeals, few
relevant facts may be noted. c
4. The Maharashtra Housing and Area Development Authority
('MHADA' for short) is a statutory authority constituted under the Maharashtra
Housing and Area Development Act, 1976 (hereinafter referred to as "the
Act"). One of the functions of MHADA is to construct residential tenements/
flats for Low Income Groups, Middle Income Groups and Other Poorer Sections D
.,. of the society and to provide them residential accommodation at lower costs .
As per the said mandate, MHADA took up Mass Housing Project and
... constructed several flats in Building Nos. 23A and 23B at Veer Savarkar
Nagar, Powai, Mumbai in 1995. The Act enables the State Government to
frame rules (Section 184) for the purpose of carrying into effect the provisions E
of the Act. Likewise, it authorises MHADA to make regulations with the
previous sanction of the State Government for all or any of the matters which
have to be or may be prjlscribed or provided by the regulations under the Act
(Section 185). In exerciile of the power under Section 184 of the Act, the State
Government has framed rules knows as the Maharashtra Housing and Area
Development (Disposal of Land) Rules, 1985. Similarly, in exercise of power F
'"y under Section 185 of the Act, MHADA framed regulations knows as the
Maharashtra Housing and Area Development (Estate, Management, Sale,
Transfer and Exchange of Tenements) Regulations, 1981. Rules framed by the
State Government as also Regulations made by MHADA provide for allotment
of residential tenements by inviting applications from members of public who
are eligible for such allotment.
G

5. MHADA, in accordance with the provisions of law released public
r advertisements for sale of 165 Non-Deluxe Flats. Between 1995 and 2002, eight
such advertisements were released in several leading newspapers for allotment
of flats, but there was practically no response from public. In 2003, as also H
554 SUPREME COURT REPORTS (2007) 6 S.C.R.

A in 2004, two more advertisements were issued but again there was negligible
response from public. MHADA also considered appointment of Estate/Property
-< ~
Agents to boost up sale and disposal of flats since huge amount of crores
of rupees had been blocked up. Pooja Estate Consultant & Construction
(original petitioner-first respondent-herein) was appointed as an authorised
property agent of MHADA. But it also could sell only 12 flats. The agency
B of Pooja came to an end on October 7, 2003 which was not renewed thereafter.
A policy decision was then taken to make allotment of flats through Co-
operative Housing Societies (Proposed) under the "Bulk Purchase Scheme'.
.
As per the said decision, an offer was made by the Powai Planet Co-operative
Housing Society (Proposed) (appellant) and since it was the only society, )-
•
cwhich had applied, a decision was taken to sell flats to the appellant subject
to the tenns and conditions mentioned in the Resolution passed by MHADA.
The tenns and conditions were accepted by the appellant-society and a Letter
of Intent was issued to the Chief Promoter of appellant-society on October
25, 2004 stating therein that its request was accepted by MHADA. It was also
communicated by MHADA to the appellant vi de its letter dated November 17,
D 2004 that the offer made by the appellant-society was accepted and that the
society had paid an amount of Rs.27,50,000/- (Rupees twenty seven lakhs,
fifty thousand only) towards EMD. r
~
6. When Pooja came to know about the resolution passed by MHADA
to sell flats to the appellant-society, it approached the High Court complaining
E
against the said action. It was inter a/ia contended by the petitioner that it
had come to know pursuant to an advertisement issued by MHADA on May
27, 2004, that certain vacant tenements of MHADA were to be sold to
members of public on "first come first served" basis. Since buyers did not
come forward to purchase the flats, MHADA entertained applications under
F the 'Bulk Purchase Scheme'. On August 23, 2004, appellant-society made
such application for purchase of flats. According to the first respondent, it
was well-known consultation and construction concern and was having vast
experience as an estate agency of MHADA. It was also interested in purchase
of flats and, accordingly, applied on September 9, 2004 for purchase of 100
flats. According to the first respondent, Letter of Intent was issued tu the
G appellant on October 25, 2004. Since the first respondent applied on September
9, 2004 and the decision was taken by MHADA and Letter of Intent was
issued thereafter on October 25, 2005, it was clear that when the decision was
taken by MHADA, application of the appellant-society as also of the first
respondent (Pooja) were before MHADA. It was, therefore, incumbent on
H MHADA to consider both the applications and to take appropriate decision
"' -
POWAi PLANT CO-OP. HOUSING socn·. (PROPOSED)~·. POOJA ESTATE CONSULTANT AND CONST. [CJ;:. THAKKER, J.J 555
on merits. The grievance of the first respondent, however, was that its A
_.. }-' application was never considered by MHADA and a decision was tal:en to
sell all flats to appellant-society. The action was, therefore, illegal, unlawful
and was liable to be set aside.

7. The Division Bench of the High Court heard the parties and noted
that even though both the parties, i.e. the appellant herein as also first B
respondent Pooja were before MHADA when the decision was taken on
October 25, 2004, the application of the first respondent was not considered
which was illegal and improper. The Court, therefore, allowed the petition
~
•4 observing that it was left "with no option but to quash the Letter of Intent
dated 25th October, 2004" issued in favour of the appellant-society. The Court c
directed MHADA to re-advertise sale of flats in one national (English)
newspaper and one vernacular (Marathi) newspaper and after receiving all the
offers, consider all offers in accordance with law and take an appropriate
decision. A Review Petition filed against the aforesaid decision was summarily
rejected observing that no case had .been made out for review.
D
8. The aforesaid decisions have been challenged by both, the society
as also by MHADA in this Court.
-r
.... 9. On September 12, 2005, notice was issued, parties were allowed to file
affidavits and further affidavits and the matter was ordered to be placed for
final hearing. E

I 0. We have heard the learned counsel for the parties.

11. The learned counsel for the appellant-society contended that the
High Court has committed an error of law and of jurisdiction in setting aside
action and decision of MHADA even though it was legal, valid and in
F
accordance with law. It was submitted that a resolution was passed by
MHADA to dispose of flats under the 'Bulk Purchase Scheme' to a Co-
operative Society (Proposed) and the said decision was in consona~ce with
law. It was not a case of a 'tender', 'offer' or 'public advertisement' by
MHADA. There was, therefore, no question to consider other offers and the G
petition filed by the first respondent was misconceived and ill-founded. The
High Court was in error in allowing the petition on the ground that since the
first respondent herein-petitioner before the High Court, applied on September
9, 2004 and the decision was taken on October 25, 2004, it was obligatory on
-· y MHADA to consider the offer of first respondent also. It was a policy
H
556 SUPREME COURT REPORTS [2007) 6 S.C.R.

A decision and the petition ought to have been dismissed by the High Court. ~ ....
It was stated that in the affidavit-in-reply filed before the High Court, MHADA
expressly stated that it was not ai case of public advertisement of disposal of
flats by inviting offtrs and MHADA was not required to consider the offe_r
said to have been made by the first respondent on September 9, 2004. It was
also urged that in Review Petition, once again the attention of the Court was
B invited to the fact that it was on the basis of policy decision of disposal of
flats under the 'Bulk Purchase Scheme' that flats were sold to the appellant
herein but the review was also dismissed summarily.

12. Even on merits, the order passed by the High Court is not ,. ~

c sustainable. It was stated that so far as the appointment of first respondent
as Estate/Property Agent of MHADA is concerned, it was a matter of past.
The said agency came to an end on October 7, 2003 and after the expiry of
the said term, the agency was not renewed by MHADA. It was, therefore, not
open to the first respondent to apply nor it was the duty of MHADA to
consider the offer made by the first respondent. Pooja had no locus standi
D to challenge the decision of MHADA or to invoke Writ Jurisdiction of the
High Court under Article 226 of the Constitution. Taking in view all the
matters, submitted the learned counsel, the order of the High Court is illegal -r
and tile appeal deserves to be allowed.
~

13. MHADA has also filed an appeal being aggrieved by the order
E
passed by the High Court and raised almost similar grounds as have been
raised by the appellant-society. It was stated that MHADA has right to
dispose of tenements/flats under 'Bulk Purchasing Scheme and a decision
was taken to dispose of flats by resorting to such method which was in the
nature of a policy decision and could not have been interfered with by the
F High Court. It was also submitted that it was not the case of the petitioner
before the High Court that such decision was contrary to law and could not
have been taken by MHADA. The precise ground of Pooja- petitioner was "'!"
that since decision was taken by MHADA in October 2004, non-consideration
of offer of Pooja vitiated the decision making process by MHADA. Since the
G High Court proceeded on a wrong basis, it allowed the petition by quashing
the order of MHADA which is liable to be set aside.

14. The learned counsel for the first respondent-petitioner before the
High Court, supported the order impugned herein. It was submitted that
MHADA is a public authority performing statutory functions under the Act. .... .
H It was, therefore, expected of MHADA to act legally, fairly and strictly in
POWAi PLANT CO-OP. HOUSING SOCTY. tPROPOSEDl 1•. POOJA ESTATE CONSULTANT AND CONST. IC.K. THAKKER. J.J 557

accordance with law. The High Court was satisfied that at the time of taking A
decision, two offers were before MHADA and it was supposed to consider
both the offers objectively. By holding so, no error of law or of jurisdiction
can be said to have been committed by the Court and no grievance can be
made against it. It was also submitted that the Court had taken into account
interest of all the parties. It did not direct to sell flats to the petitioner, but B
passed an order to re-advertise sale of flats and allowed MHADA to take
appropriate decision on all offers.

15. It was, therefore, submitted that the decision of the High Court
needs no interference in exercise of discretionary jurisdiction under Article
136 of the Constitution and the appeals deserve to be dismissed. C
16. Having given anxious consideration to the facts and circumstances
of the case and having gone through the relevant provisions of law and the
decision taken by MHADA, in our opinion, grievance voiced by the appellants
before this Court is well-founded and the submissions deserve to be accepted
by setting aside the order passed by the High Court. MHADA is a statutory D
authority. It is required to exercise its powers, perform its functions and
-,. discharge its duties in consonance with law. Under the Act, it is required to
' provide housing accommodation throughout the State and to dispose of its
property in accordance with law. In exercise of power under the Act, the State
Government has framed rules. Rules 11 to 17 deal with disposal of tenements. E
They also lay down manner of disposal of residential tenements in buildings
constructed by MHADA. Rule 12 declares that all disposal should be by
'public notice'. Rule I6B, however, makes special provision for disposal of
tenements in certain cases. It reads thus;

168. Special provisions for disposal of tenements in certain F
circumstances.

If after following the procedure prescribed in the foregoing rules
or the Regulations made thereunder, it is found that there is no
adequate response and demand for tenements in any particular scheme, G
such of the tenements as cannot be so disposed of may be disposed
of in any other manner deemed fit by the Authority.

17. MHADA had also framed regulations for the purpose of management,
-> ~ sale, transfer and exchange of tenements. The regulations also provide for
allohnent of residential tenements by laying down procedure for such allohnent. H
Though normally tenements are to be disposed of by issuing notices, inviting
558 SUPREME COURT REPORTS [2007] 6 S.C.R.

A offers and drawing lots by determining eligibility, they also deal with situation
where there is no adequate response from public at large. Regulation l 4A
provides for such situation and is material which reads as under;

14A. Special provision for disposal of tenements in certain
circumstances.
B
If even after renotification of vacancies as provided in Regulation
14 there is no adequate response and demand for tenements in any
particular scheme such of the tenements as can not be so disposed
of must be disposed of on the 'first served' basis or in any other
manner determined by the Authority from time to time. (emphasis
supplied)

18. Our attention has been invited by the learned counsel for the
appellants-society and MHADA that several attempts were made by MHADA
to dispose of flats at Powai by issuing public advertisements. 10 advertisements
D (8+2) had been issued in various newspapers in different languages like
English, Marathi, Hindi, Gujarati, etc. But there was no proper response from
public. Records show that initially no public members came forword and even
after several advertisements, fe:w flats could be disposed of. Thus, on the one
hand, construction of flats was complete and the residential accommodation
E was available but not opted by general public and on the other hand, there
was block up of huge amount of MHADA, depriving it from undertaking
other functions which were required to be undertaken by it under the Act.
It, therefore, considered the question and in an Office Note dated October 12,
2004, opined that disposal of flats could be made under the 'Bulk Purchase
Scheme'. In the said Note, it was mentioned that there were 214 flats. Deducting
F the flats for which response was received (10 flats), flats allotted to Amey
CHS (53 flats) and applications received from public (37 flats), 114 flats were
still vacant which could be allowed to a proposed co-operative society in
exercise of power by MHADA. Terms and conditions were also laid down and
the proposal was submitted for orders. Accepting the said proposal, Letter
G oflntent was issued by MHADA on October 25, 2004 to the first-respondent-
society which was the only eligible society under the 'Bulk Purchase Scheme'.
Provisional Offer Letter was, therefore, sent to the appellant herein by MHADA
on November 17, 2004. The learned counsel for the appellants, in our opinion,
are right in submitting that it was not a case of inviting tenders/offers from
general public and the High Court was in error in proceeding on the basis as
H if offers were invited from public at large. If it is so, it goes without saying
POWAi PLANT CO.OP. HOUSING SOCTY. (PROPOSED)"· POOJA ESTATE CONSULTANT ANO CONST. IC.IC THAKhER. J.] 559
,.;.·)' that the High Court was in error in setting aside the decision of MHADA on A
the ground that though Letter of Intent was issued in October, 2004 and
Provisional Offer was made in November, 2004, since the offer of the first
respondent-petitioner, dated September 9, 2004 was not considered. the action
of MHADA was illegal. Jn our opinion, Prima facie, MHADA acted within
four comers of law and in exercise of power under the regulations, particularly,
B
Regulation I68, it considered the offer of the first respondent. The basis on
which the High Court proceeded was not well-conceived or well-founded and
on that ground alone, the decision deserves to be set aside .
•-.(
' 19. We have also gone through the affidavits filed by the contesting
respondents before the High Court (appellants herein) in which the above c
aspect has been highlighted. Even after the decision by the High Court in the
Writ Petition, in Review Petition also, the said contention was raised, but the
Review Petition had been rejected summarily. It is also the case of the
appellants that first respondent-original petitioner (Pooja) was no longer
authorised agent ofMHADA after 2003 and had no right to claim any benefit
D
as an agent of MHADA. We express no opinion on that aspect inasmuch as
the High Court had not decided the matter on that ground .
........
... 20. It is no doubt contended by the first respondent (original petitioner)
that even otherwise the action impugned by the first respondent in the High
Court was illegal, unreasonable and otherwise objectionable. To repeat, the E
High Court has not considered other questions and on a short ground (non-
consideration of offer of Pooja) allowed the petition. It is, therefore, appropriate
if we set aside the order of the High Court and remit the matter for fresh
disposal in accordance with law.

21. For the foregoing reasons, the appeals deserve to be allowed and F
are accordingly allowed. The order passed by the High Court in Writ Petition
....... as also in Review Petition is set aside and the matter is remanded to the Court
for fresh decision in accordance with law.

22. Before parting with the matter, we may clarify that we have not G
entered into correctness or otherwise of the decision taken by MHADA and
we may not be understood to have expressed any opinion thereon. We are
also not deciding one way or the other the contention of the appellants as
,. to locus standi of Pooja that since its agency came to an end in 2003, it could
)..-
not have filed a writ petition to challenge the decision of MHADA. The
H
560 SUPREME COURT REPORTS (2007) 6 S.C.R.

A parties are at liberty to take up all pleas before the High Court and the Court
will decide them in accordance with law without being influenced by
observations made by us in this judgment. The High Court is requested to
decide the matter expeditiously preferably within three months from the receipt
of the order from this Court.
B The appeals are disposed of accordingly with no order as to costs.

D.G. Appeals disposed of.

. ,.. •