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PETITIONER: DELHI DEVELOPMENT AUTHORITY ETC.

       Vs.

RESPONDENT: M/S AMBITIOUS ENTERPRISES & ANR. ETC.

DATE OF JUDGMENT:       09/07/1997

BENCH: K. RAMASWAMY, D.P. WADHWA

ACT:

HEADNOTE:

JUDGMENT:           With CIVIL APPEAL NOS.4322-4331 OF 1997 (SLP(C)   No.10058/95,    SLP(C)   No.10819/95,    SLP   (C) No.18870/95, SLP(C),  No.9028/95, SLP(C)  No.9098/95, SLP(C) No.9031/95, SLP(C)  No.9123/95,  SLP(C)  No.9369/95,  SLP(C) No.9370/95 and SLP(C) No.9567/95.)                       J U D G M E N T D.P. Wadhwa, J.      Special leave granted.      These 11  appeals are  directed  against  the  judgment dated July  29, 1994 of the Division Bench of the Delhi High Court passed  in appeal  against the judgment of the learned single Judge dated May 27, 1994. The judgment of the learned single Judge  decided as  many as 25 writ petition, while he allowed 14  of them  11 were  dismissed.  Delhi  Development Authority (for  short the  DDA)  has  filed  letters  Patent Appeals against  the judgment  of the  learned single  Judge allowing the writ petitions, 1 of these are before us.      The writ  petitioner were aggrieved by the order of the DDA rejecting  their applications for allotment of plots for which they  had applied  in terms  of  public  notice  dated February 8,  1976 and  they had  also deposited  the earnest money and  had further  paid  30%  of  premium  as  per  the subsequent notice issued in September 1976.      The rejection  of the  request of  the  appellants  for allotment of  plots was principally on two grounds : (1) the applicants were not having licences under Section 416 of the Delhi Municipal  Corporation Act  and (2)  Rule 6(v)  of the Delhi Development  Authority (Disposal  of Development Nazul Land) Rules,  1981 (for short Nazul Rules) also required the applications to  be possessed  of  municipal  licence.  Both these objections  of the DDA did not find favour either with the learned  single Judge  or the  Division Bench  in Letter Patent Appeals. So these appeals by DDA.      Notice dated February 8, 1976 informed all concerned of the decision  of the  DDA to  the industries  functioning in non-conforming  areas   or  the   areas  which   were  under acquisition for  various public purposes to obtained land in the conforming  industrial ares  which has been developed by the DDA  in different localities in Delhi in accordance with the provisions  of the  Master  Plan.  The  applicants  were

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required to  make  applications  on  prescribed  forms.  The notice also informed the applicants to deposit earnest money on the  basis of  the size  of the  plot applied by them for allotment. Price  of the  land was  to be  deposited in four quarterly instalments.  The last  date for  receipt  of  the application was  March 31,  1976. A second notice was issued by DDA in September 1976 requiring the applicants to pay 30% of the  total premium  of the land by October 31, 1976. This notice also  specified the rates to be charged for different types of  developed plots.  It  is  not  disputed  that  the appellants did  apply, deposit  earnest money as well as the premium as  required by  the two notices. Their applications however came to be rejected in the year 1988 and the earnest money and premium were also refunded. In the letter rejected the applications  no ground  was mentioned  as  to  why  the applications were  rejected. But  it is a common ground that these were  rejected as the applications did not possess the municipal licence  and any  allotment on  that account would contravane the  statutory provisions  of  the  Nazul  Rules. Section 416 of the DMC Act is as under :      "416.  Factory,  etc.,  not  to  be      established without  permission  of      the Commissioner  . (1)  No  person      shall,   without    the    previous      permission  in   writing   of   the      Commissioner,  establish   in   any      premises,  or   materially   alter,      enlarge  or  extend,  any  factory,      workshop or trade premises in which      it is  intended  to  employ  steam,      electricity,   water    or    other      mechanical power.      (2) The  commissioner may refuse to      give such  permission, if  he is of      the  opinion   that  establishment,      alteration,     enlargement      or      extension of such factory, workshop      or trade  premises, in the proposed      position would  be objectionable by      reason  of   the  density   of  the      population  in   the   neighborhood      thereof, or  would be a nuisance to      the     inhabitants      of     the      neighborhood."      Contravention   of   this   provision   entails   penal consequences and  its punishment  is provided  under Section 461 which is as under :-      "461.   Punishment    for   certain      offences. Whoever -      (a) contravenes  any  provision  of      any of  the sections, sub-sections,      clauses,    provisos    or    other      provisions of this Act mentioned in      the first  column of  the Table  in      the Twelfth Schedule: or      (b) fails  to comply with any order      or direction  lawfully given to him      or any  requisition  lawfully  made      upon him  under  any  of  the  said      sections,  sub-sections,   clauses,      provisos or other provisions.      shall be punishable -      (i) with  fine which  may extend to      the amount,  or  with  imprisonment      for a  term which may extend to the

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    period, specified in that behalf in      the third  column of the said Table      or with both; and      (ii) in  the case  of a  continuing      contravention or  failure, with  an      additional fine which may extend to      the amount  specified in the fourth      column of  that Table for every day      during which  such contravention of      failure continues  after conviction      for the first such contravention or      failure."      If we  refer to  Twelfth Schedule  as mentioned  in the section, the punishment prescribed is as under : ------------------------------------------------------------ Section,       Subject                  Fine      Daily sub-section,                            or        fine clause or                               imori-    which may proviso                                 sonment   be imposed                                         which                                         may be                                         imposed ------------------------------------------------------------ Section        Establishment of         5000      500 416            factory, etc., without                permission ------------------------------------------------------------ Rule 6(v) of the Nazul Rules is as under :-      "6(v) to  industrialists or  owners      and occupiers  of ware  houses  who      are   required   to   shift   their      industries  and  ware  houses  from      non-conforming areas  to conforming      area  under  the  Master  Plan,  or      whose  land   is  acquired   or  is      proposed to  be acquired  under the      Act;      Provided  that  the  size  of  such      industrial plot shall be determined      with reference  to the  requirement      of the  industry or  warehouses set      up or  to be  set up  in accordance      with   the    plants    and    such      industrialists   and    owners   of      warehouses  have  the  capacity  to      establish and  run such  industries      or warehouses and on the conditions      that  the  land  allotted  at  pre-      determined rates  shall not, in any      case, exceed  the size  of the land      which has  been,  if  any  acquired      from such  industrialists or owners      and  occupiers  of  warehouses  and      which form part of Nazul land;      Provided  further  that  in  making      such allotment, the Authority shall      be advised  by the  Land Allotment,      Advisory Committee;"      Pursuant  to  the  notice  inviting  application  about 15,000 applications were received for allotment of plots. As the number  of applications  was large  the  DDA,  it  would appear, decided  that an applicant should deposit 30% of the premium amount  of the  land sought  to  be  allotted  as  a condition precedent for DDA to consider the application. Out of 15,000 applicants only 416 deposited the requisite amount

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of premium.  Thus sizeable  number of applicants were weeded out. Even after depositing the amount of premium some of the applicants were  left in  the field.  In November  1980  the applicants were asked to furnish a legible photostat copy of the MCD  licence pertaining  to their  respective units  and location. Out of these 184 applicants were allotted plots as they were  found to  be in  possession  of  valid  municipal licence issued  by the MCD as on the date of the application and their  industries were  found to  be  in  non-conforming areas. Cases  of remaining  115 were referred to a committee for ascertaining  their eligibility  for allotment of plots. The committee  after examining  the matter found that 60 out of 115 applicants were eligible for allotment of alternative plots. Cases  of 55  applicants were  rejected on the ground that they  were not  possessing municipal  licence as on the date of  making their applications for allotment of plots of their industries  were not situated in non-conforming areas. These 11  appellants before  us are from those 55 applicants whose applications were rejected.      Para 8  of the  application of  allotment of plot which was made  on the  form prescribed required information as to the following :      "Number  and   date  of   municipal      licence held, if any, and date upto      which it is valid."      The Division  Bench noted  that the  word "if any" were significant and  that what  the information required was the details of  the  municipal  licence  if  the  applicant  was holding one.  It held  that holding  of a  municipal licence could not  be a  mandatory condition  for allotment of plot. February  1976   notice  also   did  not  require  that  the applicants who wanted shifting of their industries from non- conforming  area   should  be   holder  of  valid  municipal licences. The  Division Bench  also observed that it was not disputed  by   the  DDA  that  the  petitioners  whose  writ petitions had  been allowed  by the learned single Judge had applied for  the industrial  licences from  the MCD and that the same  were granted  to them with retrospective were made by them  for allotment of plots and that therefore in either view, the contention of DDA based on possession of municipal licences could  not merit  consideration. The Division Bench then examined  Rule 6(v)  of the  Nazul Rules and was of the opinion that  it did  not postulate any condition that Nazul land could  be allotted  at  pre-determined  rates  only  to persons  having   municipal  license   in  respect   of  the industrial undertakings. The Division Bench held as under:      "According to  the above Rule, land      could be allotted to industrialists      or owners of units and occupiers of      Warehouses  who   are  required  to      shift from  non-conforming areas to      conforming areas  under the  Master      Plan or  whose land  is acquired or      is  proposed  to  be  acquired.  It      seems to  us that the Rule requires      industries   operating    in   non-      conforming areas  to be  shifted to      conforming areas in accordance with      the Master  Plan. Under Master Plan      land use  of a  particular area  is      specified. The  land cannot be used      sanctioned  by   the  Master  Plan.      Therefore, any  industry  operating      in a  non-confarming areas would be      required  to   be  shifted   to   a

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    conforming area.  In any  event, as      already  pointed   out,  the   writ      petitioners  whose  writ  petitions      have been  accepted by  the learned      Single Judge were granted municipal      licences from  retrospective dates,      covering   the   dates   on   which      applications    were    made    for      allotment of land."      The question  that arises  for consideration  is if the DDA was  justified  in  superimposing  a  condition  for  an applicant to hold a valid municipal licence and if Rule 6(v) of the  Nazul Rules  required allotment  of land  only to an applicant  holding   a  valid  municipal  licence  or  whose industry was in non-conforming area.      It was submitted before the learned single Judge by the DDA that  there were  large number  of applicants  and fewer plots and  therefore putting  a condition  that  only  those applicants who  were  holding  municipal  licence  could  be allotted plots  was a  valid  condition.  This  is  how  the learned single Judge dealt with this argument :      "DDA is  a public  authority. It is      bound by  the standards held out as      governing  the   case  of   several      applicants.  When   the  plots  are      allotted for  a particular  purpose      in pursuance of a scheme formulated      by the public authority, the public      authority is  expected to  consider      the  case  of  the  applicant  with      reference to  the said scheme. Only      because there are a large number of      applicants,  the  public  authority      cannot  ignore  the  terms  of  the      scheme. If there are more number of      applicants than the number of plots      available,  the   DDA  could   have      resorted to  the  drawing  of  lots      amongst all the eligible applicants      or could have probably proceeded to      hold  auctions.   By  imposing  the      requirement of  the  municipal  the      requirement   of    the   municipal      licence   on   an   applicant,   an      artificial distinction is sought to      be made  amongst the industries who      were  operating  in  non-conforming      areas."      To us  it appears that the condition imposed by the DDA for allotment  of industrial plot to a person who was having a valid  licence under  the MCD  Act was  neither arbitrary, unreasonable or  irrational. A person who is running a trade without a  valid licence under Section 416 of the MCD Act is committing an  offence which  as a continuing offence and he cannot be  put at the same padestal with a person who is law abiding and  is having a valid licence. Otherwise it will be putting a  premium on  illegality. That condition of holding of valid  MCD licence  imposed by DDA would be legal even if the number  of plots  available is more than the applicants. It is  not material  if the notice inviting applications was silent on this aspect of the matter and the application form which was  prescribed used  the words  "if any" as mentioned above. It was submitted on behalf of the DDA that due to the pressure of  the industries  which had  been running  in the non-conforming areas  temporary scheme for their continuance

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until their  eviction was  announced in  1982 by the MCD and thereunder ad  hoc licences  were granted to such industries subject to  their giving  an  undertaking  for  closing  the industry and  not to  claim any damages for such closure and also not  to claim  any alternative site in conforming zone. This Court  also noted  the argument  of the respondent that when the  Committee was  constituted to  identify out of 115 applicants and  60 of  them were found to be eligible and 55 ineligible, some  units out of those 60 found to be eligible were  in  the  same  position  as  those  who  had  obtained temporary licence  under the  ad hoc scheme in 1982 and they also did  not have  the necessary licences under the MCD Act as required  under Section  416 prior  to the date of making the application  for allotment  and that  their  cases  were similar to  that of  the respondents. The Court directed the DDA to  verify those  facts. Thereafter  it was submitted by the counsel  for the DDA that he himself examined cases of 7 parties out  of 11  in respect  of whom  these appeals  were pending and  that he  did not  find  any  criteria  as  such prescribed for  allotment to  those  60  persons  or  denial thereof to  the 11  persons subject matter of these appeals. Each case  has been  considered in  its own  back drop.  The Court recorded  the statement  of Mr.  Arun Jaitley, learned counsel for the DDA as under :      "A perusal  of the  recommendations      of the  Committees indicating  that      there  was   no  single  definitive      criterion    adopted     by     the      committees. The  case of  each unit      appears to  have been dealt with on      its own merit".      In this view of the matter, the Court observed that the appropriate course would be to direct the Commissioner (Land Disposal) of  DDA to  constitute a  committee consisting  of three high ranking officers to go into the merits in each of the claims  of the respondents and to find out what criteria would  be   adoptable  in   those  cases   and  whether  the respondents would  be entitled to the allotment on the basis thereof. Report of the committee was submitted to this Court and objections  thereto by  the respondents filed before the committee which  were again examined and the committee after considering those  objections again  submitted  its  report. Nevertheless the  Court after  examining the  reports was of the view  that the  averments made  by  the  respondents  in support of  their matters had not been adequately dealt with by the  Committee. The  Court directed  an affidavit  to  be filed by  the DDA  as to  how the  objections had been dealt with and  found to be unsustainable. The Court also directed filing of  the policy  of the allotment. In pursuant thereto an affidavit  of Ms.  Asma Manzar,  Director (Lands),  Delhi Development Authority was filed .      Ms. Asma Manzar, Director (Lands) DDA was also a member of the  committee which had submitted its report earlier and examined the objections of the respondents subsequently also which had  been filed  with reference  to the report. In the present  affidavit  Ms.  Asma  Manzar  has  filed  a  precis regarding the policy of allotment of industrial plots to the applicants who  had deposited  earnest money  in response to the press  advertisement issued  in 1976.  It was decided by the DDA  that all those applicants who had deposited on time 30% of  the premium  be  allotted,  if  eligible  otherwise, industrial plots. The eligible condition as we find from the record were (1) the prospective allottee should have a valid municipal licence  under Section  416 of  the MCD Act on the date of  the application  for allotment  of plot and (2) the

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industry should  be existing  in a  non-conforming area.  On these   basis   the   applications   were   scrutinised   on representation being  made. Cases  on 115 parties out of 299 which  had   earlier  been   rejected  were  ordered  to  be reexamined by  the Vice-Chairman,  DDA. A committee was thus constituted to  look into  each and  every  case  so  as  to determine its  eligibility. The  Deputy Director (Industry), Deputy Director  (City Planning)  and one  representative of the Prosecution  Branch of  the DDA  were nominated  on  the committal. It  is stated  that this  committee had inspected all the  115 units  after formulating a perform and examined the documents  of the  units  which  had  bearing  on  their eligibility. The  committee in its report rejected the claim of 55  units. The  recommendations of the committee as these were  based  on  spot  inspection,  assessment  of  physical performance, consideration of removal of hazard and nuisance etc., it would appear, were accepted by the DDA.      A committee which had been constituted after directions of this  Court again  examined the  records of  those  units whose cases had been accepted as it was suggested by some of the respondents  that their  cases also  fell  in  the  same category. The  committee, however,  did not find these facts to be correct.      It is not disputed that the parties who were not having municipal licences  on the  date of  their  industrial  plot altogether. They  are, however,  left to fend for themselves either by  buying an industrial plot in public auction or by a private  purchase. As per the policy the DDA does not want to allot  the industrial  plots to  them  on  pre-determined rates as  they fell  outside the policy made by it. In terms of this  policy it is also not material as to from what time in fact an industrial units had been working and may be much prior to the date of application for allotment of industrial plot. An  argument was  also advanced  that the  Nazul Rules came into  force only  on September  26, 1981 but the public advertisement for  allotment of  plots had  been issued much earlier  and,  therefore,  the  Nazul  Rules  would  not  be applicable. This  argument doe  not appear  to be  sound. No plots had  been allotted   prior to the coming into force of the Nazul  Rules and  once these Rules, which are statutory, came into  force no  allotment could  have been made outside and in  contravention of those Rules. If we see the relevant part of  Rule 6(v) it will apply to those industrialists who are required   to shift their industries from non-conforming areas to  conforming areas  under the  Master  Plan.  It  is correct that  some of the respondents were granted municipal licences  under   ad  hoc  licensing  policy,  1982  from  a retrospective date and it would appear, licence fee has also been charged  from the back date. DDA has not accepted these ad hoc  licences as per condition of its policy these should be a valid municipal licence on the date of the application. It has been pointed out that those parties who wanted ad hoc licences  has  to  give  an  indemnity  bond.  This  ad  hoc licensing policy  was issued  by the MCD on consideration by the Delhi  Administration that  "at length  the  problem  of industrial  units   functioning  in   non-conforming   areas unauthorisedly without  any licence  and has  suggested that the units  set up  before August  15,  1982  which  are  not obnoxious and  hazardous should  be granted licence in terms and conditions  finalised and  conveyed in  this behalf". In the indemnity bound there had to be a specific averment that the person  was running  factory "without  a proper  licence from the  Municipal Corporation  of Delhi" as required under Sections 416/417  of the  Delhi Municipal  Corporation  Act, 1957. Another  stipulation was  "that the  person  will  not

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claim any alternative sits in any conforming area in lieu of the   temporary   licence   granted   to   me/us   for   the aforesaid/factory run  by me/us  in the non confirming area, details whereof  have been  mentioned  hereinabove."  Yet  a further stipulation  in the  indemnity bond  was that  "I/we will not  claim damages  or compensation  or any alternative site in  a conforming  area in  case I/we  am/are  asked  or required to  close or  shift the trade/industry from the non conforming area  in respect  whereof of temporary licence as aforesaid  has  been  granted  to  me/us  by  the  Municipal Corporation of Delhi."      The respondents  relied on  these ad  hoc  licences  to claim that  they were  running trade/factory  from 1976  but were not  accepted by  the DDA  and their  applications were rejected by  the committee  even after they filed objections to the  report of the committee during the pendency of these appeals. We have also examined the reports of the committee; objections of  the respondents;  policy and other records of these appeals, and we find that except for the cases of M/s. Vijay Steel  Products and  Anr. SLP  (C)  No.9028/95,  Kimat Baldev Chhiber  & Anr.  SLP (C)  No.9123/95 and  M/s. Chawla Sons (Regd.)  & Anr.  SLP (C)  No.9098/95 other cases do not merit  consideration   thus  holding  that  the  respondents therein are not entitled to alternative plots.      In the  case of  Vijay Steel Products there is a notice dated August  21, 1980  from the  DDA requiring  Vijay Steel Products to  stop its industrial units as it was running the same  in  non-conforming  area  in  contravention  of  Zonal Development Plan  of Zone  No.H-4 under  Section 14  of  the Delhi Development  Act, 1957.  Vijay Steel Products was even prosecuted for  an offence  under Section 29 of that Act for contravention of Zonal Plan. The learned Magistrate however, acquitted the  party by  an order dated February 21, 1985 on the ground  that the  party had  deposited earnest  money as well as  30% of  the premium  for allotment  of  alternative plots of  land in  1976 and  all this period the DDA had not made any  allotment. It was, therefore, wrong on the part of the DDA to reject the application of Vijay Steel Products on the ground  that it  was not  located in non-conforming area being situated  in ‘Lal Dors’. DDA cannot have two different stands one  for rejecting  the application  of  Vijay  Steel Products for allotment of industrial plot on the ground that it was  not  located  in  a  non-conforming  area  and  also prosecuting it  on  the  ground  that  it  was  running  its industry in  a non-conforming area. The appeal against Vijay Steel Products has to be dismissed.      In the case of Kimat Baldev Chhiber we find that he was granted L-4  licence in  1968 Central  Excise  Rules  framed under  the  Central  Excise  and  Salt  Act,  1944  for  the "manufacture of  goods liable to Central duty of excise". It is claimed  in the  affidavit filed by Mr. K.B. Chhiber that he was  granted municipal  licence to  run his industry with effect from  18.6.75 which  was in  pursuance of application dated 17.10.1975.  There is a letter of February 24, 1977 of the MCD  to M/s. Saraswati Cable Corporation (proprietor Mr. K.B. Chhiber) requiring it to deposit a sum of Rs.5569 on or before February  28, 1977  toward the  licence  fee  with  a warning that  legal  action  would  be  taken  and  sanction withdrawn in  case any  default was  made. This letter would justify the  stand of  Mr. Chhiber  that MCD  had  issued  a licence under  Section 416  of the MCD with effect from June 18, 1975.  The appeal  of the  DDA against M/s. K.B. Chhiber also  does   not  merit  consideration  and  it  has  to  be dismissed.      In the  case of  M/s. Chawla Sons (Regd.) there are two

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MCD licence,  one is  for the  period from  April 1, 1976 to 31st March,  1977 of  which validity  is upto March 31, 1983 and amounts  of Rs.210/-  had been  deposited in  each  year against the  receipt numbers  mentioned in the licence. This licence shows that the industry is in a non-conforming area. The other licence is for the period from April 1983 to March 1984 onwards and issued on March 28, 1983. The Committee has rejected the case of this period on the ground that the unit had obtained MCD licence under ad hoc policy on the basis of undertaking that it will not claim alternative allotment and was thus  not eligible  for allotment. It appears to us that the first  licence had  not been  given due consideration by the committee. The appeal of DDA against this party has also therefore to be dismissed.      Considering  the whole aspect of the matter the appeals of the Delhi Development Authority in the case of M/s. Vijay Steel Products  SLP (C) No.9028/95, Kimat Baldev Chhiber SLP (C) No.9123/95  and M/s.  Chawla Sons  (Regd.)  9098/95  are dismissed and  affirming the orders of the High Court and in the cases  of M/s.  Ambitious Enterprises  SLP (C)  8351/95, M/s. Chopra  Dying  Industries  SLP  (C)  No.10819/95,  M/s. Basant Parkash  Electric  &  Co.  SLP  (C)  No.9031/95,  Raj Brothers SLP  (C) No.  9567/95, R.K. Chanderbhan Multani SLP (C) No. 18870/95, Joytosma Export SLP (C) 9370/95, M/s.Dolly Toys International SLP (C) No.9369/95 and Satish Chander SLP (C) No.10058/95  the appeals  are allowed, the orders of the High Court are set aside and the writ petitions filed by the respondents are dismissed. No costs.