Bombay High Court
Neelam Finance Bombay Private Limited vs The State Of Maharashtra Th. The ... on 17 April, 2024
Author: G.S. Patel
Bench: G.S. Patel
Neelam Finance Bombay Pvt Ltd v State Of Maharashtra & Ors (II)
904-OSWP-2051-2024+F.DOC
Ashwini
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2051 OF 2024
WITH
INTERIM APPLICATION (L) NO. 13142 OF 2024
IN
WRIT PETITION NO. 2051 OF 2024
WITH
INTERIM APPLICATION (L) NO. 13138 OF 2024
IN
WRIT PETITION NO. 2051 OF 2024
WITH
INTERIM APPLICATION (L) NO. 13119 OF 2024
IN
WRIT PETITION NO. 2051 OF 2024
WITH
Digitally
INTERIM APPLICATION (L) NO. 12911 OF 2024
signed by
ASHWINI IN
ASHWINI
H GAJAKOSH
GAJAKOSH Date: WRIT PETITION NO. 2051 OF 2024
2024.04.18
10:16:48
+0530 WITH
INTERIM APPLICATION (L) NO. 12910 OF 2024
IN
WRIT PETITION NO. 2051 OF 2024
Page 1 of 13
17th April 2024
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Neelam Finance Bombay Pvt Ltd v State Of Maharashtra & Ors (II)
904-OSWP-2051-2024+F.DOC
Neelam Finance Bombay Pvt Ltd ...Petitioner
Versus
The State of Maharashtra through the Ministry of ...Respondent
Housing Department
Mr Aspi Chinoy, Senior Advocate, with Navroz Seervai, Senior
Advocate, Sharan Jagtiani, Senior Advocate, Aseem
Naphade, Kausar Banatwala, Chirag Sarawagi, Viraj Bansod &
Yash Dhakad, i/b Tushar Goradia, for the Petitioners in
WP/2051/2024.
Dr Birendra Saraf, Advocate General, with Jaymala O, Addl. GP,
for the Respondent-State.
Mr Janak Dwarkadas, Senior Advocate, with Namrata Vinod, i/b
Jagdish G Aradwad (Reddy), for Respondent No. 2-SRA.
Mr Ravi Kadam, Senior Advocate, with Ashish Kamat, Senior
Advocate, Harsh M, Chirag Shah, Ekta Dalvi, Kavita
Dhanuka & Shyamsundar Jadhav, i/b Ekta Tripathi, for the
Respondent-MMRDA.
Mr TN Subramanian, Senior Advocate, with Priya Ranade, Rubin
Vakil, Tanvi Gandhi, Sahil Gandhi & Nupur Desai, i/b M/s
Markand Gandhi & Co, for Respondents Nos. 4 & 5.
Mr Anil Singh, Senior Advocate, with Vishal Acharya & Adarsh V,
for the Intervenor (Prerna CHS Ltd).
Mr Subhash Jha, with Pradeep Thorat, Vishal Acharya, Harekrishna
Mishra, Neha Balani & Ritesh Kesarwani, i/b Vishal Acharya,
for the Intervenor in IAL/13119/2024 in WP/2051/2024.
Mr Suraj Dinkar Gurav, with Aditya D Gurav, for the Intervenor in
IAL/12911/2024 & IAL/12910/2024 in WP/2051/2024.
CORAM G.S. Patel &
Kamal Khata, JJ.
DATED: 17th April 2024 PC:- Page 2 of 13 17th April 2024 ::: Uploaded on - 18/04/2024 ::: Downloaded on - 18/04/2024 15:49:27 :::
Neelam Finance Bombay Pvt Ltd v State Of Maharashtra & Ors (II) 904-OSWP-2051-2024+F.DOC
1. This is a second round by the Petitioner, Neelam Finance ("Neelam"). The first one ended on 12th March 2024 with our dismissal of Neelam's Writ Petition No 488 of 2024. 1 A copy of that order is at Exhibit "C" to the present Writ Petition at page 85. The concern expressed by the Petitioner on that date was that its slum rehabilitation project at Ramabai Nagar at Ghatkopar was being jeopardised at the instance of a Public Authority, namely the Mumbai Metropolitan Regional Development Authority ("MMRDA") which had, and we use this word loosely, joined hands with the Planning Authority, the Slum Rehabilitation Authority ("SRA"). Paragraphs 6, 7, 8, 11 and 13 of that order at page 91 of the present Writ Petition read thus:
"6. Neelam is alarmed by three things. The first are Minutes of a Meeting at page 101. This meeting was held by MMRDA. The Minutes are dated 26th September 2023. The meeting was chaired by the MMRDA Commissioner. The entire focus of the meeting seems to have been an extension of the Eastern Freeway. Neelam was represented. The gist is set out and an earlier proposed part of the Freeway was to be substituted with an extension. Paragraph 3 of the Minutes tells us that it was desirable to explore the feasibility of the Eastern Freeway proposal along the Ramabai Nagar, that is the site in question. It notes the existence of a large number of structures affecting the alignment namely the slums. Neelam's representative said that the slum clearance could be done if permission was granted for the entire land. There were some numbers discussed in regard to Project Affected Person ("PAP") housing and slum housing. Clause 9 of the Minutes said 1 Neelam Finance Bombay Pvt Ltd & Anr v State of Maharashtra & Ors, Order dated 12th March 2024 in Writ Petition No 488 of 2024, 2024:BHC- OS:4218-DB.Page 3 of 13
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7. What happened thereafter was that MMRDA began circulating in early January 2024, a glossy brochure saying that it was undertaking the entire development on the entire plot. A copy of this brochure is from page 105. It has all kinds of figures, images, legends, and slogans both appropriate and markedly less so. (For instance, it is curious that a proponent of a massive infrastructure project would quote Jane Jacobs, legendary for opposing precisely such development in New York city at the instance of Robert Moses). Brochure do not trouble us. They should not trouble the Petitioners.
8. Neelam's second worry is the document at Exhibit 'W,' called an RFP or Request for Proposal, for a term loan for what MMRDA describes as the Ramabai Redevelopment Project. This is a notice inviting Expressions of Interest (EOIs) or in principle sanction for a rupee-denominated loan of Rs 4000 crores to the MMRDA for the development of the slum rehabilitation project.
11. On the second sketch plan annexed to this order, the one tendered by Dr Sathe, we see that Neelam presently has two Letters of Intent ("LOIs"). The entire plot privately held is about 1,96,905 sq mts. The first LOI is of 15th May 2009 for an area of 18,100.18 sq mts, slightly revised to 20,375 sq mts. This LOI covers the portion shown in blue in the bottom left roughly triangular portion. Adjacent to that is an irregularly shaped portion covered by a revised LOI dated 12th June 2020. The amalgamated or combined area is 62,397.07 sq mts, still well short of the entirety of the plot. The revised LOI which covers the 62,037.07 sq mts includes the previous area of 20,370.35 sq mts.Page 4 of 13
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13. Mr Chinoy and Mr Seervai for the Petitioners maintain that this is nothing but an attempt to hijack the slum redevelopment which is on a private plot without the due process of law and without the authority of law. The Petitioners' valuable development rights are not only adversely affected but are likely to be extinguished if MMRDA is allowed to continue. Mr Chinoy submits once the property is part of a slum project, no authority can simply override the settled rights of a developer under a slum rehabilitation scheme for which an LOI has been issued. If the slums are on private lands, the rights cannot be extinguished simply by a takeover of the slum redevelopment. The Maharashtra Slum Areas (Improvement, Clearance And Redevelopment) Act 1971 ("Slums Act") itself has important safeguards and inter alia allows a private owner a preferential right to develop before any other developer or authority is brought in. The issuance of the brochure and its wide publicity and circulation and the RFP for finance all point in one direction, that is to say, a threatened or anticipated takeover action by MMRDA working with the State Government and the SRA."
2. We declined to interfere on that date because there was nothing then, we believed, that lent itself to judicial review. All that we had was a brochure and a request for proposal.
3. The present Petition was filed on 5th April 2024. To our previous order, we had annexed a sketch of the site in question and we do so in this order as well. As the sketch shows, this is a very large tract of land at Ghatkopar. There is the Freeway on the western side and some of the affected land continues beyond the Page 5 of 13 17th April 2024 ::: Uploaded on - 18/04/2024 ::: Downloaded on - 18/04/2024 15:49:27 ::: Neelam Finance Bombay Pvt Ltd v State Of Maharashtra & Ors (II) 904-OSWP-2051-2024+F.DOC Expressway on the west. The majority, however, is to the east. The whole of this is Ramabai Nagar.
4. Neelam Finance admittedly has a Letter of Intent ("LoI") or a set of LoIs , the most recent being of 2023 in relation to CTS No 195(part). This is shown on the sketch plan with the legend "construction not started". In itself this is substantial, about 62,000 sq mts. Below this plot is a government plot. The government plot is not Neelam's concern. There is a private plot for which no LoI has been issued. The owners of the land, as we had previously noted, are represented by Mr Subramanian. Neelam Finance has a power of attorney and other documents but the disputes between Neelam Finance and the owners are not our concern today.
5. The present Petition is filed on the basis that the government at every level, it is said from the Chief Minister downwards, has given its blessings to what is called a Joint Venture ("JV") between MMRDA and the SRA for the entirety of Ramabai Nagar, including CTS No 195 (part) for which Neelam Finance holds LoIs.
6. The submission by Mr Chinoy is that there is no question of Neelam Finance facing a show cause notice under Section 13(2) of the Maharashtra Slum Areas (Improvement, Clearance And Redevelopment) Act, 1971 for a termination or cancellation of its LoIs because the result is really predetermined. It is a foregone conclusion. The entire exercise of power is ex facie a colourable exercise of power. The reason is that SRA is bound hand and foot by its so-called JV with MMRDA. Whether SRA does or does not have Page 6 of 13 17th April 2024 ::: Uploaded on - 18/04/2024 ::: Downloaded on - 18/04/2024 15:49:27 ::: Neelam Finance Bombay Pvt Ltd v State Of Maharashtra & Ors (II) 904-OSWP-2051-2024+F.DOC a financial or pecuniary interest in that JV is immaterial; what matters is that it is a partner in that enterprise with MMRDA for the proposed redevelopment of the entire land. In these circumstances, Mr Chinoy submits, there is not the slightest possibility of SRA ever being able to take an objective decision on the Section 13(2) proceedings against Neelam Finance.
7. In other words, so long as SRA has this 'JV' or arrangement with MMRDA, there is no question of permitting SRA to take any decision at all regarding the Section 13(2) notice, whether Neelam is in default or not, and whether its LoIs should be cancelled or not. Any decision will surely be influenced by SRA's 'JV' with MMRDA, and that will be used as a reason to eject Neelam whether the JV is expressly cited as a reason or not. Hence, the entire exercise is not just tainted but the attempt to terminate Neelam Finance's LoIs is a colourable exercise of power. There is no other authority empowered to decide a Section 13 proceeding, and, therefore, so long as there is this JV between SRA and MMRDA, the SRA should not be permitted to proceed against Neelam. The termination of the Petitioners' LoI is a foregone conclusion; it is already all over, bar the shouting.
8. That there have been public announcements about a tie up between MMRDA and SRA is undeniable. There is material to that effect on record. The Affidavits by SRA and MMRDA on this aspect of the matter are interesting. The SRA Affidavit says that SRA is not a pecuniary stake holder nor a partner and has no commercial, financial, or monetary interest in the MMRDA-driven Page 7 of 13 17th April 2024 ::: Uploaded on - 18/04/2024 ::: Downloaded on - 18/04/2024 15:49:27 ::: Neelam Finance Bombay Pvt Ltd v State Of Maharashtra & Ors (II) 904-OSWP-2051-2024+F.DOC Ramabai Nagar rehab project. But in paragraph 15, it says that what is proposed to be implemented by the MMRDA is "in Joint Venture" with SRA. This is clarified in paragraph 16 with the assertion that the phrase JV is "not intended to mean and does not mean that the SRA will make any financial gain from the project".
9. For its part, MMRDA in its Affidavit in Reply begins in paragraph 3 by asserting that SRA will be the Planning Authority and that MMRDA will be the developer. Then, in paragraph 7 MMRDA says that it will clear the land and that MMRDA will have a commercial interest while SRA will be the Planning Authority. However, in paragraph 5 MMRDA echoes what SRA has said because it confirms that there was on 12th December 2023 approval at the highest levels for this scheme by MMRDA as a developer 'in JV' with the SRA. In paragraph 9(c), the MMRDA says again that SRA will be only the Planning Authority and all commercial rights will vest with MMRDA.
10. There is another dimension to the matter, and it is one that weighs with us. We believe we should not, in an appreciation of the Petitioners' submissions, blind ourselves to a possibility that there is indeed a case to be made against Neelam Finance for defaults or non-performance. It would be exceedingly difficult to hold that even if there is a default or non-performance because there is this so- called tie up or involvement of SRA with MMRDA therefore, as long as that arrangement continues Neelam Finance's continuance as a developer cannot ever be questioned or that no action whatsoever can ever be taken against it The Slum Rehabilitation Act is not for Page 8 of 13 17th April 2024 ::: Uploaded on - 18/04/2024 ::: Downloaded on - 18/04/2024 15:49:27 ::: Neelam Finance Bombay Pvt Ltd v State Of Maharashtra & Ors (II) 904-OSWP-2051-2024+F.DOC the benefit of developers. It never was. They are given certain benefits in terms of the free sale components, but they have significant obligations to the beneficiaries, various slum dwellers and slum societies. It is those interests that are paramount.
11. We pose this question: What is to be done if indeed Neelam Finance can be shown to be in default of its obligations under the LoI? Is it even conceivable that this should never be adjudicated because MMRDA has proposed redevelopment in its own name and has involved SRA in that enterprise? After all, MMRDA is not particularly concerned with only CTS No 195(part). It is painting on a much larger canvas, taking on a much bigger project.
12. The show cause notice annexed to the Petition is worthless. An English translation is from pages 99 to 100 (the Marathi edition is helpfully photocopied grey on black and its completely illegible). The so-called show cause notice of 13th March 2024 says absolutely nothing. There is an internal note on the following page that indicates, though without further particulars, that for some time now there has been no progress by Neelam Finance. Unfortunately, that internal note muddles that alleged lack of progress with the JV, thus considerably feeding into Mr Chinoy's construct for the Petitioners.
13. These two things must be kept separate. SRA cannot adjudicate against Neelam Finance because of the JV with MMRDA. To that extent, Mr Chinoy is correct. But this cannot be stretched to the point of saying that SRA -- the only empowered authority --
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14. The proverbial cat is out of the legendary bag when Neelam Finance says that so long as there is this JV (even though SRA is only the planning authority), there can never be a Section 13(2) proceeding against Neelam Finance to assess its performance or decide whether its LoIs should or should not be cancelled.
15. In other words, the so-called JV admirably suits Neelam Finance's purpose by giving it a full-envelope immunity against the statute itself.
16. That can never be.
17. Concerned with maintaining the integrity of the decision making process -- and only that -- we asked Mr Dwarkadas to take Page 10 of 13 17th April 2024 ::: Uploaded on - 18/04/2024 ::: Downloaded on - 18/04/2024 15:49:27 ::: Neelam Finance Bombay Pvt Ltd v State Of Maharashtra & Ors (II) 904-OSWP-2051-2024+F.DOC instructions. He said immediately that a fresh show cause notice with sufficient particulars would be issued within two weeks from today. The Chief Executive Officer ("CEO") SRA himself would afford a hearing to the Petitioners. That hearing would be on an assessment of and only of Neelam Finance's performance under the LoIs that were issued to it in respect of the scheme of project on CTS No 195(part). The CEO SRA would decide this aspect on merits entirely uninfluenced and with no reference whatsoever to the JV or the tie up or the proposal by MMRDA. We accept this.
18. We make it clear that the so-called JV is not a factor that will be allowed to weigh with the CEO SRA at all. The CEO SRA will be bound by these directions to wholly ignore the JV and all documents and communications relating to it. The MMRDA initiate is to be kept out of consideration altogether.
19. To ensure that this hearing is not otherwise compromised, we direct that the CEO SRA will hear not only Neelam Finance but representatives of every one of the societies on CTS No 195(part). After all they too may have something to contribute in regard to the performance or non-performance by Neelam Finance of its obligations on that plot.
20. In the fresh show cause notice, it is open to the SRA to invoke any currently applicable Government Resolution, Circular or other directive.
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21. However, in this show cause notice, t the CEO SRA is not to hear MMRDA under any circumstances.
22. The CEO SRA will pass a speaking order. If that order is against the Petitioners, and especially since we are approaching the ensuing Court vacation, that order will not be acted upon for a period of five weeks thereafter, but only in respect of CTS No 195(part).
23. We clarify that this is not an order by consent of parties. While Mr Dwarkadas has instructions to make this statement, Mr Chinoy has not indicated that he is aggregable to this course.
24. Except as noted above (i.e., that all consideration of MMRDA and the so-called JV must be excluded at the hearing on the show cause notice), all contentions are expressly left open, both at the level of the CEO SRA and for a further hearing of the Petition; including the opportunity to Mr Chinoy to argue at a later stage that what he had predicted has come to pass or, in other words, to allow him to say, "I hate to say I told you so but I told you so."
25. We are not disposing of the Petition. All Interim Applications are also kept pending. Liberty to the parties to apply.
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