Bombay HC overturns Thane civic body's ruling on Sheth Developers

20 Nov 2023 CW Team

Recently, the Bombay High Court declared that Thane Municipal Corporation could not avail itself of the "considerable financial benefit" of receiving Rs 420 million from a builder, along with the builder's development of a public amenity (a fire brigade station), without honouring its commitment under a buy-back policy.

The High Court deemed the Corporation's refusal in July 2023 to grant the builder development permission, including additional developable space as per a 2020 regulation for its free-sale building, as "manifestly arbitrary." The rejection was based on the Corporation's claim that the buy-back policy (BBP) was temporarily suspended due to an inquiry initiated after a question was raised in the State legislative assembly regarding the policy in May.

Sheth Developers, the builder, contested the rejection in the High Court, asserting that it was arbitrary and violated principles of legitimate expectations and the doctrine of promissory estoppel (a legal principle ensuring the enforceability of a promise by law).

On November 1, the bench of Justices Gautam Patel and Kamal Khata stated that the rejection contravenes established legal principles concerning unreasonableness and the doctrine of proportionality in administrative action. It also fails to meet the "test of non-arbitrariness in administrative action mandated by Article 14 (right to equality)."

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