Case Note & Summary
The petitioner, M/s. Shree Ambica Developers, a sole proprietorship of Mr. Madeva Patel, was allotted Plot No. 1 in Sector 1, Kharghar, Navi Mumbai by CIDCO (respondent Nos. 2 and 3) for commercial use after being the highest bidder in a tender with a bid of Rs. 40 crores. Subsequently, the petitioner applied for and was granted a change of user from commercial to commercial cum residential use by CIDCO on payment of necessary charges. Acting on this permission, the petitioner constructed up to the plinth level and entered into agreements to sell residential flats. However, on 14.9.2010, CIDCO issued a stop work notice, followed by a show cause notice. After considering the petitioner's reply, CIDCO passed an order dated 17.3.2011 revoking the change of user permission and directing restoration of the plot to commercial use, on the ground that the permission was illegal and CIDCO had no power to grant such change. The petitioner challenged this order before the Bombay High Court. The sole legal issue was whether CIDCO could cancel the permission after the petitioner had acted upon it. The Court, applying the doctrine of promissory estoppel, held that CIDCO was estopped from revoking the permission. The Court found that CIDCO had the power to grant change of user under its regulations, and the revocation was arbitrary. The Court quashed the order dated 17.3.2011 and allowed the petition.
Headnote
A) Administrative Law - Promissory Estoppel - Revocation of Permission - Public Authority - CIDCO granted change of user permission to the petitioner for a plot from commercial to commercial cum residential use. The petitioner paid charges and acted upon it by constructing up to plinth level and entering into agreements to sell flats. CIDCO later revoked the permission on the ground that it was illegal. The Court held that CIDCO was estopped from revoking the permission after the petitioner had acted upon it to its detriment. The revocation was arbitrary and unsustainable. (Paras 1-3) B) Contract Law - Change of User - CIDCO's Power - The Court noted that CIDCO had the power to grant change of user under its regulations. The revocation was based on an erroneous view that CIDCO lacked such power. The permission was validly granted and could not be unilaterally withdrawn after the allottee had relied on it. (Paras 2-3)
Issue of Consideration
Whether CIDCO is entitled to cancel the permission granted earlier for change of user of a plot from commercial to commercial cum residential use after the petitioners had acted upon it.
Final Decision
The Court allowed the petition and quashed the order dated 17.3.2011 passed by the Vice Chairman and Managing Director, CIDCO revoking the change of user permission.
Law Points
- Doctrine of promissory estoppel applies to public authorities
- revocation of permission after reliance is arbitrary
- change of user permission cannot be revoked after allottee acts upon it
