Supreme Court allows redevelopment of building near refinery: Satwaratna Co-op Housing Society Ltd. vs. Bharat Petroleum Corporation Ltd. (26 April 2022)

Introduction

Date of the Judgment: 26 April 2022
Citation: 2022 INSC 410
Judges: Indira Banerjee, J. and A.S. Bopanna, J.

Can a Municipal Corporation deny permission for the redevelopment of an existing building solely based on its proximity to a refinery, even when no specific law prohibits such construction? The Supreme Court of India recently addressed this critical question in a case involving a housing society and Bharat Petroleum Corporation Limited (BPCL). The court examined the balance between development rights and safety concerns, ultimately ruling in favor of the housing society. This judgment clarifies the extent to which municipal authorities can restrict construction based on perceived risks without explicit legal backing. The judgment was authored by Justice Indira Banerjee and Justice A.S. Bopanna concurred.

Case Background

The case revolves around a residential building in Mumbai, constructed in 1972-73, which was in a dilapidated condition. The Satwaratna Co-operative Housing Society Limited (Appellant-Society) decided to redevelop the building and appointed M/s. Kishraj Developers (Appellant-Developer) for this purpose. A development agreement was executed, and the Appellant-Developer approached the Municipal Corporation of Greater Mumbai for permission to redevelop the building, proposing a stilt plus seven-story structure.

Initially, the Municipal Corporation disapproved the proposal but later granted permission to reconstruct the building, subject to certain conditions. Following this, the existing building was demolished, and the 12 families who were members of the Appellant-Society were provided with alternative accommodation at a monthly rent. The Municipal Corporation also granted a commencement certificate to the Appellant-Developer to start construction up to the plinth level.

However, Bharat Petroleum Corporation Limited (Respondent-BPCL) raised objections, claiming that the redevelopment would jeopardize the safety of its refinery and the locality. Despite these objections, the Appellant-Developer continued construction up to the plinth level. The Municipal Corporation then issued a stop-work notice, leading to a legal battle.

Timeline

Course of Proceedings

Initially, the Municipal Corporation of Greater Mumbai disapproved the redevelopment proposal but later granted permission to reconstruct the building subject to certain conditions. After BPCL raised objections, the Municipal Corporation issued a stop-work notice. The Appellants then filed a writ petition in the Bombay High Court, which directed the Municipal Corporation to make a reasoned decision. The Municipal Commissioner then granted permission to continue construction, subject to certain conditions.

Aggrieved by this, Respondent-BPCL filed a writ petition in the Bombay High Court, which initially ordered a status quo. The High Court ultimately allowed the writ petition and quashed the Municipal Commissioner’s order, citing safety and security concerns for the refinery. The High Court emphasized the need for a buffer zone and criticized the Municipal Commissioner’s decision to allow construction despite earlier concerns. This led to the appeal before the Supreme Court.

Legal Framework

The primary legal framework for this case is the Maharashtra Regional Town Planning Act, 1966 (MRTP Act) and the Development Control Regulations for Greater Mumbai, framed under Section 22(m) of the MRTP Act. The MRTP Act deals with development plans and regional planning but does not contain any specific provision that prohibits or restricts construction near a refinery. The Development Control Regulations require measures of safety and public interest to be taken into consideration.

Regulation 16 of the Development Control Regulations of 1991 states the requirements of sites for construction. It specifies that land cannot be used for construction if the Commissioner considers it insanitary, dangerous, or lacking water supply. It also prohibits construction if it endangers health and safety, damages the environment, or is against public interest.
The relevant part of the regulation is as follows:

“16. Requirements of sites – No land shall be used as a site for the construction of buildings –
(a) if the Commissioner considers that the site is insanitary or that it is dangerous to construct a building on it or no water supply is likely to be available within a reasonable period of time.
(b)-(d) ***
(e)If the use of the said site is for a purpose which in the Commissioner’s opinion may be a source of danger to the health and safety of the inhabitants of the neighborhood.
(f)-(m)***
(n)if the proposed development is likely to involve damage to or have deleterious impact on or is against urban aesthetics or environment or ecology and/or on historical/architectural/aesthetical buildings and precincts or is not in the public interest.”

Arguments

Arguments of the Appellants (Satwaratna Co-op Housing Society and M/s. Kishraj Developers):

• The Appellants argued that the building was being redeveloped, not newly constructed.
• They contended that there was no specific law or regulation that prohibited the construction of a seven-story building at the site.
• The Appellants highlighted the fact that the Municipal Commissioner had taken into account all relevant factors, including the existence of other buildings in the vicinity, before granting permission.
• They also pointed out that they had provided undertakings to ensure the safety and security of the building, including police verification of prospective buyers.
• The Appellants argued that the High Court had erred in interfering with the Municipal Commissioner’s decision, which was within his jurisdiction.

Arguments of the Respondent-BPCL (Bharat Petroleum Corporation Limited):

• Respondent-BPCL argued that the redevelopment posed a threat to the safety and security of its refinery and the surrounding area.
• They emphasized the potential for natural calamities and terrorist attacks, stating that the refinery is a vital installation that needs to be protected.
• Respondent-BPCL contended that the Municipal Commissioner had ignored the security concerns raised by them.
• They argued that the High Court was right in quashing the Municipal Commissioner’s order and that a buffer zone should be maintained around the refinery.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue:

1. Whether the High Court was justified in setting aside the order of the Municipal Commissioner permitting redevelopment of the building in question, in the absence of any specific law or regulation prohibiting such construction.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court considered the Maharashtra Regional Town Planning Act, 1966 and noted that it does not contain any specific provision that prohibits or restricts construction near a refinery.
• The Court considered the Development Control Regulations for Greater Mumbai and noted that it requires measures of safety and public interest to be taken into consideration.
• The Court specifically referred to Regulation 16 of the DC Regulations of 1991 and noted that the Commissioner may prevent the use of land if it is dangerous or a source of danger to the health and safety of the inhabitants of the neighbourhood.

The Supreme Court held that the High Court had erred in interfering with the decision of the Municipal Commissioner. The Court emphasized that in the absence of any specific law, rule, or regulation prohibiting the construction of a seven-story building at the site, the Municipal Commissioner’s discretion should not have been interfered with. The Court noted that the Municipal Commissioner had considered all relevant factors, including the existence of other buildings in the vicinity, before granting permission for redevelopment.

The Court also observed that the High Court had overlooked the fact that a building was already in existence and that the redevelopment was for a stronger, better building. The Court stated that only a few additional floors were being added, which did not contravene any rules or regulations. The Court emphasized that the owner of land cannot be prevented from utilizing the land effectively, including the right to carry out redevelopment and reconstruction as per law.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the lack of any specific legal provision prohibiting construction near a refinery. The Court emphasized that in the absence of such a law, the Municipal Commissioner’s decision to allow redevelopment should not have been overturned by the High Court. The Court also took into account that the building was being redeveloped, not newly constructed, and that the Municipal Commissioner had considered all relevant factors before granting permission. The Court’s reasoning was also influenced by the fact that the High Court had acted as an appellate authority over the decision of the Municipal Commissioner, which was not within its jurisdiction.

The Court quoted the following from the High Court’s order:

“47. For one, the concern is founded on two critical aspects. First is safety. Now, natural calamities come uninvited. On such occasions, it is the normal and ordinary expectation of the general public and those caught in and are victims of calamities, that rescue operations are commenced forthwith. The response, therefore, ought to be almost immediate. The teams and squads in-charge of emergent relief and rescue measures ought to reach the site within minutes and not hours.”

“48. Secondly, the security of the refinery is of paramount consideration. That must prevail over a commercial or private business enterprise. The refinery under continued threat of the nature highlighted above means risk to human life, threat, to the economy and loss of reputation of the State as a whole.”

“53. That the factories, industries and installations dealing with inflammable and obnoxious substances and products by themselves present a threat to the life of the people residing in buildings within their proximity.”

Key Takeaways

• In the absence of a specific law or regulation prohibiting construction near a refinery, a Municipal Commissioner’s decision to allow redevelopment should not be interfered with by the High Court.
• Redevelopment of an existing building is different from new construction and should be considered accordingly.
• Municipal authorities must act within the limits of their jurisdiction and not act as an appellate authority over the decisions of the Municipal Commissioner.
• Safety and security concerns are important but cannot be the sole basis for denying construction permissions when there is no legal basis for such denial.

Directions

The Supreme Court directed that the Appellants may issue advertisements for the sale of additional flats, indicating that preference would be given to the Respondent-Corporation and to Government/Public Sector Undertakings. In the event that the Respondent-BPCL or any other Government or public sector undertaking makes an offer to purchase the additional flats at the market value, the additional flats shall be sold to them, subject to the requisite formalities.

Development of Law

The ratio decidendi of this case is that in the absence of a specific law or regulation prohibiting construction near a refinery, the Municipal Commissioner’s decision to allow redevelopment should not be interfered with. This case clarifies that general safety concerns are not sufficient grounds to restrict construction without explicit legal backing. It reinforces the principle that authorities must act within their jurisdiction and that the right to utilize land effectively, including redevelopment, should be upheld unless there is a clear legal prohibition.

Conclusion

The Supreme Court allowed the appeal, setting aside the High Court’s judgment. The Court held that the Municipal Commissioner’s decision to allow the redevelopment was valid, as there was no specific law or regulation prohibiting such construction. The Court emphasized the importance of adhering to legal provisions and not interfering with the decisions of authorities acting within their jurisdiction. This judgment clarifies the legal position on construction near refineries and reinforces the need for clear legal frameworks when restricting development rights.