Supreme Court allows slum redevelopment despite lease claim: Lullu Vas vs. State of Maharashtra (22 February 2019)

Date of the Judgment: 22 February 2019
Citation: (2019) INSC 144
Judges: N.V. Ramana, J. and Mohan M. Shantanagoudar, J.

Can a disputed lease agreement prevent the redevelopment of a slum area, especially when the majority of residents support the redevelopment? The Supreme Court of India addressed this complex issue in a case involving a long-standing dispute over land rights and the implementation of a slum rehabilitation scheme. The core issue was whether the appellants, claiming leasehold rights, could prevent the slum dwellers from proceeding with a redevelopment plan approved by the Slum Rehabilitation Authority (SRA). The bench consisted of Justices N.V. Ramana and Mohan M. Shantanagoudar, who delivered a unanimous judgment.

Case Background

The case revolves around a property in Mumbai, initially acquired by the Government of Bombay before 1945 and later vested in the Municipal Corporation of Greater Mumbai (MCGM). In 1945, Lullu Vas, the predecessor-in-interest of the appellants, applied for a lease of the land for residential purposes, paying an earnest money of Rs. 8,232. The appellants contended that MCGM decided to grant leasehold rights in perpetuity to Lullu Vas. At that time, the land was already occupied by about 70 slum structures. In 1965, MCGM handed over symbolic possession of the plot to Lullu Vas on an “as is where is” basis, with the existing encroachments.

In 1971, the Maharashtra Slum Areas Act was enacted. By 1976, photo-passes were issued to the slum dwellers, and the area was declared a slum, making it eligible for redevelopment under the Development Control Regulations and the Slum Act.

In 1996, the slum dwellers formed a cooperative housing society, “New Sagar Vihar” (respondent no. 4), and proposed a slum rehabilitation project to the SRA. The SRA approved the proposal and issued a Letter of Intent (LoI) and an Intimation of Approval (IoA) in 1999. A commencement certificate was also issued, and the society appointed a developer (respondent no. 5) to implement the scheme.

Lullu Vas passed away in 1997. In 2008, Mr. Shailesh Chheda, claiming to be the power of attorney holder for Lullu Vas’s legal representatives, filed a writ petition challenging the SRA’s 1999 order. This petition was withdrawn with the liberty to approach the High-Power Committee (HPC).

The HPC initially concluded in 2009 that the land belonged to MCGM and the appellants were lessees for 999 years. However, since the LoI had lapsed, the HPC directed the SRA to hear both parties regarding its revalidation. The SRA revalidated the LoI in 2010, which was challenged by the appellants before the HPC. In 2011, the HPC set aside the SRA’s revalidation order, and subsequently, the SRA allowed the appellants’ application to record the scheme.

In 2015, MCGM withdrew its earlier communications accepting Lullu Vas’s lease claim, stating that the lease documents were invalid due to lack of proper seal and signature and failure to remove encroachments. The appellants then filed a civil suit in 2016 challenging MCGM’s decision and seeking a declaration of their leasehold rights. They also sought a temporary injunction, which was partly granted in 2018.

Meanwhile, in 2011, the slum dwellers filed a writ petition challenging the HPC’s 2011 order cancelling their LoI. The High Court allowed this petition in 2018, setting aside the HPC’s order and directing the SRA to proceed with the redevelopment. This order was challenged in the present appeal before the Supreme Court.

Timeline:

Legal Framework

The judgment refers to several key legal provisions:

• The Maharashtra Slum Areas Act, 1971 (referred to as “Slum Act”): This act provides for the improvement and redevelopment of slum areas in Maharashtra. It empowers the government to acquire property in slum rehabilitation areas and gives preferential rights to societies of slum dwellers.
• Regulation 33 (10) of the Development Control Regulations: This regulation, read with the provisions of the Slum Act, allows for the redevelopment of declared slum areas.
• Section 107 of the Transfer of Property Act, 1882: This section mandates that a lease of immovable property for a period exceeding one year must be registered.
  
  The court noted that “Section 107 of the Transfer of Property Act, 1882, which mandates that a lease of immovable property for a period exceeding one year should be registered.”
• Sections 70 and 71 of the Mumbai Municipal Corporation Act, 1888 (referred to as “Municipal Act”): These sections prescribe the mode of executing contracts by the Municipal Corporation and state that any contract made in contravention of these provisions is not binding on the corporation.
  
  The court observed that “Sections 70 and 71 of the Mumbai Municipal Corporation Act, 1888…prescribe the mode of executing contracts and indicate that any contract made in contravention to the same shall not be binding on the corporation.”

Arguments

The arguments presented by the parties were as follows:

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether the impugned order passed by the High Court, allowing the respondents to proceed with the redevelopment of the land, can be sustained in the eyes of law, considering the pending civil suit before the trial court.

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

The Supreme Court analyzed the submissions made by all parties and treated them as follows:

How each authority was viewed by the Court?

• Balasaheb Arjun Torbole v. Administrator and Divisional Commissioner [(2015) 6 SCC 534]*: The Supreme Court used this case to highlight that the Slum Act is a beneficial legislation intended to improve the living conditions of slum dwellers. This was a crucial point in the court’s reasoning to prioritize the slum dwellers’ rights to redevelopment.
• Section 107 of the Transfer of Property Act, 1882: The court used this provision to emphasize that the lease claimed by the appellants was not valid as it was not registered as per the requirement of the said provision.
• Sections 70 and 71 of the Mumbai Municipal Corporation Act, 1888: The court used these provisions to highlight that the lease claimed by the appellants was not valid as it was not executed as per the requirement of the said provisions.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

1. The disputed nature of the appellants’ lease claim, which was not supported by a registered document.
2. The beneficial nature of the Slum Act, which aims to improve the lives of slum dwellers.
3. The fact that the majority of slum dwellers supported the redevelopment scheme.
4. The ongoing delay in the redevelopment project due to the litigation, which was causing hardship to the slum dwellers.
5. The principle of comparative convenience, which favored the slum dwellers’ rehabilitation over the appellants’ disputed lease claim.
6. The availability of an alternative remedy for the appellants, who could be compensated through damages if they succeeded in the civil suit.

The Court’s reasoning was heavily influenced by the need to balance the appellants’ claims with the welfare of the slum dwellers and the public interest in slum redevelopment.

Fact:Law Ratio

The ratio of Fact:Law indicates that the court gave more weight to the factual aspects of the case, such as the support of the slum dwellers for redevelopment and the disputed nature of the lease claim, than to purely legal considerations.

Logical Reasoning

The court’s logical reasoning can be summarized as follows:

Judgment

The Supreme Court, after considering the arguments and the facts of the case, held that the High Court’s order allowing the redevelopment of the slum area was justified. The Court observed that:

• The appellants’ claim to leasehold rights was disputed, and there was no registered lease deed to support their claim.
• The Maharashtra Slum Areas Act, 1971, is a beneficial legislation aimed at improving the living conditions of slum dwellers.
• The majority of the slum dwellers had formed a society and supported the redevelopment scheme.
• The balance of convenience was in favor of allowing the redevelopment to proceed, as it was in the larger public interest and would benefit the slum dwellers.
• The appellants could be adequately compensated with damages if they succeeded in their civil suit.

The Court emphasized that the rights of the slum dwellers, who are the primary beneficiaries of the redevelopment scheme, must be balanced with the claims of the appellants. The Court also noted that the appellants had not been able to show any irreparable injury that could not be remedied through damages.

The Court quoted from the judgment:

“In the present case, the genesis of the appellants’ right is a lease which was allegedly entered into between the appellants’ predecessor in interest and MCGM…Respondent no. 2 has vehemently denied the existence of any lease…”

“While taking into consideration the rights of the appellants, we must also not lose sight of the fact that the Slum Act is a beneficial legislation meant to ameliorate the poor condition of slum dwellers.”

“The balance of convenience in the present case tilts in favour of the respondents, as the completion of the scheme is in greater public interest.”

The Court clarified that any observations made by the High Court that affected the merits of the matter were set aside. Additionally, the Court stated that its observations should not prejudice the appellants during the trial on merits.

Key Takeaways

• A mere claim of leasehold rights without a registered lease deed is unlikely to prevent the implementation of a slum redevelopment scheme.
• The Maharashtra Slum Areas Act, 1971, is a beneficial legislation that prioritizes the rights of slum dwellers to a dignified life and shelter.
• The support of the majority of slum dwellers for a redevelopment scheme is a significant factor in its approval.
• Courts will balance the interests of all parties involved, including the slum dwellers, developers, and those claiming leasehold rights.
• Parties claiming leasehold rights must have valid, registered documents to support their claim.
• The principle of comparative convenience, which favors the greater public good, will be considered in such cases.
• The focus is on the larger public interest and the welfare of the slum dwellers, and the court will not allow a disputed claim to stall the process.
• The court has emphasized that the Slum Act is a beneficial legislation and that the rights of the slum dwellers, who are the primary beneficiaries of the redevelopment scheme, must be balanced with the claims of the appellants.