Supreme Court Upholds Slum Rehabilitation Authority’s Allotment Process: Sayunkta Sangarsh Samiti vs. State of Maharashtra (2023)

Introduction

Date of the Judgment: 15 December 2023

Citation: 2023 INSC 1080

Judges: Aniruddha Bose, J., Sudhanshu Dhulia, J. (authored the judgment)

Can a private agreement between a developer and a minority group of slum dwellers bypass the established procedures of the Slum Rehabilitation Authority (SRA) when it comes to allotting tenements? The Supreme Court of India recently addressed this critical question in a case concerning a slum rehabilitation project in Mumbai. This judgment clarifies that statutory procedures must prevail over private arrangements in slum rehabilitation schemes.

The core issue revolved around whether a Memorandum of Understanding (MoU) between a developer and a minority group within a slum could dictate the allotment of flats, overriding the SRA’s established procedure of allotment by lottery. The Supreme Court, in its judgment, firmly rejected this contention, emphasizing the primacy of statutory regulations and the public interest involved in slum rehabilitation.

Case Background

The case originated from a slum rehabilitation project at C.S. No. 1(pt) of Lower Parel Division in Mumbai. The project aimed to rehabilitate 1765 slum dwellers by constructing nine towers, along with commercial and recreational tenements. The Slum Rehabilitation Authority (SRA) approved the scheme, and a developer, Lokhandwala Kataria Constructions, was appointed by the majority of the slum dwellers, who had formed a cooperative housing federation called “Shramik Ekta Co-Operative Housing Federation”.

However, a minority group of slum dwellers, who were also members of the federation but had formed a separate society called “Sayunkta Sangharsh Samiti” (SSS), caused obstructions, stalling the project in 2007. This led to the developer filing a civil suit against the obstructing members. During the pendency of the suit, the developer and SSS entered into a Memorandum of Understanding (MoU) on 23.06.2009. This MoU stipulated that SSS would undertake self-development of Towers D, E, and F, with the cooperation of the developer, and that these towers would be exclusively occupied by SSS members.

The SRA was not a party to the civil suit or the MoU. Subsequently, the SRA decided to allot flats in Towers D, E, and F through a lottery system, as per its established procedure. This decision was challenged by SSS, leading to the present litigation.

Timeline:

Legal Framework

The primary legal framework for this case includes the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 (the ‘1971 Act’) and the Maharashtra Regional and Town Planning Act, 1966 (the ‘MRTP Act, 1966’). The 1971 Act provides for the improvement, clearance, and redevelopment of slum areas, and it establishes the Slum Rehabilitation Authority (SRA). The MRTP Act, 1966, aims for planned development in Maharashtra and was amended in 1995 to give SRA the status of a Planning Authority for slums.

Key provisions of the 1971 Act include:

• Section 2(ga): Defines “slum area” as any area declared by the Competent Authority under Section 4, or deemed to be a slum area under Section 4-A.
• Section 3-A: Outlines the composition of the Slum Rehabilitation Authority, consisting of a Chairman, a Chief Executive Officer, and fourteen other members appointed by the State Government.
• Section 4: Details the process for declaring an area as a slum area by the Competent Authority, based on conditions such as inadequate amenities, insanitary conditions, or buildings unfit for habitation.
• Section 4-A: States that areas declared as slum improvement areas under the Maharashtra Slum Improvement Board Act, 1973, are deemed to be slum areas under the 1971 Act.
• Section 42: Bars the jurisdiction of Civil Courts in matters that the Administrator, Competent Authority, or Tribunal is empowered to determine under the Act. It also prohibits injunctions against actions taken under the Act.

Additionally, the Development Control Regulations (DCR) of 1991, specifically Regulation 33(10), govern the implementation of slum rehabilitation schemes. Appendix (IV), Clause 1.8 of DCR 1991, prioritizes differently-abled persons and female-headed households in tenement allotment, followed by a lottery system for remaining eligible hutment dwellers.

Arguments

The appellants, Sayunkta Sangharsh Samiti (SSS), argued that the SRA should have allotted flats in Towers D, E, and F according to the terms of the Memorandum of Understanding (MoU) dated 23.06.2009. They claimed that the MoU, which was part of a consent decree in a civil suit, entitled their members to preferential allotment in these towers. The appellants contended that the SRA was bound by this private agreement between the developer and SSS. The core of their argument was that the consent terms arising from the MoU should be enforced, granting their members exclusive rights to the flats in the specified towers.

The respondents, primarily the State of Maharashtra and the SRA, argued that the SRA is bound by the statutory procedures outlined in the 1971 Act and the Development Control Regulations (DCR). They contended that the allotment of tenements must be done through a lottery system, as mandated by Circular No. 162 dated 23.10.2015 and the Letter of Intent (LoI) issued to the developer. They emphasized that a private agreement between a developer and a minority group of slum dwellers cannot override the established statutory procedures and public policy. The SRA maintained that it was not a party to the civil suit or the MoU, and therefore, it was not bound by the settlement terms.

The respondents further argued that the SRA is the final authority in implementing slum rehabilitation schemes and cannot be dictated by private agreements. They cited previous judgments to support the view that slum rehabilitation schemes have a public law element and must be implemented according to statutory procedures. The SRA also pointed out that the appellant society represented a minority of the slum dwellers and did not meet the criteria of 70% or more of eligible hutment dwellers required to form a cooperative society for the purposes of slum rehabilitation.

The innovativeness of the argument by the appellants was that they sought to enforce a private agreement, which was a consent decree of a civil court, to obtain preferential treatment in the allotment of flats, despite the existence of statutory procedures for such allotments. This argument attempted to bypass the established legal framework by leveraging a private settlement.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue for consideration:

1. Whether the Slum Rehabilitation Authority (SRA) is bound by a private agreement, specifically a Memorandum of Understanding (MoU) and subsequent consent terms, between a developer and a minority group of slum dwellers, which seeks to bypass the statutory procedure of allotment of tenements through a lottery system.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issue:

Authorities

The Supreme Court considered the following authorities in its judgment, categorized by the legal point they address:

Judgment

The Supreme Court dismissed the appeal, upholding the Bombay High Court’s order. The Court held that the Slum Rehabilitation Authority (SRA) is not bound by the private agreement between the developer and the appellant society, as it contravenes the statutory procedures for slum rehabilitation.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to uphold the statutory framework governing slum rehabilitation and to prevent private agreements from undermining public policy. The Court emphasized the following points in its reasoning:

• ✓ Statutory Mandate: The Court stressed that the SRA is bound by the statutory procedures outlined in the Maharashtra Slum Areas Act, 1971, and the Development Control Regulations. These laws mandate that allotments must be done through a lottery system to ensure fairness and transparency.
• ✓ Public Interest: The Court highlighted that slum rehabilitation schemes have a public law element and are not purely private contractual matters. The aim is to provide dignified housing to slum dwellers, and this objective must not be undermined by private agreements.
• ✓ Private Agreements Cannot Override Statutory Procedures: The Court firmly stated that private agreements, such as the MoU between the developer and the appellant society, cannot override the established statutory procedures of the SRA. This ensures that the SRA’s authority is not circumvented by private deals.
• ✓ Minority Group Cannot Dictate Terms: The Court noted that the appellant society represented a minority of slum dwellers and did not meet the criteria for forming a cooperative society for the purposes of slum rehabilitation. Allowing a minority group to dictate terms would create chaos and uncertainty in the implementation of slum rehabilitation schemes.
• ✓ SRA’s Role as Final Authority: The Court reiterated that the SRA is the final authority for implementing slum rehabilitation schemes and must act in accordance with its policies and circulars. It cannot be dictated by private or contractual interests.
• ✓ Fairness and Transparency: The Court emphasized that the lottery system ensures fairness and transparency in the allotment of tenements, preventing any preferential treatment that could arise from private agreements.

The Court considered alternative interpretations that would have allowed the private agreement to prevail but rejected them because they would have undermined the statutory framework and the public interest. The Court emphasized that the SRA’s established procedures must be followed to ensure fairness and transparency in the allotment of tenements.

The Court’s decision was a clear affirmation of the principle that statutory procedures cannot be circumvented by private agreements in matters of public interest.

Implications

The Supreme Court’s judgment in this case has several significant implications for slum rehabilitation schemes and legal precedents:

• ✓ Precedence for Statutory Authority: The judgment establishes a clear precedent that the Slum Rehabilitation Authority (SRA) is the final authority in implementing slum rehabilitation schemes and cannot be dictated by private agreements. This reinforces the importance of following statutory procedures and regulations.
• ✓ Public Interest over Private Contracts: The decision emphasizes that slum rehabilitation schemes are matters of public interest and cannot be treated as purely private contractual matters. This means that the public good and the welfare of all eligible slum dwellers must take precedence over private interests.
• ✓ Transparency and Fairness: The judgment reinforces the need for transparency and fairness in the allotment of tenements. The lottery system is upheld as the standard procedure, preventing preferential treatment and ensuring that all eligible dwellers have an equal opportunity.
• ✓ Limits on Private Agreements: The ruling places limits on the extent to which private agreements can influence or override statutory processes in slum rehabilitation projects. Developers and minority groups of slum dwellers cannot rely on private arrangements to circumvent the established legal framework.
• ✓ Legal Clarity: The judgment provides legal clarity on the relationship between private agreements and statutory procedures in slum rehabilitation schemes, reducing the potential for future disputes and litigation.
• ✓ Future Cases: This case will serve as a significant precedent for future cases involving similar issues, ensuring that statutory procedures are followed in slum rehabilitation projects and that private agreements do not undermine public policy.

Conclusion

In conclusion, the Supreme Court’s judgment in Sayunkta Sangarsh Samiti vs. State of Maharashtra (2023) reaffirms the primacy of statutory procedures in slum rehabilitation schemes. The Court held that the Slum Rehabilitation Authority (SRA) is not bound by private agreements that seek to bypass the established process of allotment by lottery. This decision underscores the public interest nature of slum rehabilitation and ensures that statutory frameworks are not undermined by private arrangements. The judgment provides a clear legal precedent, emphasizing the importance of fairness, transparency, and adherence to established procedures in slum rehabilitation projects.