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The Bombay High Court has ruled against the Thane Municipal Corporation's (TMC) refusal to grant a builder, Sheth Developers, development permission with additional space, calling it "manifestly arbitrary." The HC found that the TMC could not benefit from receiving Rs 42 crore from the builder and the construction of a fire brigade station without fulfilling its commitment under a buy-back policy. The court emphasized the violation of legal principles, including legitimate expectations and the doctrine of promissory estoppel, highlighting the unreasonable and arbitrary nature of the TMC's decision. The dispute centred on the TMC's decision to suspend its Buy-Back Policy (BBP), a policy for the repurchase of lands acquired under Development Control Regulations (DCR) and plots reserved for public use. Sheth Developers contested not only the general direction to suspend this policy but also the TMC's failure to honour its terms after benefiting from it, citing principles of legitimate expectations and promissory estoppel. Sheth Developers had acquired development rights over 28 acres of land from Voltas Ltd. in 2003. In 2016, the Maharashtra Government introduced the 'Accommodation Reservation Policy' to transfer the responsibility of developing reserved plots to private landowners or developers. The HC criticized the TMC's argument that the policy was in abeyance due to a legislative inquiry, pointing out that the builder had paid 125 percent of the ready reckoner rate to the TMC for the rights. The court highlighted the firm establishment of the doctrine of promissory estoppel in Indian jurisprudence, emphasizing that no authority should act arbitrarily in exercising statutory powers. Referring to the Supreme Court's stance on substantive legitimate expectation as a means to ensure non-arbitrariness under Article 14, the HC analysed the law and provisions of the UDCPR 2020, finding them not materially distinct from the 2016 policy. The court concluded that the TMC was obligated to apply the policy based on both the UDCPR 2020 and the assured 2016 policy, invoking principles of promissory estoppel and legitimate expectations. This legal decision underscores the court's commitment to preventing arbitrary actions by authorities and upholding principles of fairness in administrative actions, particularly when it comes to contractual commitments and policies affecting builders and developers. The ruling reinforces the importance of honouring assurances and commitments made by governmental bodies to private entities, promoting transparency and fairness in such transactions.
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