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Surana Developers (Wadala) LLP & Others v/s The State of Maharashtra & Others

    Writ Petition No. 69 of 2022 with Interim Application (L) No. 6356, 17829, 9499 of 2022
    Decided On, 14 November 2022
    At, High Court of Judicature at Bombay
    By, THE HONOURABLE MR. JUSTICE S.V. GANGAPURWALA & THE HONOURABLE MR. JUSTICE R.N. LADDHA
    For the Petitioners: Milind Sathe, Sr. Advocate a/w. Mayur Khandeparkar, Bhushan Deshmukh, Jamshed Master, Ashraf Diamondwala i/b. Diamondwala & Co., Tushad Cooper, Sr. Advocate a/w. Vinod Kothari, Sonal Sanap i/b. Apex Law Partners, Dr. Birendra Saraf, Sr. Advocate a/w. Priyanvada Singhania i/b. DSK Legal, Advocates. For the Respondents: L.T. Satelkar, Himanshu Takke, AGPs, R2 to R4, Vijay D. Patil, H.S.Venegaonkar a/w. Ms. Aayushi Kedia, Bharat Mirchandani, Advocates. For the Intervenor: Anil Anturkar, Sr. Advocate a/w. Yash Anand i/b. Poonam Utekar, Advocates.


Judgment Text
S.V. Gangapurwala, J.

1. The petitioners assail the impugned letter dated 26th August 2021 informing the petitioners that the Deputy Director, Directorate of Enforcement under communication dated 24th August 2021 informed the office of SRA to maintain status quo in respect of project and not to take decision on any requests for modification of Letter of Intent (LOI) claimed by the petitioners without the No Objection Certificate of the office of Directorate of Enforcement.

2. Mr. Sathe, learned Senior Advocate for the petitioner submits that on or about 31st January 2011, LOI was issued by the SRA in favour of the petitioner No.1 for Slum Rehabilitation Scheme of the subject property. Subsequent LOI is issued on 5th May 2012 on the property as detailed in the said letter. Thereafter, on 2nd July 2014, revised LOI is issued by the SRA to carry out the Slum Rehabilitation Scheme (SRS) on Sheikh Mishree SRA CHS. On or about 22nd October 2014, a letter is issued by the SRA sanctioning the amended plan of Anand Nagar Rehabilitation Scheme and on the said date LOI is issued in supersession of the earlier LOI dated 31st January 2011. Thereafter, on 26th March 2015, IOA is issued by the SRA for the SRS for Sheikh Mishre CHS. Similarly, on 19th May 2021 application was made by the Architect of petitioner No.1 to the SRA for issuance of revised LOI. The impugned communication is issued stalling the same and on the direction of the Directorate of Enforcement. The application for revised LOI is recorded.

3. Mr. Sathe, learned Senior Advocate submits that the provision for implementation of Slum Rehabilitation Scheme is contained under Development Control and Promotion Regulation, 2034 (DCPR 2034). On 17th March 2017, the SRA sanctioned the amended plan for construction of rehab building in Slum Rehabilitation Scheme in respect of Anand Nagar SRA CHS Limited. On 17th March 2017, the SRA also issued Intimation of Approval for the construction of composite building for implementation of scheme namely Anand Nagar SRA CHS limited. On 8th May 2018, the revised development plan for Greater Mumbai prepared by the Municipal Corporation for Greater Bombay was sanctioned by the State Government under Section 31 of the Maharashtra Regional Town Planning Act, 1966 (MRTP Act). The Development Control and Promotional Regulation 2034 came into force from 8th May 2018.

4. The impugned communication rejecting the petitioners’ application dated 19th May 2021 to issue the revised LOI as per DCPR 2034 is absolutely arbitrary, unreasonable and contrary to the statutory and regulatory regime. The learned Senior Advocate further submits that the SRA scheme and its implementation is governed by the provisions of DCR 33(10) and Appendix IV of the Development Control Regulation for Greater Mumbai 1991 (DCR 1991) and DCPR 2034. The petitioners are granted the LOI and the revised LOI from time to time for implementation of the SRA Scheme. The SRA scheme has substantially progressed and the petitioners have taken further steps and invested money in implementing the Slum Rehabilitation Scheme. The permissions granted to the petitioner by the SRA in implementing the scheme are the development permissions under Section 44 of the MRTP Act, 1966. The development permissions for implementation of the SRA Scheme are granted by SRA as a Planning Authority. The only reason not to issue the revised LOI under DCPR 2034 under the impugned letter is that the investigation by the Enforcement Directorate is pending. The same cannot be a ground for refusal to grant the development permission under the provisions of MRTP Act, 1966. The impugned letter dated 26th August 2021, as such, is ultra vires the MRTP Act, 1966. The letter issued by the Enforcement Directorate dated 24th August 2021 directing to ensure status quo on SRA scheme is without jurisdiction and ultra vires the provisions of the Prevention of Money Laundering Act, 2002. The Enforcement Directorate had no jurisdiction and power to direct the Planning Authority not to process the application for permission for development. The grant or refusal of development permission is governed by a State law i.e. MRTP Act, 1966 and the facts and circumstances of granting and refusing to grant the development permission are prescribed under Section 46 of the MRTP Act, 1966 and the DCR 1991 and DCPR 2034. The pending investigation against certain person by Central Investigating Agency can never be a ground for not processing an application for development permission under MRTP Act, 1966. The learned Senior Advocate relied upon the judgment in case of S.N.Rao v. State of Maharashtra (1988 SCC 712)and in a case of Anahita Pandole v. State of Maharashtra (2004 (6) BCR 246).

5. The learned Senior Advocate further submits that for implementation of the SRA Scheme, the petitioners have constructed 9 rehab building pursuant to the permission granted by the SRA from time to time. The petitioners have paid an amount of Rs.5,87,21,114/- towards development charges to SRA. for implementation of the Slum Rehabilitation Scheme. The petitioners are obligated to provide amenities free of cost to SRA pursuant to the implementation of the scheme such as Balwadi, Welfare Center, Yuva Kendra, Library, Woman Entrepreneurship Center, Community Hall, Society Office. The petitioners have already paid amount of Rs.155 crore to slum dwellers as transit rent. The petitioners have entered into agreements with the prospective fat purchasers from the sale component of the SRA. The petitioners have obligation under the Real Estate (Regulation and Development) Act, 2016 (RERA, 2006) towards implementation of the subject Slum Rehabilitation Scheme. Merely because an investigation by Central Investigating Agency is initiated, Slum Rehabilitation project cannot be stopped by the Planning Authority under the MRTP Act, 1966. It is submitted that before issuing the letter dated 26th August 2021 by the Executive Engineer, SRA, the petitioners are neither given an opportunity of hearing nor were the petitioners supplied with the information as to the pending Enforcement Directorate investigation. It is further submitted that the development permissions are granted in favour of petitioner No.1. Petitioner No.1 has two partners i.e. petitioner Nos.2 and 3. Enforcement Directorate investigation is against the Director of petitioner No.2 in the individual capacity. Even assuming for the sake of argument that the Director of petitioner No.2 is ultimately convicted by the Court under the provisions of Money Laundering Act, it will not be a ground to reject the development permission for implementation of the Slum Rehabilitation Scheme of petitioner No.1. The impugned order is issued by the Planning Authority acting under the dictate of Central Investigation agency without application of its own mind. The Planning Authority cannot take into consideration any other factor which is not relevant under Section 46 of the MRTP Act, 1966. The learned Senior Advocate relied on the judgment of Apex Court in S. N. Rao (supra) and Laxminaraian R. Bhattad & Ors. v. State of Maharashtra (2003(5) SCC 413).The petitioners also rely on the judgment of this Court in case of Anil Bafana in Writ Petition No. 3695 of 2014 and Kantilal Baldolta in Writ Petition No. 5871 of 2014 to submit that only because criminal investigation is pending, the Statutory Authority cannot refuse to process application for non-agricultural use.

6. The learned Senior Advocate submits that if the petitioners are not allowed to continue to develop, all the stakeholders will suffer irreparable harm such as (i) the Petitioners are prevented from carrying out further construction of rehab buildings and sale buildings; (ii) due to prevention in carrying out further constructions, will cause delay in completing the slum rehabilitation scheme; (iii) due to such delay, the petitioners are required to bear the costs of providing continuous temporary alternate accommodation to the slum dwellers during the period of prevention, which will result into causing huge financial burden on the project; (iv) it will cause delay in carrying out construction of sale buildings as consequences thereof a delay will cause in handing over the possession of the fats of the respective fat purchasers; (v) it will result into the petitioners facing multiple litigations from the prospective purchasers; (vi) it will result into paying the delayed interest under RERA to the prospective purchasers and even refund of consideration paid by the prospective purchaser against cancellation of allotments, (vii) it will result into payment of penalty and liquidated damages for delay to the construction contractor; (viii) it will result intodefault in repayment of loan to the lenders and; (ix) it will result into huge financial loss resulting into complete closure of the project not only to the detriment of the petitioners but also the stake holders.

7. Mr. Venegaonkar, learned Advocate for respondent No.5/Directorate of Enforcement submits that the Directorate of Enforcement is Statutory Investigating Agency. The Enforcement Directorate had started investigation against 1) Mr. Babulal Varma 2) Kamalkishore Gupta and others wherein it was alleged that M/s. Surana Developers LLP, M/s. Omkar Realtors and Developers Pvt. Ltd. and M/s. Anatomy Realtors took loan of Rs.410 Crore from Yes Bank, but the said loan was not used for the intended purpose and further diverted. During the course of investigation, it was found that M/s. Surana Constructions (Wadala) Firm [now Surana Developers, (Wadala) LLP] took loan of Rs.410 Crore from Yes Bank for the purpose of construction of rehab component and sale component of Anand Nagar SRA CHS Scheme. However, after the disbursal of full amount of loan, no rehab building or sale building pertaining to Anand Nagar SRA CHS, Wadala were constructed. The impugned communication is issued within the purview of law and the said action is legal and proper. Diversion of amount of Rs.410 Crore was done, on account of increased FSI resulting from illegal increase of tenements from 138 to 402 tenements in the Anand Nagar SRA CHS, by the petitioners and in connivance with SRA official whose role is also investigated. The eligible slum dwellers were only 138 when the scheme commenced, however, subsequently increased to 402 while clubbing all the other three Schemes with Anand Nagar SRA CHS. The numbers of tenements who were not eligible were also considered as eligible tenements so as to get maximum FSI in Anand Nagar SRS CHS. Accordingly, the FSI of 4 was sanctioned to the petitioners. The further investigation is in progress. The petitioners are guilty of diverting Rs.410 Crore loan received from Yes Bank and used for the purpose other than the intended purpose. The learned Advocate further submits that the relation between the loan and the fraudulent LOI and revised LOI, so also the bank loan obtained in connivance with bank officials and SRA officials are investigated. The offence of money laundering and utilization of proceeds of crime is subject matter in the prosecution complaint No. 377 of 2021. The Enforcement Directorate was within its power to issue impugned communication to the SRA.

8. We have considered the submissions canvassed by the learned Counsel for the parties.

9. There is no dispute that against the partner of petitioner No.2 the prosecution has been filed. The partners of petitioner No.2 are still in custody. The issue of the diversion of the fund of Rs.410 Crore by the petitioners is a subject matter of investigation. The contention of the Enforcement Directorate appears to be that the loan of Rs.410 Crore was sanctioned exclusively for the construction and development cost of SRA project at Anandnagar SRA CHS, Wadala. However, even after disbursal of full amount of loan no rehab building and sale buildings pertaining to Anandnagar SRA CHS, Wadala were constructed. The said loan facility was to be used only and only for constructing rehab buildings pertaining to Anand Nagar SRA and sale building out of FSI generated from the Anand Nagar SRA project. Since as per the approved clubbed project rehab building of Anand Nagar SRA was to be constructed at Anand Nagar itself and its sale component was to be loaded in Worli project, the said loan should have been used to construct those rehab building at Anand Nagar and its identified sale component at Worli project. But neither the rehab components nor the sale components of Anand Nagar SRA CHS were constructed.

10. The Enforcement Directorate further contends that the diversion of Rs.410 Crore was done on account of increase of FSI resulting from illegal increase of tenements from 138 to 402 in the Anandnagar SRA CHS Scheme by the petitioners and in connivance with the SRA officials and their role is also not investigated. Those who were not eligible were also considered eligible and hence helped the petitioner to get huge increase of FSI and with laundering of the proceeds of crime.

11. The SRA is Statutory Authority discharging the functions under Maharashtra Slum Rehabilitation (Improvements, Clearance and Redevelopment) Act, 1971 and the MRTP Act, 1966. The petitioners were granted LOI and revised LOI from time to time by the SRA for implementation of the SRA Scheme. The SRA is a Planning Authority granting development permission resorting to Section 44 of the MRTP Act, 1966.

12. The Enforcement Directorate has relied upon Section 54(i) of the Prevention of Money Laundering Act, 2002 (PML Act, 2002) to contend that it has got power to issue the impugned order. Section 54 states that the following officers and others are empowered to assist the Authorities in the enforcement of this Act:

(i) Officers of any other body corporate constituted or established under a Central Act or a State Act.

13. There cannot be any debate with the proposition that for the enforcement of the PML Act, 2002, the statutory authorities and officers are required to assist the authorities under the PML Act, 2002. The Planning Authorities are also required to consider whether the construction is carried out in accordance with LOI or the revised LOI. If the construction is not in consonance with the LOI or the revised LOI and/or the SRA Scheme, then the Planning Authority can take further steps as contemplated under the provisions of MRTP Act, 1966. Under the MRTP Act, 1966, the Planning Authority has got the further powers of directing stoppage of work, cancellation of scheme in case the construction is not in consonance with the permission granted. The SRA can consider all these aspects while deciding the application of the petitioners for revised LOI.

14. The Enforcement Directorate can take action as contemplated under the PML Act, 2002. It has power to attach the property and confiscate the property in accordance with law. The same are independent powers of the Enforcement Directorate under the PML Act 2002. The Enforcement Directorate can exercise those powers.

15. The Planning Authority can consider provisions of MRTP Act, 1966, the DCR 1991 and DCPR 2034 while granting or refusing to grant development permission and/or revised LOR.

16. Even if the revised LOI is granted by the SRA, the Enforcement Directorate still can proceed ahead under the provisions of PML Act, 2002 for taking further action as against the property where the Enforcement Directorate has reason to believe on the basis of material in its possession that any person in possession of any proceed of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner frustrating any proceedings, he may attach the property provisionally also. Provision is also available for confiscation.

17. Deciding the application of revised LOI

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would in no manner hinder the power of Enforcement Directorate under the PML Act, 2002. The power of Planning Authority under Section 44 of the MRTP Act, 1966 and the powers of Enforcement Directorate under the provisions of PML Act, 2002 are distinct and separate. While deciding the application for revised LOI, the SRA may consider the provisions of MRTP Act, 1966, DCR, 1991 and DCPR 2034 and also the apprehension /contention of the Enforcement Directorate. At the same time, the Enforcement Directorate would not be precluded from taking independent action under the provisions of PML Act, 2002 or under any other law as may be permissible, if it so desires. In light of the above, we pass the following order: ORDER i) The SRA may decide the application of the petitioner for revised LOI on its own merits by considering the provisions of MRTP Act, 1966, DCR, 1991 and DCPR 2034, so also the contention of Enforcement Directorate about the increase of tenements from 138 to 402 in the Anand Nagar SRA CHS Scheme. ii) While taking decision, the letter issued by the Enforcement Directorate dated 24th August 2021 asking SRA to maintain status quo would not be an impediment. The decision on the application of revised LOI would not preclude the Enforcement Directorate from proceeding with the subject property under the provisions of PML Act, 2002 or of any such Statute or law as may be permissible. The decision by SRA on an application of the petitioner for revised LOI would be subject to any further action that may be taken or intended by the Enforcement Directorate. iii) The writ petition is accordingly disposed. No costs. iv) In view of disposal of writ petition, interim applications also stand disposed of.
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