Regularisation Over Demolition in Irregular Land Allotment

The Supreme Court, in a judgment by Justice Alok Aradhe, with Justice Pamidighantam Sri Narasimha on the bench, dealt with an irregular allotment of land in Sector 30A, Vashi, Navi Mumbai, originally earmarked for IT use.

The Court accepted that the allotment to the developer was irregular and that the High Court was right in holding it arbitrary and violative of Article 14. The dispute, however, had moved far beyond the legality of the original allotment. The Court framed the real question as whether public interest was better served by demolition or by a supervised regularisation with full financial restitution to the public authority.

The factual background mattered. CIDCO had earmarked the area as an International Infotech Park, but later resolved to convert part of it for residential, commercial and office use after the IT sector downturn. The developer applied for allotment, received plots including the subject plot, and was allotted land at Rs. 10,250 per sq. metre with FSI 3.0, subject to developing a garden on adjoining Plot No. 40 at its own cost. A lease followed, construction proceeded, and the mall and hotel became operational.

The Sankaran Committee later found that the subject plot should have been disposed of through competitive tender under CIDCO’s policy. It recorded that the market value of a residential-cum-commercial plot in September 2002 was Rs. 20,791 per sq. metre, and that the allotment at Rs. 10,250 per sq. metre caused an estimated loss of about Rs. 50 crores to CIDCO. It recommended cancellation and public tender, along with action against the officers responsible.

The High Court had directed restoration of the plot and vacant possession to CIDCO, while leaving open the question of regularisation. The Supreme Court took a different remedial route. It held that, given the passage of time, the completed construction, the investment of about Rs. 450 crores, and the continuing commercial operation since 2009, demolition would not serve the public interest as effectively as a financial regularisation.

The Court therefore directed the developer to pay Rs. 3,18,31,37,664 as the fair market value for the entire subject plot, based on ready reckoner rates applicable to Sector 30A, Vashi, as of November 2014. The amount already paid at the original allotment rate was to be adjusted. The developer was also directed to pay Rs. 1 crore in lieu of the unfulfilled obligation to develop the garden on Plot No. 40. On payment within four months, the allotment would stand regularised.

The Court also clarified that the dispute concerning Plot No. 39/16, which was the subject of a separate writ petition, would be decided by the High Court on its own merits.

Practical takeaway: where an allotment is found irregular but the project is complete and public interest has materially shifted, the Court may prefer regularisation with full market-based restitution over demolition.