G.B. MAHAJAN AND ORS versus JALGAON MUNICIPAL COUNCIL AND ORS.

Citation: [1990] SUPP. 3 S.C.R. 20 · Decided: 13-09-1990 · Supreme Court of India · Bench: M.N. VENKATACHALIAH · Disposal: Dismissed
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Judgment (excerpt)

A 
B 
c 
G.B. MAHAJAN AND ORS. 
v. 
JALGAON MUNICIPAL COUNCIL AND ORS. 
SEPTEMBER 13, 1990 
[M.N. VENKATACHALIAH, N.D. OJHA AND J.S. VERMA, JJ .] 
Constitution of India, I950: Articles 14 and 298-State Instru-
mentality-Municipal Council entering into contract with private 
developer for construction of Commercial Complex on self financing 
basis-Adoption of such an unconventional technique as a policy 
option-Validity of. 
Article 226-Resort to-Contractual transaction of Government 
or its instrumentality-Presence public law elemem-Essential for invoking· 
Judicial Review. 
D 
Municipalities: Maharashtra Municipalities Act, 1965: Sections 
92 & 272( 1)-Municipal Market-Disp0sal of occupancy rights-
Construction o[ Commercial Complex-Private developer to undertake 
on self financing basis-Giving adrninistrative building to Municipal 
Council free of cost-Shops to be given to a/lottees-Liberty to dispose 
of the remaining accommodation to cover financial outlays and project 
E -Whether valid. 
F 
Administrative Law: Judicial Review-Policy decision-Govern-
ment or its instrumentality-Whether free to evo!Ve and adopt any 
method for executing of a Project-Such decisions-Whether open to 
Judicial Review. 
Test of'Reasonableness'-To distinguish between proper use and 
improper use of power-Applicability of. the test depends upon 
context. 
Delegation of power-Statutory function under Section 272 of the 
G Maharashtra Municipalities Act, I965-0ccupancy rights-Powers to 
substitute occupiers in its own place by developer~Whether permissible. 
Interpretation of Statutes: Use of same word/phrase or concept in 
different laws-Distinction in meaning and usage-Need for. 
H 
Words & Phrases: 'Reasonableness'-' Reasonable man'-Mean-
~· 
ing of. 
20 
.,. 
; . 
MAHAJAN v. JALGAON MUNICIPAL COUNCIL 
21 
The respondent Municipal Council received by way of gill certain A 
lands from one 'L' and the said lands were used by the Agricultural 
Produce Market Committee as a cotton market and wholesale fruit and 
vegetables market. The Respondent Council, in order to put the land to 
a better and more profitable use, persuaded the Market Committee to 
yield up possession. However, since the gill stipulated certain condi-
tions regarding the user, the Respondent Connell approached the heirs B 
of the donor for amending the terms of the gill, and the heirs bargained 
for and secured a benefit that five shops be given to them free of cost in 
the proposed c<immercial complex. The entire project of constructing 
the Administrative building, an adjacent structure for vegetable market 
and a commercial complex wa8 to be executed by a developer at his own 
expense. The estimated financial outlay was about Rs.11 crores. It was 
contemplated that the developer was to hand over the Adlninistrative C 
building free of cost to the Municipality and the vegetable market to the 
allottees and the five shops to tht heirs of the donee of the land. There-
after the developer would be entitled to dispose of the occupancy rights 
in respect of the rest of the accommodation in the commercial complex 
and retain the promia received therefrom to cover the fmancial outlays D 
and profit thereon. The occupie..S to whom allotments were made as 
also the occupiers inducted by the developer were to pay rents .to the 
Respondent Connell for 50 years. 
Tenders were issued for the project, and after scrutiny of the 
tenders submitted by five developers, the tender of Respondent No. 6 E 
was accepted by the Respondent-Connell, and a formal agreement was 
entered into between the Council and Respondent No. 6. 
The appellants, residents of the area petitioned to the Collector to 
suspend the Resolutions of the Connell nnder:tal<ing the said project and 
the agreement entered with Respondent No. 6, on the grounds that the 
F 
_, 
proposed transaction amounted to a lease for 50 years which was pro-
hibited under Section 92 of the Maharashtra Municipalities Act, 1956; 
that sanction of the Development Department was not ob_tained; that an 
impermissible encumbrance would be created on the Council's pro-
perty in favour of the developer and that the intended user violated the 
original terms of the gift. On the said petition, the Collector passed G 
orders suspending the Resolutions. On revision, the Minister stayed the 
operation of the Collector's order. 
Meanwhile, a Writ Petition was flied before the High Court, 
assailing the said Resolutions. Another Writ Petition was f'de
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