Bangalore Mysore Infrastructure Corridor Area Planning Authority & Anr. vs Nandi Infrastructure Corridor Enterprise Limited & Ors.

HELD: 1.1 The Outline Development Plan (ODP)/Master Plan was prepared by the Planning Authority for the new planning area and had received approval of the State. In the backdrop of the stated agreements, ODP/Master Plan and the amendment to Zonal Regulations of ODP/Master Plan, the Project Proponents submitted an application to the Planning Authority for sanction of group housing scheme in 53 acres 5 guntas of land, which included lands transferred to the Project Proponents under sale deeds and notified under Section 28(4) of the Karnataka Industrial Areas Development Act, 1966. Later on, the Project Proponents submitted modified development plan for permission to set up group housing scheme in 42 acres 30 guntas of land by excluding the lands in respect of which no sale deed was executed in their favour. The present (fifth) round of litigation is by the Project Proponents themselves, who had applied to the Planning Authority for grant of permission for construction of group housing scheme at the stated location(s). That permission having been rejected, subject writ petitions were filed before the High Court, which have been disposed of by the common judgment and order of the Division Bench. The High Court posed wrong questions to itself and that led to the erroneous and untenable conclusion deduced by it. The fundamental issue is: whether the subject modified plan submitted by the Project Proponents directly to the Planning Authority for approval is replete with deviations and/or violation of the stipulations and specifications in the FWA? In that, the FWA had circumscribed the user of the land in terms of the location(s), as well as, the area thereof for implementation of the Project. If so, was it imperative for the Project Proponents under the FWA to obtain prior approval of the State including that of the Empowered Committee? And if that was declined or granted in part, should they take recourse to remedy of resolution of disputes or through arbitration mechanism, as provided in the FWA itself? If all these questions were to be answered in favour of the Project Proponents, only then the Court could be called upon to examine the justness of the four reasons recorded by the Planning Authority. The High Court hastened to examine the justness of the reasons given by the Planning Authority for rejecting the proposal, vide the impugned communication dated 7.2.2015. The Integrated Infrastructure Corridor and Finance Project (the Project) was conceived and formalised to construct a privately financed infrastructure corridor and seven new Townships between Bangalore city and Mysore city in Karnataka State. The Project also included construction of the southern section of the Bangalore City Outer Peripheral Road. The infrastructure corridor was to include a modern, four-lane (extendable to six-lane) limited access expressway; potable water, sewage treatment, and electric power transmission facilities; and fibre optic communication cables. The southern section of the Outer Peripheral Road was to link the infrastructure corridor with the region’s entire highway network. The report (PTR) plainly sets out that the seven new Townships were to be organic, self-sufficient communities, each with its own unique economic base and directly served by the infrastructure corridor. All this would fulfil the National and State policy goals for population dispersion, infrastructure modernisation and economic development, and inevitably, economic and infrastructure privatisation. As a limited-access expressway with a continuous barrier on either side, the road was intended to prevent ribbon development, increase efficiency of individual travel and cargo movement, and improve vehicle safety. It also notes that it was intended to provide access to existing and proposed Townships, for which nine (9) interchanges were to be constructed along the length of the expressway. Location(s) of the interchanges, as well as, the “Townships” area were clearly demarcated in the PTR. Section I of the report (PTR) deals with topics such as Socio- Economic Profile, Highway Planning Issues, Recommended Scheme, Traffic Data and Analysis, Engineering Design, Bridges, Initial Environmental Examination, NANDI INFRA CORRIDOR ENTERPRISE LTD.

Cost Estimate, Privatisation of Highway Projects, Appendix-I and Appendix-II. Under topic “Recommended Scheme”, the details of the Expressway, Underpasses/Overpasses, Cattle Underpasses, Utilities Road, Interchanges, Service Areas, Toll Plazas, Central Administrative Complex, Express Lighting, City Centre Access etc. have been duly elaborated including their exact location and other essential specifications. The project report (PTR) was deliberated and eventually translated into a formal decision of the State with some modifications and changes to the recommendations made therein. Finally, the Framework Agreement (FWA) was executed between the State and NICE. Even this agreement at the outset - in the recitals, unambiguously refers to the PTR and the necessity to implement the Project as finally approved by the Government in larger public interest. The underlying concern of the State was about the increasing urbanisation problems and to assuage the hardship caused on that account to the general public. The Project, as envisaged and finalised was intended to achieve the objective of orderly development of Bangalore as a major industrial, commercial and residential city. [Paras 7, 11-14, 36-40][799-EG; 800-A-C; 820-D-H; 821-A; 825-B-C; 835-G-H; 836-A; 838E-F]

1.2 The PTR had suggested creation of seven Townships, but in the final decision, as noted in the FWA, only five Townships have been approved as part of the Project being Townships 1, 2, 4, 5 and 7. It was a conscious decision taken by the State to have limited number of self-sustaining Townships in the entire belt, so as to fulfil the National and State policy goals of population dispersion and to ensure proper functionality in the region. In other words, the FWA predicates that the Project Proponents will be allowed to develop only five Townships at the demarcated locations and which are self-sustaining with sufficient infrastructure for ensuring smooth and accident-free traffic on Bangalore-Mysore Expressway stretched to about 140 kilometres. There is no room for giving liberal meaning to the stipulations and specifications which would inevitably defeat and frustrate the underlying objective of the Project- of orderly development of Bangalore City and to address the everincreasing urbanisation problems. The FWA executed between the State and the Project Proponents delineates the nature of contract and the scope of work to be carried out by the Project Proponents, as per the terms and conditions specified therein. It is an integrated project not only for construction and management of Expressway, but also creation of Townships at the demarcated location(s) as per the specifications and area earmarked therefor. The “Infrastructure Corridor” has been defined as having the same meaning as set forth in the recital (4th WHEREAS clause) of the FWA. It means, collectively, the Land, the Toll Road, the Townships, the Power Plants, the Telecommunication Facilities, Water Supply Facilities and the Waste Water Treatment Facilities and other developments, and the acquisition, design, construction, engineering, financing and implementation thereof, as referred to in the PTR. “Townships” is, therefore, an identified and well-defined component of the “Infrastructure Corridor Project”. From this definition, it is amply clear that only five Townships (each having different purpose – such as Corporate Centre, Industrial Centre, Ecotourism Centre, Heritage Centre and Commercial Centre) have been envisaged in the Infrastructure Corridor Project. The location(s) of these five Townships have been identified in the PTR. Besides the location(s), the extent of area to be utilised for creation of each Township has also been specified in the PTR, which applies proprio vigore to the expression “Townships” in the FWA. The term “Townships”, no doubt, includes housing, but a standalone group housing scheme cannot be regarded as a Township as such. The Townships would, however, comprise of not only housing, but also schools, hospitals, shopping complexes, parks and open spaces as noted in Schedule 4. Besides Schedule 4, it may be appropriate to advert to Schedule 1, which deals with the total Land to be used for the Infrastructure Corridor Project. The bifurcation of the extent of land to be used for different activities, such as Toll Road and Township areas township-wise, is also specified. To put it differently, the Project Proponents are obliged to construct the five Townships at the demarcated location(s) only and to the extent of land specified therefor. Any other proposal of the Project Proponents would be nothing short of deviation from the FWA in particular. The Project Proponents are obliged to NANDI INFRA CORRIDOR ENTERPRISE LTD.

construct housing in the area demarcated for Townships and ensure that the other socio-economic infrastructure components such as schools, hospitals, shopping complexes, parks and open spaces etc. are also provided for within the Townships. The construction of the essential components including housing, as expressly provided in the FWA, must also comply with the municipal laws governing such constructions. Indeed, while planning for the development of Townships, it is open to the Project Proponents to deviate from the PTR within the defined norms to the extent such deviation is required to enable the parties to realise the full benefits intended from development of the Project. But, that is required to be done only with prior written approval of the State. This is made amply clear by Article

7.1 of the FWA itself. Article 3 deals with the obligations of the State for implementation of the Project referred to in the FWA. Considering the fact that the State is obliged to facilitate the Project Proponents to deviate from the PTR specifications adopted in the FWA for the development of Townships, that does not mean that the Project Proponents will set up housing complex at location(s) other than those demarcated for five Townships including not providing for other components of Townships in the proposal or limit the proposal only to one component, such as housing and excluding the other mandatory components schools, hospitals, shopping complexes, parks and open spaces etc. Such interpretation cannot be countenanced and if accepted, it would inevitably defeat the very purpose of the welldefined project intended to address the increasing urbanisation problems and for orderly development of Bangalore City including smooth and accident-free traffic between Bangalore and Mysore Expressway. [Paras 41-44][838-H; 839-A-F; 840B-C; 841-H; 842-D-F; 844-D; 848-C; 850-C-D]

2.1 The next question is: whether the stipulations and specifications in the FWA regarding the scope of work and the application of both parties stood modified or altered due to supplementary agreements dated 6.10.1999 and 31.3.2000? Even on a fair reading of these agreements, there is no express clause therein which would alter the scope of work and the obligations of both parties regarding the setting up of five selfsustaining Townships only at the demarcated location(s). The supplementary agreements, however, deal with other aspects with which the Court is not concerned nor are the same relevant to decide the matters in issue. Similarly, the Tripartite Agreement dated 9.8.2002 between the State, NICE and NECE also does not alter or modify the stipulations and specifications for setting up of five self-sustaining Townships only at the demarcated locations. The Court fails to understand as to how this clause can be construed to mean that the original stipulations and specifications regarding the five designated Townships in the FWA stood modified or altered in any manner. This clause only deals with the meaning of “Stage 1 of the Infrastructure Corridor”. Indeed, clause (c) thereof refers to Township–1, but that reference is in the context of basic development and sale of land, and by no stretch of imagination, can be construed to mean that Township–1 (Corporate Centre) could be set up at any other location much less at intersections demarcated in the PTR. The purpose of intersections is to provide for free flow of traffic across the area. All the five Townships referred to in the PTR are indisputably far away from intersections. Despite that, the Project Proponents have proposed for group housing scheme in Section A of the Project at intersections 5/7 thereat on the peripheral road. This is notwithstanding the fact that even the Tripartite Agreement does not modify the location(s) and specifications for the Townships referred to in the PTR, which forms part of the FWA. The thrust of the argument of the Project Proponents is that housing is a permitted usage, in terms of the ODP/Master Plan. For, the area for which the proposal for group housing scheme had been submitted is within yellow zone/residential zone. The question is: whether the Project Proponents can rely solely on ODP/Master Plan, notified by the Planning Authority in exercise of statutory function as a Planning Authority (for the entire area including the Project area)? The ODP/Master Plan, no doubt, would apply and must be reckoned if any building proposal/plan is submitted to the Planning Authority. However, the Project Proponents are obliged to develop the Project only in the manner provided for in the FWA. For, the right to develop the Project bestowed on the Project Proponents flows, primarily, from the FWA and the supplementary agreements in that regard. Unless the FWA NANDI INFRA CORRIDOR ENTERPRISE LTD.

enables the Project Proponents to set up Townships at location(s) other than location(s) for five Townships demarcated in the FWA read with PTR and as standalone group housing scheme, the question of Project Proponents unilaterally using the allotted land for construction of a group housing scheme spread over in 42 acres and 30 guntas, that too at location(s) other than demarcated for five Townships, cannot be countenanced. Only upon grant of prior permission by the State in that regard, the stipulations in the FWA (about the location(s) of the Townships/group housing scheme), would stand relaxed and modified and the Project Proponents would then be entitled to pursue such proposal with the Planning Authority. The State can do so in terms of Article 3.2.3 and the Project Proponents can request the State in that regard by invoking the enabling provision in Article 7.1 (both of the FWA). The zone specified in the ODP/Master Plan per se is not enough to allow the Project Proponents to unilaterally use the land made over to them after acquisition from private land owners for the Project, for purpose and manner other than specified in the FWA and the PTR. [Paras 45-47][850-E-G; 851-B-H; 852-A-D]

2.2 The second round of litigation was again a public interest litigation to question the land acquisition proceedings initiated by the State for implementation of the Project. The group of writ petitions came to be disposed of by the Division Bench of the High Court, resulting in dismissal of stated writ petitions and issuance of a direction to the State to continue to implement the Project. That decision was affirmed by this Court in State of Karnataka & Anr. Vs. All India Manufacturers Organisation & Ors. Neither the judgment rendered in appeal by this Court in All India Manufacturers Organisation nor the observation found in the order dated 3.11.2009 (passed by this Court in Contempt Petition (C) No. 144/2006 and connected contempt petitions in Civil Appeal Nos. 3492-3494/2005) will be of any avail to the Project Proponents. For, the Court was not called upon to adjudicate the question even indirectly, as to whether the subject proposal for setting up of group housing scheme could be proceeded directly before the Planning Authority just because it is in conformity with the ODP/Master Plan and even though it is proposed at a location different than the demarcated location(s) for the five Townships in the FWA read with the PTR. No such plea was raised by the Project Proponents. In other words, none of the Court orders referred to by the Project Proponents had examined the questions/issues involved in these appeals. Admittedly, in the present case, the modified proposal submitted by the Project Proponents on 5.5.2012 for developing 42 acres 30 guntas of land as group housing scheme, pertained to Survey Nos. 17(P), 18, 19, 20/1, 20/3, 21/1(P), 21/2A2(P), 21/2B(P), 21/2C(P), 21/2D(P) and 21/2E(P) at village Kommagatta, Kengeri Hobli, Bangalore South Taluk (at intersection 5/7, Section A of the Project on the peripheral road). It was not for setting up of Township as such. Neither the PTR nor the FWA envisages construction of standalone group housing scheme, that too at a location other than demarcated location(s) for five Townships. Thus, it was a clear case of deviation from the stipulations and specification contained in the FWA read with the PTR; and to relax or modify the same, prior permission of the State is made mandatory in terms of the Article 7.1. For that reason, the Planning Authority had informed the Managing Director, NECE vide letter dated 28.5.2012 to obtain NOC from the concerned authorities. Notably, even the State had intimated the Planning Authority vide letter dated 19.12.2013 sent by the Principal Secretary, Public Works, Ports and Inland Water Transport Department, that in respect of change in land use and approval of residential developments, prior decision of the Empowered Committee should be obtained. [Paras 4, 49-51][797-E-G; 798-A; 854-E-H; 855-A-C; 860-D]

State of Karnataka & Anr. v. All India Manufacturers Organisation & Ors. (2006) 4 SCC 683 : [2006] 1 Suppl. SCR 86 – held inapplicable.

2.3 Article 7.1 of the FWA obliges the Project Proponents to submit proposal to the State for approval in case of any deviation. No such proposal was submitted to the State. Instead, the Project Proponents pursued the matter directly with the Planning Authority. In that sense, prior approval of the State for deviating from the FWA and in particular constructing housing complex at location other than demarcated for Townships, is not forthcoming. Admittedly, no such approval was taken. If such NANDI INFRA CORRIDOR ENTERPRISE LTD.

proposal was to be submitted to the State, it would be open to the State to examine the same on its own or refer the matter to the Empowered Committee constituted for resolving such issues, as envisaged in Article 4 of the FWA. Indeed, the Empowered Committee is not a statutory committee, but it can be so constituted in terms of Article 4 read with Schedule 6, consisting of high officials of the concerned departments. This is only to facilitate quick processing of the proposals and implementation of the Infrastructure Corridor Project with mutual understanding and due consultation wherever necessary. It may be assumed that the Empowered Committee may not agree with the proposal, as it may be of the view that the deviation is quite substantial and would disrupt the core objective of the Integrated Infrastructure Corridor (the Project), which has been designed with purpose of holistic and orderly development of the region as a whole. In that eventuality, the Project Proponents would be required to resort to mechanism of resolution of disputes envisaged in Article 18 of the FWA. A priori, it must necessarily follow that the Project Proponents cannot and ought not to have directly approached the Planning Authority for grant of stated permission in reference to the provisions in the KTCP Act or ODP/Master Plan. If the proposal to be submitted by the Project Proponents was compliant with the stipulations and specifications given in the FWA read with the PTR, only then the Project Proponents could justifiably approach the Planning Authority directly for grant of permission as per the extant regulations and municipal laws applicable in that regard, to construct buildings and structures for establishing a Township. In other words, the proposal/application of the Project Proponents would be a valid proposal/application to the Planning Authority only if it was to be in strict compliance with the land use specified in the FWA read with the PTR. In case of any deviation therefrom, it ought to accompany a formal prior approval of the State or the Empowered Committee, as the case may be, so that it can be processed further by the Planning Authority. [Paras 52, 53][863-C-D; 865-F-H; 866-D-F]

3.1 Much emphasis was placed on the fact that the appellants had permitted the Project Proponents to construct housing complex at a location outside the demarcated area for the five Townships referred to in the FWA. Similarly, as the stated location was falling in yellow zone being residential, the other neighbouring private land owners were permitted to develop their property for housing complex. This argument does not take the matter any further for the Project Proponents, inasmuch as the land in question has been allotted to the Project Proponents by the State after acquiring it from private land owners for implementation of the Project. For that reason, the use of the land should be strictly in conformity with the FWA and the applicable stipulations in the PTR. It is not open to the Project Proponents to contend that they can unilaterally develop the land allotted to them by the State in the manner other than specified in the FWA, being bound by the contractual obligations flowing from the FWA. Notably, the State had granted prior permission to the Project Proponents to construct housing units at location(s) other than the five Townships. That was to accommodate the concerned land losers in connection with the same Project as per the policy of the State. Besides, the stated housing complex is not spread over in 42 acres and 30 guntas of land, so as to disrupt the holistic development envisaged in the FWA/PTR. In any case, that could be done only after obtaining prior approval of the State in that regard. As regards permission given to the private land owners, as aforesaid, that was given by the Planning Authority as per the applicable town planning regulations and in particular the use specified in the ODP/Master Plan. For, their lands did not form part of the Project and also because they are not bound by the stipulations in FWA in particular, unlike the Project Proponents. [Paras 54, 55][866-G-H; 867-A-D]

3.2 Reverting to the factum of assurance given by the Planning Authority in the earlier round of writ petition(s) that the modified proposal/application dated 5.5.2012 will be considered in accordance with law and also that the State was party to that petition, does not entail in acquiescence or waiver of the jurisdictional issue by the State (regarding necessity of seeking prior approval of Empowered Committee and No Objection (Certificate)/approval from the concerned State authorities). In that, the assurance given by the Planning NANDI INFRA CORRIDOR ENTERPRISE LTD.

Authority cannot come in the way of the State to urge that in law, the Project Proponents had no authority to develop the lands in question except as per the stipulations and specifications prescribed in the FWA read with the relevant clauses of the PTR. As a matter of fact, the earlier writ petitions were not decided on merits, but came to be disposed of leaving all contentions open, in lieu of the assurance given by the Planning Authority that it would consider the modified application as per law. In the present writ petitions, therefore, the State in the larger public interest is duty-bound to take a legal plea regarding jurisdictional issue including the extent of right of the writ petitioners (Project Proponents) being limited to stipulations in the FWA. Thus, neither the unilateral assurance given by the Planning Authority nor the fact that such specific reason has not been recorded by the Planning Authority in the impugned communication or that the State was party to the said writ petitions, would denude the State from raising the legal question regarding the scope of the FWA disentitling the Project Proponents for grant of any relief in the subject writ petitions. Further, the High Court in the guise of issuing mandamus to the Planning Authority for issuing the Commencement Certificate, in effect, has prevented the State from calling upon the Project Proponents to strictly abide by the stipulations in the FWA. That cannot be countenanced. It is urged that this Court had held that it would be open to the Project Proponents to carry on construction work of housing on lands which are not falling within the Townships area, if the same were otherwise permissible under the ODP/Master Plan and the town planning regulations. This submission is founded on complete misreading of the observations in the decision of this Court in All India Manufacturers Organisation. The lis before this Court including review petition(s) had arisen on account of the challenge to the FWA and also the acquisition of land for the purpose of the corridor project being excessive. Neither the High Court nor this Court was called upon to answer the issue now raised by the Project Proponents that it was free to construct standalone group housing scheme and at location(s) outside the demarcated five Townships (in the FWA/PTR). The argument of the Project Proponents that the plea taken by the State is hit by res judicata and in any case, by principles of constructive res judicata, cannot be countenanced. As a matter of fact, the Project Proponents did not pursue the plea of res judicata or of constructive res judicata before the High Court. Even if it can be considered as a question of law, the same does not arise in the fact situation of the present case. [Paras 5658][867-E-H; 868-A-H]

3.3 The Project can be taken forward by the Project Proponents only in conformity with the stipulations and specifications in the FWA and the PTR. Additionally, the Project Proponents are also obliged to ensure compliance of ODP/Master Plan and if so complied, the Planning Authority cannot create any impediment. If the State accords approval to the deviation in terms of the FWA itself, the Project Proponents may be competent to carry on such a work. Prior approval of the State for deviation from the stipulations and specifications in the FWA is the quintessence. Further, the dictum in M. Nagabhushana (in third round of litigation which challenged the acquisition proceedings initiated for implementation of the Project. That challenge was rejected by the Division Bench of the High Court. The said proceedings culminated with the decision of this Court in M. Nagabhushana) will also be of no avail to the Project Proponents as it does not militate against the Planning Authority and State, in particular. The direction issued by the High Court in the impugned judgment, in any case, cannot be countenanced in law. But this question has become academic for the view already taken that the Project Proponents could not have directly approached the Planning Authority for approval of modified proposal, which was replete with deviations from the stipulations and specifications in the FWA read with the PTR. This is so because the right in favour of the Project Proponents to carry on development work on the lands referred to in the FWA and the PTR would enure only in conformity with the stipulations and specifications in the stated documents. It is not open to the Project Proponents to develop the land in any other manner, unless permitted by the State. The impugned judgment of the High Court is set aside with liberty to the Project Proponents to first approach the State (under Article 7 of the FWA) for its prior permission to allow them to deviate NANDI INFRA CORRIDOR ENTERPRISE LTD.

from the stipulations and specifications in the FWA and the PTR. Further directions issued.[Paras 60, 62, 66-68][869-D-E; 870C; 873-E-G; 874-A-B]

M. Nagabhushana v. State of Karnataka & Ors. (2011)

3 SCC 408 : [2011] 2 SCR 435 ; Dakshinamurthy v. B.K. Das, IAS & Ors. (2010) 1 SCC 64 – held

inapplicable.

Tata Cellular v. Union of India (1994) 6 SCC 651 : [1994] 2 Suppl. SCR 122 ; Raunaq International Ltd. v. IVR Construction Ltd. & Ors. (1999) 1 SCC 492 : [1998] 3 Suppl. SCR 421 ; Association of Registration Plates v. Union of India & Ors. (2005) 1 SCC 679 : [2004] 6 Suppl. SCR 496 ; Michigan Rubber (India) Limited v. State of Karnataka & Ors. (2012) 8 SCC 216 : [2012] 8 SCR 128 ; Badrinath vs. Government of Tamil Nadu & Ors. (2000) 8 SCC 395 : [2000] 3 Suppl. SCR 573 – referred to.

S.M. Mohan Rao Nadgir v. State of Karnataka & Ors. Decision dated 28.2.2005 of High Court of Karnataka in Writ Appeal No. 72/2004 – held inapplicable. H.T. Somashekar Reddy v. Government of Karnataka & Anr. 1998 SCC Online Kar 609 – referred to.