Holding

The Director’s sanction of additional FSI and height relaxation under the MRTP Act and Bye‑law 28.2 is binding on the Municipal Council, which cannot refuse permission or order demolition of the additional floor.

Summary

The appellants, Live Oak Resort Ltd., obtained a 3‑star rating and applied to the Panchgani Hill Station Municipal Council for permission to add an extra floor to their hotel. The council referred the matter to the Director of Town Planning, who, under the Maharashtra Regional and Town Planning Act, 1966 and Bye‑law 28.2, granted additional Floor Space Index (FSI) and a height relaxation. The hotel proceeded with construction, but the Town Planning Department later advised the council that the total built‑up area exceeded the sanctioned limit, leading the council to reject the permission and order demolition of the added floor. The Bombay High Court dismissed the appellants’ writ petition and review. On appeal, the Supreme Court held that the Director’s sanction of additional FSI and height relaxation is binding on the municipal council; the council cannot refuse permission or order demolition for the additional floor, though it may act on any separate infractions of building rules for other floors. Consequently, the High Court’s order was set aside and the appeals were allowed.

Issues considered

The Municipal Council’s statutory duty to implement the Director of Town Planning’s sanction of additional FSI and height relaxation.
Whether the Council may refuse permission and order demolition despite the Director’s sanction.
The legal effect of Bye‑law 28.2 on the hierarchy of authority between the Director and the Municipal Council.
The applicability of the doctrine of deemed sanction where the council fails to communicate a decision within 60 days.
The extent to which the municipality may enforce building‑rule violations for ground and first floors independent of the Director’s sanction.

Legislation cited

Maharashtra Regional and Town Planning Act, 1966s. 154, s. 156, s. 37, s. 45

Subjects

Town planningFloor Space IndexAdditional floorMunicipal council authorityDirector of Town PlanningBye‑law 28.2Section 45 MRTP ActDemolition orderBuilding regulationsEnvironmental considerations

Judgment

MIS. LIVE OAK RESORT (P) LTD. AND ANR. A
v.
PANCHGANI HILL STATION MUNICIPAL COUNCIL AND ANR.

- AUGUST 31, 200 I

- [A.P. MISRA AND UMESH C. BANERJEE, JJ.] B

Town Planning :

Maharashtra Regional and Town Planning Act, 1966: Sections 37 and
45. c
Buildings-Construction of-Within the Jurisdiction of Municipal
Council-Hotel sought permission to construct an additional floor consequent
to conferment of "3-star" status on it-Municipal Council referred the matter
to Director, Town Planning-Director granted permission of additional Floor
Space Index (FSJ) and also relaxed height restrictions-Consequently,
D
additional construction commenced-Subsequently, Town Planning Department
informed the Municipal Council not to grant permission as the total area of
construction was more than that permissible-Municipal Council rejected the
permission and ordered demolition on additional construction-High Court
dismissed writ petition and review petition-Correctness of-Held: Municipal E
council is under statutory obligation to abide by the Director's sanction-The
Council cannot refuse permission once the additional FSJ is granted-Hence,
Municipal Council's action, not sustainable-However, If there is an infraction
of the FSJ or of the Building Rules, Municipality is liberty to take appropriate
steps in accordance with law.
F
The appellant sought permission from the Municipal Council for
construction of an additional floor in its hotel consequent to the conferment
of a "3-Star" status on it. The Municipal Council referred the matter to the
Director, Town Planning seeking guidance whether additional Floor Space
Index (FSI) could be granted for the said construction. The Director, Town
planning not only granted permission of additional FSI but also granted
G

- relaxation on the height as well under Section 45 of the Maharashtra Regional
and Town Planning Act, 1966. Thereafter, the appellant commenced
construction of an additional floor in its existing hotel premises.

Subsequently, the Assistant Director, Town Planning informed the
433 H
434 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A Municipal Council that the permission for construction ought not to be
granted, the reason being the total area of construction was more than the
construction area which was permissible and sanctioned by the Director, Town
Planning. Thereupon, the Municipal Council rejected the permission granted
and issued order of demolition of the portion constructed, being unauthorised.
-
-
B The High Court dismissed the appellant's writ petition as also the review
petition. Hence this appeal.

Allowing the appeals, the Court

HELD: I. The Director, Town Planning by a letter, has categorically
C recorded grant of permission of additional Floor Space Index (FSI) and having
regard to an additional floor, it would obviously be more than the sanctioned
height of the building. The appellants were not only authorised to construct
an additional floor but the memo also contained a relaxation on the height as
well being more than the permissible sanctioned limit The situation therefore,
turns out to be that the Director, Town Planning being the authority in terms
D of the provisions of law did grant sanction of an additional floor with an
additional height upon proper relaxation being granted. This aspect of the
matter, the High Court has not considered at all and thus clearly fell into an
error. The Director himself as a matter of fact did place reliance on provision
No. 28.2 of the building byelaws applicable to 'B' and 'C' class Municipalities
in the State. The entire reference to the Director was by reason of the above
E said provision and all the statutory agencies have acted thereupon.
[446-G-H; 447-A-B[

2. Provision No. 28.2 of the building byelaws having the definite
application in the contextual facts, sanction from the Director, Town Planning
in terms of the Standardised Building Byelaws for 'B' and 'C' Class Municipal
F Councils of the State supersedes any further power of the Council. The power
conferred under provision No. 28.2 being supreme, the Council is under
statutory obligation to abide by the decisions as contained in the Director's
letter and grant sanction in terms of Section 45 of the Maharashtra Regional
and Town Planning Act, 1966 but in accordance therewith: This power stands
G absolute and there is no escape from that sanction. But there is no unguided
power of the Director-The powers of the Director also stand circumscribed
by and under provision No. 28.2 itself and to the effect that exercise of such
a power pertains to the grant of additional FSI and correspondingly authority
and jurisdiction to grant relaxation as regards the height. [447-D-F)

H 3.1. The additional FSI stands granted and in the event of such a grant
LIVE OAK RESORT (P) LTD. r. PANCHGANI HILL STATION MUNI. COUN. 435
the Council cannot on an analysis of the different statutory provisions, sit over A
the decision of the Director and refuse permission. Byelaw No.28~2 clearly
recognised the power to grant such a sanction for additional FSI and the
decision of the Director is final on that score and the Council is to implement
such a decision and not act de hors the same. If it were otherwise, there exists
no justifiable reason for forwarding the application of the appellants to the B
Town Planning Department for guidance and neither was there any
justification for the Council to deposit the regulation fee in term of the letter
of the Town Planning Department as additional levy for grant of additional
FSI. These issues, however, remained unanswered : Mere silence, however,
will not provide a solace to the appellant. It is in this aspect of the matter
that the High Court has also fallen to a great error. (448-B-E] c
3.2. The Director who happened to be the proper authority to confer
the benefit of additional FSI, there ought not to have been any confusion
between the conferment of benefit of the additional FSI and the grant of
sanction of building plan~-the two issues are separate in nature and the
authorities are also separate-whereas the Director, Town Planning happened D
to be the deciding factor in the matter of grant of sanction of additional FSI
and the power to relax the height issue, the Municipality in terms of Section
45 of the Act remained and still remains the authority to sanction or reject
the plan in the ordinary course of events. There is thus no conflict between
the provisions. (448-E-G]
E
4.1. The sanction pertains to the additional FSI. The sanction letter did
not speak of construction or grant of sanction pertaining to the ground and
first floors at the said premises. The Director, Town Planning never sanctioned
any construction area in the ground and first floors at the same premises.
While it is true that sanction was granted for additional FSI as also increased p
height but there was never any mention or any sanction conveyed for ground
and the first floor construction in the letter. It cannot thus but be termed to
be the brain child of the Assistant Director who has in fact, superseded the
order of the Director which is not a permissible state of affairs. (451-D-F]

4.2. Provision No. 28.2 of the Byelaws has been taken recourse to and G
the Assistant Director not being able to avoid the same, simply recorded the
factum of construction area on the ground and first floors in excess of the
sanction granted by the Director, Town Planning. The act or acts on the part
of the Assistant Director cannot but be said to be wholly without jurisdiction
and consequently the action on the basis thereof as taken by the Municipal H
Council cannot also be sustained. (451-F-G]
436 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A Goa Foundation, Goa v. Diksha Holdings Pvt. Ltd., (2001] 2 SCC 97 and
People United for Better Living in Calcutta-Public and Anr. v. State of West
Bengal, AIR (1993) Cal 215, referred to.

5. In the·event of there being any infraction of the order of the Director
pertaining to additional FSI and the height as relaxed by the Director and in
B the event of there being any infraction of the Building Rules concerning the
ground and the first floors or the basement thereof, the Municipality would
be at liberty to take appropriate steps in accordance with law. (452-G-H)

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 6057-6058
C of2001.

From the Judgment and Order dated 10.7.2000 of the Bombay High
Court in W.P. No. 2226 of 1999.

A.K. Ganguli Kailash Vasudev, J. Reis, Y. Choudhary and V.D. Khanna
D for the Appellants.

Ms. lndu Malhotra, Makrand D. Adkar, Vishwajit Singh and S.D. Singh
for the Respondents.

Dushyant A. Dave and S. V. Deshpande for the Intervenor.
E
The Judgment of the Court was delivered by

BANERJEE, J. Leave granted.

The appellants herein, moved this Court under Article 136 of the
F Constitution of India seeking special leave to appeal against the orders of the ...
Division Bench of the High Court of Judicature at Bombay in the matter of
dismissal of the writ petition being No. 2226 of 1999 dated I 0th July, 2000
as also an order of dismissal of the Review Petition dated 6th November,
2000. By the impugned order of dismissal, the High Court did lend its
concurrence to an order of demolition of an additional floor constructed by
G the appellants in Panchgani said to be in violation of the Municipal Rules as
also of the direction contained in an earlier judgment of the same High Court
in a public interest litigation being No. 2754 of 1997 wherein the High Court
has dealt with a circular issued by Urban Development, Public Health and
Housing Department in 1971. Incidentally, be it noted that various public
H interest petitions have been filed before the High Court seeking to prevent
LIVE OAK RESORT (P) LTD.''- PANCHGANI HILL STATION MUNI. COUN. [BANERJEE, J.] 43 7

construction and/or regular constructions in the Mahabaleshwar- Panchgani A
area in the State of Maharashtra being an ecologically sensitive belt. In the
writ petition filed by the Bombay Environmental Action Group the bone of
cantention of the appellants had been that there was large scale illegal
construction and deforestation in the Mahabaleshwar-Panchgani region
resulting in wide spread environmental and ecological degradation to these B
two hill stations in the State of Maharashtra. The High Court upon
consideration of the pleadings and the facts on record passed various orders
from time to time and finally dealt with the matter in its judgment dated 18th
November, 1998 containing certain directions in order to put an embargo to
the constant exploitation of nature resulting in ecological imbalance in the
area and thus to avoid the bio-diversity crisis. The appellants herein were C
also parties therein as respondent No. 17.

Ecological imbalance and non-conformity of the Municipal Rules are
however two independent and separate factors to invoke the jurisdiction of
the law courts and either of the two factors however would prompt the law
courts to pass necessary orders by reason therefor to protect the environment. D
Before adverting to the contextual facts in the present appeals under
Article 136 of the Constitution, the earlier order of the Bombay High Court
spoken of hereinbefore in this judgment dated 18th November, 1998 ought
to be adverted to so as to appreciate the resultant culmination on to the
issuance of an order of demolition by the Panchgani Municipal Council and E
subsequent concurrence thereof by the High Court in a writ petition filed by
the appellants herein.

Incidentally, be it noted that the two hill stations of Panchgani and
... Mahabaleshwar recently have been acclaimed to be very popular tourist resorts p
and tourism has thus turned out to be a great economic benefactor to the
State - and it is this possible improved economic situation that the State
Government in the year 1971 issued a circular (more fully dealt with hereinafter
in this judgment) under which an additional FSI was made available to the
luxury hotels (with 3 star facilities and above) - obviously the State
Government at the time of issuance of the circular had in its mind the long G
catena of cases of this Court as also that of various High Courts that while
ecology cannot be given a go by, in the same vein development process
cannot be ignored: As a matter of fact the law courts thus evoked the factum
of striking of a balance between the development and ecology since in a
developing economy there cannot be either development or ecology but both H
438 SUPREME COURT REPORTS (2001) SUPP. 2 S.C.R

A must exist and thus a balance shall have to be struck between the two, as
otherwise the society will perish in the absence of either of the two elements
noticed above.

In this context, two decisions ought to be adverted to briefly: one from
the Calcutta High Court and the other of this Court. In the Calcutta High
B Court, People United for Better Living in Calcutta - Public and Anr. v. State
of West Bengal and Ors., AIR (1993) Calcutta 215 the Single Judge in
paragraph 2 of the Report observed:

"2. While it is true that in a developing country there shall have to
be developments but that development shall have to be in closest
c possible harmony with the environment, as otherwise there would be
development but no environment, which would result in total
devastation, though however, may not be felt in presenti but at some
future point of time, but then it would be too late in the day, however,
to control and improve the environment. Nature will not tolerate us
D after a certain degree of its destruction and it will in any event, have
its toll on the lives of the people: Can the present day society afford
to have such a state and allow the nature to have its toll in future -
the answer shall have to be in the negative: the present day society
has a responsibility towards the posterity for their proper growth and
development so as to allow the posterity to breathe normally and live
E in a cleaner environment and have a consequent fuller development
: time has now come therefore, to check and control the degradation
of the environment and since the Law Courts also have a duty towards
the society for its proper growth and further development and more
so by reason of definite legislations in regard thereto as noted
F hereinafter, it is a plain exercise of the judicial power to see that there
is no such degradation of the society and there ought not to be any
hesitation in regard thereto - but does that mean and imply stoppage
of every developmental programme - the answer is again 'no' : There
shall have to be a proper balance between the development and the
environment so that both can co-exist without affecting the other. On
G the wake of the 21st century, in my view, it is neither feasible nor
practicable to have a negative approach to the development process
of the country or of the society, but that does not mean, without any
consideration for the environment. As noted above, there should be
a proper balance between the protection of environment and the
development process: the society shall have to prosper, but not at the
H
LIVE OAK RESORT (P) LTD.,._ PANCHGANI HILL STATION MUNI. COUN. [BANERJEE, J.] 439

cost of the environment and in the similar vein, the environment shall A
have to be protected but not at the cost of the development of the
society - there shall have to be both development and proper
environment and as such, a balance has to be found out and
administrative actions ought to proceed in accordance therewith and
not de hors the same."
B
This Court, however, in Goa Foundation's decision Goa Foundation,
Goa v. Diksha Holdings Pvt. ltd. and Ors., [20011 2 SCC 97 affirmatively
approved the approach as stated· in the Calcutta High Court judgment.

Be it noted that on this factual backdrop and by reason of the notification
in 1971 there was a wide spread violation of the regional plan for C
Mahabaleshwar-Panchgani area wherein agricultural land was being
extensively useJ for non-agricultural purposes such as hotels, holiday homes,
luxurious private bungalows - it has been the contention of the Bombay
Environmental Action Group that forestry in the Mahabaleshwar- Panchgani
region being depleted at an alarming rate thus requiring protection and resultant D
intervention of the Court. The records further depict that the rule-nisi in the
earlier matter was issued on 23rd June, 1997 and while issuing the said rule-
nisi the State Government was directed to form a high level committee to
find out as regards the illegal construction and user of land in violation of the
Regional Town Plan for the area or the Building Bye-laws and Development
Control Rules. The committee in terms of the order did submit its report on E
17th November, 1997, wherein about 1060 buildings in Mahabaleshwar-
Panchgani region were found to be in contravention of statutory protection '
and suggested various remedial measures and in terms therewith apart from
the directions on to the Pollution Board, Mahabaleshwar Municipal Council
were also directed to take immediate action against erring parties and it is in F
course of hearing that some of the persons who had received notice submitted
that they were prepared to give undertakings to the High Court that basement
of the construction could only be used for parking, storage, air-conditioned
plants and not for any other purpose. The High Court while dealing with the
matter observed:
G
"In our view, on such undertakings being given by the parties to
whom notices were issued, no further action would be required to be
taken on the ground that the basement area is to be included for built-
up area calculations. It was directed that such undertakings be given
to this Court and to the Chief Officer of the Municipal Council on or
before 15th September, 1998. As regards the interpretation of the H
,,
I

440 SUPREME COURT REPORTS (2001] SUPP. 2 S.C.R.

A Bye-law, the learned counsel for the respondent sought time.

On 15th September, 1998 the parties were heard at length. With
regard to the Building Bye-laws and Development Control Rules for
Mahabaleshwar and Panchgani Municipal Councils, the statements
made by the learned Advocate General were recorded, viz.,
B
(a) For deciding the permissible maximum height, the council is taking
into consideration the height of average of the four corners of the
surrounding ground level;

(b) The lower storey of the building, if constructed below or partly
C below the ground level, is considered as basement and if basement is
used for the purpose specified in the Rules such as parking space,
store room or air-conditioning plant room, then it is not included for
calculation of total built-up area and it is also not considered as one
storey or floor;

D (c) The council is following Bye-law 20.6. which provides that the
overall height of any building shall not be more than 9 mtrs. In
Sector I, S. No.52 and area selected for MIG/LIG/EWS housing with
approval of Government and shall not be more than 11 mtrs. in all
other areas.

E
In this view of the matter, the Municipal Councils were directed to
exclude the basement area from built up area calculations ifthe owners
of the building filed necessary undertakings before this Court .............. .

........... As regards the violation of height restrictions, the Planning
F
Authority was directed, at its discretion, to condone violation of I or
2 feet wherever such violation was there and that it was not to be
treated as a license to grant permission to violate the height limit.
Further height should be counted by taking average height of the four
corners of the plot. The applications for condonation of such height
G violations were required to be filed on or before 30th September,
1998. Such condonation was directed to be granted on recovering a
penalty of Rs. 1,000 to Rs. 25,000. It was also clarified that this
would not give the authority to the Councils to sanction plans m
violation of the height regulation.

H
LIVE OAK RESORT (P) LTD. 1•. PAN CH GANI HILL STATION MUNI. COUN. [BANERJEE, J .] 441

........... However, it is clarified that if the benefit of the Government A
Resolution of the year 1971 is already given then those cases are not
to be disturbed and are not to be reviewed Henceforth, the benefit
of the said Resolution is not to be given. "

(Emphasis supplied)
B
It would be convenient to note the true scope and effect of 1971 circular
spoken of earlier at this juncture. The circular incidentally pertains to higher
floor space index to luxury hotels within the jurisdiction of the Municipal
Corporations and Municipal Council in the State of Maharashtra. Relevant
extract of the circular however is noticed herein below. The circular reads:
c
"Government has been receiving requests from several Hotels in
Maharashtra that they should be allowed higher F.S.I. for their
buildings than is normally permissible. Government decided that all
the Municipal Corporations - Municipal Councils in the State of
Maharashtra should be advised to allow higher FSI for luxury hotels
with a grading of 3 star and above within their jurisdiction provided D
the request is recommended by the Department of Tourism.
Government is also pleased to advise that the additional FSI to be
allowed should not exceed 50 per cent of the normal FSI allowed in
such cases. Government is further pleased to direct that the minimum
area of the plot should not be less than 1/4 acre or 1000 sq. meters E
in respect of hotels having I 0 rooms and where the number of rooms
is more than 10, the plot size should be larger as may be required by
the Department of Tourisra.

Government is further pleased to advise the Municipal Corporations
(other than Bombay), Municipal Councils that if any Development F
Control Rules, Town Planning Regulations, Building regulations
applicable in their area do not permit a higl-.er FSI for luxury hotels
as indicated above, the higher FSI may be allowed in anticipation of
suitable modifications in the rules/regulations etc."

Admittedly, the appellants herein had commenced the construction of G
an additional floor in the existing hotel premises after conferment of a 3 Star
status. Mr. Ganguly, learned senior counsel, appearing in support of the
petition for special leave contended that the commencement of the construction
of the additional floor. in the hotel was on bonafide belief since the plan
furnished by them had in fact being sanctioned by the Director, Town Planning H
and as such question of issuance of the order of demolition would not arise
442 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A and it is the issuance of this order of demolition, the appellants herein moved
the High Court at Bombay in a petition under Article 226 of the Constitution
which however was negatived by the High Court with an order of dismissal
of the same and hence the special leave petition before this Court as noticed
earlier.

B Mr. Ganguly addressed this Court in detail on two specific counts
challenging the dismissal of the order of the writ petition by the High Court:
the first count being that the High Court's refusal to entertain the writ petition
'"
has been totally on a misreading of the earlier judgment of the High Court
and on the second it has been contended by Mr. Ganguly that the finding of
C violation of the Municipal Rules warranting a demolition in the contextual
facts have been totally unjustified.

Needless to record that Panchgani, a hill station in Satara district of the
State of Maharashtra has recently been facing a tremendous influx of people
as noticed herein above: a virgin land having all round beauties of nature
D thus turned out to be a tremendously popular tourist centre. Admittedly the
High Court, however, in order to stop further exploitation of nature directed
a restraint order effective from the date of the order viz., 18th November,
1998 in regard thereto. It is only a prospective order and not a retrospective
one.

E Incidentally, Mr. Dushyant Dave, learned senior counsel appearing for
the intervenor in the matter with his usual felicity of expression very strongly
objected to the submissions of Mr. Ganguly, upon reliance on the earlier
judgment of the High Coun as noticed herein before. Equally forceful however
have been the submissions of Mr. Deshpande appearing for the Government
and Mr. Singh for the Municipal Council.
F
Before going into the main thrust of submissions of the parties, a brief
look to the order impugned would be convenient at this stage: the relevant
extracts are as below:

"3. We have gone through the original files of the Municipal Council
G and the record of the case with the assistance of the learned counsel
for the parties. We have also perused the photographs of the structure
constructed by the petitioners. The respondent No. I has sanctioned
for construction of only ground plus one storey and basement.
However, it appears that the petitioners have constructed a building
H of ground plus 3 stories. The so-called basement is actualiy a ground
LIVE OAK RESORT (P) LTD. 1•. PANCHGANI HILL STATION MUNI. COUN. [BANERJEE, J.l 443

floor which is being used for the purpose ofresidence contrary to the A
Development Control Rules. It is also seen that the petitioners have
violated high restriction and there is excess construction to the extent
of 107 sq. meters. It seems that this construction was carried out
inspite of stop work notice given by the respondent no. I and when
the writ petition No.2754 of 1997 was pending before this Court.
B
4. Mr. Reis the learned counsel for the petitioners strenuously
contended that the petitioners constructed an additional floor in view
of the no objection granted to the Director of Town Planning. He
contended that although technically there was no sanction from the
Municipal Council, keeping in mind the fact that no objection was C
granted by the Director of town Planning and also the fact that the
petitioners had invested additional funds for the construction of the
extra floor and having regard to the observations made by the division
bench in para 27 of the order dated 18.11.1998, the construction of
the extra floor by the petitioners should be regularised. We do not
find auy merit in the submission of the learned counsel. In the first D
place petitioners had constructed extra floors and not one as
contemplated by the circular dated 7. I 0.1971. As indicated above
petitioners have not constructed basement and instead they have
constructed a ground floor. Secondly the observation of the division
bench in para 27 of the order are of no help to the petitioners. The
division bench has categorically held that the benefit of the additional E
FSI could not have been given to any 3 Star hotels after the
commencement of the Development Control Rules. The division bench
has merely clarified that if the benefit of the circular of 7.10.1971
was already given then those constructions were not be disturbed. In
the instant case it is an admitted position that the plans for additional p
floors were not sanctioned by the resp.ondent No. I. In the
circumstances the observations made by the Division Bench are not
applicable to the present case and the petitioners are not entitled to
claim any benefit of the said Government Circular. The construction
of additional two stories is totally unauthorised and contrary to the
Development Control Rules. We do not find any infirmity in the G
impugned orders passed by the respondent No. I."

It is this order which is under challenge in this petition under Article
136. Incidentally, upon issuance of notice and the interim order passed in the
presence of the parties, all the parties agreed that the matter under consideration H
444 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A ought to be disposed of at the notice stage itself and hence the final disposal
in terms of this judgment. .

Turning on to the factual score it appears that the rejection of the plan
by the letter dated 20.3.1997 emanating from Panchgani Hill Station Municipal
Council has had four specific grounds and the same are set out hereinbelow:
B
"I. The present F.S.I. of the present building's Ground Floor and
First Floor is more than the F.S.I. given by Hon'ble Director,

2.
Town Planning, Maharashtra State, Pune.

It is not correct to grant permission/permissible for Health Club
.....
C and Sanitation House.

3. Alongwith the annexed Plan of the construction some
measurements are shown in feet. The feet measurements must be
shown in Metric.

4. Sanitation House is not permissible in Kitchen."
D
A plain look at the grounds mentioned however, depict that the principal
objection centres round the first of the four grounds. It is in this respect that
one ought to fall back upon relevant correspondence either inter-departmental
or intra parties. First of the series however is a letter dated SI.13th June, 1995
from the Director, Town Planning to the Assistant Director, Town Planning,
E Satara, the letter though inter-departmental stands disclosed in the proceedings
and pertains to the circular dated 7th October, 1971 spoken of earlier since
Mr Ganguly's principal defence against so-called violation of Municipal Act
is dependant on this document. Let us have a clear view of the matter in a
broader perspective - A letter dated 6th April, 1995 was sent by the Municipal
F Council to the Town Planning Department expecting guidance whether
additional FSI can be granted for the construction of a three Star hotel at a
final plot No.414-E - Town Planning Scheme No.3 Panchagani by Director,
Town Planning, Maharashtra State, Pune. The same in turn was placed before
the Director, Town Planning, Pune for his opinion and guidance by the
Assistant Director, Town Planning, Satara and which was in tum replied to
G by the Director by the letter noticed above dated 8/13th June, 1995, wherein
the issue of grant of additional FSI was considered and an opinion expressed
therein by way of a sanction. The relevant extract of the letter dated 8/13th
June, 1995 are set out hereinbelow for appreciation of the submissions and
being the main plank of defence against the order of demolition as noticed
above. The relevant extracts whereof, however are as below:
LIVEOAK RESORT (P) LTD. 1·. PANCHGANI HILL STATION MUNI. COUN. [BANERJEE, J.] 445
"Holder of the property consisting of the piece and parcel of land A
bearing final Plot No.414-E, Town Planning Scheme No.III situated
within limits of Panchgani Hill Station Municipal Council has been
granted permission for the Hotel by the Municipal council and he has
submitted proposal for the additional FSI for carrying out construction
of star Category Hotel and in that connection guidance has been B
expected from this directorate.

In accordance with the Circular dated 7. I 0. 7I of the Government, an
additional FSJ is permissible for the Three Star and higher grade
hotel and applicant has submitted proposal in accordance with this
circular, there is no objection to sanction the same.
c
(Emphasis supplied)

In connection with this proposal as suggested by the Deputy
Director, Town Planning, Maharashtra State, Pune Region, Pune it
will be appropriate to charge fees @ 50% of the existing markets rate
for the additional FSI. D
As because of this permission of additional FSJ as one floor will
be more than the sanction and height of the building is more by 3.20
mfrs. than sanction, it is unavoidable but to give relaxation.

Jn accordance with provision No.28.2 of the Development Control E
Regulations and Certified Construction Bye-laws which are applicable
for "B" and "C" Class Municipal Councils, relaxation is being granted
as of the special case. Enclose herewith all papers of the branch
office."

(Emphasis supplied) F
This decision of the Director, Town Planning as above, was in tum
communicated to the Chief Officer, Panchgani Hill Station Municipal Council
by a letter from the Assistant Director, Town Planning dated 23rd February,
1996 wherein it has been categorically mentioned that the letter of the Director
dated 13.6.1995 has provided guidance and a copy whereof was also sent G
therewith. The Assistant Director by the said intimation dated 23.2.1996 also
requested the Municipality to deposit a sum of Rs. 7,442 for the additional
FSJ granted in the letter of the Director in terms of Section 360-B of the
B.C.S.R fees. A further intimation has also been effected to the effect that the
aforesaid sum of Rs. 7442 being the additional premium is to be recovered H
446 SUPREME COURT REPORTS [2001) SUPP. 2 S.C.R

A from the applicant - The sanction thus stands acted upon by the parties. The
record further depicts that by letter dated 3rd June, 1996, the Assistant Director,
Town Planning did call for the construction plans of the existing building and
in terms therewith the Municipal Council, Panchgani forwarded the same
upon obtaining copies of the same from the appellants herein. It is only
thereafter however that the Town Planning Department by a letter dated 31st
B December, 1996 informed the Chief Officer of the Municipal Council that
the permission for construction ought not to be granted, the reason being the
total area of construction is more than the construction area which is
permissible and sanctioned by the Director, Town Planning, Maharashtra
State vide letter dated 8/13th June, 1995 and in terms therewith Panchgani
C Hill Station Municipal Council wanted a further clarificatory order from the
town planning authority who in tum by its letter dated 6th March, 1997
recorded the 4 point objection as noticed hereinbefore and the subsequent
application dated 9th September, 1997 regarding the grant of permission for
construction of the 3 star hotel at the premises in question stood rejected.
Representation made by the appellants but to no effect and subsequently
D order of demolition of the portion constructed said to be unauthorisedly was
issued which was brought to challenge before the High Court and the factual
score thereafter stands already noted in this judgment and as such we do not
think it expedient to repeat the same once again.

E It is in this factual matrix, the High Court dealt with the matter. At the
first stroke, it seems rather significant though the High Court in the earlier
judgment has categorically recorded that if the benefit of the Government
resolution of the year 1971 has already been given, then and in that event,
those cases are not to be disturbed and thus not to be reviewed. The High
Court while incorporating the same recorded that it is an admitted position
F that the plans for additional floors were not sanctioned by the respondent
No. I and as such, the issue does not seem to have any benefit from the order
of the Division Bench - at the first sight, it seems no exception can be taken
on this but on a closer scrutiny of the record displaces such an observation
of the High Court. By the letter dated 8/l 3th June, 1995, the Director, Town
G Planning has categorically recorded grant of permission of additional FSI and
having regard to an additional floor, it would obviously be more than the
sanctioned height of the building. The appellants were not only authorised to
construct an additional flour but the memo also contained a relaxation on the
height as well to the extent of 3.20 meters than the permissible sanction limit
The letter in question stands extensively quoted in the earlier part of the
H judgment and the emphasised portion would depict the conclusion as has
LIVE OAK RESORT (P) LTD. 1•. PANCHGANI HILL STATION MUNI. COUN. [BANERJEE, J.] 44 7

been noticed hereinbefore. The situation therefore, turns out to be that the A
Director, Town Planning being the authority in terms of the provisions of law
did grant sanction of an additional floor with an additional height of 3 .20
metres upon proper relaxation being granted, This aspect of the matter, the
High Court has not considered at all and thus clearly fell into an error. It is
to be placed on record that Director himself as a matter of fact did place
reliance on provision 28.2. of the bye-laws applicable to 'B' and 'C' class B
municipalities in the State of Maharashtra. The entire reference to the Director
was by reason of the above said provision and all the statutory agencies have
acted thereupon. The above noted provision 28.2 reads as below:

"28.2 The Director of Town Planning may permit special relaxation C
to any of the bye-laws, provided the relaxation sought does not violate
the health safety, fire safety, structural safety, public safety of the
inhabitants and the buildings and the neighbourhood" -

The proviso noticed above having the definite application in the
contextual facts, sanction from the Director, Town Planning in terms of the D
Standardised Building Bye-laws for "B" and "C" Class Municipal Council of
Maharashtra supersedes any further power of the council. As a matter of fact,
the power conferred under 28.2 being supreme, the Council is under statutory
obligation to abide by the directions as contained in the Director's letter as
above, and grant sanction in terms of Section 45 of the MRTP (for short) but E
in accordance therewith : This power stands absolute and there is no escape
from that situation. We however, ought not to be understood to record the
unguided power of the Director - The powers of the Director also stand
circumscribed by and under the provision 28.2 itself and to the effect that
exercise of such a power pertains to the grant of additional FSI and
correspondingly authority and jurisdiction to grant relaxation as regard the F
height.

It is on this score, Mr. Ganguly, contended that the provision as contained
28.2 of the bye-laws as noticed above does not recognise any superior authority
than the Director in the matter of grant of additional FSI and since the G
Director has granted, the Council has no other alternative or option but to
follow the same and grant sanction in accordance therewith and not de hors
the same. Additional FSI stands granted and the plan on the basis of such
grant, ought in the ordinary course of events to have been sanctioned. It is
on this score that Mr. Dave appearing for the intervenor alongwith the learned
Advocates _appearing for the State of Maharashtra and the Municipal Council H
448 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A in one voice also very strongly contended that since the Municipal Council
is the ultimate sanctioning authority in tenns of the Maharashtra Regional
and Town Planning Act, 1966, the question of acting in excess of jurisdiction
so far as the Council is concerned would not arise - obviously there is some
confusion persisting by reason wherefor the High Court has also fallen into
B an error : the reason being failure to distinguish between the grant of sanction
of additional FSI and the sanction of the building plan. The additional FSI
stands granted and in the event of such a grant, can the Council sit over the
decision of the Director and refuse permission - on an analysis of the different
statutory provisions, our answer cannot but be in the negative. Bye-law 28.2
clearly recognised the power to grant such a sanction for additional FSJ and
C the decision of the Director is final on that score and the Council is to
implement such a decision and not act de hors the same. Jn the event the
respondents' contentions are to be accepted, then there exist no justifiable
reason for forwarding the application of the appellants to the Town Planning
D~ partment of the State Government for guidance neither there was any
justification for the Council to deposit the regulation fee of Rs. 7,442 in terms
D of the letter of the Town Planning Department as additional levy for grant of
additional FSJ - These issues however remain unanswered: Mere silence
however will not provide a solace to the appellants herein. It is in this aspect
of the matter that the High Court has also fallen to a great error. The High
Court by its earlier judgment has clarified that in the event of the benefit of
E the Government resolution of 1971 has already been_ given, then those cases
are not to be disturbed and not to be reviewed - in fact, such a benefit has
been given by the Director who happened to be the proper authority to confer
such benefit, there ought not to have been any confusion between the
confennent of benefit of the additional FSI and the grant of sanction of
building plans - two issues are separate in nature and the authorities are also
F separate - whereas the Director, Town Planning happened to be the deciding
factor in the matter of grant of sanction of additional FSJ and power to relax
the height issue, the Municipality in terms of section 45 of the Act remained
and still remains the authority to sanction or reject the plan in the ordinary
course of events. There is thus no conflict between the provisions - Mr.
G Deshpande however significantly contended that the Director, Town Planning
being the authority who is consulted by the Government before it finalises
the draft development plan of the Municipal Council has a very limited
function to discharge and only to provide technical guidance to the local
authority: the submission however runs counter to statutory rules and as such
we are unable to concur therewith.
H
LIVEOAK RESORT (P)LTD. "· PANCHGANI HILL STATION MUNI. COUN. [BANERJEE, J.] 449

In this context a public notice No. Vl/999-95-96 in terms of resolution A
No.71 dated 28th November, 1995 ought to be noticed. The public notice
reads as below:
.....
"PANCHGANI HILL STATION MUNICIPAL COUNCIL, PANCHGANI

PUBLIC NOTICE
B

Under Section 37 of Maharashtra Regional and Town Planning Act,
1966.:

No. VI/999-95-96. - All citizens residing in Panchgani Hill Station C
Municipal Council's limit are informed by this public notice, that the
Panchgani Hill Station Municipal Council intends to suggest the
following addition to the development control and Buildings Byelaws
in Chapter Xll-B after Law No.52. In the sanctioned (Revised)
Development Plan of Panchgani Hill Station Municipal Council which D
has been sanctioned by the Director of Town Planning, Maharashtra
State's Notification No.DP/Panchgani (R) /49-88/TPV-ll dated 12th
May 1988 and came into force with effect from !st July, 1988.

Proposed addition in Byelaws is given below: ·
E
Particulars of Additional Bye-laws

For star category Luxury Hotels in independent plots and under one
establishment with a rating of 3 and above as approved by the
Department of Tourism, Government oflndia or the State Government,
additional F.S.I. to the maximum extent of 50 per cent over and F
above the permissible F.S.I. in the area in which such hotel plot is
situated may be permitted provided that such extra F.S.I. shall be
subject to payment of such premium as may be fixed from time to
time by the Municipal Council in consultation with the Director of
Town Planning, Pune provided further that permissible height of 9.15 G
m. may be relaxed if necessary and only to facilitate use of extra
F.S.I. in consultation with the Director of Town Planning. No
condonation in the required open spaces, parking spaces and any
other requirements of the Development Control Rules except the height
as provided above shall be allowed in case of grant of such additional H
F.S.I."
450 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A Mr. Deshpande next contended that the letter dated 8/!3th June, 1995
cannot but be read as a mere direction to consider the grant of relaxation of
height and not a sanction - we are however unable to record our acceptance
thereto by reason of the specific language of the Director's letter noted above. ...
B Mr. Dave for the Intervenor further contended that Bye-law 28.2 of the
Development Control Regulation as noted above does not have any manner
of application to Panchgani and contended that even if it does so applied, the
same cannot have any manner of application by reason of Sections 45, 154
and 156 of the Maharashtra Regional and Town Planning Act, 1966. Grant
or refusal of permission stands vested with the planning authority and there
C cannot be any manner of dispute in regard thereto by reason of the provisions
of Section 45 of the Act of 1966 - This aspect of the matter has already been
dealt with herein before as such we need not further dilate on the issue
excepting recording that the Director did not act on its own initiative but the
ball has been set to roll by the Municipal Council itself, since they wanted
D guidance and opinion apropos the application for additional FSI: It is not that
the petitioner applied before the Town Planning authority but the application
was made to, as in the normal course of events it has to be, to the Municipal
Council and who in their turn sent it to the Department of Town Planning
which ultimately was placed before the Director, Town Planning and the
latter granted while expressing opinion in regard thereto also granted sanction
E as also relaxation in terms statutory conferment of power as noticed more
fully hereinbefore. Mr. Dave's definite submission however has been that the
appellants are not entitled to get the additional FSI and thus resultantly no
relaxation on heights also is permissible. We are however, unable to record
our concurrence therewith by reason of the factum of the issuance of the
F letter by the Director, Town Planning Department in terms of provision of
Rule 28.2 and the entitlement follows therefrom.

The issue of res-judicata as urged by Mr. Dave need not detain us for
long since in our view, the doctrine or even constructive res judicata cannot
G possibly be have any application in the contextual facts.

The other aspect of the matter requiring consideration pertains to the
letter dated 31.12.1996 addressed to the Chief Officer, Municipal Council,
Panchgani by the Assistant Director, Town Planning, Satara wherein the
latter intimated the Municipal Council that sanction should not be granted
H taking into consideration the sanctioned development plan of the Panchgani
LIVEOAK RESORT (P)LTD. 1•. PANCHGANI HILL STATION MUNL COUN. [BANERJEE, l.1451

city. The reason for such a refusal as available therefrom has been stated to A
be:

"Area of the construction of the building of the first floor and ground
floor carried out at the said premises i.e. total area of construction is
more than the construction area which is permissible and sanctioned
by the Hon'ble Director, Town Planning, Maharashtra State, Pune B
vide letter No.DS/Panchgani/Star Hotel/final Plot No.414-E, T.P.S.3/
TPV-2/3060/dated 13.6.95."

Needless to record and as noticed hereinbefore that the Council acting
on the basis of such an intimation rejected the plan and issued the impugned C
notice. Even a cursory look at the sanction letter dated 8/13 .6.1995 belies the
contents of the letter under reference dated 31.12.1996. The sanction pertains
to the additional FSI vis-a vis the circular issued by the Government dated
7th October, 1971. The sanction letter dated 8/13.6.1995 did not speak of
construction or grant of sanction pertaining to the ground and first floor at
the said premises. The Director, Town Planning by the letter dated 8/13.6.1995 D
never sanctioned any construction area in the ground and first floor at the
same premises. As a matter of fact, the letter under reference dated 31.12.1996
seems to be overriding the order of the Director. Significantly, however the
letter dated 31.12.1996 corroborates the stand of the appellants that there was
in fact a sanction by the Director, Town Planning vide letter dated 8/13.6.1995. E
While it is true that sanction was granted for additional FSI as also increased
height but there was never any mention or any sanction conveyed for ground
and the first floor construction in the letter. It cannot thus but be termed to
be the brain child of the Assistant Director who has, in fact, superseded the
order of the Director - is this a permissible state of affairs? Mr. Deshpande
offered us an answer in silence! Obviously he does not have anything else at F
his disposal to justify the issuance of the letter. Provision No.28.2 of the
Development Control Regulation has been taken recourse to and the Assistant
Director not been able to avoid the same, simply recorded the factum of
construction area on the ground and first floor being in excess of the sanclion
granted by the Director, Town Planning. The act or acts on the part of the G
Assistant Director by reason of the contents of the letter dated 8/13.6.1995
cannot but be said to be wholly without jurisdiction and consequently the
action on the basis thereof as taken by the Municipal Council cannot also be
sustained.

The observations as noticed hereinbefore thus stands supported by the H
452 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A municipality's own public notice This aspect of the matter has also escaped
the attention of the High court and as such, the High Court fell into a clear
error.

As regards the issue of deemed sanction, the High court answered it in
the negative recording therein that the appellants were refused of any sanction
B though beyond the period as such deemed sanction would not arise.
Unfortunately, we cannot lend our concurrence thereto. Panchgani Municipal
Council being a 'C' Class Municipal Council of Maharashtra in its Standardised
Buildings Bye-laws, in particular, bye-law 9.2 records that while the authority
may sanction or refuse a proposal, there stands an obligation on the part of
C the authority to communicate the decision and where no orders are
communicated within 60 days from the date of submission of the plan either
by way of a grant or refusal thereto, the authority shall be deemed to have
permitted the proposed construction. In view of our observations noticed
hereinbefore, we are not inclined to go into this issue in any detail suffice
however to record that the submissions pertaining to deemed sanction has
D substance and cannot be brushed aside in a summary fashion. Eventual
rejection does not have any manner of correlation with deemed sanction - it
is only that expiry of the 60 days that the sanction is deemed to be given,
subsequent rejection cannot thus affect any work of construction being declared
as unauthorised. The deeming provision saves such a situation. As noticed
E above, we are not inclined to detain ourselves any further on this score.

Incidentally, be it noted that even though at the initial stage of hearing,
environmental degradation was spoken of but the same have not been adverted
to at all at the time of final submissions - the same were restricted to municipal
violations. Environmental Audit Report has not seen the light of the day.
F Obviously, there would not be any such affectation and we also thus do not
feel it expedient to deal with that aspect of the matter.

In the view we have taken, we are unable to record our concurrence
with the submissions of both the Intervenors and Municipal Council as well
the State Government. The Appeals are thus allowed. The order of the High
G Court stands set aside. It is however made clear that in the event of there
being any infraction of the order of the Director pertaining to additional
F.S.I. and the height as relaxed by the Director and in the event of there
being any infraction of the Building Rules concerning the ground and the
first floor or the basement thereof, the municipality would be at liberty to
H take appropriate steps in accordance with law. We do feel it expedient to
LIVE OAK RESORT (P) LTD."· PANCHGANI HILL STATION MUNI. COUN. [BANERJEE, J.] 453
direct further that the appellants should furnish a fresh undertaking as regards A
the user of the basement in this Court within a period of four weeks from the
date of the availability of a copy of this judgment. The Registry is directed
to make available a copy of this judgment to the appellants with utmost
expedition.

No order however as to costs. B
v.s.s. Appeals allowed.