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of <h1>Supreme Court Upholds Project Financing Agreement Validity, Emphasizes Limited Judicial Review</h1> <h3>G.B. Mahajan Versus Jalgaon Municipal Council</h3> G.B. Mahajan Versus Jalgaon Municipal Council - 1991 AIR 1153, 1990 (3) Suppl. SCR 20, 1991 (3) SCC 91, 1991 (1) SCALE 378 Issues involved: Validity of project financing agreement between local authority and developer, extent of judicial review over governmental projects, interpretation of statutory powers of Municipal Council, compliance with statutory provisions, reasonableness as a test of validity, application of principles of judicial review to contractual decisions, allegations of favoritism in project tendering process, consideration of potential financial misconduct by developer.1. Financing Agreement Validity: The Supreme Court held that a project, though legal, financed and executed by a developer through an agreement with a local authority, does not become impermissible unless it violates legal limits or constitutes an abuse of power. Judicial review is limited to cases of constitutional violations or clear abuse of power. The court recognized the administrator's right to trial and error within the limits of authority.2. Policy Options in Urban Planning: In the context of urban planning, a wide range of policy options consistent with statutory objectives should be permissible. The court stated that it is challenging to determine the superiority of one policy option over another in urban planning matters, as long as they align with statutory powers.3. Interpretation of Statutory Powers: The court found that the power exercised by the Municipal authority in the case aligns with Section 272(1) of the Maharashtra Municipalities Act, and there is no reason to interpret the provision restrictively to exclude such projects.4. Compliance with Statutory Provisions: It was determined that the transaction did not violate Section 92 of the Act, and it would be unduly restrictive to impose additional restrictions not found in the statute. The court approved the developer's substitution of an occupier with the Municipal Council's consent.5. Reasonableness as a Test of Validity: The court discussed the different contexts of 'reasonableness' in administrative law, tort law, and constitutional law. The administrative law test of reasonableness focuses on distinguishing between proper and improper use of power, rather than the standard of the 'reasonable man' in tort law.6. Application of Judicial Review to Contractual Decisions: The court emphasized that public law elements must be present in contractual decisions to invoke judicial review. In this case, the material presented did not meet the legal requirements for judicial interference.7. Allegations of Favoritism: The court rejected claims of favoritism in the project tendering process, stating that the tender terms were clear and comparable for all bidders, and no other tenderer raised grievances. The charge of arbitrariness was deemed unsubstantiated.8. Consideration of Financial Misconduct: The court dismissed concerns about potential financial misconduct by the developer as insufficient grounds to condemn an otherwise valid decision by the Municipal authority. Judicial intervention based on such grounds was deemed inappropriate.
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