TaxTMI 
TaxTMI 
2025 (3) TMI 1193
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....2025 & respondent No. 5 in WPST/6431/2025. For the Respondent/State: Ms. Dhruti Kapadia, AGP. For the Respondent No. 5 in WP/2065/2025 & For the Petitioner in WPST/6431/2025: Mr. Prateek Seksaria, Senior Advocate with Mr. Anuj Desai, Mr. Nishant Chotani, Mr. Siraj Salelkar and Ms. Samiksha Rajput i/by Lexicon Law Partners. For the Respondent No. 6-AGRC: Mr. Dinyar Madon, Senior Advocate with Ms. Dhruti Kapadia. JUDGMENT: 1. This petition under Article 226 of the Constitution challenges the legality of orders passed by the Slum Rehabilitation Authority (SRA) under Section 13 (2) of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 (the "Slum Act"). The impugned orders terminate the petitioner's appointment as developer of a slum rehabilitation project and were issued on the ground of the petitioner's failure to pay transit rent arrears and to complete the project within the stipulated time. The petitioner, a real estate developer, underwent insolvency resolution under the Insolvency and Bankruptcy Code, 2016 ("IBC") during the pendency of the project. A resolution plan has been approved under Section 31 of the IBC, which the petitioner co....
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....struction of rehabilitation building No. 2 and handover possession of permanent alternative accommodation to 135 members of respondent No. 3 and completed work of rehab building upto 16th floor. 5. Respondent No. 3 on 8 January 2020 executed a supplementary development agreement for implementation of slum scheme on the said property supplementing development agreement dated 5 March 2011 by recording a recital that respondent No. 3 and its members had unconditionally consented for two redevelopment plans. According to the petitioner, erstwhile promoter of the petitioner during their role as Director of the petitioner engaged in multiple transactions which were later as being in nature of "avoidance transactions" in terms of provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "the IBC") the erstwhile promoter of the petitioner engaged in transactions which were undervalued without requisite approvals from respondent No. 5. Therefore, implementation of slum scheme on the property under the management of erstwhile promoter was failed. Respondent No. 5 extended secured financial assistance of Rs. 79,90,00,000/- to the petitioner for completion of slum s....
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....on of rehab building No. 1 but could not carry on construction on account of impediment and obstruction created by respondent No. 3 and its members. 9. The petitioner on 26 May 2023 addressed a letter to respondent No. 3 to provide certain documents, schedule of meeting for conducting KYC of its members so as to enable the petitioner to handover cheques towards their rent. On 29 May 2023, the petitioner issued an email to respondent No. 3 showing its willingness to distribute the amounts to the members of respondent No. 3. By letter dated 17 April 2023 to respondent No. 1, the petitioner requested respondent No. 1 to remove erstwhile architect to enable them to start the revised approval process and the process of changing the designated architect of the petitioner consumed more than three months and ultimately respondent No. 1 by letter dated 31 July 2023 terminated appointment of erstwhile architect and appointed present architect. 10. According to the petitioner, with a view to adhere directives outlined in resolution plan in a timely manner, established an operational infrastructure including setting up of dedicated office facilities equipped with the necessary technologi....
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....d consent from all members for rehabilitation scheme under Regulation 14.7 subject to permitting the petitioner to undertake additional internal work. According to the petitioner, the petitioner agreed to pay Rs. 7,51,00,000/- to respondent No. 3 in staggered manner for paying Rs.1 crore on commencement of work; Rs. 2 crore after 1 year from commencement of work; Rs. 2 crore after two yeas of commencement of work; and Rs. 2.5 crore after three years from commencement of work. Respondent No. 3 circulated draft minutes of meeting dated 3 February 2024 to the petitioner. However, never circulated final minutes of meeting dated 3 February 2024 to the petitioner. 14. The petitioner vide letter dated 16 April 2024 informed respondent No. 1 that it had deposited amount of Rs. 2,31,00,000/- in its separate bank account towards advance eleven months' rent payable to eligible units as per Circular No. 41 issued by respondent No. 1 and deposited additional amount of Rs. 74,80,000/- to make provision for rent payable in the event of inclusion of further eligible units by respondent No. 1, which signifies and notifies petitioner's commitment, willingness and preparedness to fulfil its obliga....
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....cted respondent No. 2 to decide appeal before 31 January 2025. The petitioner filed written submissions in addition to oral submissions before respondent No. 6. Despite no oral arguments were made in the said appeal on 12 December 2024, respondent Nos. 1 and 2 relied upon report dated 26 December 2024 prepared by Assistant Registrar, SRA. Therefore, the petitioner filed additional written statements before respondent No. 6 and requested for opportunity of oral hearing along with written statements showing its readiness to pay arrears of rent as determined by the Assistant Registrar, SRA in its report dated 26 December 2024. The petitioner, by its advocate letter dated 20 January 2025, attempted to circulate application for hearing before respondent No. 6 by serving copy of it on respondent Nos. 1 to 5. However, respondent No. 6 refused to receive letter dated 20 January 2025. Therefore, copy of letter was sent to respondent No. 6 on its official email address. Respondent No. 6, by relying on report dated 26 December 2024, though hearing was closed for order on 13 December 2024, dismissed the petitioner's appeal. Therefore, the petitioner has filed present writ petition under Articl....
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....dent Nos. 1 and 2 were well aware of change in management and shareholding pattern of petitioner which is evident from legal opinion dated 10 July 2023 issued by the Chief Legal Consultant endorsed by respondent No. 1. He submitted that amount of Rs. 4,83,00,000/- was deposited by the petitioner with respondent No. 1 towards transit rent payable to each eligible member of respondent No3-Society quantified at Rs. 10,000/- per month. He submitted that the report furnished by the Assistant Registrar, SRA dated 26 December 2024 which is the date after the proceedings were reserved for orders and hearing before it was concluded on 13 December 2024. The petitioner therefore filed an application with respondent No. 6 for granting opportunity of hearing to show petitioner's bona fide intention to pay arrears of rent of Rs. 18,80,29,882/- as determined by the Assistant Registrar in its report dated 26 December 2024. He submitted that the authorities under the Act failed to consider the fact that rehab building R-2 was completed and 135 members of respondent No. 3-Society have been accommodated and construction work of rehab building R-2 has been completed upto 16th floor. He submitted that ....
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....side. 24. Per contra, Mr. Godbole, learned Senior Advocate on behalf of respondent Nos. 1 and 2 submitted that the judgment in the case of Ghanashyam Mishra and Sons Private Limited Through The Authorised Signatory (supra), does not help the petitioner as powers of SRA under Slum Act, 1971 cannot be curtailed by mere NCLT and/or because of approval of resolution plan. He submitted that SRA was not even party before NCLT. He submitted that Section 238 of the IBC will not affect the provisions and powers of the Slum Act as both acts are different in their objective and implementation and nature. Even bar under Section 231 will not applicable to SRA. He submitted that the petitioner is under obligation to pay rent to slum dwellers which is a contractual obligation and based on such terms the petitioner was granted permission for development and for completion of rehabilitation scheme. The indemnity and affidavits submitted by the petitioner are towards future liability out of default on the part of the petitioner. 25. He submitted that delay in payment of transit rent is evident. He submitted that resolution plan is approved on 29 March 2023 and even from the date of approval of....
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....nforcement, but statutory obligations such as payment of transit rent cannot be overridden by insolvency proceedings. 27. He further submitted that for a prolonged period of 406 days, slum dwellers were deprived of their rightful transit rent during the entire CIRP process, thereby violating their fundamental right to a dignified life and adequate shelter under Article 21 of the Constitution of India. He emphasized that the effective date under the resolution plan was 29 May 2022, i.e., 30 days from the CoC's approval. However, the petitioner did not pay any transit rent to Respondent No. 3 or deposit it with Respondent No. 1 from 29 May 2022 onwards. It was only after Respondent No. 3 passed a General Body Resolution on 25 April 2024 terminating the petitioner's appointment that the petitioner belatedly deposited the rent with Respondent No. 1. Such belated compliance demonstrates mala fide intent and a clear breach of fiduciary and contractual obligations owed to slum dwellers. 28. Mr. Chinoy further submitted that the petitioner had caused an inordinate and unexplained delay of nearly 15 years in the implementation of the slum rehabilitation project, thereby frustrating th....
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....ed, including the petitioner, creditors, and any local authority such as the Slum Rehabilitation Authority ("SRA"), to whom a debt or obligation arising under any law is due. In the present case, since the payment to slum dwellers was duly incorporated as part of the resolution plan, any claims raised prior to the approval of the resolution plan stand extinguished and cannot be enforced subsequently. Respondent No. 6 (Apex Grievance Redressal Committee) does not have the jurisdiction to sit in appeal over an approved resolution plan nor can it render any finding in contravention thereof. He contended that the finding recorded in paragraph No. 223 of the impugned order-that the NCLT does not have the power to reduce the rent payable to slum dwellers-is wholly without jurisdiction. The NCLT, as the adjudicating authority under the IBC, has exclusive jurisdiction to approve a resolution plan, and once such a plan is approved, all past claims stand settled. He further argued that the finding in paragraph No. 229 of the impugned order-that the petitioner holds no further rights except recovery of balance compensation from Respondent No. 3-is legally perverse and unsustainable. The petit....
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....tion plan, once approved, discharges all past liabilities, and no subsequent claim for arrears of transit rent can be enforced outside the framework of the IBC; He lastly submitted that the impugned order passed under Section 13 (2) of the Slum Act is in direct contravention of the binding effect of the resolution plan and is liable to be quashed. 34. Per contra, Mr. Madon, learned Senior Advocate appearing for Respondent No. 6 (Apex Grievance Redressal Committee), supported the impugned order, contending that the decision rendered by Respondent No. 6 is well-reasoned, fully justified, and does not warrant any interference by this Court in the exercise of its writ jurisdiction under Articles 226 and 227 of the Constitution of India. He submitted that each and every contention raised by the petitioner was duly considered by the statutory authorities, and the impugned orders were passed after recording findings on all relevant issues. According to him, the judgment delivered by Respondent No. 6 is self-explanatory and speaks for itself, demonstrating due application of mind, adherence to principles of natural justice, and compliance with statutory provisions. He further submitted ....
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....ecessary to recognize that the IBC and the Slum Act are legislations enacted with distinct purposes. The IBC is an economic and fiscal legislation. Its object is to facilitate timely resolution of corporate insolvency in a manner that maximizes the value of assets, balances the interests of all stakeholders, and allows for the revival of a failing company. On the other hand, the Slum Act is a social welfare legislation. It is intended to rehabilitate slum dwellers, promote improvement and redevelopment of slum areas, and secure basic housing and dignity for those who live in slums. Although these two statutes operate in separate fields, in certain cases, their objectives may intersect. In fact, in the present case, the two objectives are not in conflict, but rather aligned. The revival of the corporate debtor would necessarily involve the successful implementation of the slum redevelopment scheme undertaken by it. The company, being a developer under the slum scheme, is expected to complete the rehabilitation component, and only then can it access the free-sale portion of the land, which is likely its sole source of revenue. Therefore, completion of the project is not only in the i....
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.... interest intervention to ensure completion of an essential housing project. In the present case, the slum dwellers are not seeking monetary compensation for themselves in the form of arrears or damages. Their primary grievance is the failure of the developer to honour the performance obligation of constructing and handing over the rehabilitation units in time, and of paying subsistence rent during the transition. The relief they seek is not money, but action - replacement of the defaulting developer with another capable of completing the project. This is in the nature of specific performance or substitution, not a debt claim. It is well recognized that certain consequences of a debtor's default - especially those involving statutory penalties, criminal liability, or regulatory enforcement - are not discharged merely by approval of a resolution plan. The IBC is not equipped to adjudicate upon or enforce such obligations, as it is primarily designed to deal with insolvency resolution and restructuring of debts. Therefore, such obligations and remedies fall outside the IBC process and continue to subsist. 40. Undoubtedly, Section 238 of the IBC gives it overriding effect over inco....
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....is designed not merely to protect private rights but to ensure that the larger public purpose - namely, the rehabilitation of slum dwellers - is not frustrated due to inefficiency or inaction of the developer. Therefore, the power of the Slum Rehabilitation Authority (SRA) under Section 13 (2) to remove a non-performing developer is a critical tool to prevent development projects from getting stuck indefinitely. 42. When a developer under an SRA scheme enters insolvency proceedings, the question that arises is whether the statutory right to seek a change of developer should be restricted or diluted. In my view, the need to exercise this right becomes even more compelling in such a scenario. Entry into insolvency usually indicates financial distress. If the developer, even prior to insolvency, had failed to pay transit rent or failed to make progress on construction, the slum dwellers' mistrust is not only understandable but also reasonable. Insolvency cannot be used as a shield to erase the developer's past non-performance. It would be illogical to suggest that a developer who could have been removed for delay while financially solvent must now be protected merely because insolv....
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....lvency resolution cannot cure social consequences by itself. 45. The Slum Act, especially Section 13 (2), provides a mechanism for replacing a developer. This mechanism can be invoked based on facts such as lack of progress or a valid resolution by a majority of slum dwellers. The Act also requires that the concerned developer be given an opportunity to show cause before any action is taken. Therefore, procedural fairness is built into the statute. Merely because a developer has undergone Corporate Insolvency Resolution Process (CIRP) does not mean that it is exempt from the consequences under the Slum Act. A conflict between the two statutes would arise only if exercising powers under the Slum Act results in undoing or frustrating the resolution plan approved under the IBC. The petitioner argues that the resolution plan assumed that the project rights would remain with it, and thus, removal under Section 13 (2) affects the viability of the plan. This contention has some weight, but it does not lead to the conclusion that the SRA's statutory powers are extinguished. 46. In most resolution plans, the continuation of business operations is made subject to legal compliances and ....
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....of the rehabilitation scheme. If the scheme itself is terminated due to the developer's failure, then the land - in its encumbered condition - holds little standalone market value. Its true worth arises only if the development scheme is implemented. Therefore, if the project is taken away due to breach, the associated land no longer holds the same developmental value for the corporate debtor. Moreover, the acquisition of land in this context is for a public purpose - namely, to ensure that the slum rehabilitation project is completed and the rights of slum dwellers are protected. As per law, compensation would be payable to the outgoing developer, and such compensation would become part of the insolvency estate. Thus, the corporate debtor is not being dispossessed without remedy; rather, it is being divested of an asset which it was unable to utilise for the public good, and that too, in accordance with legal process. 48. The legal consequence of the developer's removal - which is a non-monetary regulatory action - is that the corporate debtor loses its role in the project and the chance to earn profits from the free-sale component. However, this consequence flows directly from ....
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.... environmental norms and the Pollution Control Board cancels its licence, the company cannot claim automatic revival of its licence merely because it later undergoes insolvency and comes out of it with a resolution plan. Unless the resolution plan specifically addresses the cancelled licence and the law permits such revival, the cancellation stands. 50. Similarly, in the present case, the SRA's action of removing the petitioner as developer is a regulatory decision made in furtherance of the statutory scheme under the Slum Act. This decision is not rendered invalid merely because the developer has undergone insolvency or that a resolution plan has been approved. The two statutes operate in distinct spheres - the IBC deals with debt resolution and revival of the corporate debtor, while the Slum Act is aimed at protecting the interests of slum dwellers and ensuring timely completion of rehabilitation projects. The observations in Rajan Garg (Supra) and the Supreme Court's refusal to interfere with that judgment (by dismissing the Special Leave Petition) underline a legal position - a developer cannot use the IBC as a tool to escape the consequences of failure in executing a slum r....
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....conflicts with an expectation embedded in the resolution plan. Unless the action of the regulator is shown to be ultra vires - that is, outside the powers granted by its governing statute - such action cannot be nullified simply because it disturbs the commercial equilibrium of the resolution plan. In fact, Section 31 (1) of the IBC makes it clear that once a resolution plan is approved by the NCLT, it becomes binding on all stakeholders, including the corporate debtor, its creditors, employees, shareholders, and even governmental and statutory authorities. This ensures that all claims and interests which are part of the insolvency process are finally resolved. Section 238 of the IBC further contains a non-obstante clause, giving the Code overriding effect in case of inconsistency with any other law. 53. However, and this is crucial, the real question is whether the obligations of a slum scheme developer - such as building tenements or providing transit accommodation - are in the nature of "claims" or "debts" which are discharged or compromised under a resolution plan. In my view, they are not. The obligations imposed on a developer under the Slum Act are of a special nature. Th....
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....ct. 55. In conclusion, the statutory action taken by the SRA to remove the petitioner as developer and consider acquisition of the project land is not in derogation of the IBC, but in faithful implementation of its own statutory duties. The IBC and the Slum Act can co-exist in harmony, provided the role and limits of each statute are respected. The IBC may restructure the financial balance sheet of a corporate debtor, but it cannot erase its statutory duties under welfare legislation, unless specifically and lawfully provided. 56. The petitioner has relied on the judgment of the Supreme Court in Ghanshyam Mishra (Supra) to argue that the slum dwellers can no longer raise any claim for unpaid transit rent, which is a pre-CIRP (Corporate Insolvency Resolution Process) liability. According to the petitioner, since the resolution plan has been approved by the NCLT and is binding on all stakeholders, any such demand stands extinguished. Further, the petitioner submits that the approval of the resolution plan "cures" all past defaults, and therefore, the very basis for invoking Section 13 (2) of the Slum Act - i.e., default by the developer - no longer survives. This contention, in....
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....the SRA. There is no provision for immediate clearance of transit rent arrears, nor any firm assurance of timely project execution. In the absence of such concrete and enforceable terms, the mere approval of the resolution plan does not automatically negate the slum dwellers' or the SRA's powers under the Slum Act. Their rights to act under Section 13 (2), especially to safeguard the public interest and ensure that the scheme moves forward, cannot be extinguished merely because the debtor has exited CIRP. 58. Secondly, even the so-called "clean slate" principle has its boundaries. The judgment in Ghanshyam Mishra was primarily concerned with legal claims - that is, rights to demand payment or other reliefs that are admissible in insolvency proceedings. However, the slum dwellers' plea for removing the developer is not a claim in that sense. It is not a demand for money or enforcement of a contractual debt. It is the exercise of a statutory right under a welfare law, which seeks to ensure better implementation of a government-backed rehabilitation scheme. Such a right cannot be brushed aside under the guise of insolvency discharge. 59. Thirdly, even if we assume that the resol....
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....ive the corporate debtor's business. However, it must be emphasised that this "clean slate" does not wipe away the history of the corporate debtor's conduct, particularly when that conduct has implications for public interest or the rights of third parties such as slum dwellers. The IBC is not a magic wand that automatically cures every legal or moral consequence of a debtor's past non-performance. Its reach is primarily in the field of debt resolution - it does not and cannot override welfare obligations or statutory responsibilities imposed by other laws. 61. In this case, the SRA is not trying to recover money from the petitioner. If it had attempted to do so - for example, by initiating recovery proceedings for unpaid transit rent - such action would indeed be barred after approval of the resolution plan. But that is not the purpose of the SRA's action. The SRA is instead focused on ensuring that the slum rehabilitation project moves forward and that the slum dwellers are not left in a state of limbo. If, based on the petitioner's past default and poor track record, the SRA forms an honest and reasonable opinion that the petitioner can no longer be trusted to deliver on its ....
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....etitioner suggests that this obligation is rooted in private agreements, and therefore, like any other contractual obligation, may be modified, waived, or extinguished through insolvency proceedings. On the other hand, the respondents have taken a firm stand that this is not a matter of private negotiation but a statutory duty arising from the scheme sanctioned under the Slum Act. Having considered the rival contentions, I find merit in the respondents' submissions, for the reasons discussed below: Source of the Obligation: 65. When a slum rehabilitation scheme is sanctioned under the Slum Act, it is not a mere private arrangement between a builder and slum dwellers. It is a public welfare scheme governed by statutory provisions, detailed guidelines of the Slum Rehabilitation Authority (SRA), and formal conditions set out in the Letter of Intent (LoI) and other regulatory documents such as Annexure II and Regulation 33(10) of the Development Control Regulations (DCR) applicable in Maharashtra. A critical condition of such schemes is that the developer must provide either alternate transit accommodation or monthly transit rent to every eligible slum dweller from the date of va....
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....g directly from the Slum Act and the conditions of scheme approval. Non-compliance would once again trigger the SRA's jurisdiction under Section 13 (2). Statutory vs. Contractual Nature: 67. It is true that the petitioner entered into formal agreements with individual slum dwellers or the co-operative housing society to implement the project. These are usually in the form of tri- partite agreements involving the developer, the slum dweller, and the SRA or society. These contracts do include a promise to pay transit rent. However, these agreements are not ordinary commercial contracts freely negotiated between equal parties. Rather, they merely formalise a statutory obligation. In administrative law, it is well-recognised that some obligations, although implemented contractually, are statutory in origin. Transit rent is one such obligation. Even if a slum dweller were to sue the developer for breach of contract in a civil court, the Court would ultimately be enforcing a duty that arises from public law. The developer cannot ignore or belittle this obligation merely because it appears in a contract. It is a duty owed not just to an individual, but to a class of beneficiaries pr....
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....ulting or inefficient developer is legally justified and necessary. The power conferred by Section 13 (2) is not discretionary in the abstract - it is a statutory mechanism meant to hold developers accountable and to avoid indefinite stagnation of rehabilitation schemes. While Section 13 (2) of the Slum Act does not set out an elaborate procedure to be followed while exercising this power, it is a settled principle of administrative law that when any authority exercises a power that affects legal rights or vested interests, it must follow the principles of natural justice. This includes at minimum: (i) issuance of a notice to the concerned party, (ii) clear intimation of the allegations or grounds for proposed action, and (iii) an opportunity to be heard before any final decision is taken. The overall scheme of the Slum Act, when read along with the SRA's internal guidelines, clearly contemplates that a developer facing proposed removal must be given a fair and meaningful opportunity to respond. These safeguards are in place to ensure that the power under Section 13 (2) is not exercised arbitrarily or unfairly. Factual basis for invoking Section 13 (2)....
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....velopment Agreement on 8th January 2020, reaffirming the petitioner's role as the developer. Subsequently, a change in management of the petitioner took place pursuant to an order dated 29th March 2023 of the NCLT. Following this change, the new management applied for a revised LoI on 9th October 2023, which resulted in the issuance of fresh Letters of Intent on 5th June 2024 and 16th July 2024. These revised LoIs grant the petitioner a fresh timeline of 72 months (6 years) to complete the project. It is important to note that this new period has not yet expired and the time for performance, under the latest approvals, is still running. Despite these developments, the respondent authorities have sought to invoke Section 13 (2) of the Slum Act to propose substitution of the petitioner as developer, primarily citing historical delays. Their justification is that the scheme was initially approved in 2009, but even by 2019, only partial progress had been achieved. They further point out that while half of the eligible members have been accommodated in R-2, the remaining beneficiaries are still in transit accommodation. 74. However, this Court is of the considered view that the invoc....
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....ilies shelterless or forced them to fend for themselves, even though it was the project itself that had displaced them. This state of affairs goes against both the letter and spirit of slum rehabilitation policies. The Slum Rehabilitation Authority (SRA), being a statutory body entrusted with protecting the rights of vulnerable slum dwellers, could not be expected to tolerate such a situation indefinitely. 77. The data placed on record by the respondents shows that the arrears of transit rent ran into several crores of rupees and affected more than 200 slum families. While it may be true that, in legal terms, those arrears exceeding Rs. 2.50 crores stood extinguished under the resolution plan approved under the Insolvency and Bankruptcy Code (IBC), the human impact of such a prolonged default has not been addressed or remedied. The legal discharge of financial claims does not erase the fact that these families lived without rent support for several months, if not years, due to the petitioner's default. 78. What further compounds the issue is that even after the petitioner's revival through the resolution plan, there was no concrete or meaningful step taken by the new manageme....
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.... consistent failure to pay transit rent is a well- recognised ground for removing a developer under Section 13 (2) of the Slum Act. This is not a punitive measure but a corrective action to ensure that the project does not remain in limbo and that slum dwellers are not made to suffer unnecessarily. Transit rent is not a mere contractual commitment - it is an integral part of the developer's public duty under a welfare-driven statutory framework. When a developer enters into a slum rehabilitation scheme and takes over the responsibility of displacing and relocating vulnerable families, it also assumes a binding legal and moral duty to ensure that those families are adequately supported during the transition period. This duty cannot be taken lightly or reduced to a question of administrative formality. In the present case, the petitioner's failure to fulfil this obligation, even after corporate revival, has undermined the confidence of the SRA and the beneficiaries. The persistent default, coupled with an absence of credible corrective action, justifies the SRA's view that the petitioner cannot be relied upon to carry forward the scheme in a manner consistent with public interest. ....
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....in matters involving statutory discretion - particularly where public interest and technical expertise are involved - the Court must confine itself to examining whether: (a) relevant material was considered, (b) irrelevant material was excluded, and (c) the decision was not arbitrary, perverse, or tainted by mala fides. 85. In the present case, it is evident that the SRA considered all relevant factors. Notably, the authority took into account the petitioner's defence, including the approval of the resolution plan under IBC, the alleged improvement in financial capacity, and the fresh LoIs issued in 2024. However, the SRA ultimately found that on-ground progress remained unsatisfactory, and more importantly, that transit rent dues remained unpaid, thereby causing hardship to slum dwellers. 103. In such a situation, the authority was justified in taking a pragmatic decision to protect the welfare of slum dwellers, which is the central objective of the Slum Act. The decision to allow the society to appoint a new developer is not punitive, but rather remedial, to break the stagnation and ensure that the scheme is taken to its logical conclusion. This Cour....
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....tice occurred in the issuance of the corrected order. The petitioner had full opportunity to contest the grounds for action, and it availed the same before the initial decision was made. 88. The petitioner faintly suggested that the SRA was unduly influenced by the slum society and was predisposed to remove the petitioner in favour of a new developer who had lobbied for the project. I find no tangible evidence of mala fides or extraneous consideration. The slum society's impatience and desire for a new developer is understandable given the long delay - that by itself does not make the SRA's action malafide; if anything, it reinforces that the beneficiaries were aggrieved and seeking redress. SRA as a public authority is expected to listen to the beneficiaries. There is nothing to suggest any collusion or corrupt motive in choosing the new developer (which, as per the policy, was nominated by the society and scrutinized by SRA). Absent any cogent proof of bad faith, the Court must proceed on the presumption that the authority acted bona fide. The impugned decision appears solely guided by the interests of completing the scheme, and not by any irrelevant factor. 89. The petitio....
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....be rejected. Balancing Objectives of IBC and Slum Act: 90. This Court is conscious of the fact that the petitioner- company has undergone revival under the Insolvency and Bankruptcy Code, 2016 (IBC), through an approved resolution plan. Ordinarily, such revival - backed by judicial approval of the resolution plan by the National Company Law Tribunal (NCLT) - carries with it a legitimate expectation that the corporate debtor, under its new management, shall be given a fair opportunity to resume operations and rebuild business with a "clean slate". However, the facts of the present case are not limited to a standard commercial transaction. The project in question is a Slum Rehabilitation Scheme, where the stakes involve not only contractual obligations but also vital public interest, particularly the housing rights, shelter security, and socio-economic well-being of slum dwellers. These beneficiaries are among the most vulnerable sections of society. Their rights, under a welfare statute like the Slum Act, must be treated with the highest regard in any balancing exercise between commercial interests and public duties. 91. In this context, it must be acknowledged that the cos....
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....the petitioner had, in its written submissions before the Appellate Grievance Redressal Committee (AGRC), expressed willingness to deposit arrears of Rs. 18,80,29,882/- as determined by the Assistant Registrar, SRA, in the report dated 26th December 2024. The petitioner has also deposited partial sums, including Rs. 2,31,00,000/- towards rent for April 2024 to February 2025, and Rs. 2,52,00,000/- for April 2023 to March 2024. However, the failure to deposit Rs. 2.50 crores as initially demanded by the SRA remains a material lapse, which undermines the petitioner's credibility. While some steps have been taken, they fall short of full compliance. 94. It must be reiterated that the petitioner is not merely an implementing agency or contractor, but also the owner of the land on which the slum rehabilitation scheme is being implemented. This dual role brings with it a greater degree of responsibility and accountability. The burden of compliance is higher, especially when the land has been granted for a public welfare scheme under beneficial terms. In such a situation, the SRA was duty-bound to afford the petitioner a conclusive and time-bound opportunity to clear the dues - particul....
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....ovided hereinafter. 97. In view of the above findings, the writ petition stands disposed of with the following directions: (i) The impugned order dated 13 August 2024 issued by the CEO, SRA under Section 13 (2) of the Slum Act dated 13.08.2024, as well as the AGRC order dated 31.01.2024, are sustained, subject to the modifications and observations below. (ii) It is directed that before finalizing the appointment of any new developer and vesting development rights, the SRA shall give the petitioner one final opportunity of hearing (within 4 weeks) strictly for the limited purpose of considering any proposal the petitioner may submit within in two weeks to substantially address the grievances of the slum dwellers (such as a concrete timeline for completion, payment of arrears of transit rent as per calculation of SRA, and any ex gratia mechanism to mitigate past rent losses). If the petitioner makes a proposal that, in SRA's opinion, adequately secures the interests of the slum dwellers, the SRA may consider whether it is still necessary to replace the petitioner. However this shall not be taken as an indefinite reinstatement of the petitioner's rights - it is me....