The Supreme Court, in a ruling on December 15, declared that private agreements within Slum Rehabilitation Schemes cannot be enforced if they contradict the statutory directives of the Slum Rehabilitation Authority (SRA). The Court underscored the exclusive authority of the SRA in implementing the scheme as outlined in the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971.

The decision draws support from a prior judgment by the Bombay High Court in the case of Smt. Usha Dhondiram Khairnar and Others v. State of Maharashtra and Other. In that case, the High Court affirmed that neither slum societies nor private developers have the prerogative to dictate terms to the SRA, emphasizing that the SRA must adhere to its own policies and circulars.

Justices, Aniruddha Bose and Sudhanshu Dhulia, emphasized that the Slum Rehabilitation Authority (SRA) must operate in accordance with its established policies and circulars. They underscored the importance of prioritizing public policy, particularly welfare-based policies, over private or contractual interests.

In the current scenario, the Slum Rehabilitation Authority (SRA) had proposed a Slum Rehabilitation Scheme for the slum located at CS No. 1(pt) of Lower Parel Division on J.R. Boricha Marg. The envisaged project aimed at constructing a total built-up area spanning 75,854.716 sq. m., with the goal of rehabilitating 1,765 slum dwellers. Notably, construction on nine towers has been successfully completed, and 473 slum dwellers have already taken possession of their residences in Towers A, B, and C. However, the allocation process for the remaining towers has encountered a standstill due to the ongoing dispute.

It's important to highlight that the SRA holds the status of Planning Authority for slums under the Maharashtra Regional and Town Planning Act of 1966. According to the SRA's scheme, more than 70 percent of eligible hutment dwellers were required to select their developer and collaborate in advancing the scheme, all under the overarching supervision of the SRA.

Consequently, a significant portion of the slum residents, initially organized into distinct independent societies, united to establish a collective entity named "Shramik Ekta Co-Operative Housing Federation," identified as respondent No. 6. Subsequently, this Federation appointed Lokhandwala Kataria Constructions, denoted as respondent No. 5, as its developer. In response to this arrangement, the Slum Rehabilitation Authority (SRA) issued a Letter of Intent on April 16, 2005, in favor of the appointed Developer, thereby endorsing the Slum Rehabilitation Scheme presented to them.

The construction of the nine towers commenced as planned but encountered a halt in 2007, primarily due to interference from a minority faction of slum dwellers who were also members of the Federation. Interestingly, this minority group had established a separate society for themselves known as "Sayunkta Sangharsh Samiti" (SSS), identified as the appellant.

In response to these challenges, the Developer initiated a civil suit before the City Civil Court in Bombay, seeking an injunction against the dwellers who were impeding the construction progress. Subsequently, the suit concluded with a compromise decree, leading to the signing of a Memorandum of Understanding (MoU) between the Developer and the appellant. This MoU constituted a purely private agreement wherein the SSS committed to overseeing or directly engaging in the construction of towers D, E, and F. Importantly, these towers were designated exclusively for occupancy by members of the SSS.

Following the execution of the MoU/Settlement, the appellants proceeded to approach the Slum Rehabilitation Authority (SRA) with the request for allotment in accordance with the terms specified in the agreement. However, contrary to their expectations, the SRA, through an order dated October 26, 2020, opted to allocate the flats in Tower D, E, and F in accordance with the procedure outlined in Circular No. 162 dated October 23, 2015. This circular, among other provisions, stipulated that the allotment process would involve a draw of lots for all the hutment dwellers.

The appellants contested this decision before the Bombay High Court, asserting that the Slum Rehabilitation Authority (SRA) was obligated to conduct the allotment in accordance with the terms specified in the Memorandum of Understanding (MoU). They contended that members of the appellant society should be accorded preferential allotment in Towers D, E, and F. Despite their arguments, the High Court dismissed the appellant's plea, leading to the current appeal.

In addressing the matter, the Supreme Court highlighted from the outset that the aforementioned arrangement was entirely of a private nature, and the SRA had no role to play in it. In addition to the above, the Court noted that the membership of the appellant society constituted less than 70%. The Court emphasized, "The claim of the appellant was based entirely on the terms of consent arrived between the Developer and them, which has no basis in law."

The Court then outlined the procedure for allotment and clarified, "The allotment by draw of lots is not an arbitrary order of SRA but this is the settled procedure, long continuing and in terms of the law." Regarding the private arrangement between the parties, the Court stated that such an arrangement cannot be accepted in accordance with established law. Furthermore, the Court pointed out that the settlement was in violation of the statutory procedure outlined in Circular No. 162.

"We do not agree with the submissions advanced on behalf of the appellant who only seeks to enforce a private arrangement arrived at between the Developer and the appellant in derogation of the procedure laid down by the SRA," the Court added.

Based on the observations and findings, the Court upheld the challenged order of the Bombay High Court and instructed the Slum Rehabilitation Authority (SRA) to proceed with the allotment of flats in accordance with the law. In a notable directive before concluding, the Court also indicated that the SRA should inquire into the actions of the Developer, who seemingly deviated from the statutory procedure, and take appropriate measures.

Case: SAYUNKTA SANGARSH SAMITI & ANR. vs THE STATE OF MAHARASHTRA & ORS,

CIVIL APPEAL NO.1359 OF 2023.

Click to read/download Judgment.