Supreme Court Holds No Mandatory Conveyance Obligation On MCGM; Sets Aside Bombay HC Order Granting Title to Mill-owner

A bench of Justices Vikram Nath and Prasanna B. Varale heard an appeal by the Municipal Corporation of Greater Mumbai (MCGM) challenging the Bombay High Court’s order of 14 March 2022 which had allowed a writ petition by Century Textiles and Industries Ltd. and directed MCGM to execute formal conveyance of plot C.S. No.1546 (Lower Parel, Block‑A) within eight weeks. The appeal raised questions of statutory construction of the Bombay Improvement Trust Transfer Act, 1925 (the 1925 Act), the terms of a 1928 lease, and whether the writ petition was barred by delay and laches.

The Court allowed the appeal and set aside the High Court judgment, holding that neither the statutory scheme nor the lease deed imposed an unconditional obligation on the Corporation to convey Block‑A on expiry of the lease. The Court construed Sections 48(a) and 51(2) of the 1925 Act harmoniously, treating the right to conveyance under Section 51(2) as contingent and subject to payment “at his cost” and compliance with lease conditions, rather than as an automatic, unconditional vesting. The Court further held that the writ petition was barred by inordinate delay and laches: the lease expired on 31 March 1955 but Century Textiles first served a statutory notice in 2006 and filed the writ petition only in December 2016, a delay of decades; no suit was filed within the statutory period under Section 527 of the Mumbai Municipal Corporation Act, 1888. The Court recorded concerns that the company sought to repurpose the premises for commercial use contrary to the scheme’s object of providing “poorer classes” accommodation. The Court, in its reasoning, observed: "In light of the above discussion, it becomes evident that neither the statutory framework in force nor the terms of the lease deed imposed any obligation upon the appellant to execute a conveyance in favour of the Respondent No.1." The Court also noted the statutory language: "Where no default is made in the conditions of the lease, then on determination of the lease at the end of the term thereof, the Board shall convey the premise to the lessee at his cost and free of all restrictions and liabilities imposed by the lease and by this Act or by the City of Bombay Improvement Act, 1898."

Background Century Textiles had applied in 1918 under the Poorer Classes Accommodation Scheme (PCAS) and Scheme No.51 was notified. The company constructed 476 dwellings and 10 shops on Block‑A after obtaining possession; Block‑B was conveyed and Block‑A was leased to the company by the Board/Corporation by a lease dated 3 October 1928 for 28 years at Re.1 per annum, effective 1 April 1927 and expiring 31 March 1955. Century’s solicitors had sought, in a 20 May 1927 letter reproduced in Board Resolution No.325 (31 May 1927), alteration of the notified scheme and referred to eventual conveyance in one paragraph; the Board approved certain paragraphs but did not approve paragraph 6 of that letter which expressly sought freehold conveyance of Block‑A at the end of the lease.

Century Textiles did not pursue legal steps to obtain conveyance at the end of the lease; it served a notice under Section 527 of the 1888 Act in August 2006 but filed no suit within the six‑month period prescribed by that provision. In 2009 it sought redevelopment permissions; internal MCGM notes in 2013 reflected opposition to conveyance. Century filed a writ petition in the Bombay High Court in December 2016 (W.P. No.295 of 2017) seeking recognition of title and mandatory directions for conveyance and record‑changing; the High Court allowed the petition in March 2022. MCGM appealed.

The Supreme Court examined the lease, the Board minutes, and the statutory scheme. It held that the High Court had misread the Board resolution and portions of the lease narration, that paragraph 6 of the 1927 letter was not approved and that paragraph 4 referred to a five‑foot sewer strip, not to vesting of Block‑A. Reading Sections 48(a) and 51(2) harmoniously, the Court concluded conveyance under Section 51(2) was conditional and required payment of costs by the lessee; Century had not paid such costs nor pursued statutory remedies in a timely manner. The Court found the writ petition sufferred from laches and was not maintainable; it emphasised the social purpose of the 1925 Act to provide dwellings for poorer classes and recorded that conversion to commercial use would undermine that purpose. The appeal was allowed, the High Court judgment was set aside and the writ petition was dismissed. Earlier interim status‑quo directions dated 13 July 2022 stood disposed of along with pending applications.

Case Details: Case No.: CIVIL APPEAL NO.6667 OF 2023 Case Title: THE MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS. VERSUS CENTURY TEXTILES AND INDUSTRIES LIMITED & ORS. Appearances: For the Petitioner(s): Shri Dhruv Mehta, Senior Counsel; Shri Neeraj Kishan Kaul, Senior Counsel (for MCGM and appellants) For the Respondent(s): Shri Darius J. Khambatta, Senior Counsel; Shri Ranjit Kumar, Senior Counsel; Shri Shyam Divan, Senior Counsel (for Century Textiles and other respondents)