Commercial activities in residential sectors in Noida banned

R.K. Mittal and Ors. Vs State of Uttar Pradesh and Ors.


The basic question in the matter was the ambit and scope of power of New Okhla Industrial Development Authority (‘Development Authority’) to permit users, other than residential, in the sectors specifically earmarked for ‘residential use’ in the Master Plan of the New Okhla Industrial Development Area.  The common question of law arising in all the appeals and applications was whether the residential premises can be, wholly or partly, used by the original allottee or even its transferee, for any purpose other than residential?

The Development Authority issued notices in the instant cases to stop commercial use failing which action would be taken as per the lease deed. In the notices, it was also stated that there was encroachment in violation of the prescribed building byelaws and the use of residential plot for commercial purpose was in violation of the provisions of the lease deed of the plot. Invoking the provisions of the U.P. Industrial Area Development Act, 1976 (‘the Act’), the Development Authority gave them opportunity to file objections. To these notices, the Appellants not only filed objections but also appeared before the Development Authority and contended that the Development Authority, in furtherance to the proposal to permit running of consulting clinics, banks and guest houses in the residential areas, had permitted such use on the main roads, on payment of 30 per cent of the existing residential rate on per square meter area of plot per annum and had invited suggestions from the general public. Reliance was also placed on certain press reports. Noticing these facts and obviously taking the view that there was no legal sanctity to the alleged change of user, the Development Authority rejected the objections and required the misuse to be stopped and the violation of the building byelaws to be removed within four months.

The appellants then filed a writ petition before the High Court of Judicature at Allahabad which was dismissed. Relying upon judgment of  Munshi Ram v. Union of India (2000) 7 SCC 22, the High Court not only dismissed the writ petition but also directed the Development Authority to take immediate and strong action against those who have started using residential plots, wholly or partially, for other non-residential uses. The Appellants, feeling dissatisfied by the judgment of the High Court, preferred the appeal before the Supreme Court.

The Supreme Court after discussing the relevant law in detail held that change in use of the building was violative not only of the Regulations, byelaws and the provisions of the Act, but was also contrary to the law governing erection of the building. The legislative purpose that emerged from the scheme of the Act and other relevant provisions is to keep a residential building separate from commercial and other buildings. It would necessarily imply that the jurisdiction of the Development Authority to permit different user in violation of the statute and the Regulations was not contemplated in law. Also the action of the Development Authority in permitting mixed user was in apparent violation of the statutory provisions in the Master Plan. Establishment of banks and nursing homes in the residential sectors meant for residential use alone was unequivocal violation of the statutory provisions in the Master Plan. The running of a bank or a commercial business by a company in the residential sector was certainly not permissible. In fact, it was in patent violation of the Master Plan, Regulations and the provisions of the Act.

The Master Plan and the Zonal plan specify the user as residential and therefore those plots cannot be used for any other purpose. The Plans have a binding effect in law. If the scheme/Master Plan was being nullified by arbitrary acts and in excess and derogation of the power of the Development Authority under law, the Court will intervene and would direct such authorities to take appropriate action and wherever necessary even quash the orders of the public authorities.

The Supreme Court thus concluded that banking or nursing homes or any other commercial activity was not permitted in Sector 19 and for that matter, in any sector, in the Development Area earmarked for ‘residential use’. It also concluded that the 21 banks and the nursing homes, which were operating in Sector 19 or any other residential sector, shall close their activity forthwith, stop misuse and put the premises to residential use alone, within two months from the date of pronouncement of the judgment. That lessees of the plots shall ensure that the occupant banks, nursing homes, companies or persons carrying on any commercial activity in the residential sector should stop such activity and shift the same to the appropriate sectors i.e. commercial, commercial pockets in industrial/ institutional area and specified pockets for commercial use within the residential sector, strictly earmarked for that activity in the development Plan, Regulations and provisions of the Act.