Bombay HC: Competent Authority Under MHADA Can Scrutinise Whether Amount Demanded Is Lawfully Due, Not Just Order Eviction
Bombay High Court rules that the Competent Authority under the Maharashtra Housing and Area Development Act has full power to examine the legality of dues demanded before ordering eviction of an allottee.
The Pune Housing and Area Development Board's attempt to confine the Competent Authority under the Maharashtra Housing and Area Development Act, 1976 to a narrow eviction-only role has failed before the Bombay High Court. Justice M. M. Sathaye, sitting singly, held on 17 June 2026 that the Competent Authority is fully empowered to examine whether an amount demanded from an allottee is “lawfully due” before ordering eviction. The court partly allowed the Board's writ petition, set aside the Appellate Officer's order insofar as it had extinguished the Board's claim to interest and incidental charges, reworked the price of the disputed flat, and directed the respondent-allottee to pay Rs. 3,42,047 within two weeks to retain possession.
The Dispute Before the Court
The subject matter is a tenement bearing No. B-2, Madhukunj Housing Society, L.I.C. Colony, Kothrud, Pune. The flat was allotted to Vithal Shripati Ladkat by order of the State Government as a special case from the 2% government quota under the Maharashtra Housing and Area Development Act, 1976. An allotment letter dated 26.07.1993 directed the Board to hand over possession immediately after completing formalities and securing a deposit amount. Crucially, no price was fixed at the time of allotment; the letter directed Ladkat to contact the Chief Executive Officer of the Board for the actual terms and conditions of payment.
By a letter dated 24.05.1995, the Board communicated a price of Rs. 5,51,000 and asked Ladkat to pay. A follow-up letter dated 14.07.1995 warned of dispossession if payment was not made. Ladkat did not pay the full amount. The Estate Manager then moved the Competent Authority, which issued a notice under Section 66(2) of the Act.
Ladkat's reply contested the demand on several grounds: that consent of the Chief Minister was required before issuing notice given the Government's special allotment; that no price had been fixed or communicated before possession; that the applicable rate for the 2% quota at the relevant time was between Rs. 180 and Rs. 225 per sq. ft.; and that the amount charged from 1987 till allotment was disputed. He contended that the price of the flat would not exceed Rs. 1,41,130 and that he had already paid Rs. 50,000 to the Board.
The Competent Authority, in Case No. 28 of 1995, passed an order on 07.02.1996. It held that Ladkat had not paid the amount lawfully due for more than two months, that no consent of the Government or Chief Minister was required, and that the amount lawfully due was Rs. 2,56,405.57. It issued a notice to vacate. Ladkat subsequently paid the balance as calculated by the Competent Authority.
Both parties appealed. Ladkat filed Appeal No. 1 of 1996 challenging the eviction direction; the Board filed Appeal No. 44 of 1996 challenging the reduction of the amount. The In-Charge Appellate Officer-II (President, Maharashtra Slum Area I.C. & R Tribunal, Mumbai) by order dated 06.10.2006 dismissed the Board's appeal, allowed Ladkat's appeal insofar as it related to eviction, and disposed of the price-fixation aspect as infructuous. The Board then filed Writ Petition No. 798 of 2007, admitted on 05.12.2007.
The Jurisdictional Question: Can the Competent Authority Re-examine the Quantum of Dues?
The Board's primary legal argument, advanced by Mr. Uday Warunjikar, was that the Competent Authority under Section 66 of the Act has no jurisdiction to re-open, re-assess, revise or determine the correctness of the quantum of dues. The Board argued that the power to revise price vests exclusively in the Board under Regulation No. 22 of the Maharashtra Housing and Area Development (Estate Management, Sale, Transfer and Exchange of Tenements) Regulations, 1981, which carries a non-obstante clause. The Competent Authority's role, the Board contended, is limited to satisfying itself whether a default in payment has occurred and then issuing a notice to vacate — nothing more.
Mr. Warunjikar relied on Regulation No. 15, which provides for variation of price where considerable time has elapsed till actual allotment, and Regulation No. 22, which empowers the Board to revise the price already specified in a notice or agreement where supervision costs have increased the cost of the tenement. He submitted that Section 69 of the Act, which gives the Competent Authority powers of a Civil Court for the purpose of holding an inquiry, is merely incidental and cannot enlarge jurisdiction. He also pointed to Section 70(5), which requires appeals to be disposed of expeditiously, as evidence that the statutory framework is intended to be summary and time-bound.
Mr. Nitin Mulye, for Ladkat, countered that if the Competent Authority cannot examine the calculation, officers of the Board could charge exorbitant amounts without any check, which could not be the legislative intent.
Justice Sathaye rejected the Board's restricted-jurisdiction argument. The court analysed the entire scheme of Chapter VI (Sections 65 to 72) of the Act. Section 66(1)(a)(i) uses the phrase “amount lawfully due”, and the court held that the word “lawfully” itself signals that the Competent Authority must be able to examine whether the amount claimed is in fact lawfully due. If the Competent Authority could only act on the Board's figure without scrutiny, and the Civil Court's jurisdiction is barred by Section 71, no authority under the Act would have power to check whether dues are lawfully demanded. The court held that such an interpretation “will result in unchecked powers with the officers to demand unlawful dues” and cannot be countenanced.
The court further noted that Section 69 gives the Competent Authority the same powers as a Civil Court when trying a suit — summoning witnesses, requiring production of documents, and examining persons on oath. Section 70 provides for appeals to an officer not below the rank of Deputy Secretary to Government with judicial experience. Reading these provisions together, the court concluded that the Competent Authority and the Appellate Authority are fully empowered to go into the calculation of the amount lawfully due.
Interest Capitalisation and the Price Reckoning
Having settled the jurisdictional question, the court turned to the merits of the price calculation. The flat was constructed in July 1987 at a cost of Rs. 1,41,130. It was allotted to Ladkat in July 1993 — a gap of six years. The Board applied interest capitalisation at 12.5% per annum from July 1987 to arrive at the 1993 price.
The Competent Authority had held that interest could not be charged for the period before allotment in 1993. Justice Sathaye disagreed. The court observed that in a location like Kothrud, Pune, it does not stand to reason that the value of a tenement and the land beneath it would remain static from 1987 to 1993, particularly after economic liberalisation in 1991. Regulation No. 15 expressly contemplates price variation where considerable time has elapsed till actual allotment, and Regulation No. 22 allows the Board to revise price to account for increased supervision costs. The court held that the method of interest capitalisation at 12.5% per annum for the 1987–1993 period cannot be called without basis or illegal.
However, the court also found fault with the Board. The allotment was in July 1993, yet the Board issued no demand until May 1995. There was no explanation for this delay. The court held that, accounting for the two-month statutory period under Section 66(1)(a)(i), the demand ought to have been made by September 1993. The Board cannot claim interest for the period from September 1993 to May 1995. From May 1995, when the demand was actually made, interest at 9% per annum was held to be legal and valid.
The court also noted that the allotment letter directed Ladkat to contact the CEO of the Board for terms and conditions of payment. There is nothing on record to show that Ladkat ever did so. The court rejected the argument that the allottee could simply pay whatever he considered appropriate and claim that no further amount was due. The allotment letter contained no concession on price or interest.
On the question of Form-II and Form-III under Regulation No. 17(1) — the standard offer and acceptance letters — the court noted that the Board had not issued a Form-II intimation, nor had Ladkat issued a Form-III acceptance, apparently because the allotment came through the Government's per-cent quota. The court held that this procedural gap does not absolve either party from the statutory obligation to pay and recover the amount lawfully due. Government quota can secure entry into a project, but it cannot eliminate price fixation liability.
The Appellate Authority had set aside the eviction order on the ground that Ladkat had already paid the amount determined by the Competent Authority. It had also held that the Board's law officer could not explain the charging of interest or the locational advantage component. Justice Sathaye held that the inability of a law officer to explain a particular head of charge has no bearing on the statutory entitlement under the Regulations. The Appellate Authority erred in using that explanation gap to disallow the interest claim.
Reworking the Amount Due
The court declined to order eviction, noting that Ladkat has been in occupation since 1993 and that it would be unjust to evict him after so many years without an opportunity to pay the balance. Instead, the court reworked the amount due in a detailed table.
The flat's initial cost in July 1987 was Rs. 1,41,130. Interest at 12.5% per annum from July 1987 to July 1993 (as calculated by the Board) added Rs. 1,07,259, giving a sub-total of Rs. 2,48,389. Payments of Rs. 11,000 on 29.07.1993 and Rs. 40,000 on 10.06.1994 were deducted, leaving a balance of Rs. 1,97,389. From May 1995, when the demand was made, interest at 9% per annum (Rs. 1,480 per month) for ten months until February 1996 when the Competent Authority determined the amount added Rs. 14,800, giving a sub-total of Rs. 2,12,189. The court then deducted an approximate amount of Rs. 1,21,939 representing payments made by Ladkat towards cost and interest (excluding furniture price and interest thereon, which the Board did not press), leaving a balance of Rs. 90,250. Interest at 9% per annum (Rs. 8,122.50 per month) from June 1995 till the date of judgment — a period of 31 years — added Rs. 2,51,797, bringing the total amount due as on the date of judgment to Rs. 3,42,047.
Order
Justice M. M. Sathaye made the rule partly absolute and disposed of Writ Petition No. 798 of 2007. The respondent Vithal Shripati Ladkat (through his legal guardian) is directed to pay Rs. 3,42,047 to the Pune Housing and Area Development Board within two weeks from 17 June 2026. Subject to such payment, Ladkat may continue to occupy the suit flat. If the amount is not paid as directed, the Board is at liberty to press for eviction. No order as to costs was made.