Susme Builders Pvt. Ltd. v. Chief Executive Officer, Slum Rehabilitation Authority & Ors.
Background
Over 800 slum dwellers in Santacruz, Mumbai, who had themselves become owners of the land through a cooperative society, appointed Susme Builders in 1986 to redevelop the slum and rehouse them, but more than three decades later the project remained largely unbuilt despite multiple revised agreements. The Slum Rehabilitation Authority (SRA) eventually cancelled Susme's appointment as developer for delay, and a rival developer, J.G. Developers, also entered the picture claiming consent of the slum dwellers. The Supreme Court had earlier directed a retired judge, Justice B.N. Srikrishna, to determine which developer actually had the mandatory 70% consent of slum dwellers, and this appeal by Susme challenged the SRA's cancellation of its rights and the findings against it.
Decision Breakdown
The Court held that neither Susme nor J.G. Developers had established the requisite 70% consent of slum dwellers needed to run the rehabilitation scheme: Susme because of this failure and its own responsibility for decades of delay, and J.G. Developers because it had obtained consent through a false promise of a larger flat, making its agreements with slum dwellers legally unconscionable and unenforceable. While the Court set aside one narrow part of the Bombay High Court's reasoning (that Susme had been given fair notice on the 70% consent issue specifically), it upheld the SRA's cancellation of Susme's development rights on the independently sufficient ground of delay, and held that Susme was not entitled to any relief. Since both rival developers were disqualified and the slum dwellers' decades-long ordeal could not be allowed to continue, the Court invoked its Article 142 power to do complete justice and issued detailed directions for a fresh, transparent tender process: the SRA was to invite proposals from reputed developers within three weeks, evaluate them on terms no worse than Susme's last offer, require a Rs. 200 crore bank guarantee from the successful bidder, and complete rehabilitation within two years of plan sanction, with the matter to be monitored through further status reports.
Lesson Learnt
A developer appointed to carry out a slum rehabilitation scheme can permanently lose its rights if it fails to prove the legally required level of resident consent and is responsible for prolonged delay, and courts can use their constitutional power to do complete justice to order a fresh, closely supervised process rather than leave vulnerable residents without a remedy.