'Municipal Machinery Cannot Be Utilised To Settle Private Disputes': Bombay High Court Quashes Stop-Work Notice, Imposes ₹30 Lakh Costs
The Bombay High Court has held that municipal authorities cannot be used as instruments to settle private contractual disputes and criticized the arbitrary, hasty and high-handed action of Pune Municipal Corporation officials in issuing a stop-work notice without any legal basis or proper inquiry. The Court found that the stop-work notice was issued in complete disregard of statutory...
The Bombay High Court has held that municipal authorities cannot be used as instruments to settle private contractual disputes and criticized the arbitrary, hasty and high-handed action of Pune Municipal Corporation officials in issuing a stop-work notice without any legal basis or proper inquiry. The Court found that the stop-work notice was issued in complete disregard of statutory procedure and was solely due to complaints by certain unknown persons, without verifying the records or conducting any site inspection.
A bench of Justices G.S. Kulkarni and Arif S. Doctor was hearing writ petitions filed by M/s. Atria Constructions and a group of flat purchasers from Rajgruhi Residency, arising out of a dispute between Atria Constructions (developer of Wings C and D) and Wellbuild Merchants Pvt. Ltd. (owner/developer of Wings A and B). The construction of Wing D had been fully completed, an application for an Occupation Certificate was pending, and the flat purchasers were awaiting possession. The municipal officials issued a WhatsApp notice for a hearing and, the very next day, passed a stop-work notice citing alleged environmental and planning violations.
The Court noted that the vagueness of the impugned notice itself raises a serious doubt about the intention of the Executive Engineer, and the said notice does not even set out the aspects on account of which the hearing was summoned on 09 December 2024, which was attended by several persons who are totally unconnected with the project and not even remotely connected with the contract.
The Court reiterated that any order to be passed by a statutory authority that would entail civil consequence and breach the civil rights of a party cannot be passed, unless there is issuance of an appropriate show cause notice with adequate grounds being made out, and an opportunity to reply to such show cause notice, along with a hearing, granted to the affected party.
The Court held that the stop-work notice was issued without any show-cause notice, site inspection, or verification of records. It found that the municipal machinery had been misused at the behest of Wellbuild after the latter failed to secure any orders against Atria Constructions in arbitration-related proceedings under Sections 9 and 37 of the Arbitration and Conciliation Act.
“… what could not be achieved directly by Wellbuild in a manner known to law, i.e. in the legal proceedings, Wellbuild has sought to achieve the same, by utilising the municipal machinery,” the Court observed.
The Court expressed surprise at the conduct of the municipal officials and directed the Municipal Commissioner to inquire into the conduct of the officials involved and submit an action-taken report to the Court.
Accordingly, the High Court imposed exemplary costs of Rs. 25 lakh on Wellbuild Merchants Pvt. Ltd. for misusing municipal machinery to settle a private dispute, and Rs. 5 lakh jointly and severally on the municipal officials responsible for issuing the stop-work notice.
Case Title: M/s. Atria Constructions v. Pune Municipal Corporation & Ors. [WRIT PETITION NO. 1022 OF 2025]