- 1 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MRS. JUSTICE K.S. HEMALEKHA WRIT PETITION NO.34628 OF 2017 (LA-UDA) BETWEEN: THE MYSORE CO-OPERATIVE BANK LTD., GANDHI SQUARE, MYSORE-570001. R/BY ITS CHIEF EXECUTIVE OFFICER. …PETITIONER (BY SRI P.A. KULKARNI, ADVOCATE) AND: 1. MYSORE URBAN DEVELOPMENT AUTHORITY, J.LB. ROAD, MYSORE-570001 REPRESENTED BY ITS COMMISSIONER. 2. THE COMMISSIONER, MYSORE URBAN DEVELOPMENT AUTHORITY, J.LB. ROAD, MYSORE-570002. 3. THE ZONAL OFFICER, MYSORE URBAN DEVELOPMENT AUTHORITY, J.LB. ROAD, MYSORE-570002. …RESPONDENTS (BY SRI T.P. VIVEKANANDA, ADVOCATE FOR R-1 TO R-3) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE ORDER DATED 13.06.2017 PASSED BY THE RESPONDENTS HEREIN AS PER ANNEXURE-A TO THE WRIT PETITION AS ILLEGAL AND QUASH THE SAME; ISSUE WRIT OF MANDAMUS TO THE 1ST RESPONDENT TO CONFIRM THE ALLOTMENT AND EXECUTE REGULAR SALE DEED IN FAVOUR OF THE PETITIONER IN RESPECT OF THE SCHEDULE PROPERTY. THIS PETITION COMING ON FOR ORDER, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: Digitally signed by MAHALAKSHMI B M Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 CORAM: HON'BLE MRS. JUSTICE K.S. HEMALEKHA ORAL ORDER The petitioner-the Mysore Co-operative Bank Ltd. was allotted Civic Amenity (C.A.) Site No.1, measuring 504 square meters at Bhogadhi City Planning Department Extension, Mysuru. Pursuant to the MUDA’s resolution dated 08.01.1999 and the allotment letter dated 01.04.1999, a registered lease deed was executed on 17.05.2006. Possession was delivered, and the site was intended for construction of the petitioner's central office building. Clause 7 of the lease deed provided that the lessee should obtain a building plan and licence within six months of execution and commence and complete construction within two years therefrom. 2. The petitioner, cited financial constraints and the requirement of Reserve Bank of India approval, could not commence construction immediately. However, the MUDA itself had issued a khata in the petitioner's name on 24.10.2013, collected tax upto 2016, issued endorsements - 3 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 dated 01.02.2016 and 15.02.2016, scheduling a spot inspection and stating that after payment of rent, steps would be taken for issuance of a commencement certificate and corresponded with the petitioner requiring construction to be taken up “within six months”. 3. Thereafter, on 25.11.2016, MUDA issued a show-cause notice under Rule 10(2) of the Karnataka Urban Development Authorities (Allotment of Civic Amenity Sites) Rules, 1991 (‘Rules, 1991’ for short) calling upon the petitioner to explain why the allotment should not be cancelled. The petitioner replied on 26.12.2016, explaining reasons for the delay and requested condonation and extension. Without granting any further hearing, the MUDA by the impugned order dated 13.06.2017 cancelled the allotment. 4. Learned counsel for the petitioner contends that the time condition under Clause 7 stood waived by the MUDA’s own conduct, issuance of khata, collection of tax, - 4 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 scheduling inspections and processing of commencement certificate, all of which treated the allotment as subsisting. The impugned order was passed without considering the reply and hence, violates the principles of natural justice. 5. It is further contended that Rule 10(7) of the Rules, 1991 empowers MUDA to cancel the allotment except in exceptional circumstances, the petitioner’s situation and MUDA’s recognition of allotment falls within exceptional circumstances. The Commissioner lacked authority to cancel without a resolution of a board and further contends that the cancellation defeats the legitimate expectation, and contrary to Article 14 of the Constitution of India. 6. Per contra, learned counsel for the respondent- MUDA contends that Clause 7 and Rule 10(7) are mandatory, and the petitioner having failed to commence or complete construction within the prescribed period, the cancellation is justified. The endorsements dated - 5 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 01.02.2016 and 15.02.2016 were merely procedural and cannot be construed as condonation of delay. The Commissioner, it is argued that, was competent to cancel under Section 62 of the Karnataka Urban Development Authorities Act, 1987 as delegated by board resolution dated 24.01.2004. The retention of unutilized CA sites defeats public purpose. 7. Reliance is placed on M/s K.K. Appaiah Charitable Trust Vs. The Comissioner, Mysore Urban Development Authority and Another1 (M/s K.K. Appaiah Charitable Trust) and M/S Divyajyothi Vidya Kendra Vs. The Karnataka Housing Board and Others2 (M/S Divyajyothi Vidya Kendra), holding that the retention of an unutilized CA sites militates against public interest. 8. He submits that Clause 7 of the lease deed and Rule 10 (7) of the Rules, 1991 contemplates: 1 W.P.No.18670/2019 D.D.08.11.2022 2 W.P.No.873/2023 D.D. 10.10.2023 - 6 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 i. Cancellation for default and ii. Relaxation or extension where exceptional circumstances exist are recorded and no exceptional circumstances are made out by the petition. 9. This Court has carefully considered the rival contentions urged by the parties and the point that arises for consideration is: “Whether the impugned cancellation order dated 13.06.2017 suffers from illegality and whether the same warrants interference?” 10. Clause 7 of the lease deed reads thus: “UÀÄwÛUÉzÁgÀ£ÀÄ ¯ÉʸÀ£ïì £ÀÄß ¥ÀqÉAiÀÄvÀPÀÌzÀÄÝ ªÀÄvÀÄÛ UÀÄwÛUÉ ¤ÃqÀĪÀªÀ¤AzÀ C£ÀĪÉÆâvÀªÁzÀ ªÀÄvÀÄÛ ¸ÀÆa¸À¯ÁVgÀĪÀ £ÀPÉëAiÀÄ ¥ÀæPÁgÀ DgÀÄ wAUÀ¼ÉƼÀUÁV ¸ÀºÀPÁj ¨ÁåAPï PÀlÖqÀzÀ ¤ªÀiÁðtªÀ£ÀÄß ¥ÁægÀA©ü¸ÀvÀPÀÌzÀÄÝ ªÀÄvÀÄÛ CzÀ£ÀÄß JgÀqÀÄ ªÀµÀðzÉƼÀUÁV ¥ÀÆtðUÉƽ¸ÀvÀPÀÌzÀÄÝ.” 11. Rule 10(7) of the Rules, 1991 reads thus: - 7 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 “10. Conditions of allotment of Civic Amenity Sites.-(1) x x x (7) The lessee shall complete the construction of the building within a period of three years from the date of registration of the lease agreement or such extended period provided the total period does not exceed 10 years, as the Authority may in any specified case by written order permit. If the building is not constructed within the said period, the allotment may, after giving reasonable notice to the institutions, be cancelled, the agreement revoked and the lessee evicted from the site by the authority and after forfeiting twelfth and half per cent (12½) of the lease amount paid by the institution the authority shall refund the balance to the institution.” 12. Under Rule 10(7) of the Rules, 1991, the lessee shall obtain building plan and licence within six months from the date of deed and shall commence construction within such period and complete the same within two years. Failure to do so, shall entail cancellation of the allotment and presumption of the site by the authority. 13. Rule 10(7) states, if the lessee or the allottee fails to construct a building and put up the CA site to use - 8 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 for the purpose which it was allotted within the period specified, in the lease deed, the allotment shall be liable to be cancelled and the site shall revert to the authority, except under exceptional circumstances to be recorded in writing by the authority. The evidence on record reveals that the MUDA long after the expiry of the two years period continued to treat the allotment as operative by issuing khata, collecting taxes, scheduling inspection for commencement and even directing construction “within six months”. These acts are inconsistent with an intention to enforce the earlier default and therefore, amount to a waiver and recognition of exceptional circumstances under Rule 10(7). 14. Having thus elected to permit continuation, MUDA could not have suddenly invoked forfeiture without first recording why its own prior indulgence was erroneous. The doctrine of legitimate expectation applies. The petitioner had every reason to believe that the delay stood condoned and that the construction could proceed - 9 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 upon inspection. While the utilization of CA sites is indeed a matter of public interest, that interest is best advanced by ensuring the allotted institute completes the building rather than by abrupt cancellation after two decades of recognized possession. Granting a fresh definite time frame with monitoring guidelines would serve both the public purpose and fairness. The impugned order dated 13.06.2017 is vitiated by non-application of mind and failure to record reasons under the recognition of exceptional circumstances, within Rule 10(7) of the Rules 1991 and the cancellation is therefore arbitrary and unsustainable. Accordingly, the point framed for consideration is answered. Accordingly, this Court pass the following: ORDER i. The writ petition is allowed. ii. The impugned order dated 13.06.2017, canceling the allotment of CA Site No.1, Bhogadhi layout is quashed. - 10 - HC-KAR NC: 2025:KHC:45827 WP No. 34628 of 2017 iii. The lease deed dated 17.05.2006 executed by the MUDA continue to be subsisting and within eight weeks process the petitioner's application for commencement of certificate and record a reasoned decision on any residual compliance requirements. iv. Upon issuance of commencement certificate, the petitioner shall commence construction within six months, and shall complete the structure within 24 months thereafter, subject to sanction of plan and payment of all dues. v. In the event the petitioner fails to adhere to the above timelines, it is open for MUDA to revoke the allotment, in accordance with law, after issuing notice and passing a reasoned order. Till then, MUDA shall not re-allot, auction or disturb possession of the schedule property. Sd/- ____________________ JUSTICE K.S. HEMALEKHA AT List No.: 1 Sl No.: 25