P&H HC | Ambience Mall, Gurgaon construction illegal: Court orders FIR and CBI enquiry into Builder-State connivance

Punjab and Haryana High Court: A Division Bench of Rajan Gupta and Karamjit Singh, JJ. has declared that the construction of the famous multi-brand Ambience Mall in Gurgaon is illegal. The Court has also ordered a CBI inquiry into the prima facie connivance between the builder and the authorities concerned.


The petition was filed in a matter pertaining to the construction raised in approximately 18.98 acres of land adjacent to the Delhi-Jaipur Highway in Gurgaon, comprising of a residential complex, commercial buildings as well as the Ambience Mall.

The builders who constructed the Ambience Lagoon Island Residential Complex along with the Ambience Mall on the said 18.98 acres of land were originally given the license only to develop a residential complex on the entire 18.98 acres of land. The same representations were made to the buyers of apartments in the residential complex and builder-buyer agreements were entered into between the parties. Later, however, a substantial portion of this 18.98 acres, i.e. 8 acres of land was delicensed and the area licensed for the residential complex was reduced to 10.98 acres only. Subsequently, this delicensed 8 acres of land was allocated for commercial projects on which the Ambience Mall has been raised.

Blatant violation of rules and procedure

Omissions, interpolations and tampering with basic document: The builder, HLF Enterprise, identified the land in question and submitted an application for establishing a group housing project thereon. The application was filed under the provisions of Haryana Development and Regulation of Urban Areas Rules, 1976. It was mandatory for the builder to apply as per the format prescribed in the Rules, however, the builder made changes in the prescribed format as per his will. As for instance, in a clever move, the builder managed not to submit the layout plan which was mandatory.

While on this aspect, the High Court observed:

Strangely, this application was accepted by the authorities as such and license was granted. It is inconceivable that authorities concerned failed to notice the stark omissions, interpolations and tampering with the basic document required for purpose of initiation of a project.

Delicensing without authority of law: The High Court asked the counsel for the State to refer to the provisions under which the order of delicensing 8 acres out of 18.98 acres of land originally licensed for residential complex was passed by the authorities. To this, the State counsel candidly admitted that there was no such provision under the Haryana Development and Regulation of Urban Areas Act, 1975 and the rules framed thereunder. The counsel, however, tried to justify the act of authorities by referring to Section 21 of the General Clauses Act that power to grant license contains implied power to delicense as well. As per the Court, the argument was bereft of merit and logic. It was observed:

Reference to Section 21 is only an ex post facto justification and an afterthought. Law is settled on this point that State affidavit/plea cannot augment or add to the orders passed by the authorities. The reasons, if any, have to be contained in the order itself, as same would only be subject to judicial review. No authority by adopting circuitous route can circumvent the settled legal position.

Preconceived plan to raise commercial complex: The Court observed that the authorities “acted more than promptly” while permitting the erection of commercial complex after delicensing 8 acres of land “ignoring all statutory provisions and throwing caution to winds”. The Court had said:

The order granting permission on 8 acres of land to establish a commercial complex out of 18.98 acres of land was passed on 16-10-2001 while the order to delicense the same area was passed on 18-10-2001, i.e. two days before the order of delicensing, showing a preconceived plan for a commercial complex to be raised within the area licensed for residential complex.

Complete ignorance of vested rights of apartment owners: As per the Haryana Apartments Ownership Act, 1983 the undivided interest of each apartment owner in the common area would be in the percentage expressed in the Deed of Declaration which has to have a permanent character and cannot be altered without consent of the apartment owners expressed in an amended declaration duly executed and registered. As per the Court:

By resorting to delicensing and sanction of the commercial project, the authorities completely ignored the vested right of apartment owners and acted in flagrant violation of Section 6(1) and (2) of the Act.

Builder-buyer agreement cannot override the law

The High Court noted that the design to develop the commercial complex was never divulged either by the builder or the State authorities to the innocent buyers at any stage. An ambiguous term was used in the builder-buyer agreement that 8 acres was reserved for “future developments”. The Court said that it is beyond comprehension how the builder himself could reserve a part of the total area for future development. The builder acted in a manner as if he was not governed by any rules. While on this, the Court observed:

[T]he reliance placed by the counsel for the builders repeatedly on builder-buyer agreement is absurd. An agreement between parties cannot override the law laid down to regulate urbanisation and to prevent ill-planned and haphazard development.

Connivance between the builder and authorities

The Court was of the view that the probability of connivance between the builder and the State authorities cannot be ruled out in view of delicensing of area meant for residential purposes and allocating the same to commercial projects. According to the Court:

Entire sequence of events points to a prior meeting of minds between the builder and the officials who dealt with the matter.

Unjust enrichment

The Court was further of the view that there has been undue enrichment of the builder perhaps with the active involvement of the State officials which cannot be ignored. Such enrichment is not just in violation of various enactments but also a loss to public exchequer at the cost of general public, the apartment buyers in particular. However, as per the Court, this aspect needs investigation by an expert agency. Reference was made to various decisions of the Supreme Court including Indian Council for Enviro-Legal Action v. Union of India, (2011) 8 SCC 161; Kerala State Coastal Zone Management Authority v. State of Kerala, (2019) 7 SCC 248 and Rameshwar v. State of Haryana, (2018) 6 SCC 215.

Colourable exercise of power

As regard the action of authorities in ‘delicensing’ the area meant for housing project, the Court termed it as “nothing but colourable exercise of power”. Referring to State of Punjab v. Gurdial Singh, (1980) 2 SCC 471 and Uddar Gagan Properties Ltd. v. Sant Singh, (2016) 11 SCC 378, the Court restated the settled position of law that when a custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested, such exercise amounts to colourable exercise of power.


As per the High Court there was no justification for delicensing of part of the area meant for housing project for commercial purpose and a huge mall, the Ambience Mall, Gurgaon, having been allowed to be raised thereon. The Court felt that the rights of the residents of the housing project need to be preserved. It refused to countenance the “blatant violation of statutory provisions and erection of buildings, particularly commercial in nature, conceived by a builder for unjust enrichment, at the cost of the general public”. The Court held thus:

(i) The order delicensing 8 acres out of the original 18.98 acres of land was quashed.

(ii) The order granted permission to raise commercial complex on the delicensed area was also quashed.

(iii) The State was directed to take “necessary consequential steps forthwith”.

(iv) It was directed that the CBI would investigate the entire issue after registering a FIR within six weeks of the order. CBI shall make an effort to complete the investigation within six months and submit a status report in sealed cover within three months.

[Amitabha Sen v. Raj Singh Gehlot, 2020 SCC OnLine P&H 920  , decided on 10-7-2020]  

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