Reservation Cannot Freeze Private Land Forever – Lapse Under Section 127 MRTP Act Operates Automatically: Bombay High Court Dismisses PIL

“Once Purchase Notice Reaches Planning Authority And No Acquisition Steps Follow, Reservation Lapses By Operation Of Law”, Bombay High Court (Aurangabad Bench) dismissed a Public Interest Litigation challenging the State Government’s communication declaring that reservations on certain lands in Hingoli had lapsed under Section 127 of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act).

The Division Bench of Justice Vibha Kankanwadi and Justice Hiten S. Venegavkar held that once a valid purchase notice is brought to the knowledge of the planning authority and no statutory steps toward acquisition are taken within the prescribed time, the reservation automatically lapses by operation of law.

The Court also observed that urban planning cannot indefinitely sterilize private land, and once the reservation lapses, the land becomes available for development as permitted under the planning scheme.

Background of the Case

The dispute related to lands bearing Survey Nos. 143, 144 (part), 146/2, 154 and 155 in Hingoli, originally owned by Usmanshahi Mills and later associated with the National Textile Corporation.

Under the Revised Development Plan of Hingoli Municipal Council (1994), the lands were reserved for various public amenities such as a stadium, high school, primary school, health centre, library, gymnasium, garden and open spaces.

Subsequently, Respondent No. 5 – M/s Nidhi Mercantile Limited acquired the land from the National Textile Corporation. The developer claimed that since the land had remained reserved for years without acquisition, it issued a purchase notice dated 4 February 2008 under Section 127 MRTP Act, followed by a reminder dated 3 June 2009 demanding acquisition.

As no acquisition steps were taken, the developer approached the State authorities. Eventually, the Urban Development Department issued a communication dated 21 September 2015 stating that the reservations had lapsed under Section 127 of the MRTP Act.

Challenging this communication and seeking continuation of reservations on the same land for public amenities, the petitioners filed the present Public Interest Litigation.

Legal Issues Before the Court

The Court considered several crucial legal questions:

“Whether the statutory requirement of service of purchase notice under Section 127 MRTP Act had been satisfied.”

“Whether the planning authority had taken any statutory steps toward acquisition within the stipulated period.”

“Whether the Court in PIL jurisdiction could compel the planning authority to maintain reservation on the very same land despite statutory lapse.”

“Whether allegations of mala fides in declaring lapse of reservation were established.”

Court’s Observations on Service of Purchase Notice

The petitioners argued that the purchase notice dated 4 February 2008 was never served on the municipal council, and therefore the statutory period for lapse never commenced.

The Court rejected this argument. It noted that the State Government had forwarded the purchase notice to the municipal council, which placed the matter before its general body and deliberated on the cost of acquisition in its meeting dated 7 March 2012.

The Court held that once the notice was brought to the knowledge of the planning authority and institutionally acted upon, the requirement of service stood satisfied.

Quoting the Supreme Court judgment in Perfect Machine Tools Company Ltd. v. State of Maharashtra, the Court emphasized that technical objections regarding service cannot defeat the statutory scheme if the authority had “adequate notice” of the demand for acquisition.

The Court observed:

“Once the purchase notice and demand for acquisition are brought within the knowledge of the planning authority and acted upon institutionally, the authority cannot defeat Section 127 by raising a technical plea of ‘no service’.”

Meaning of “Steps Toward Acquisition” Under Section 127

A central issue was whether the municipal council had taken steps toward acquisition after receiving the notice.

The Court referred to Supreme Court precedents including Girnar Traders v. State of Maharashtra and Shrirampur Municipal Council v. Satyabhamabai Dawkher, which clarify that “steps” must be concrete statutory steps leading toward acquisition, such as issuance of declarations under acquisition laws.

The Court found that the municipal council merely passed resolutions stating that acquisition would require huge funds and sought government grants, but no statutory acquisition process was initiated.

The Bench held:

“Mere resolutions or correspondence expressing financial inability cannot be treated as ‘steps’ within the meaning of Section 127. Steps must be real steps leading to acquisition under law.”

Consequently, the Court concluded that no valid steps toward acquisition were taken within the statutory period, resulting in automatic lapse of reservation.

Municipal Council’s Subsequent Conduct

The Court also examined the municipal council’s later resolutions, particularly the general body resolution dated 9 December 2015, which recorded that the reservations had lapsed and that the land was not required for acquisition.

The Court held that such institutional conduct of the municipal council treating the reservation as lapsed weakened the argument that the purchase notice was never served.

It observed that the council’s later actions—including approving layouts and acting under the post-lapse situation—indicated acceptance of the statutory consequence.

PIL Cannot Freeze Reservation On One Particular Land

Another major argument raised by the petitioners was that public amenities should continue to remain reserved on the same land in public interest.

The Court rejected this contention, observing that development plans are dynamic and subject to revision under the MRTP Act.

It noted that the Second Revised Development Plan came into force on 10 February 2019, and the planning authorities had ensured reservation for public amenities elsewhere in the town.

The Bench stated:

“Urban planning is an evolving arrangement balancing public needs with legal limitations on sterilization of land. A private parcel cannot be frozen indefinitely merely because it was once reserved.”

The Court further observed that once reservation lapses under Section 127, the land becomes available for development as permitted under the plan applicable to adjacent land.

Allegations of Mala Fides Rejected

The petitioners also alleged that the lapse of reservation was a mala fide and colourable exercise of power to benefit the developer.

The Court rejected these allegations, holding that no concrete material was placed on record to substantiate mala fides.

Instead, the record showed that the State sought reports from the planning authorities and the municipal council, which itself admitted financial inability to acquire the land.

The Court concluded that the case simply reflected long inaction in acquisition, which is precisely the situation addressed by Section 127 of the MRTP Act.

The Bombay High Court dismissed the PIL, upholding the communication dated 21 September 2015 declaring lapse of reservation under Section 127 of the MRTP Act.

The Court ruled that:

“Where a purchase notice is brought to the knowledge of the planning authority and no statutory acquisition steps are taken within the prescribed time, the reservation lapses automatically by operation of law.”

The Court also directed that ₹25,000 out of the ₹50,000 deposited by the petitioners be refunded, while the remaining ₹25,000 be credited to the High Court Legal Services Authority.

Date of Decision: 09 March 2026