Statutory failure to communicate refusal of building permission within thirty days results in deemed sanction by operation of law.

The petitioners own ancestral property in Sarafa Bazar, Gwalior, designated as a commercial-cum-residential area

Seeking reconstruction, they obtained a building plan sanction from the Town and Country Planning department and subsequently filed an application under Section 294 of the M.P. Municipal Corporation Act, 1956 ("the Act") with the Gwalior Municipal Corporation on April 17, 2005

When the Commissioner failed to communicate a decision within the 30-day statutory period, the petitioners commenced construction on June 15, 2005, under the "deemed permission" provision of Section 295(3)

On July 6, 2005, the respondents issued a stop-work order based on Resolution No. 1210 (dated 1999), which restricted construction within 500 meters of Maharaj Bada

This resolution was later withdrawn in 2009 via Resolution No. 446

Despite the withdrawal, the respondents issued a notice on April 5, 2010, declaring the construction unauthorized, and a letter on March 30, 2010, demanding a compounding fee of ₹1,51,62,480/-

Section 295(3) of the M.P. Municipal Corporation Act, 1956, which establishes a "legal fiction" of deemed permission if the Commissioner fails to grant or refuse sanction within 30 days of an application

Any administrative action founded upon a withdrawn resolution cannot be sustained

Precedent in Administrator, Municipal Corporation, Raipur vs. Charanlal Sahu (C. Revision No. 471 of 1975), which held that if an application is not rejected within the statutory period, the right of the authority to refuse permission is forfeited

The court reasoned that the statutory scheme of Section 295(3) imposes a mandatory obligation on the competent authority to decide on building applications within a fixed timeframe

Since the respondents failed to communicate any refusal within 30 days of the April 17, 2005, application, a vested right was created in favor of the petitioners through the operation of law

Regarding Resolution No. 1210, the court noted that since it was withdrawn by the Corporation itself in 2009, any subsequent action (such as the 2010 notices) predicated on that resolution was void ab initio

The court found the impugned notices for demolition and compounding fees to be arbitrary, as they ignored the legal fiction of the deemed sanction and were issued without a proper hearing, thereby violating the principles of natural justice

The Court held that the petitioners' construction shall be treated as having been carried out under deemed permission in accordance with law

The respondents were restrained from taking coercive action, though the Court granted them liberty to initiate fresh action only if it is factually determined that the construction deviates from the original sanctioned layout plan

No costs were awarded