Conservationists may take a council to court over a planning pact with Tesco.
Tesco had proposed building on the site of council-owned flats
North Norfolk District Council's secret deal in May 2003 for a Tesco store on council land in Sheringham, Norfolk.
The deal stated only Tesco could build a supermarket on council-owned land, but the council said there was no evidence of "impropriety".
Friends of the Earth (FoE) argued the deal may affect rival supermarket planning bids. Tesco said the deal does not affect non council-owned land.
A council report, into the secret pact, which was only made public in 2006, suggests the deal was "officer-led" at a time of "weak political leadership".
North Norfolk District Council has investigated the pact
In response FoE's solicitor Gita Parihar has written to the council raising concerns about how it dealt with rival plans to build a supermarket on other council-owned land in the town.
She said it appeared from the report the council took the secret pact into account when considering whether to grant permission for the rival application.
It also appeared, she argued, the council had confused its duties as a landowner with its duties as a planning authority.
"This report raises serious issues of legal concern with regard to the conduct of your authority," she said.
On Thursday a spokeswoman for the council said the letter had been received and officers were looking to provide the information requested.
Following the publication of the report last month, the council agreed measures supporting greater openness.
The council report finds that there was "no evidence of impropriety in the deal with Tesco but that confidentiality was taken to an extreme which meant members were not able to take decisions based on all the facts".
A number of councillors and local residents who had opposed plans for a Tesco supermarket on council-owned land in Sheringham only heard about the deal three years later.
A Tesco spokesperson earlier said the deal "precludes the council from promoting an alternative council-owned site for supermarket development but does not prevent the council granting planning permission to other retail developments on non-council land".
At present, the Tesco proposals are with a government planning inspector after the supermarket claimed the council was taking too long to come to a decision.