In a recent ruling, the Supreme Court opined on an important aspect of land acquisition law in India.
The Court clarified that as per Section 126(1)(b) of the Maharashtra Regional and Town Planning Act of 1966, when a landowner surrenders land for a public purpose, they are responsible for constructing or developing an amenity on the surrendered land at their own expense, as per the Final Development Control Regulations. In turn, the Planning Authority is obligated to reciprocate by granting additional Floor Space Index or Transferable Development Rights.
Brief Facts:
A Writ Petition was filed in the Supreme Court challenging the impugned order of the Bombay High Court. The High Court dismissed the Appellant’s claim to receive a Development Rights Certificate for an area of 31,057.30 sq.m. to build a recreational ground.
Brief Background:
The second Development Plan for Greater Mumbai was created between 1981-2001, and parts were sanctioned between 1991 and 1994. This plan reserved plots of land, including those owned by Appellant No.1 and managed by Appellant No.2, for recreation grounds. The Maharashtra Act 10 of 1994 (hereinafter referred to as “Amendment, 1994”) added clauses (a), (b), and (c) to Section 126(1) of the Maharashtra Regional and Town Planning Act of 1966 (hereinafter referred to as “Act, 1966”), which gave power to the Planning Authority/Development Authority to acquire any land required or reserved for public purposes specified in any plan or scheme.
These clauses provided three methods of acquisition: an agreement upon payment of an agreed amount, granting floor space index or transferable development rights, or through the initiation of proceedings under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (hereinafter referred to as “RFC”).
Appellant No.1 applied to surrender land for “Recreation Ground”. In exchange, they would receive Transferable Development Rights (hereinafter referred to as “TDR”) equal to the area of land surrendered and additional TDR against the development or construction of the amenity on the surrendered land at the owner's cost. The Appellant's architects expressed their intent to develop the land sought to be surrendered, and eventually, the development work was undertaken. After completing the development work, a letter was issued certifying the completion of the development work.
The Appellant was informed that their request for the grant of the Development Rights Certificate (hereinafter referred to as “DRC”) would be considered after the requirements mentioned therein were complied with. One of the conditions was that they had to deposit a sum of Rs.3,50,000/- as security for faithful compliance with the requirements mentioned in the letter. The appellant completed the construction of storm water drains, and the Executive Engineer certified that the drains had been constructed satisfactorily. The Architects of the Appellant No.1 had a temporary site office and godown on the plot reserved for the Recreation Ground, and they offered to remove it once the work was completed. While developing the amenity, local people wanted access, so the Deputy Chief Engineer requested orders from the Chief Engineer for access and permission to take over possession of the land. Appellant No.1 handed over formal possession of the land.
The Respondents granted NOC to Appellant No.1. The Municipal Corporation issued a Circular restricting the grant of additional TDR for amenities such as “Recreation Ground”. During the pendency, Appellant No.1 gave Appellant No.2 the Power of Attorney regarding the amenity TDR. Claiming to have completed the amenity development, the Appellants applied for the grant of Additional TDR. The Corporation declined the request for additional TDR based on prevailing policy. After the Court set aside the Circular in the decision in Godrej and Boyce Manufacturing Company Limited vs the State of Maharashtra and Others [(2009) 5 SCC 24], the appellant made one more request for the grant of Additional TDR. Still, it was turned down by the Municipal Corporation. Aggrieved by the response, the Appellants filed a writ petition, which the Bombay High Court dismissed.
Contentions of the Appellants:
It was argued that TDR/Additional TDR should be considered compensation for acquiring land and developing amenities, and denying it would violate Article 300A of the Constitution. It was also pointed out that the Appellants had developed the “Recreation Ground” in compliance with the plan approved by the Superintendent of Gardens.
Further, it was argued that the High Court’s conclusion that the appropriate authority had not given its approval was incorrect because the approval granted by the Municipal Commissioner was also available on record.
According to Regulation 6, the amenity must be developed on the surrendered plot. The vesting in favour of the Corporation only takes place after the amenity has been developed in compliance with Section 126(1)(b) of the Act, 1966. It was also argued that the Corporation’s claim that the Appellants had not developed the amenity was an afterthought.
Contentions of the Respondents:
It was argued that the Appellants’ failure to develop amenities, not making any claims for Additional TDR, and the lack of approval from the appropriate authority did not warrant interference under Article 136 of the Constitution. It was also submitted that the Appellants only challenged the rejection of their request for Additional TDR 12 years after it was made.
It was also argued that the Appellants were not entitled to claim Additional TDR after surrendering and transferring the land to the Corporation and receiving TDR. The claim for Additional TDR should have been made simultaneously with the claim for TDR. They contended that cutting, levelling, filling, terracing, and landscaping activities did not constitute the development of amenities.
Observations of the Court:
The Supreme Court analysed the rejection of the Appellants’ application for additional TDR by the Corporation in November 1998 and subsequent legal proceedings. However, the Supreme Court disagreed, stating that the right to claim additional TDR was in a state of suspended animation between 1996 and 2009 due to a circular that limited such claims in certain situations.
The issue in question was regarding the statutory provisions about the right to claim additional TDR and the factual circumstances surrounding it. Section 126(1) of the Act, 1966 allows for land acquisition by agreement, granting the landowner TDR, or by requesting the state government for land acquisition for public purposes. Clause (b) of sub-section (1) of Section 126 allows for compensation in the form of TDR and additional FSI against the development or construction of an amenity on the surrendered land.
The Appellants accepted TDR instead of compensation, but the question is whether the last limb of clause (b) was satisfied. This limb provides that the landowner would receive additional TDR or FSI for the development or construction of the amenity as per the Final Development Control Regulations. The Court determined that the appellants did not present their activities up to the point of handing over possession as the development of an amenity, which would have eliminated the need for additional TDR.
The Apex Court found that developing the amenity and lodging a claim for additional TDR was carried out only after Mayfair Housing entered the picture, thereby binding the appellants to the condition laid down by the Corporation that appellant No.2 would not be entitled to Additional TDR.
The decisions of the Court:
The Supreme Court agreed with the High Court’s finding that the Appellants did not develop the amenity, and thus, they were not entitled to Additional TDR. As a result, the appeal was dismissed, and the Supreme Court upheld High Court’s order.
Case Title: Godrej & Boyce Manufacturing Company Ltd. thr. Constituted Attorney v The Municipal Corporation of Greater Mumbai & Ors
Case No.: Civil Appeal No. 9021 of 2014
Citation: 2023 Latest Caselaw 451 SC
Coram: Hon’ble Mr. Justice V. Ramasubramanian and Hon’ble Mr. Justice Pankaj Mithal
Advocates for Petitioner: Mr. P. Chidambram, Sr. Adv., Mr. Pramod B. Agarwala, AOR, Mr. Pravin Samdhani, Sr. Adv., Mr. Anirudh Joshi, Adv., Mr. Nivit Srivastava, Adv., Mr. Nell Mandevia, Adv., Mr. Kunal Vajani, Adv., Mr. Aayush Agarwala, Adv., Mr. Shubhang Tandon, Adv., Mr. Pramod B. Agarwala, AOR
Advocates for Respondent: Mr. Atmaram N.S. Nadkarni, Sr. Adv., Mr. S. Sukumaran, Adv.
Mr. Anand Sukumar, Adv., Mr. Bhupesh Kumar Pathak, Adv., Ms. Meera Mathur, AOR, Mr. S.S. Rebello, Adv., Ms. Deepti Arya, Adv., Ms. Arzu Paul, Adv., Ms. Manisha Gupta, Adv.
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