Supreme Court Clarifies Amenity TDR Entitlement in Land Acquisition Cases: Godrej & Boyce vs. MCGM (2023)

Date of the Judgment: May 8, 2023

Citation: 2023 INSC 504

Judges: V. Ramasubramanian, J., Pankaj Mithal, J.

Can a landowner claim additional Transferable Development Rights (TDR) for developing a recreational ground on land that has been surrendered to a municipal corporation? The Supreme Court of India recently addressed this question in a case involving Godrej and Boyce Manufacturing Company Limited and the Municipal Corporation of Greater Mumbai. The core issue was whether the landowner had sufficiently developed the land to qualify for additional TDR under the Maharashtra Regional and Town Planning Act, 1966. The judgment was delivered by a two-judge bench comprising Justice V. Ramasubramanian and Justice Pankaj Mithal, with Justice V. Ramasubramanian authoring the opinion.

Case Background

The case revolves around a plot of land owned by Godrej and Boyce Manufacturing Company Limited (Appellant No. 1) in Mumbai. This land was reserved for a “Recreation Ground” in the second Development Plan (DP 1991) for Greater Mumbai, sanctioned between 1991 and 1994. The appellant, through its constituted attorney (Appellant No. 2), applied to surrender the land and sought Transferable Development Rights (TDR) in return. The timeline of events is as follows:

Course of Proceedings

The Bombay High Court dismissed the writ petition filed by the appellants, upholding the Municipal Corporation’s decision to deny additional TDR. The High Court’s reasoning included:

• The claim for additional TDR arises under clause 6 of Appendix VII of Regulation 34 of the Development Control Regulations for Greater Mumbai, 1991.
• The correspondence did not show an intention to claim additional TDR under clause 6.
• The Superintendent of Gardens was not the appropriate authority for such claims.
• The appellants only claimed TDR under clause 5, not additional TDR under clause 6.
• The appellants accepted the initial DRC without protest.
• The appellants did not establish that they carried out any development as required under clause 6.
• The agreement between M/s Mayfair Housing and the Corporation showed that the appellants only surrendered the land and did not undertake development.
• The appellants did not fill out the required form for additional TDR.
• The amenity was not developed as per the stipulations of the Commissioner.
• Appellant No. 2 was not the owner or lessee of the land and could not claim TDR.
• The appellants abandoned their claim due to the delay in filing the writ petition.

Legal Framework

The core legal provision at play is Section 126(1) of the Maharashtra Regional and Town Planning Act, 1966, which outlines how land reserved for public purposes can be acquired. The relevant portion of the law states:

“126. Acquisition of land required for public purposes specified in plans
(1) When after the publication of a draft Regional Plan, a Development or any other plan or town planning scheme, any land is required or reserved for any of the public purposes specified in any plan or scheme under this Act at any time, the Planning Authority, Development Authority, or as the case may be, any Appropriate Authority may, except as otherwise provided in section 113A acquire the land, —
(a) by agreement by paying an amount agreed to, or
(b) in lieu of any such amount, by granting the land-owner or the lessee, subject, however, to the lessee paying the lessor or depositing with the Planning Authority, Development Authority or Appropriate Authority, as the case may be, for payment to the lessor, an amount equivalent to the value of the lessor’s interest to be determined by any of the said Authorities concerned on the basis of the principles laid down in the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, Floor Space Index (FSI) or Transferable Development Rights (TDR) against the area of land surrendered free of cost and free from all encumbrances, and also further additional Floor Space Index or Transferable Development Rights against the development or construction of the amenity on the surrendered land at his cost, as the Final Development Control Regulations prepared in this behalf provide, or
(c) by making in application to the State Government for acquiring such land under the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013,
and the land (together with the amenity, if any, so developed or constructed) so acquired by agreement or by grant of Floor Space Index or additional Floor Space Index or Transferable Development Rights under this section or under the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, as the case may be, shall vest absolutely free from all encumbrances in the Planning Authority, Development Authority, or as the case may be, any Appropriate Authority.”

This section allows for land acquisition through agreement, grant of FSI/TDR, or under the Land Acquisition Act. Specifically, clause (b) allows for TDR in lieu of compensation for the land and additional TDR for developing amenities on the surrendered land. The term “amenity” is defined in Section 2(2) of the Act as including recreational grounds. The term “development” is defined in Section 2(7) of the Act as including carrying out of building, engineering, mining or other operations in or over or under land or the making of any material change, in any building or land or in the use of any building or land or any material or structural change in any heritage building or its precinct and includes demolition of any existing building, structure or erection or part of such building, structure of erection; and reclamation, redevelopment and lay-out and sub- division of any land. The Development Control Regulations for Greater Mumbai also define “amenity” similarly in Regulation 2(7).

Regulation 34 of the Regulations deals with Transfer of Development Rights and refers to Appendix VII (later renumbered as Appendix VII-A). Clauses 5, 6 and 7 of Appendix VII-A are relevant:

“5. The built-up area for the purpose of FSI credit in the form of a DRC shall be equal to the gross area of the reserved plot to be surrendered and will proportionately increase or decrease according to the permissible FSI of the zone where from the TDR has originated.
Provided that in specific cases considering the merits, where Development Plan Roads/ reservations are proposed in No Development Zone, the Commissioner with prior approval of the Government shall grant FSI for such road land/reserved land equivalent to that of the adjoining zone.
6. When an owner or lessee also develops or constructs the amenity on the surrendered plot at his cost subject to such stipulations as may be prescribed by the Commissioner or the appropriate authority, as the case may be and to their satisfaction and hands over the said developed/ constructed amenity to the Commissioner/ appropriate authority, free of cost, he may be granted by the Commissioner a further DR in the form of FSI equivalent to the area of the construction/development done by him, utilisation of which etc. will be subject to the Regulations contained in this Appendix.
7. A DRC will be issued only on the satisfactory compliance with the conditions prescribed in this Appendix.”

Clause 5 deals with TDR for the surrendered land, while clause 6 deals with additional TDR for developing the amenity.

Arguments

Appellants’ Arguments:

• The denial of additional TDR infringes on the right to property under Article 300A of the Constitution.
• The appellants developed the “Recreation Ground” as per the plan approved by the Superintendent of Gardens.
• The Municipal Commissioner had granted approval, which the High Court overlooked.
• The vesting of the land with the Corporation occurs only after the amenity is developed under Section 126(1)(b) of the Maharashtra Regional and Town Planning Act, 1966.
• The Corporation’s claim that the appellants did not develop the amenity was an afterthought.
• The rejection of additional TDR in 1998 was based on a “prevailing policy” that was later struck down by the Supreme Court.
• The delay in approaching the High Court was due to the need to await the outcome of the challenge to the “prevailing policy”.

Respondents’ Arguments:

• The High Court’s findings of fact, including that the appellants did not develop the amenity, do not warrant interference.
• The 12-year delay in challenging the rejection of additional TDR implies abandonment of the claim.
• After surrendering the land and receiving TDR, the appellants ceased to be owners and could not claim additional TDR.
• The claim for additional TDR should have been made simultaneously with the claim for TDR.
• The development of amenities had to be as per the competent authority’s stipulations.
• Activities like cutting, leveling, filling, terracing, and landscaping cannot be considered development of an amenity.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the High Court was right in concluding that there was abandonment of claim by the appellants?
2. Whether the finding of fact arrived at by the High Court that the appellants did not and could not have developed the amenity, calls for any interference, especially in the light of the statutory provisions and the facts that unfold from the correspondence exchanged between the parties?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Judgment

The Court analyzed the correspondence and found that the initial activities by the appellants were to facilitate the surrender of land and obtain TDR. The claim for additional TDR arose later, after a third party (Mayfair Housing) entered the scene. The Court noted that the Municipal Corporation had made it clear to Mayfair Housing that they would not be entitled to additional TDR.

The Supreme Court held that the High Court was correct in concluding that the appellants did not develop the amenity to be eligible for additional TDR. The Court emphasized that the activities undertaken were not projected as the development of an amenity for additional TDR, and the claim arose only after the entry of Mayfair Housing. The Court also pointed out that the second Power of Attorney executed by the appellants, authorized the power agent to apply for getting permission from the authorized department of the Corporation for the construction of Recreation Ground, indicating that the development was not complete.

The Court’s reasoning was based on a detailed analysis of the facts and statutory provisions. The following points weighed in the mind of the Court:

• The initial application was only for TDR for the surrender of the land.
• The activities undertaken by the appellants were to facilitate the surrender of land and obtain TDR, not for claiming additional TDR.
• The claim for additional TDR arose only after Mayfair Housing entered the picture.
• The Municipal Corporation had made it clear to Mayfair Housing that they would not be entitled to additional TDR.

The Court’s decision was primarily influenced by the factual aspects of the case, particularly the sequence of events and the correspondence between the parties.

“To put it differently, what was cited by the Municipal Corporation in their order of rejection dated 27.11.1998 as an impediment for the grant of additional TDR was the subject matter of challenge in the first round.”

“Therefore, the appellants had to necessarily wait till the cloud over their right got cleared. To say that the wait of the appellants during the period of this cloudy weather, tantamount to abandonment, is clearly unjustified and unacceptable.”

“To be precise, all activities undertaken by appellant No.1 through their Architects till the handing over of possession of the land were not towards the development of amenity and for the grant of Additional TDR. All those works were undertaken as part of the effort to make the Corporation accept the surrender of land and to grant TDR.”

Logical Reasoning

The following flowchart explains the court’s logical reasoning for Issue II:

Key Takeaways

• Landowners seeking additional TDR for developing amenities must clearly demonstrate that their actions are specifically for the development of the amenity and not merely for the surrender of land to obtain initial TDR.
• The timing of the claim for additional TDR is crucial. It should be made clear that the development work is for the purpose of claiming additional TDR and not for the surrender of land.
• Third parties cannot piggyback on the rights of the original landowner to claim additional TDR, especially if the corporation has made it clear that they will not be entitled to additional TDR.
• The correspondence and actions of the landowner will be scrutinized to determine the purpose of the development work.
• The courts will not readily infer abandonment of a claim if there is a valid reason for the delay, such as pending litigation on the validity of the policy restricting the claim.

Directions

No specific directions were given by the Supreme Court in this judgment.

Specific Amendments Analysis

There was no specific amendment discussed in this judgment.

Development of Law

The ratio decidendi of the case is that a landowner is not entitled to additional TDR for developing an amenity on surrendered land if the development work was undertaken primarily to facilitate the surrender of land and obtain initial TDR, rather than specifically for claiming additional TDR. This judgment clarifies the conditions under which a landowner can claim additional TDR under Section 126(1)(b) of the Maharashtra Regional and Town Planning Act, 1966. There is no change in the previous position of law, but the judgment clarifies the application of the law to the facts of the case.

Conclusion

The Supreme Court dismissed the appeal, upholding the Bombay High Court’s decision. The Court found that Godrej and Boyce Manufacturing Company Limited were not entitled to additional TDR for developing a recreational ground on land surrendered to the Municipal Corporation of Greater Mumbai. The Court reasoned that the development work was not undertaken for the purpose of claiming additional TDR, but rather to facilitate the surrender of landand obtain initial TDR. The Court’s decision underscores the importance of clearly demonstrating the purpose of development work when claiming additional TDR for amenities.