Supreme Court clarifies compensation for land surrender and amenity development: Kukreja Construction Company vs. State of Maharashtra (2024) INSC 692 (13 September 2024)

Introduction

Date of the Judgment: 13 September 2024

Citation: 2024 INSC 692

Judges: Justices B.V. Nagarathna and Nongmeikapam Kotiswar Singh

The Supreme Court of India has delivered a significant judgment concerning the grant of Transferable Development Rights (TDR) to landowners who surrender their land for public purposes and construct amenities on it. The core issue revolves around the interpretation of Section 126(1)(b) of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act) and the Development Control Regulations for Greater Bombay, 1991 (DCR). Specifically, the court addressed whether landowners are entitled to 100% TDR for the area of the amenity constructed, or if this is limited by subsequent circulars and amendments.

Case Background

Several landowners in Mumbai had their lands reserved for public purposes, particularly for Development Plan Roads (DP Roads), under the MRTP Act. These landowners voluntarily surrendered their lands to the Mumbai Municipal Corporation and, at their own cost, constructed DP Roads on these plots. In return, they were granted Floor Space Index (FSI) and/or TDR in the form of Development Rights Certificates (DRC), based on the gross area of the surrendered land.

Prior to amendments, Para 6 of Appendix-VII of the DCR allowed for additional TDR for construction of amenities. The Municipal Corporation initially granted only 15% or 25% TDR for the area of the amenity constructed. This was challenged, leading to the Supreme Court’s decision in Godrej & Boyce Manufacturing Company Limited vs. State of Maharashtra, (2009) 5 SCC 24 (Godrej & Boyce I), which held that landowners were entitled to 100% TDR for the area of the amenity constructed.

Subsequently, the Mumbai Municipal Corporation declined to grant 100% additional TDR, leading to multiple writ petitions in the High Court of Judicature at Bombay. The High Court’s decisions on these petitions form the basis of the present appeals before the Supreme Court. A notification issued on 16.11.2016 amended Regulation 34 of the DCR, virtually removing Appendix-VII, which raised the question of whether these modifications would apply retrospectively.

Timeline:

Course of Proceedings

The High Court of Judicature at Bombay heard multiple writ petitions concerning the implementation of the Godrej & Boyce I judgment. Some petitions were rejected due to delay and laches, while others were allowed, directing the Municipal Corporation to grant additional TDR. The High Court held that the notification dated 16.11.2016 was valid but would not have retrospective effect on lands surrendered before that date.

The High Court also held that the decision in Godrej & Boyce I was not per incuriam. It clarified that Regulation 33(1) applied to land reserved for roads, while Para 6 of Appendix-VII applied to additional TDR for construction of amenities. The High Court also held that after 17.06.2010, the additional FSI for road construction was limited to 25% of the area.

Appeals were filed before the Supreme Court by both the landowners whose petitions were dismissed, and by the Mumbai Municipal Corporation against the orders allowing certain writ petitions.

Legal Framework

The case primarily revolves around the interpretation of Section 126 of the MRTP Act, which deals with the acquisition of land for public purposes. Specifically, Section 126(1)(b) allows for the acquisition of land by granting the landowner FSI or TDR:

“126. Acquisition of land required for public purposes specified in plans.—(1) Where 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 113-A acquire the land, — (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 and 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…”

This section provides for two types of compensation: (i) FSI or TDR for the surrendered land, and (ii) additional FSI or TDR for the development or construction of an amenity on that land.

The Development Control Regulations for Greater Bombay, 1991 (DCR), particularly Regulation 34 and Appendix-VII (later Appendix-VII-A), provide the framework for granting TDR. Para 6 of Appendix-VII, as it stood prior to the 2016 amendment, entitled the owner to TDR equivalent to the area of construction/development of the amenity.

The term “amenity” is defined under Section 2(2) of the MRTP Act and Regulation 3(7) of the DCR, which includes roads and recreational grounds.

Arguments

Appellants’ Arguments:

• The appellants argued that the High Court had correctly upheld their right to 100% additional TDR as per the Godrej & Boyce I judgment. They contended that the denial of relief based on delay and laches was unjustified.

• They submitted that the compensation for land acquisition is held in trust by the acquiring body and must be paid once determined. They relied on Noida Entrepreneur Association vs. NOIDA, (2011) 6 SCC 508, to support their argument that compensation cannot be denied due to delay.

• The appellants argued that the right to fair compensation is a constitutional right under Article 300A of the Constitution of India. They cited Vidya Devi vs. State of Himachal Pradesh, (2020) 2 SCC 569, and other cases to emphasize that the state must ensure fair compensation for land acquisition.

• They contended that the Mumbai Municipal Corporation failed to prove that the delay amounted to laches, that the Corporation had altered its position to its prejudice, or that any third-party rights had accrued that could not be disturbed. They cited Moon Mills Ltd. vs. M.R. Meher, President, Industrial Court, Bombay, AIR 1967 SC 1450, and other cases to support their argument against the denial of relief due to delay.

• They argued that the notification dated 16.11.2016 could not have retrospective effect and could not nullify the vested right conferred by Godrej & Boyce I. They contended that the amendment was intended to provide additional compensation in view of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and not to curtail amenity TDR.

• They also argued that the right to receive compensation for acquisition is a vested and constitutional right, which cannot be taken away by an amendment to the statute. They argued that the High Court correctly held that the DCR amendment was prospective and not retrospective.

Respondents’ Arguments (Mumbai Municipal Corporation):

• The Mumbai Municipal Corporation argued that the decision in Godrej & Boyce I was per incuriam as it ignored the effects of Regulation 33 of the DCR. They contended that if compensation had been paid, TDR could not be granted.

• They argued that the notification dated 16.11.2016 removed the basis of the decision in Godrej & Boyce I and prohibited the issuance of TDR to those already compensated. They contended that the notification applied even to pending cases.

• The Corporation contended that there could not be 100% TDR for the area of the amenity developed, and the notification was enforced to cure this defect. They argued that the DCR applicable on the date of deciding an application for development permission should govern the decision.

• They argued that the High Court was right in denying relief based on delay, as developers who had already availed of TDR without protest could not agitate the matter again after the Godrej & Boyce I judgment.

• They contended that the compensation payable was crystallized on the date of the acquisition notice, and the owner could not claim additional TDR due to the escalation in land prices. They also argued that granting additional TDR despite delay would result in unjust enrichment.

• They also argued that for the appellant M/s Kukreja Construction Company, the conditions for seeking compensation under Section 126(1)(b) of the MRTP Act were not met.

Sub-Submissions Table:

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the High Court was right in declining to grant relief to the writ petitioners/appellants herein on the ground of delay and laches?
2. Whether the appeals filed by the respondent – Mumbai Municipal Corporation would call for any interference by this Court?
3. What order?

Treatment of the Issue by the Court

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

Authorities

Cases Relied Upon by the Court:

Legal Provisions Considered by the Court:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court followed Godrej & Boyce Manufacturing Company Limited vs. State of Maharashtra, (2009) 5 SCC 24, reiterating that landowners are entitled to 100% TDR for the area of the amenity constructed.
• The Court followed Municipal Corporation of Greater Bombay vs. Natwar Parikh & Co. Pvt. Ltd., Civil Appeal No.1748 of 2015, noting that it was too late to revisit the decision in Godrej & Boyce I.
• The Court cited Godrej & Boyce Manufacturing Co. Ltd. vs. Municipal Corporation of Greater Mumbai, (2023) SCC OnLine SC 592, and discussed the principle of abandonment of claim, holding that the appellants’ actions did not amount to abandonment.
• The Court followed Municipal Corporation of Greater Bombay vs. Yeshwant Jagannath Vaity, (2011) 11 SCC 88, noting that the reasoning of this case was applicable to the present cases.
• The Court cited Noida Entrepreneur Association vs. NOIDA, (2011) 6 SCC 508, and noted that compensation cannot be denied due to delay.
• The Court cited Vidya Devi vs. State of Himachal Pradesh, (2020) 2 SCC 569, and noted that delay and laches cannot be raised in cases of continuing cause of action or if circumstances shock judicial conscience.
• The Court cited Dehri Rohtas Light Rly. Co. Ltd. vs. District Board, Bhojpur, (1992) 2 SCC 598, and noted that the real test is whether a parallel right has been created due to delay.
• The Court cited Tukaram Kana Joshi vs. Maharashtra Industrial Development Corporation, (2013) 1 SCC 353, and noted that delay is not an absolute impediment.
• The Court cited Kazi Moinuddin Kazi Bashiroddin vs. Maharashtra Tourism Development Corporation, 2022 SCC OnLine SC 1325, and noted that in matters of compensation, justice should be preferred over technicalities.
• The Court cited G.T. Lad vs. Chemical and Fibres of India Ltd., (1979) 1 SCC 590, and noted that abandonment requires a total giving up of duties with an intention not to resume.
• The Court cited State of Punjab vs. Davinder Pal Singh Bhullar, (2011) 14 SCC 770, and noted that waiver requires intentional abandonment of rights with full knowledge.
• The Court cited Moon Mills Ltd. vs. M.R. Meher, President, Industrial Court, Bombay, AIR 1967 SC 1450, and noted that the rights which have accrued to others by reason of the delay in filing the petition should not be allowed to be disturbed unless there is a reasonable explanation for the delay.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the principle of ensuring fair compensation for landowners who surrender their land for public purposes and construct amenities at their own cost. The Court emphasized that the right to compensation is a constitutional right and cannot be denied based on technicalities like delay and laches. The Court also highlighted that the state has a duty to pay compensation to land losers, and this duty cannot be circumvented by subsequent amendments or circulars.

The Court’s reasoning was also guided by the need to uphold the principle of stare decisis, as it refused to revisit the decision in Godrej & Boyce I. The Court also considered the fact that the Mumbai Municipal Corporation had not demonstrated any prejudice due to the delay on the part of the landowners.

Sentiment Analysis Ranking:

Fact:Law Ratio Table:

Logical Reasoning Flowchart:

Final Order

The Supreme Court allowed the appeals filed by the landowners and dismissed the appeals filed by the Mumbai Municipal Corporation. The Court directed the Mumbai Municipal Corporation to consider the cases of the appellants in light of the decision in Godrej & Boyce I and release the balance FSI/TDR within three months from the date of the judgment.

The Court also clarified that the notification dated 16.11.2016 would not have retrospective effect and would not affect the rights that had vested in the landowners prior to that date. The Court also clarified that the landowners were entitled to 100% TDR for the area of the amenity constructed, as per the decision in Godrej & Boyce I.

Implications

This judgment has significant implications for landowners, developers, and municipal authorities in Maharashtra and potentially across India. Some key implications include:

• Landowners: Landowners who have surrendered their land for public purposes and constructed amenities are entitled to 100% TDR for the area of the amenity constructed, as per the decision in Godrej & Boyce I. This right cannot be denied based on delay or subsequent amendments to regulations.
• Developers: Developers can now be more confident in their entitlement to TDR for constructing amenities on surrendered land. This judgment provides clarity and certainty in the development process.
• Municipal Authorities: Municipal authorities are required to implement the judgment and release the balance FSI/TDR to landowners within three months. They cannot deny TDR based on delay or subsequent amendments. They must also ensure that the compensation paid is fair and just.
• Legal Precedent: This judgment reinforces the principle of stare decisis and clarifies the interpretation of Section 126(1)(b) of the MRTP Act and the DCR. It also provides guidance on the treatment of delay and laches in compensation cases.
• Constitutional Rights: The judgment emphasizes the importance of the constitutional right to property and the right to fair compensation, ensuring that landowners are not deprived of their rights due to technicalities or delays.