Supreme Court Denies Additional TDR for Recreation Ground Development: Godrej & Boyce vs. MCGM (2023)

Date of the Judgment: May 08, 2023

Citation: 2023 INSC 428

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

Can a landowner claim additional Transferable Development Rights (TDR) after surrendering land for a public purpose and developing an amenity? 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 company was entitled to additional TDR for developing a recreation ground on land surrendered to the municipality. 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 dispute between Godrej and Boyce Manufacturing Company Limited (Appellant No. 1) and the Municipal Corporation of Greater Mumbai (MCGM) regarding the grant of additional Transferable Development Rights (TDR). The appellant owned land in Mumbai that was reserved for a “Recreation Ground” in the Development Plan of 1991. In 1994, the Maharashtra Regional and Town Planning Act, 1966 was amended to allow for land acquisition through various means, including the grant of TDR. Godrej and Boyce sought to surrender their land in exchange for TDR, including additional TDR for developing the recreation ground.

The company, through its architects, applied to surrender the land and develop the amenity. They undertook development work, including leveling, filling, and terracing, and also constructed storm water drains. The Municipal Corporation acknowledged the completion of the work and took possession of the land in 1995. However, a dispute arose regarding the grant of additional TDR, with the corporation initially denying it based on a restrictive circular issued in 1996. This circular was later challenged and set aside by the Supreme Court in a previous case involving the same company. Despite this, the Municipal Corporation continued to deny the additional TDR, leading to the present appeal.

Timeline

Course of Proceedings

The appellants initially approached the Bombay High Court after the Municipal Corporation rejected their claim for additional TDR in 2010. The High Court dismissed their writ petition, holding that the appellants had not established that they carried out any development and had abandoned their claim due to the delay in approaching the court. The High Court also noted that the appellants had accepted the initial DRC without protest and had not followed the proper procedure for claiming additional TDR. The High Court also held that the claim for additional TDR was made by appellant no. 2, who was not the owner of the land, and hence not entitled for additional TDR. Aggrieved by this decision, the appellants appealed to the Supreme Court.

Legal Framework

The legal framework for this case is primarily based on Section 126 of the Maharashtra Regional and Town Planning Act, 1966, which deals with the acquisition of land for public purposes. The relevant portion of Section 126(1) of the Act is as follows:

“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 provides three methods of acquiring land: by agreement, by granting TDR, or by initiating proceedings under the Land Acquisition Act. The case focuses on clause (b), which allows for the grant of TDR in lieu of compensation, including additional TDR for developing an amenity on the surrendered land.

The Act also defines “amenity” in Section 2(2) as including “roads, streets, open spaces, parks, recreational grounds, play grounds, sports complex, parade grounds, gardens, markets, parking lots, primary and secondary schools and colleges and polytechnics, clinics, dispensaries and hospitals, water supply, electricity supply, street lighting, sewerage, drainage, public works and includes other utilities, services and conveniences.” “Development” is defined in Section 2(7) as “the carrying out of buildings, 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; and “to develop” shall be construed accordingly.”

The Development Control Regulations for Greater Mumbai, particularly Regulation 34 and Appendix VII-A (renumbered from Appendix VII), also play a crucial role. Clause 5 of Appendix VII-A deals with the grant of TDR equivalent to the area of the surrendered land, while Clause 6 deals with the grant of additional TDR for the development or construction of an amenity on the surrendered land.

Arguments

Appellants’ Arguments:

• The appellants argued that TDR and additional TDR are forms of compensation for land acquisition and development of amenities. Denial of additional TDR infringes on their right to property under Article 300A of the Constitution.
• They contended that they developed the “Recreation Ground” according to the plan approved by the Superintendent of Gardens.
• The appellants argued that the High Court overlooked the approval granted by the Municipal Commissioner, making the finding that no appropriate authority granted approval factually incorrect.
• They submitted that the amenity is required to be developed on the surrendered plot, and the vesting of the land in favor of the Corporation occurs only after the development of the amenity, as per Section 126(1)(b) of the Maharashtra Regional and Town Planning Act, 1966.
• The appellants claimed that the Corporation’s stand that they did not develop the amenity was an afterthought.
• They stated that their request for additional TDR was rejected not on the grounds of lack of development but due to the prevailing policy (circular dated 09.04.1996).
• The appellants argued that the delay in approaching the High Court was due to the need to await the outcome of their challenge to the “prevailing policy,” and therefore, the inference of abandonment was incorrect.

Respondents’ Arguments:

• The respondents argued that the High Court had recorded findings of fact that the appellants did not develop any amenity, did not claim additional TDR, and lacked approval from the appropriate authority.
• They contended that these findings of fact do not warrant interference under Article 136 of the Constitution.
• The respondents stated that the rejection of additional TDR was challenged after 12 years, justifying the High Court’s inference of abandonment.
• They argued that after the surrender of land and grant of TDR, the appellants ceased to be owners and could not claim additional TDR.
• The respondents submitted that the claim for additional TDR should be made simultaneously with the claim for TDR, which the appellants failed to do.
• They stated that the development of amenities had to be as per the stipulations of the competent authority, which was not done in this case.
• The respondents argued that activities like cutting, leveling, filling, terracing, and landscaping cannot be considered development of an amenity.

[TABLE] of Submissions

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:

Cases:

• Godrej and Boyce Manufacturing Company Limited vs. State of Maharashtra and Others [(2009) 5 SCC 24] – Supreme Court of India. This case involved the same appellant and challenged the circular dated 09.04.1996, which restricted the grant of additional TDR. The Supreme Court set aside the circular.
• P. Dasa Muni Reddy vs. P. Appa Rao [(1974) 2 SCC 725] – Supreme Court of India. This case was cited to define the concept of abandonment of rights. The court held that abandonment is more than mere waiver or laches, and there can be no waiver of a non-existent right.

Statutes and Regulations:

• Section 126 of the Maharashtra Regional and Town Planning Act, 1966 – This section deals with the acquisition of land for public purposes and the grant of TDR.
• Section 2(2) of the Maharashtra Regional and Town Planning Act, 1966 – This section defines “amenity.”
• Section 2(7) of the Maharashtra Regional and Town Planning Act, 1966 – This section defines “development.”
• Regulation 34 of the Development Control Regulations for Greater Mumbai, 1991 – This regulation deals with the transfer of development rights.
• Appendix VII-A of the Development Control Regulations for Greater Mumbai, 1991 – This appendix provides the regulations for the grant of TDR, including additional TDR for amenity development.

[TABLE] of Authorities

Judgment

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

How each authority was viewed by the Court?

• Godrej and Boyce Manufacturing Company Limited vs. State of Maharashtra and Others [(2009) 5 SCC 24]* – The court noted that this case was crucial in understanding the context of the dispute. The court acknowledged that the circular that was set aside in this case was the reason for the initial rejection of the appellant’s claim for additional TDR.
• P. Dasa Muni Reddy vs. P. Appa Rao [(1974) 2 SCC 725]* – This case was used to define the concept of abandonment of rights. The court held that the appellants did not abandon their right to claim additional TDR.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the factual analysis of the correspondence between the parties and a strict interpretation of the relevant provisions of the Maharashtra Regional and Town Planning Act, 1966 and the Development Control Regulations. The Court emphasized that the activities undertaken by the appellants before handing over possession of the land were primarily aimed at facilitating the surrender of land and obtaining TDR, and not towards the development of an amenity for the purpose of claiming additional TDR. The court also noted the entry of a third party after the surrender of land, and that the third party was not entitled for additional TDR. The court concluded that the appellants did not fulfill the necessary conditions to claim additional TDR.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio

The court’s reasoning was more focused on the factual aspects of the case, specifically the correspondence between the parties, to determine whether the appellants had indeed developed the amenity for the purpose of claiming additional TDR. The legal considerations were also important to interpret the provisions of the Act and the Regulations.

Logical Reasoning:

The court considered the appellants’ argument that they had developed the amenity, but ultimately rejected it, finding that the development was not specifically for the purpose of claiming additional TDR. The court also considered the argument that the delay in approaching the court was due to the challenge to the circular, and accepted it.

The court’s decision was based on the interpretation of the last limb of clause (b) of sub-section (1) of Section 126 of the Maharashtra Regional and Town Planning Act, 1966, which states that additional TDR can be granted “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.” The court interpreted this to mean that the development of the amenity must be specifically for the purpose of claiming additional TDR, and not merely as a condition for surrendering the land and obtaining TDR.

The court also noted that the entry of a third party, Mayfair Housing, into the fray, after the surrender of land, further complicated the issue. The court noted that the claim for additional TDR was made after Mayfair Housing entered into the picture, and that Mayfair Housing was not entitled to additional TDR. The court also noted that the power of attorney given to Mayfair Housing was for the purpose of constructing the recreation ground, which showed that the recreation ground was not already developed for additional TDR.

The court quoted the following from the judgment:

“The law of abandonment is based upon the maxim invito benefic ium non datur . It means that the law confers upon a man no rights or benefits which he does not desire.”

“To put i t differently, what was cited by the Municipal Corporation in their order of rej ection dated 27.11.1998 as an impediment for the grant of additional TDR was the subject matter of challenge in the first round. It was made by the very appellant No.1 herein , though in respect of another property.”

“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.”

There were no dissenting opinions in this case.

Key Takeaways

• Landowners must clearly demonstrate that any development of an amenity on surrendered land is specifically for the purpose of claiming additional TDR, and not merely as a condition for surrendering the land.
• The intent to claim additional TDR must be clearly stated from the beginning of the process, and not as an afterthought.
• The court will scrutinize the correspondence between the parties to determine the intent behind the development of the amenity.
• The entry of third parties after the surrender of land, may complicate the claim for additional TDR.
• The court will not allow a party to piggy ride on another party to claim additional TDR.

Directions

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

Development of Law

The ratio decidendi of the case is that the development of an amenity on surrendered land must be specifically for the purpose of claiming additional TDR, and not merely as a condition for surrendering the land and obtaining TDR. This clarifies the interpretation of Section 126(1)(b) of the Maharashtra Regional and Town Planning Act, 1966, and provides a clear guideline for landowners seeking additional TDR. This case clarifies that the intent to claim additional TDR must be clear from the beginning of the process, and not as an afterthought. This case also clarifies that the court will scrutinize the correspondence between the parties to determine the intent behind the development of the amenity.

Conclusion

The Supreme Court dismissed the appeal, upholding the High Court’s decision that Godrej & Boyce were not entitled to additional TDR. The Court found that the company’s actions were primarily aimed at surrendering the land for TDR, not developing an amenity for additional TDR. This case highlights the importance of clearly demonstrating the intent and purpose behind any development activity when seeking additional TDR under the Maharashtra Regional and Town Planning Act, 1966.