In a series of significant rulings, the Supreme Court of India and the Bombay High Court have clarified crucial aspects of Transferable Development Rights (TDR) and Floor Space Index (FSI) for real estate projects affected by public reservations. These cases highlight the ongoing legal debate over compensation rights for property owners, the obligations of the Mumbai Municipal Corporation (MCGM), and the statutory time limits governing TDR and FSI grants.
Bombay High Court’s Ruling in Bhartu Estates (P) Ltd. v. MCGM on TDR Claims
On January 30, 2024, the Division Bench of the Bombay High Court, comprising Justices G.S. Patel and Kamal Khata, issued a judgment in Bhartu Estates (P) Ltd. vs Municipal Corporation of Greater Mumbai. Bhartu Estates filed a petition seeking a 10% incentive TDR for a property in Andheri affected by a public road reservation, which required part of their land. Bhartu Estates contended that this incentive TDR was compensatory and claimed entitlement under the Development Control and Promotion Regulation (DCPR) 2034. However, MCGM denied the request, citing that the surrender of land did not meet the required 36-month timeframe outlined in Clause 4.1.1 of DCPR 2034.
The High Court upheld MCGM’s decision, ruling that timely surrender within 36 months from the DCPR’s enforcement date (September 1, 2018) was mandatory. Since possession was only taken on December 8, 2021, outside the permitted window, the Court refused the incentive TDR claim, emphasizing that any delays would lead to potential inflation of TDR rates.
Supreme Court’s Dismissal of Special Leave Petition
Following the Bombay High Court’s decision, Bhartu Estates appealed to the Supreme Court through a Special Leave Petition (SLP). On November 4, 2024, the Supreme Court dismissed the petition, finding no reason to entertain further relief for Bhartu Estates. This order underscores the judicial stance on adhering to procedural timeframes in TDR claims and affirms the Bombay High Court’s interpretation of DCPR regulations.
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Supreme Court Ruling on Kukreja Construction Co. vs. MCGM: Retrospective FSI/TDR Claims
In a landmark judgment on September 13, 2024, the Supreme Court addressed broader concerns regarding compensation for real estate developers in cases involving public infrastructure. The case, Kukreja Construction Co. vs SOM, focused on the right to additional FSI/TDR for developing public amenities under previous guidelines in Appendix VII of DCR. Following a 2009 Supreme Court judgment in Godrej & Boyce Manufacturing Co. vs State of Maharashtra, developers were initially entitled to 100% TDR for constructing amenities like DP Roads. However, a 2016 amendment to DCR Regulation 34 essentially nullified these compensations.
The Supreme Court ruled that the 2016 amendment did not have retroactive effect, as it would otherwise violate Article 300-A, which protects the right to property. The Court observed that delay and laches did not apply here due to MCGM’s own delays in honoring compensation obligations. By reversing the Bombay High Court’s dismissal of the case on grounds of delay, the Supreme Court reinstated the petitioners’ rights to 100% TDR for constructed amenities and directed MCGM to re-evaluate the claims accordingly.
Implications for Property Developers and Landowners
These rulings underscore the significance of adherence to regulatory timelines and procedural requirements in TDR and FSI compensation claims. They reinforce developers’ rights to compensation for providing public amenities, countering the retroactive removal of entitlements. The legal emphasis on strict timelines, as seen in the Bhartu Estates case, also alerts developers and landowners to act within prescribed timeframes for successful TDR claims.