1

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INTHEHIGHCOURTOFJUDICUATUREATMUMBAI
ORDINARYORIGINALCIVILJURISDICTION
PUBLICINTERESTLITIGATIONNO.94OF2008

1. AmitMaru,
StructureNo.22,Opp.BlockNo.4/5,
BhanjibhaiRathodMarg,
TardeoTulsiwadi,Mumbai34.
2. ArunNathuramGaikwad,
523/7,FernandesChawl,
NewMillRoad,KurlaWest,
Mumbai400070.
Versus
1. StateofMaharashtra,
throughtheSecretary,
UrbanDevelopmentDepartment,
Mantralaya,Bombay400012.
2. TheCommissioner,
MunicipalCorporationofGreaterMumbai,
MahapalikaMarg,
Mumbai400001.

...

Petitioners

...

Respondents

WITH
WRITPETITIONNO.2443OF2008
1. M/s.D.B.S.Realty,
aregisteredfirmregisteredunderthe
provisionsoftheIndianPartnership
Act,1932,andhavingitsregistered
officeatGen.A.K.VaidyaMarg,
Goregaon,(East),Mumbai.
Versus
1. TheStateofMaharashtra,
throughGovernmentPleader,1stFloor,
P.W.D.Building.
2. TheSecretary,Governmentof
Maharashtra,UrbanDevelopmentDepartment,
Mantralaya,Mumbai400032.
3. MunicipalCorporationofGreater
Mumbaihavingitsofficeat
MahanagarpalikaBuilding,

2
Mumbai400001.

...

Respondents

Mr. Mukul Rohatgi Sr. Counsel with Mr. Mahesh Agarwal and Mr. Kiran
Bhaleraoi/byMr.K.P.BhaleraoforthepetitionersinPIL94of2008.
Mr. D.D. Madon, Sr. Counsel with Mr. C.S. Balsara and Mr. Mohamed
Himayatulla,i/byNegandhiShah&HimayatullaforPetitionersinW.P.No.
2443of2008.
Mr.RaviKadam, AdvocateGeneral withMr.D.A.Nalawade,Government
PleaderandMr.N.P.Deshpande,A.G.P.ForStateinallmatters.

Mr. K.K. Singhvi, Senior Counsel with Ms. S.A. Module for B.M.C. In all
matters.
Mr. Janak Dwarkadas, Senior Counsel with Mr. Pravin Samdani, Senior
Counsel,Mr.RahulDwarkadas,Mr.NevelleMukherjiandMs.BrigittaJohn
andRheaMarshali/byM/s.WadiaGandhy&Co.fortheintervenorMCHI
inPILNo.94of2008.
Mr.Yogesh Adhia for Applicant inCh/s. No.134 of2008 in PIL No.94of
2008.
Mr.RobertC.Sequeira for ApplicantinCh/s.No. 81/10 inPILNo.94 of
2008.
Mr. Pravin Samdani, Sr. Counsel, Mr. Nevelle Mukherji i/by M/s. Wadia
Ghandy&Co.forIntervenorsMCHIInW.P.No.2443of2008.

CORAM:FERDINOI.REBELLO&
A.A.SAYED,JJ.
DATED:JUNE10,2010

OralJudgment(PerFerdinoI.Rebello,J.):
Rulein thePetitions.Respondentswaiveservice. With consentof
partiesandasthepleadingshavebeencompletedandasperdirectionsofthe
SupremeCourt,thesepetitionsarebeingheardandfinallydisposedof.

2.

Inboththepetitions,thereischallengetothefollowingNotifications.

3
Notificationdated 10.4.2008 issuedunder section37(1)readwith Section
154oftheMaharashtraRegionalandTownPlanningAct,1966(hereinafter
referredtoasMRTPAct)proposingamendmentstoD.C.Regulation32anda
direction bringing it into force. The State Government immediately then
issued another notification dated 11.7.2008 in purported exercise of its
powers under Section 37(1)(A) of the M.R.T.P. Act. Subsequent thereto a
notificationhasbeenissuedon3.10.2008sanctioningthe modificationto
Regulation32oftheDevelopmentControlRegulationforMaharashtra1991
underSection37(2)whichhereinaftershallbereferredtoastheimpugned
regulation.

Forthepurposeofdecidingthequestionswhicharisetheavermentsin
PILarebeingsetout.TheavermentsinWritPetitionNo.2443of2008will
bereferredtotheextentthattheyarenotsetoutinPILNo.94of2008and
arerequired.

3.

ThePetitionersinPILhaveaverredthatthey areengagedinvarious

socialactivitiesandareassociatedwithvarioussocialserviceorganizations.
They have in the past undertaken various activities relating to lives of
citizens, amenities and infrastructural facilities in Greater Mumbai,
functioningofMunicipalCorporationofGreaterMumbai,functioningofState
Government particularly Urban Development Department and other legal
issues. Theyhave ventilated suchgrievancesbyvariousmodes including

4
takingrecoursetolegalmeasuresasprovidedunderlaw.Issuesraisedbythe
Petitionershavebeensetout.ThePetitionwasoriginallyfiledtoimpugnthe
notification dated 10.4.2008 by the Government of Maharashtra for
increasingtheFloorSpaceIndex(FSI)inthesuburbsofMumbaifrom1to
1.33 in the purported exercise of powers under section 37(1) along with
section 154 of the M.R.T.P. Act. The Petition was thereafter amended to
challengethenoticeissuedbytheStateGovernmentundersection37(1)(A)
oftheM.R.T.P.Act.Thepetitionthereafterwasalsoamendedtoimpugnthe
notificationdated3.10.2008undersection37(2)oftheM.R.T.P.Act.

4.

It is not necessary to consider the challenge to notification dated 10.4.2008 or

the purported exercise of powers under section 154 of the M.R.T.P. Act, as apart
from the fact that no arguments have been advanced, the State Government has
issued notification of 3.10.2008 in exercise of its powers under section 37(2) which
brings into force the amendment to D.C. Regulation 32 and that notification is also
the subject matter of the challenge in the present petitions.

4.

By the impugned notification the Floor Space Index (FSI)

in the suburbs

and extended suburbs of Mumbai has been increased on the respective plots from 1
to 1.33. It is the case of the Petitioners that FSI is part of the development plan
prepared under section 22 of the M.R.T.P. Act. Section 37 provides for only minor
modifications. The increase of FSI from 1 to 1.33 amounts to a major modification
which can only be done if the entire development plan is prepared afresh. The

5
Petitioners contend that in this process the entire infrastructure in the suburbs shall
get crushed. The amendment has been made by State Government to increase FSI
on erroneous grounds.

FSI and TDR in the suburbs is already 2 because of the

provisions of distribution of TDR. Factually FSI in the suburbs is 1 and

it can go

upto 2, only if TDR is used. The TDR is created primarily on account of surrender
of land

in open areas,

city parks etc.

simultaneously reduces built up area

The said TDR generates FSI and

in another place. Thus there is no gross

increase in the built up area. The FSI can go upto 2 provided there is enough TDR.
Even if the entire TDR potential is used, in the suburbs there would be increase just
by a small fraction as there is not sufficient TDR to be used. The increase in FSI
has been done for revenue consideration which is contrary to the spirit of M.R.T.P.
Act. The FSI is part of development plan and the same is not

prepared for

considerations of earning revenue. The development plan is prepared for

town

planning, city and civic infrastructure and the exigencies related therewith. As the
Town planning scheme is prepared keeping in mind technicalities and the imperatives
of urban planning, the

element of earning revenue by selling FSI defeats the

primary objective of this statutory procedure and provisions

with reference to

development plan.

6.

This court, it is set out, in Janhit Manch Vs. State of Maharashtra 2007 BCR

329, has whilst allowing user of Transferable Development Rights (TDR) in the
corridor area of suburbs, which was not previously allowed, has allowed it subject
to certain restrictions and

with a hope that the process for new Development Plan

will commence in 2008 and the plan will come into force by 2011. By way of

6
infrastructure, basic amenities such as roads, recreation grounds, gardens and other
civil facilities are the right of every individual in the country which right is
enshrined under Article 21 of the Constitution of India. The impugned notifications
are violative of the right under Article 21 of the Constitution of India.

7.

During the pendency of the petition,

a notification

was issued dated

11.7.2008 inviting suggestions/objections from the general public within the period
of one month from the date of publication in the official gazette. The Deputy Director
of Town Planning, Greater Mumbai was appointed Officer under Section 162 of the
M.R.T.P. Act to hear suggestions/objections on the notification and submit a report to
the Government. The notification states that the Government had issued directions to
the Municipal Corporation of Greater Mumbai to initiate modification in Regulation
No. 32 of the Development Control Regulations and the Corporation had failed to
publish the notice within the stipulated period of 90 days and consequently in
purported exercise of powers

vested under section 37(1A) of M.R.T.P. Act

suggestions/objections were invited from the general Public.

The legality and

validity of the said notice is also challenged.

8.

By a further amendment of the Petition, it is set out that consequent to the

notice issued and, suggestions/objections received, such parties were given hearing
by the Director of Town Planning, who has submitted

his report to the State

Government on 12.9.2008 and after considering the said report and on consulting
with Director of Town Planning the Government had sanctioned the said amendment
with certain modifications as spelt out in the gazette notification of 3.10.2008. It is

7
contended that the notification amounts to changing the character

of the

development plan and as such could not have been effected under section 37 of the
M.R.T.P. Act. The notification is thus ultra vires section 37 of the M.R.T.P. Act.

9.

The Notification dated 3.10.2008 it is set out suffers from arbitrariness on the

part of the Government inasmuch as the Government inspite of pendency of the

petition and inspite of various grounds of challenge to the earlier notification,
proceeded further and allowed and permitted modification to the D.C. Regulations in
undue hurry.

The alarming anxiety and eagerness of the Government to act with

undue haste with a pre determined decision and settled mind is also expressly evident
from the fact that the publication of the notification dated 11.7.2008 was made
immediately on the 91st day of the expiry of the notification dated 10.4.2008. The
notification dated 3.10.2008 is violative of Article 14 of the Constitution of India.
Inspite of the Municipal Corporation having not published the notice and various
corporators having raised various objections to the notification dated 10.4.2008, the
Government issued notification on 3.10.2008 unreasonably and

in an arbitrary

manner ignoring all objections. The Government ought to have waited for making
such wholesale replacement of FSI. The same amounts not only modification to the
development plan but also changes the character of development plan. As it does not
contemplate to add or reduce that which already existed in the final plan but instead
seeks to add something that never existed and hence, outside the scope of section 37.

10.

The action of the Government on the eve of expiry of present development

plan and D.C. Regulations,

when in fact the process of review of the new

8
development plan and the new

DC regulations should be started and on face of

said interim Order, in fact, is in the nature of attempt of over-reaching this Honb le
Court and amounts to unreasonable exercise of delegated legislation by the
Government under the M.R.T.P. Act and

such exercise/abuse of power is also

violative of Article 14 of the Constitution of India. The notification totally failed to

take into consideration the impact on the environment in the city of Mumbai and
thereby affecting the already overburdened infrastructure and consequently has put
into jeopardy the life of citizens of Mumbai.

11.

It is

submitted that

suggestions/objections

is not

giving hearing

to the public and inviting

an empty formality. The

suggestions/objections and particularly

invitation for

of such far reaching changes of final plan

ought to have been given wide publicity and the Government would also be liable to
give sound and cogent reasons for not considering the objections raised and must
satisfy the court that there has been due application of mind and substantial grounds
to reject the suggestions/objections. The impact on the environment in the city of
Mumbai by way of environmental analysis ought to have been considered by an
Environment Impact Study undertaken by the Government before considering the
modifications. The manner in which action has been undertaken by the Government
by allowing the modification and such modification allowed in a summary manner
without Environment Impact Study or Analysis by the Government, appears to be an
empty formality and an eye wash. The notifications are for financial consideration
and receiving premium as largesse to Developers and Builders and calculated at
highly discounted rates for the proposed

0.33% increase in the FSI. The contention

9
that premium is to be collected ostensibly for infrastructure development is not
substantiated by mode of distribution contemplated in the schedule. Even assuming
that the same is considered, still allowing wholesale change in the character of
development plan

would be arbitrary. The notification also suffers from being

violative of Article 21 of the Constitution of India as it has effect

on the right to

quality life and proper infrastructure.

12.

In W.P. No. 2443 of 2008

similar challenges have been raised.

The

Petitioners in that petition when was first filed, had raised objection that the State
Government under Section 154 of the M.R.T.P. Act has no power to impose any
tax or premium including by amending D.C. Regulations, 1991 by charging
premium for sale of 0.33 FSI and any such direction was illegal and ultra vires the
provisions of M.R.T.P. Act, 1996.

Pursuant to the notification of 3.10.2008 it is

sought to be contended that the notification of 3.10.2008 is ultra vires M.R.T.P. Act
and powers vested therein. It was also set out that the notifications are issued with
a view to generate funds by sale of 0.33 FSI but without power vested in them. No
impact assessment was carried out nor environment and other requirements in the
matter of infrastructure were taken into consideration.

In the Petition as originally filed it was set out that the amendment permitted
higher FSI in the

Eastern and Western suburbs on payment of highly discounted

premium, thereby rendering the said secured market for sale of slum TDR, FSI
diluted or taken away from such owners/developers who had already transfered
their property to the SRA and/or by constructing Slum Rehabilitation tenements at

10
huge costs by availing benefit of FSI in lieu thereof for sale in the open market. The
developers

of Slum Rehabilitation schemes had come forward and undertaken

redevelopment projects which State was unable to do, relying on the policy of
respondent No. 1 and

its assurances that the TDR

generated from

such

redevelopment will be utilized by other property owners/developers in the Eastern

and Western suburbans on account of the scheme of D.C.R. 1991. The scheme is
valid till 2010. By the impugned notification respondent No. 1 state has not only
resiled from the aforesaid promises and assurances and statutory commitments to the
slum developers, but in fact, intends to become dealer or trader of FSI and
make profits by driving TDR holders out of the market and take over such business
from them.

13.

The challenges raised by the Petitioners can be summarized as under :

(1) The

amendment amounts to

change in the character of the plan and

therefore, could not have been sanctioned under Section 37 of M.R.T.P. Act.
(2) Due procedure was not followed in carrying out the amendment considering
the provisions of section 37 of the M.R.T.P. Act.

It was not open to the

State Government to bypass the Planning authority whose opinion is essential

and mandatory in making alterations in the development plan.
(3) The development plan could not have been amended without infrastructure
assessment considering the effect it has on the

infrastructural facilities

thereby affecting the quality of life and consequently are ultra vires Article
14 and 21 of the Constitution.

11
(4) Whether an amendment can be done in the development plan only to
augment financial resources and whether the State Government has legal
authority to charge premium for the sale of 0.33 FSI without such action
being sanctioned by authority of law and whether such amendment is ultra
vires to the provisions of M.R.T.P. Act.

14.

Replies have been filed on behalf of the Corporation which is the Planning

Authority and the State Government. On behalf of the Corporation, an affidavit has
been filed by Mr. Ashok T. Shintre before the notification of 3.10.2008. It however,
deals with various aspects of the issue. It is contended that PIL Petition appears to
have been filed at the behest of cartel of builders/developers as public interest
Litigation with mala fide intention as it is only this group whose interest will be
affected by the impugned notification.

The cartel of builders/developers are today

holding around 48% of the Slum TDR which is exorbitant. The existence of cartel is
reflected in the difference in the price on one hand of slum TDR and road/reservation
TDR on the other hand. The increase in the FSI in suburbs and extended suburbs
will reduce the prices of the Slum TDR, thereby the prices of the flats will also
automatically be reduced. The Notification is in fact in the interest of common man.
In terms of Regulation No. 32, in the suburbs and extended suburbs of Greater
Mumbai including Gaothan and excluding the area mentioned in the Table, the
permissible FSI in residential and commercial zone is 1.00. As per the provision of
Appendix VIIA under regulation 34 of the said Regulations, the FSI of receiving plot
shall be allowed to be exceeded by not more than 0.8 earned either by way of T.D.R.
in respect of reserved plots or by way of land surrendered for road widening or

12
construction of new road. As per the provisions of Appendix VIIB in respect of
Regulation No. 33(10) and 33(14) TDR receiving plot shall be eligible for not more
than 100% additional FSI in whichever combination, provided at least 20% of FSI
shall be mandatorily kept for use of TDR generated as surplus from Slum
Rehabilitation scheme. Additional 0.33

FSI is optional and non transferable.

Corporation has placed reliance on the chart showing the total TDR generated from
25.3.1991 to 20.5.2008 in respect of roads other reservations and slums. It is also
pointed out that

180 proposals were received, out of which 84 proposals have been

approved and the Corporation have received 150 Crores paid by owners/developers
and 150 Crores paid to the State with Government. At the hearing of the arguments
figures were made available which show that TDR generated upto the end of 2009
was 3132 900.12 sq. mtrs. The TDR utilized was 2,99,1021.87 sq. mtrs. The balance
TDR as per these figures works out to 1,41,938.25 sq. mtrs. The summary of TDRs
was made available which shows DRC issued for an area of 86076088.968 sq. mts.
utilized was 81,32,091.144 sq. mtrs. leaving balance area of 5,37,192.41 sq. mtrs.
In terms of the notification it is set out that the land that may be available for
utilization of FSI of 0.33 is 2,31,28,345. sq. mtrs. Assuming 50% is actually used
additional FSI works out to 3816177.39 sq. mtrs.

15.

On behalf of the State Government various affidavits have been filed. The

first such affidavit dated 30.4.2008 was filed by Mr. Sudhakar Baburao Nangaure,
Deputy Secretary, Urban Development department. It is contended that the PIL
petition is neither bona fide nor in public interest and is in fact clearly opposed to
and contrary to the interest of large sections of the people in the city of Mumbai. The

13
Government it is contended has reason to believe that the transferable Development
Rights in Mumbai are concentrated in a few hands.

Such persons have virtually

formed a cartel as a result of which the prices of TDR have sky-rocketed to

astronomical proportions. Apart from FSI of 1.00 which is available for development
of the plot in the suburbs and extended suburbs, the plot can be alloted user of
additional FSI by way of TDR upto 1.00. Thus the total FSI that can be consumed
on a plot in the suburbs and extended suburbs is 2.00. By D.C.R. 34, additional FSI
of 1.00 TDR of which 0.8 can be used out of general TDR, i.e. TDR generated out of
any plot, that is, reservations etc. while the remaining 0.2 FSI can only be out of slum
redevelopment. Consequently the price of TDR is in the range of Rs.4000 to 5000/respectively per sq. ft. that is, far more than the prevalent rate of land itself,
particularly in the areas like Borivali, Dahisar and certain parts of eastern suburbs
like Bhandup, Mulund etc. This high price of TDR results in prices of flats being
correspondingly higher and as a result, the supply of affordable housing in the hands
of vast majority of people is hopefully inadequate. As a pragmatic economic policy
decision, the Government decided to make available additional 0.33 FSI, by way of
raising the FSI in the suburbs to 1.33 by bringing it on par with the provisional FSI in
the Island city.

This will immediately impact the TDR prices inasmuch as, the

prices at which the Government will make 0.33 FSI available will be substantially
lower than the prevailing TDR prices. This will have an immediate impact on the cost
of construction and consequently and inevitably on the price of flats and apartments.
Also charging

premium on additional FSI being granted by the Corporation will

generate funds, which will go to the special Fund Escrow Account and which will
be utilized for development of infrastructures in the city. It is therefore, set out that

14
there is no real change in using of additional FSI. In the additional affidavits filed
on 2.7.2008, dealing with the notification it was set out that the amendment does not
change the character of the Development Plan and it is part of regulatory regime.
The affidavit of 2.7.2008

deals with the notice of 11.7.2008 inviting public

objections. In the affidavit of 28.8.2008, the reason for issuance of notice under
section 37(1A) has been set out which arose on account of failure by the Planning
Authority to comply with the directions issued by the State Government under D.C.
Regulation 37. It is also pointed out that the notification will not increase stress on
infrastructure as additional 0.33 FSI

is within the overall FSI cap of 2, and there

will not be additional burden on the infrastructure.

Reference is made

to the

judgment of Janhit Manch Vs. State of Maharashtra 2007 (1) B.C.R. 329. where the
challenge to D.C.R. 34 as manifestly arbitrary and unreasonable and ultra vires was
rejected. The state by their affidavit in that petition had filed affidavit disclosing
that the infrastructure in the suburbs is sufficient to

bear utilization of TDR.

Reference is made to various projects initiated by the State for improving the
infrastructure. The last affidavit is dated 4.12.2009. It is set out therein that the
suggestions/objections received by the public were heard by the Deputy Director of
Town Planning,

Greater Mumbai, the officer authorized under Section 162 of the

M.R.T.P. Act. The officer after hearing the objections submitted a report to the
Government. On receipt of the report and after consulting the Director of Town
Planning and considering suggestions/objections received, the Government exercised
its powers under section 37(2) sanctioning the modification. The notification does not
change the character of the plan and is permissible under the Act and is an exercise in
subordinate legislation. The notification is not a wholesale replacement of the D.C.

15
Plan. It is an alternate source of 0.33 FSI within the overall cap of 2.00 FSI which
already prevails. It is also set out that the carrying out environment impact study by
involving experts is not a sine qua non for modification under Section 37 of the said
Act.

Adequate resources are available for providing public amenities and

maintenance and improvement of area.

There is a provision of additional FSI for

educational, medical and hotel building subject to payment of premium which is

shared equally between Government and the Planning Authority.

It was felt

necessary to levy premium on extra FSI in suburbs also. It is shared between

Government of Maharashtra and Municipal Corporation

of Greater Mumbai on

50-50 basis. The Municipal Corporation of Greater Mumbai can utilize the amount
for implementation of Development plan and infrastructure.

16.

Various interveners were allowed to intervene amongst them are the

Maharashtra Chamber of Housing Industries, a representative body of the

Developers engaged in housing real estate development in the city of Mumbai. Its
members it is set out are accountable for setting up 80 to 90% of the houses/flats in
the city of Mumbai and its vicinity. The objections have been set out. The PIL it is set
out is a motivated litigation seeking to serve their own private interest and of certain
other persons which can only be persons dealing in TDR which TDR had been
cartelized till now. The

concept/principle for the introduction of the impugned

notification by Respondent Nos. 1 and 2 is to charge a premium for 0.33 FSI which
premium is to be utilized exclusively for the effective implementation of the
development plan by the Planning Authorities in the State of Maharashtra as well as
the city of Mumbai. This will reduce the financial burden of Respondent No. 2 who

16
would otherwise be required to pay cash from its own coffers for implementation of
the Development plan and other such vital infrastructure projects.

By the

notification Respondent No. 1 expects to collect approximately Rs.4,000 Crore this

year itself, which will provide a huge boost to the infrastructure in the city.

The

impact of the impugned notification will result in reduction of the prices of flats,
ease the process of construction, increase the pace of construction and consequently
the availability of flats in Mumbai and implementation of the several development
plans and infrastructure projects in the city.

17.

In the various replies and rejoinders filed by the Petitioners in the PIL, they

have dealt with the various contentions and have also made specific reference to the
Budget speech of the Finance Minister for the year 2008-09. It is further set out that
the additional outlay amounting to Rs.1400 crore as mentioned earlier in the budget
proposal would be met through premium on account of additional FSI of 0.33 in
Mumbai Suburban District, better tax collection and administration as well as
through additional resource mobilization proposal to which we will revert. Para No.
137.3 comes under the heading Creation of the Minority Development Department
in the State Government and in Para 137.2 it is then set out that an outlay of Rs.100
crore has been proposed for the minority welfare schemes for the year 2008-09.

18.

We may refer to some of the provisions of M.R.T.P. Act. Under Section 2(2)

amenity has been defined and reads as under :

amenity means roads, streets, open spaces, parks,
recreational grounds, play grounds, sports complex,

17
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 right has been defined in section 2(9A) and which reads
as under :
Development right means right to carry out
development or to develop the land or building or both
and shall include the transferable development right in
the form of right to utilise the Floor Space Index of
land utilisable either on the remainder of the land or
partially reserved for a public purpose or elsewhere, as
the final Development Control Regulations in this
behalf provide.
Section 37(1) with sub sections 37(1A) and 37(2) read
as under :
37. Modification of Final Development Plan. (1)
Where a modification of any part of or any proposal
made in a final Development Plan is of such a nature
that it will not change the character of such

18
Development plan, the Planning Authority may, or
when so directed by the State Government shall, within
ninety days from the date of such direction, publish a
notice in the Official Gazette and in such other manner
as may be determined by it, inviting objections and
suggestions from any person with respect to the
proposed modification not later than one month from
the person with respect to the proposed modification
and not later than one month from the date of such
notice,

and shall also serve notice on all persons

affected by the proposed modification and after giving

a hearing to any such persons, submit the proposed
modification (with amendments, if any), to the State
Government for sanction.
(1A) If the Planning Authority fails to issue the notice
as directed by the State Government, the State
Government shall issue the notice, and thereupon, the
provisions of sub section (1) shall apply as they apply
in relation to a notice to be published by a Planning
Authority.
..................................................................................
(2) The State Government may, make such enquiry as
it may consider necessary and after consulting the
Director of Town Planning by notification in the

19
Official Gazette, sanction the modification with or
without such changes, and subject to such conditions
as it may deem fit, or refuse to accord sanction. If a
modification is sanctioned, the final Development
Plans shall be deemed to have been modified
accordingly.

Thus under Section 37, power has been conferred on the Planning authority or
on direction by the State Government to commence the process of modification of
the final development plan, which

will not change the character of such

development Plan. In the event the Planning authority fails to comply with the
directions issued by the State Government then under section 37(1A) the State
Government can issue notice

and thereupon provisions of section 38(1) will apply

as they apply in relation to the notice to be published by the Planning authority.

Thereafter under section 37(2) the State Government after making such enquiry and
after consulting the Director of Town Planning by notification in the official gazette
sanction the modification with or without such changes and subject to such
conditions as it may deem fit.

19.

Under Section 162, on the Development authority failing to exercise or

perform the duty imposed, under any of the provisions of the Act, the State
Government or person or persons appointed in this behalf by the State Government
may exercise such powers and perform such duties. Section 158 is the power to
make rules for the purpose of the Act. Section 159 is the power to frame regulations.

20
Chapter VIA was inserted by Maharashtra Act 16 of 1992. Section 124A provides
for levy of development charge or use or change of use of any land or building or
development of any land or building, for which permission is required under the Act,
at the rates specified by or under provisions of this Chapter.

Under Section 124B

for the purpose of assessing the development charge, the user of the land and
building shall be classified under various categories. Under Section 124J a
development fund has to be set up for development and all moneys received by the
authority as development charge together with interest thereof, if any, under this
chapter shall be credited to the Development fund.

The moneys

credited, from

time to time, to the said fund shall be applied only for the purposes of providing
public amenities in the area and maintenance and improvement of the area under the
jurisdiction of the said authority.

20.

With that background, we may now consider the various contentions raised.

Before that the preliminary objections raised on behalf of the State Government can
be dealt with. It is submitted that the PIL Petitioners have made out no case
whatsoever in public interest. There are no averments much less material placed by
the Petitioner to enable the court to go into the issue sought to be raised.

It is

based on bald averments and lacking in material particulars and the pleas ought not
to be examined in the absence of detailed facts and figures. PIL can be filed only
by a third party which is an aggrieved party. The Petitioners has set out and
challenged constitutional validity of the modifications. The Supreme Court it is
submitted in Guruvayoor Vs. C.K. Rajan 2003 (7) SCC 546 has held that. In so far
as Writ Petition No. 1831 of 2008 the Petitioners are not at all affected, warranting

21
interference by this court under Article 226 of the Constitution.

The provisions

relating to TDR has not been affected in any way. The Government it is set out
never promised that till entire slum TDR is exhausted the Government would not
or planning authority would not increase the FSI. Similarly providing another source
of FSI without effecting the provisions relating to TDR in any way cannot give any
cause of action to the Petitioner. The Petitioner

it is set out is ex facie a

representative of the holders of the slum TDR. PIL Petition is therefore, not bona
fide and further the Petitioners do not disclose any cause of action warranting
interference under Article 226.

21.

In so far as the PIL Petition is concerned, various contentions have been

raised including violation of Articles 14 and 21 of the Constitution of India by the

proposed notification which amends D.C. Regulation 34. Apart from that, in writ
petition No. 2443 of 2008, it is contended on behalf of the Petitioners that they are a
partnership firm of M/s. Real Street Developers Pvt. Ltd. DB Reality and Sumer. It
is in the process of undertaking slum rehabilitation scheme on the property at
Chandivali and has invested substantial amounts. The Petitioners have also raised a
ground that before carrying out amendment, the impact assessment ought to have
been carried out in respect of the increase of FSI of 0.33% or

environment

requirement in the nature of infrastructure. The notification it is set out is

with a

view to generate funds by sale of 0.33 FSI which amounts to abuse of powers. At
any rate it is ultra vires the M.R.T.P. Act and powers vested therein. The Petitioners
originally in ground (K) had set out that

under section 154 of the M.R.T.P. Act,

1966 the State has no power to impose any tax, fee or premium including to amend

22
DC Regulations 1991 by proposing charging of premium for sale of 0.33 FSI and any
such direction it was contended is illegal and ultra vires the provisions of M.R.T.P.
Act, 1966. Article 14 has also been invoked on several grounds.

We may gainfully refer to some of the observations in the Judgment in

Bombay Dyeing Co. Ltd. Vs. Bombay Environmental Action Group (2006) 3 SCC
434 :

63. While entertaining a public interest litigation of

this nature several

aspects of public interest being

involved, the Court should find out as to how greater

public interest should be subserved and for the said
purpose a balance should be struck and harmony
should be maintained between several interests such as
(a) consideration of ecology; (b) interest of workers (c)
interest of public sector institution, other financial
institutions, priority claimed due to workers; (d)
advancement of public interest in general and not only
a particular aspect of public interest; (e) interest and
rights of owners; (f) the interest of a sick and closed
industry; and (g) schemes framed by BIFR for revival
of the company.
64.

The courts in doing so would have to take into

consideration a large number of factors, some of which

23
may be found to be competing with each other. It may
not be proper to give undue importance to one at the
cost of the other which may ultimately be found to be
vital and give effect to the intent and purport for which
the legislation was made.

65.

Scope of Public Interest Litigations in view of

several decisions of this Court has its own limitations.

We would hereinafter notice a few of them.

66.

In

Raunaq

International

Ltd.

v.

I.V.R.

Constructions Ltd. & Ors. [(1999) 1 SCC 492], this

Court highlighted that the public interest litigation
should not be a mere cloak.

The court must be

satisfied that there is some element of public interest

involved in entertaining such a petition. The court
also cautioned that before entertaining a writ petition
and passing an interim

order overwhelming public

interest should be taken into consideration therefor. It

was further observed :
" It is important to bear in mind that by court
intervention, the proposed project may be considerably
delayed thus escalating the cost far more than any
saving

which the court would ultimately effect in

24
public money by deciding the dispute in favour of one
tenderer or the other tenderer. Therefore, unless the
court is satisfied that there is a substantial amount of
public interest, or the transaction is entered into mala
fide, the court should not intervene under Article 226
in disputes between two rival tenderers."

67.

In Ashok Lanka v. Rishi Dixit [(2005) 5 SCC

598], this Court opined:

" It is well settled that even in a case where a

petitioner might have moved the Court in his private
interest and for redressal of personal grievances, the
Court in furtherance of the public interest may treat it
necessary to enquire into the state of affairs of the
subject of litigation in the interest of justice."

68.

This was also the view taken in Guruvayoor

Devaswom Managing

Committee v. C.K. Rajan

[(2003) 7 SCC 546 at para 50], Shivajirao Nilangekar

Patil v. Dr. Mahesh Madhav Gosavi [(1987) 1 SCC
227] and Chairman & MD, BPL Ltd. v. S.P. Gururaja
and Others, (2003) 8 SCC 567.

25
69.

In K.K. Bhalla v. State of M.P. & Ors. [2006

(1) SCALE 238], it was stated:

"The Appellant has brought to the notice of the High
Court that a malady has been prevailing in

the

department of the State of Madhya Pradesh and the

JDA. It may be true that the Appellant did not file any
application questioning similar allotments but it is
well-settled if an illegality is brought to the notice of
the court, it can in certain situations exercise its power
of judicial review suo motu"

70.

This Court times without number, however, has

laid down the law as regard limited scope of public

interest litigation.

It sounded note of caution for

entertaining public interest litigation in service matters

[See Dr. B. Singh v. Union of India and Others, (2004)
3 SCC 363], in questioning the validity or otherwise of
a statute or when a statute is enacted in violation of the
direction of a superior court [See Ashok Kumar Thakur
v. State of Bihar & Ors. [(1995) 5 SCC 403]. But, we
cannot also shut our eyes to the fact that this Court has
entertained a large number of public interest litigations
for protection of environmental and/ or ecology.

26
[See .M.C. Mehta group of cases and T.N. Godavarman
Thirumulpad v. Union of India and Others, (2006) 1
SCC 1]

71.

Public interest litigations, thus, have been

entertained more frequently where a question of

violation of the provisions of the statutes governing the
environmental or ecology of the country has been
brought to its notice in the matter of depletion of forest
areas and/ or when the executive while exercising its
administrative

functions

or

making

subordinate

legislations has interfered with the ecological balance

with impunity. The High Court of Bombay, therefore,
cannot be faulted with for entertaining the writ petition
as a public interest litigation.

In our opinion,

in order to entertain a petition, the answer is not whether

the petition ultimately succeeds. The question that this court is called upon to answer
is whether the issues raised by the Petitioners have prima facie to be considered.
Once we hold that there are issues which have to be answered, and in our opinion,
Petitioners in both the Petitions have raised

issues involving both Articles 14, 21

and also the power of the State Government and or the Planning Authority to charge a
premium for sanctioning 0.33 additional FSI in the suburbs and extended suburbs.
Merely because the petitions in the PIL Petition may be to an extent espousing the

27
cause of the holders of slum T.D.R. that by itself can be no ground to hold that the
Petitioners in PIL Petition lack bona fides. The Petitioners in the other Petition are
aggrieved

since they have invested moneys in a S.R.A. Scheme and legitimately

expected to make profit from it. They are entitled to contend that the action of the
Government to charge F.S.I. and thereby profit itself is ultra vires the Act. The
Petitioner in both the Petitions have locus standi. Apart from that PIL being nonadversial litigation public interest must prevail. Mere absence of some pleadings or
some grounds will not prevent a constitutional court from examining the real issues
in controversy at the instance of public spirited citizens. See Janhit Manch (supra).

22.

We have heard the learned counsel for the parties and Interveners. We have

referred to the pleadings to the extent that they are necessary for disposing of the
controversy arising in these petitions. A large number of judgments have been cited
before us. Oral arguments have been canvassed and written submissions submitted.
We propose to consider the judgments to the extent necessary for deciding the
controversy which has arisen in these two petitions.

23.

The first question that arises is whether the notification

amending

Regulation 32, to increase FSI on the plot from 1 to 1.33 can be said to change the
character of the development plan.

On behalf of the State Government it was sought to be contended that while

considering notification under section 37, section 22A cannot be considered as
section 22A applies while considering section 29 which is modification made after

28
preparing and publishing notice of the draft development plan and section 31 on
sanctioning a draft development plan. Section 22A arises when modification is of a
substantial nature. In our opinion, however, that issue may not be any longer res
integra considering the observations by the Supreme Court in Bombay Dyeing
(supra) where the Supreme Court observed as under :

It is axiomatic that for the said purpose section 37 of

the M.R.T.P. Act must be read

in the

context of

Section 22A which provide for substantial changes.

Our attention is invited to Section 22A (f) wherein it is set out that alterations
in the Floor Space Index beyond ten per cent of the floor space index prescribed in
the Development Control Regulations prepared and published under Section 26 or
published with modifications under section 29 or 31, as the case may be. It is sought
to be pointed out that the effect of granting additional 0.33 FSI will result in increase
of 33% and this would directly amount to substantial change and consequently
change the character of the plan.

From the affidavits filed by the Planning Authority

and the State Government, it is clear that in the suburbs and extended suburbs apart
from

FSI of 1.00

which is available on the plot, the said plot can be

burdened/loaded with additional FSI of 1.00 in the form of TDR. TDR certificates
are issued under various provisions of D.C. Regulations like Slum TDR, Road TDR,
Reservation TDR, Heritage TDR and the like. However, out of the additional FSI of
1.00 it is mandatory to use 0.2 from Slum TDR. It is open to the developer/builder
also to use the entire TDR from slum rehabilitation. In other words, though

29
considering section 22A (f) technically though the

amendment which provides for

increase of 0.33% FSI may amount to amendment of substantial nature, however

considering the expression change the character of the plan, as additional FSI of 1
in form of TDR was available before the modification, to be used on the plot, in our
opinion, it cannot be said that the same amounts to change of character of the plan.
The Supreme court while interpreting words change in character of the plan in
Bombay Dyeing (supra) observed that the question would be as to whether the
change in character is referable to alteration of the entire plan. Change in character
would necessarily mean that change in the basic feature thereof of the entire plan
and the same has to be read in totality. The question is whether

a radical

transformation has taken place to its basic features resulting in the plan losing its
original identity. Reference was also made to the judgment in Sadanand Varde and
Ors. Vs. State of Maharashtra 2007 BCR 1 810 to contend that in that case validity
was upheld as the court arrived at the finding that granting additional FSI to specific
building/plots cannot be said to change character of the plan. The plan before the
present modification had already been modified permitting use of additional FSI of 1
by way of T.D.R.

Those modifications to the plans were not challenged or if

challenged, the challenge was rejected. The only change by the present modification
is that the FSI is generated on the same plot instead of the plot being loaded with
FSI generated on another plot. There is therefore, no wholesale replacement in the
character of the plan. In our opinion, therefore, this argument will have to be
rejected.

24.

It is next submitted that while carrying out the amendment, Respondents

30
failed to comply with the requirements of Section 37 of the M.R.T.P. Act. This
notification of 3.10.2008 therefore, is ultra vires. The argument proceeds on the
following contentions which are summarized.

1. The State Government merely on failure by the planning authority to

issue notice in terms of directions under section 37(1) could not have
excluded the Planning authority from hearing the objections and
submitting the report which has to be submitted by the Planning
Authority alone with their

suggestions or the objections to the

modifications.
2. While issuing notice under Section 37(1A) the Government would not
have powers to alter or amend any direction as given in order dated
10.4.2008. The notification issued on 11.7.2008 is different from the
notification dated 10.4.2008 and this is contrary to Section 37(1A)
of the Act.

In the alternative, if it is the case of the Government that the

12.5.2008 clarification as well as 5.6.2008 instructions to include further
items 11 to 13 in notice of 11.7.2008, to invite suggestions/objections
are also directions and thereby 10.4.2008 directions are modified, then in
that event, powers of section 37(1A) could not have been exercised prior
to expiry of 90 days therefrom i.e. 90 days from 5.6.2008, which was
available to M.C.G.M. from the date of direction.
3. The fact that immediately on expiry of 90 days from 10.4.2008 new

31
notification was issued also confirms that the entire exercise was an after
thought and Government even did not wait to see whether M.C.G.M. is
acting on its directions or not. Considering section 37, it would be clear
that the Planning Authority is an expert on the subject. Its views being
relevant, bypassing that authority would again disclose arbitrariness. The
Municipal Corporation it is submitted is the local body which has special
knowledge of the local infrastructure and facilities. It consists of elected
members and

it is in

better position to understand the problem or

objection and or impact of the notification. The statutory role of the

Corporation could not have been dispensed with. When the Statute
requires certain procedure to be followed, the said must act strictly in
accordance with the manner prescribed and

not in other manner.

Reliance for that purpose has been placed on several judgments. We may
gainfully reproduce the following paragraphs from State of Punjab
Versus Surjeet Singh Grewal 2007 (6) SCC 292 :
39.

The next important finding recorded by

the High Court is that the provisions of the Act of 1995

were not followed in specifying and declaring the site
for new town for which the land was sought to be
acquired.

We have earlier considered the various

provisions of the Act of 1995 and we concur with the

finding of the High Court that in specifying and
declaring the planning area, namely the site for a new
town, the various provisions of the Act were not

32
complied with.
44.

The argument that the Government is the final

authority and was not bound to consult the Board

cannot be countenanced since that is in the teeth of the
mandatory provisions of Section 56 of the Act. The
Legislature having enacted a statute and expressly
provided a procedure for declaration of a planning
area, which involved consideration of objections and
suggestions from the public and publication of the
declaration in the Official Gazette, the State could not
have adopted a different procedure in breach of express
provisions, completely ignoring the existence of the
Board, the apex authority under the Act, and
obliterating the provision for public participation in the
matter of declaring a planning area.
45.

We have, therefore, no hesitation in holding that

the declaration of the planning area, a site for a new

town, was never validly made by the competent
authority after following the prescribed procedure and,
therefore, there was in law no validly selected site for a
new town, nor a validly declared planning area.
Consequently, there was no justification for acquisition
of land to set up a new town. The public purpose
stated in the impugned Notifications was non-existent

33
in view of the fact that there was no planning area
validly declared by the competent authority for the
development of which any land was required. Section
42 which provided for acquisition of land under the
provisions of the Land Acquisition Act could not,
therefore, be invoked, since Section 42 came into
operation only when land was required for the purposes
of the authority under the Act of 1995, and not for any
other purpose.

In Nazir Ahmed Vs. King Emperor LXIII Indian Appeals 372, it has
been observed therein as under :

The rule which applies is a different and not

less well recognized rule-namely that where a power is
given to do a certain thing in a certain way the thing
must be done in that way or not at all. Other methods
of performance are necessarily forbidden.

Reference was also made to Meera Sahni Vs. Lt. Governor of Delhi
(2008) 9 SCC 177 and the following observations made therein :
35.

It is by now a certain law that an action to be

taken in a particular manner as provided by a statue,

must be taken, done or performed in the manner

34
prescribed and in no other manner. In this connection
we may appropriately refer to the decision of this Court
in Babu Verghese v. Bar Council of Kerala, (1999) 3
SCC 422, wherein it was held as under:

31. It is the basic principle of law long

settled that if the manner of doing a
particular act is prescribed under any
statute, the act must be done in that
manner or not at all. The origin of this
rule is

traceable to the decision in

Taylor v. Taylor (1875) 1 Ch D 426

which was followed by Lord Roche in
Nazir Ahmad v. King

Emperor AIR

1936 PC 253 who stated as under:

"Where a power is given to do a

certain thing in a certain way, the thing
must be done in that way or not at all."

32. This rule has since been approved by this Court in

Rao Shiv Bahadur Singh v. State of V.P. AIR 1954 SC
322 and again in Deep Chand v. State of Rajasthan AIR
1961 SC 1527. These cases were considered by a three-

35
Judge Bench of this Court in State of U.P. v. Singhara
Singh AIR 1964 SC 358 and the rule laid down in
Nazir Ahmad case (supra) was again upheld. This rule
has since been applied to the exercise of jurisdiction by
courts and has also been recognized as a salutary
principle of administrative law.

36.

The Registering Officer who is required to

register a document whereby the land is purported to

be transferred by sale, mortgage, gift, lease or
otherwise was statutorily under an obligation not to
register any such document unless the person seeking
to transfer the land produces before such registering
officer a legal, valid and statutory permission in
writing of the competent authority for such transfer.
The aforesaid exception provided in the Delhi Lands
Act for grant of permission despite acquisition is a
statutory exception and should be construed strictly in
the light of the said provisions, namely, in the light of
provisions of Sections 5 and 8 of the Delhi Lands Act.

37.

In the sale deeds referred to and relied upon by

the appellants it was stipulated and mentioned that no

notifications under Sections 4 and 6 of the Land

36
Acquisition Act have been issued in relation to the land
in question prior to the said alleged transfer. The said
transfer is on a wrong representation of material facts
and in fact on a misrepresentation. In the present case
the registering officer appears to have registered the
sale deeds illegally and without jurisdiction, as in our
considered

opinion,

none

of

the

pre-requisite

conditions laid down under Sections 4, 5 and 8 of the

Act, which are required to be strictly complied with for
obtaining permission to sell or transfer and also for
registering the said documents was complied with, as is
required to be done.

38.

It is, thus, established from the record placed

before us that neither any proper application was made

either by the predecessors in-interest of the appellants
or by the appellants themselves, as envisaged under
Sections 4 and 5 of the Delhi Lands Act, nor any valid
and legal permission was granted to the appellants by
the competent authority under the provisions of the
aforesaid Act. The transfers made in favour of the
appellants by the original land holders by execution of
the sale deed, therefor are illegal and without
jurisdiction. We have no hesitation in our mind in

37
holding that no title could be conveyed or could pass to
the appellants on the basis of such transfer and also that
consequential mutation in favour of the appellants for
the above reasons is found and held to be without
jurisdiction.
4. It is not open to the State Government to reject the
objections without giving reasons.
5. There was undue hurry and that would disclose non
application of mind and a pre-determined result. All
the contentions, it is submitted will attract Article 14
of the Constitution of India for failure

to comply

with the procedure set out in Article 14.

25.

The scope of Section 37 came up for consideration in PMC Versus

PromotersandBuildersAssociationandAnother(2004)10SupremeCourt
Cases796.InPara5itisobservedasunder:

Making of DCR or amendment thereof are

legislativefunctions.Therefore,section37hasto
beviewedasrepositoryoflegislativepowersfor
effecting amendments to DCR. That legislative
power of amending DCR is delegated to State
Government.Aswehavealreadypointedout,the
true interpretation of section 37(2) permits the

38
Stategovernmenttomakenecessarymodifications
or put conditions while granting sanction. In
section37(2),thelegislaturehasnotintendedto
provide for a public hearing before according
sanction. The procedure for making such
amendmentis provided insection37. Delegated
legislation cannot be questioned for violating
principles of naturaljusticeinits making except
when the statute itself provides for that
requirement.Wherethelegislaturehasnotchosen
toprovideforanynoticeorhearing,noonecan
insist upon it and it is not permissible to read
natural justice into such legislative activity.
Moreover,aprovisionfor'suchinquiryasitmay
consider necessary' by a subordinate legislating
body is generally an enabling provision to
facilitatethesubordinatelegislatingbodytoobtain
relevantinformationfromanysourceanditisnot
intendedtovestanyrightinanybody.(Unionof
India and Anr. v. Cynamide India Ltd and Anr.
(1987) 2 SCC 720 paragraphs 5 and 27. See
generallyHSSKNiyamiandAnr.v.UnionofIndia
andAnr.(1990)4SCC516andCanaraBankv.

39
DebasisDas(2003)4SCC557).Whileexercising
legislative functions, unless unreasonableness or
arbitrarinessispointedout,itisnotopenforthe
Courttointerfere.(SeegenerallyONGCv.Assn.of
NaturalGasConsumingIndustriesofGujarat1990
(Supp)SCC397)Therefore,theviewadoptedby
theHighCourtdoesnotappeartobecorrect.

FromtheabovejudgmentitisclearthatmakingofDCRoramendment
thereof are legislative functions which power is delegated to the State
Government.Theenquirycontemplatedisanenablingprovisiontofacilitate
the subordinate legislating body to obtain relevant information from any
sourceanditisnotintendedtovestanyrightinanybody. Asobservedin
IndianExpress(Bombay)Pvt.Ltd.AndOthersVs.UnionofIndiaandOrs,
1985(1)SCC641whereinthecourtheldthatsubordinatelegislationcannot
bequestionedonthegroundofviolationofprinciplesofnaturaljusticeoron
thegroundthatcertainmatterwasnottakenintoconsideration.Thecourt
thenobservedasunder:
Adistinctionmustbemadebetweendelegation
ofalegislativefunctioninthecaseofwhichthe
question of reasonableness cannot be enquired
into and the investment by statute to exercise
particular discretionary power. In the latter case

40
thequestionmaybeconsideredonallgroundson
which administrative action may be questioned,
suchas,nonapplicationof

mind, taking

irrelevantmatters intoconsideration, failure to

takerelevantmattersintoconsideration,etc.etc.
On the facts and circumstances of a case, a
subordinatelegislationmay

bestruckdown

asarbitraryor contraryto statuteif itfailsto

takeintoaccountvery vital facts which either
expresslyorbynecessaryimplication
required

are

tobe taken into consideration by

thestatuteor,say,theConstitution.Thiscanonly
bedoneonthegroundthatitdoesnotconformto
thestatutoryorconstitutionalrequirements

or

thatitoffendsArticle 14 orArticle19 (1)

(a)of

the Constitution. It cannot, no

doubt,be

donemerelyonthegroundthatit

is notreasonable orthatithasnottakeninto
account

relevantcircumstances

which

theCourtconsidersrelevant.

Thechallengetodelegatedlegislation,wemayreiterate,canonlybe
onthegroundofmanifestarbitrariness,unreasonableness,ultraviresorbeing

41
violativeofthefundamentalrights.

26.

InthecontextofSection37,wemaynowexaminethecontentionsas

raisedonbehalfofthePetitioners.Beforethatwemayadverttotheobjects
andreasonsclausebywhichamendmentwasaffectedandsection37(1A)was
introduced.Clause3thereinsetsoutthatitwasdonesothatsometimelimit
isprescribed,withinwhichthePlanningAuthoritymaypublishnoticeandto
providethattheStateGovernmentitselfshalltakeaction,iftheplanning
authorityfailstopublishnoticeasdirectedtodobytheGovernment.Thereis
nodisputethattheCorporation(PlanningAuthority)failedtocomply with
thedirectionsissuedundersection37oftheAct.Oncetherebeingfailurethe
State Government itself can issue notice. It is not open to contend that
becausethesubordinatelegislativebodyexerciseditspowers,whichitcould
do on failure by the Planning authority, that it discloses a preplanned
decisiontomodifytheplan.OncetheLegislaturehasprovidedatimeframe
andtheplanningauthorityfailedtocomplywiththedirections,withinthe
timeframe,theStateGovernment,couldexerciseitspowersandnomotive
canbeaccordedforexercisingthesepowers.Theplanningauthorityonthe
StateGovernmentissuingnoticeisdivestedofitspowerstoservenoticeofthe
proposedmodificationandalsoofhearingthepartieswhofiletheirobjections
and submit a report considering section 37(1A). The power to make
subordinatelegislationundersection37isnotinthePlanningAuthoritybut
intheStateGovernment.IsitopentothePetitionerstocontendwhenthe

42
Planning authority has not raised any objections, to contend that the
Planning Authority had to hear the objections andsubmitreport. Inthe
instantcase,theplanningauthorityitselfhasnotraisedanyobjection.Our
attentionwasinvitedtosection37(1A)(B)tocontendtheroleofPlanning
authority.Inouropinion,oncetheplanningauthorityfailstocomplywiththe
directions,itindicatesthatitdoesnotproposetoissuedirection.Inthese
circumstances,theStateGovernment isnotlefthelpless.Thelegislation
under Section 162 of the M.R.T.P. Act has conferred power on the
GovernmentonfailurebythePlanningauthoritytoperformitsdutyeither
itselftoperformdutyorgetitperformedthroughanyotherperson.Inthe
instantcase thedutywasperformedthroughanofficer appointedbythe
StateGovernment.Thereportsubmittedbytheofficerisnotbindingonthe
State Government. Under Section 37(2) it can make enquiry as it thinks
necessaryandafter consulting thedirectorofTownPlanning,sanctionthe
notificationassetouttherein. Theduty undersection37isbasically to
collectmaterialandtosubmit reporttotheGovernmentonfailurebythe
planning authority. The officer concerned, steps into the shoes of the
PlanningAuthoritytodischargethedutiesofthatauthority.Inouropinion,
therefore,itcannotbesaidthattherehasbeenfailuretocomplywiththe
requirementundersection37(1)oftheAct.

27.

Itwasalsosoughttobecontendedthatondirectionissuedafter1st

noticetherebeingchangesinthesecondnoticeitwasnotwithinthetime

43
contemplatedundersection37fortheStateGovernmenttoexercisepowres
underSection37(1A).Inouropinion,suchchallengemustalsofail.Thesaid
challengeisbasedmerelyontheperiodwithinwhichnoticecanbeissued.
Petitionersinsuchcasemustshowtheprejudiceoccasionedtothem.Thisis
notthecasewherethecourtonfailuretocomplywiththeprocedurewould
holdthattheentireactionisultravires.Wemayforthatpurposegainfully
refertothejudgmentintheStateofU.P.Vs.HarendraAroraandOrs.2001
(6)SCC392.ReferencemaybemadetoPara13whichreadsasunder:
Thematter
another

may be examined from

view point. There may be cases

wherethereareinfractionsofstatutoryprovisions,
rulesand

regulations. Can it be said that

everysuchinfractionwouldmaketheconsequent
actionvoidand/orinvalid?

Thestatutemay

containcertainsubstantiveprovisions,e.g.,whois
the competent authority to impose a particular
punishment on a particular employee. Such
provision must be strictly complied with as in
thesecasesthetheoryofsubstantialcompliance
maynotbeavailable.Forexample,wherearule
specificallyprovidesthat thedelinquent officer
shallbegivenanopportunitytoproduceevidence
in support ofhiscaseafterthe close of the

44
evidence of the other side and if no such
opportunityisgiven,

itwouldnotbepossible

to saythatthe inquirywas notvitiated. Butin

respectofmanyproceduralprovisions,it would
be possible to apply the theory of substantial
complianceor

the test of prejudice, as the

casemay

be. Even amongst procedural

provisions,

theremaybe

some provisions

of a fundamental nature which have to be

compliedwith andinwhosecasethetheoryof
substantialcompliancemay notbeavailable,but
the question of prejudice may be material. In
respect of procedural provisions other than of a
fundamental nature, the theory of substantial
compliancewouldbeavailableandinsuchcases
objectionson

this score have to be judged

onthetouchstoneofprejudice.

The test would

be,whetherthedelinquentofficerhadordidnot
havea

fairhearing. InthecaseofRusselvs.

DukeofNorfolk&Ors.,1949(1)AllE.R.109,it
waslaiddownbythe Court ofAppealthatthe
principleofnatural justicecannotbereducedto
anyhardandfastformulaeandthesamecannot

45
beputinastraitjacketasitsapplicabilitydepends
uponthecontextandthefactsandcircumstances
of

eachcase.

It would thus be clear that where there has to be compliance of

proceduralprovisions,whatistobeappliedistheprinciple ofsubstantial
complianceorprejudice.Intheinstantcase,petitionershavebeenunableto
showanyprejudicethathasbeenoccasionedtothem.

Apart from that the Act itself takes care in case of such failure to
complyunderSection150oftheAct.Section150(d)and(e)provideforany
actdoneorproceedingstakenundertheActshallnotbequestionedonthe
groundmerelyoffailuretoservenoticeonanypersonwherenosubstantial
injusticehasresultedfromsuchfailureoranyomission,defectorirregularity
notaffectingthemeritsofthecase.Thiscourthadoccasiontoconsiderthat
issue under Section 150(d) in the case of Bharat Petroleum Vs. State of
Maharashtra2009(4)Bom.C.R.616.Inthatcase,itwascontendedthatthere
wasnonoticeservedonthepersonsaffectedbytheproposedmodifications.
Thecourtheldthatthoughthepersonaffectedbytheproposedmodification
wasentitledtoindividualnotice,failuretoservenoticewouldnotvitiatethe
entire action unless such person satisfies the court that it has resulted in
substantialinjustice.Intheinstantcase,nosuchpleahasbeenraised.Inour
opinion,therefore,thecontentiononthisgroundwillalsohavehavetobe

46
rejected.
28.

WearealsonotimpressedwiththeargumentbasedonArticle243W

read with Article 243 ZF. Article 243W itself states that subject to the
provisionsoftheConstitution.TheM.R.T.P.Actisaneconomicandsocial
legislation falling in item 20 of List III. See Maneklal Chotalal Vs. M.C.
MakwalaAIR1967SC373.UnderSection37,the subordinatelegislative
bodyistheStateGovernmentconsideringsection37(2).UnderSection37(i)
the planning authority can move to amend the notification, gather
materialandsubmititsreporttotheStateGovernment.Section37devolves
poweronthemunicipalitieswhichisalsotheplanningauthority.Therefore,
section37isinconformitywiththeconstitutionalmandate.Tryingtoread
Section37(1)and37(1A)bylookingattheprovisionsofsection37(1AA)
would be of no assistance. What has to be considered is the legislative
scheme.AlthoughtheM.R.T.P.Act has conferredpowertocommencethe
preparationonthePlanningauthoritytopreparetheD.C.Plan,ultimatelyit
istheStateGovernmentwhichhasbeenconferredthepowertosanctionthe
planormodifytheplan.Iftheactitselfprovidefor situations,whenthe
planningauthorityfailstocarryoutthe directions,itcannotbecontended
thattheunwillinghorseshouldstillbepartoftheconsultationprocess.On
failure to exercise power and comply with its duties, the legislature has
created an alternative mechanism for performance of that duty. That
argumenthasalsotherefore,toberejected.

28A. The argument that the reasons had to be given, why the

47

objections were rejected in our opinion, is devoid of merits. A

legislativebodydoesnothavetodisclosereasonsastowhythelawhas
beenenacted.Thatisanexerciseofitssovereignpower,exercisedby
itselforthroughthedelegate.Anexercise in subordinatelegislation
moresoinsocioeconomicplanning,nodoubthastohaveacleannexus
withthecivicamenities.Wehavealsotobearinmindthat itisthe
Legislativethathastoexerciseitswisdom.Ifthedelegatewasofthe
opinionthatthepriceofflatswasrisingbecauseofa cartelofT.D.R.
Holders,chargingexorbitantly,itisnotforthecourtstoexaminethat
wisdom. All that the court whilst examining such legislature will
examineiswhetheritismanifestlyarbitrary,unreasonable,ultravires,
theparentActorviolativeoftheFundamentalRights.Whileexamining
theconceptofunreasonablenessitmustbeunderstoodnotinasense
ofitnotbeingreasonablebutinasensethatitismanifestlyarbitrary.

29.

The next issue which we have to consider is whether the

amendment to the extent and as contended on behalf of the

petitionersthattherehasbeennoenvironmentalstudyundertakento
assesstheimpactwhichwillariseonaccountofthehugeFSIwhich
wouldbecomeavailableandthereforesuchamendmentisviolativeof

48

Article 14 and 21 of the Constitution of India. Considering the

materialsetoutinJanhitManch(Supra),itwascontendedthatthere
would be complete break down of sanitation, water requirement,
electricityandacutetrafficproblem.TheSupremeCourtinBombay
DyeinghasheldthatanymodificationoramendmentunderSection
37mustaddresstheenvironmentalconsequences.Intheinstantcase
theprocedureformodificationhasbeenfollowed.Themodification
doesnotsufferfromanymanifestarbitrarinessorviolativeofArticles
14and21.Furtherinouropinion,itisnotnecessarytoconsiderthe
variousjudgmentscitedatBaronbehalfofthepetitioner.Thisisnot
acasewhereadditionalFSImorethanwhatisalreadyavailablefor
developmentinthesuburbsandextendedsuburbsisbeingsanctioned
bymodification.Inthesuburbsandextendedsuburbsonaplotapart
fromFSIof1(one),couldbywayofTDRloadtheplotwithwhatis
equivalenttoadditionalFSIof1(one).Themodificationtotheplan
andamendmentstotheregulationwhichprovidedfortheadditional
FSIof1arenotthesubjectmatterofachallengeinthesepetitions.
We may, only, note that this aspect had been considered in Janhit
Manch(Supra), wherethisCourtnotedthatthesuburbshaveaFSI
CAPof1.00.TheadditionalFSIof1.00canonlybefromHeritage
TDR,RoadTDR,andslumTDR.TheformorcolourofTDRdoesnot

49

matterWhatisrelevantisthegrant/useofadditionalFSIbywayof
TDR. The challenge on thatgroundwas rejected. This Court noted
thattheCourtsmustpresumethattheauthoritieswhowentintothe
issueofframingthedevelopmentplanand/ormodificationsthereto,
were guided by the provisions of the Act and have taken into
considerationtheprinciplesascontainedinMRTPActwhilemaking
subordinate legislation including environmental consultation. We
have earlier quoted the figure which would result in the 0.33 %
additionalFSIassumingonly50%couldbeused.Thisland,however,
could have already been loaded with additional FSI of 1.00. That
sufficientTDRmaynotbeavailablebasedonthematerialplacedis
no ground to hold that Article 21 is infracted. On the contrary, a
prudentowner,developer,builder,ifsuchapersoncanavailofFSIof
2willnotbe in ahurrytoconstructbyusing FSIof 1.33,thereby
depriving himself of more profits. For these reasons we do not
proposetoaddressourselvestothejudgmentscited.Ifthereisfailure
by the legislature or abuse or arbitrariness on the part of the
Executive, Courts, as sentinels of the Constitution are bound to
protecttheenvironment.Inthiscasethereisnofailureorabuse.The
onlymaterialproducedarethefiguresregardinggenerationofTDR,
useofTDRandtheextraFSIwhichwillbereleasedonthegroundof

50

themodification.Toanswertheargument,wehavetopresumethat
all buildings will be redeveloped or plots not built upon building
activitieswillcommenceimmediately.Thereisnosuchmaterial.The
Court in such cases must give judicial deference to legislative
judgmentmoresointhecaseofeconomicregulationtheninother
areaswherefundamentalrightsareinvolved.InsofarastheImpact
Assessment Report on Environment is concerned, if there be any
project which falls under the notification or the Rules, then that
projectwillhavetogetthenecessaryapprovalsundertheprovisions
oftheEnvironmentActandtheRulesframedthereunder.

30.

Thenextsubmissiontobeconsiderediswhethertheimpugned

Notificationdated3rdOctober,2008isillegalandultravirestheMRTP
ActandSection124Athereof,inasmuchasitpurportstochargea
premium ranging from Rs.7,000/ to Rs.23,000/ per sq. mtr. as a
conditionforsuchincreasedFSI.

The Finance Minister of the State of Maharashtra while

presenting the Budget Estimates for the year 20082009 proposed
increaseinFSIinMumbaiSuburbanDistrictandsoughttobringiton
parwithFSIpermissibleintheislandcity.Thebudgetspeechfurther

51

statesthatfortheadditional0.33FSI,premiumwouldberequiredtobe
paidonthebasisofmarketvalueasperthereadyreckoner.(Wemayat
thisstagepointout,thatinsofarastheislandcityisconcerned,forthe
FSIofmorethan1,i.e.balance0.33nopremiumisbeingcharged.)
UndertheheadingcreationoftheMinorityDevelopmentDepartmentin
theStateGovernment,thereisanoutlayofRs.1000croresforminority
welfareunderparagraph137.3,itissetoutthattheadditionaloutlay
amounting to Rs.1,400 crore for the year 20082009 will be met
throughthepremiumonaccountofadditionalFSIof0.33inMumbai
SuburbanDistrict,bettertaxcollection,etc.Subsequenttothebudget
speech,anotificationcametobeissuedon10th April,2008increasing
the FSI in Mumbai Suburban District from 1.00 to 1.33 subject to
paymentofpremiumthereofandthatwassoughttobeputintoeffect
immediatelyinexerciseofpowersunderSection154oftheMRTPAct.
Anoticethereaftercametobeissuedon11th July,2008onfailureby
the Planning Authority to publish the notice regarding the proposed
modification.TheDeputyDirectorofTownPlanningwasappointedas
theOfficerunderSection37(1)readwithSection162oftheAct.

31.

Then came the impugned notification of 3rd October, 2008

sanctioningthemodificationproposedwithsomechangesasdescribed

52

intheSchedule.Wemayonlyreproducethefollowingportion:
Provided that FSI may be permitted to exceeded upto 1.33
subjecttofollowingconditions:
1)
Additional0.33FSIisoptionalandnontransferable.Itisto
begrantedasonapplicationandtobeusedonthesame
plot.
2)
ThetotalmaximumpermissibleFSI,with1.33FSI,Road
FSIandTDRshallberestrictedto2.00.
3)
AsperconceptofTDR,additionalFSIshallbepermissible
ongrossplotarea.
4)
Additional FSI available as per Regulation 33, shall be
relatedtobasicFSIof1.00only.
5)
Premiumshallbechargedforadditional0.33FSI,asper
the rates mentioned in Annexure. However, the
Governmentmayrevisetheseratesfromtimetotime.

32.

Onbehalfofthepetitioners,itissubmittedthatthepremiumor

charge/levied/recoveredundertheDevelopmentControlRegulation32
which constitutes subordinate legislation for the increased FSI from
1.00to1.33isnotapaymentunderacontractoravoluntarypayment.
The statutory Development Control Regulation 32 makes the use of
increasedFSIconditionalonthepaymentofpremiumasstipulatedin
the Schedule. The Government's contention that the charge of such
premiumdoesnotconstituterecoveryofataxorfeeaspaymentisnot
compulsoryandthepremiumispayableonlyifthecitizen/plotholder
choosestousetheextraFSI,isexfacieincorrectinlaw.
Onlybecausecitizen/plotholderisrequiredtopaythepremium

53

ifheusestheadditionalFSI,doesnotmakethepayment/stipulationof
levy of premium, optional, or a voluntary payment. Any statutory
regulation which makes any development of land by a plot holder
subjectto payment of developmentcharges or a statutory regulation
which permitted a cellular telephony company to erect a cellular
tower/receivingandtransmittingstationonrooftops,onpaymentof
premiumandprovidedforacompulsoryexactionbywayofafeeora
taxandrequiresauthorityinlawforitslevy/charge/recovery.Reliance
isplacedinthecaseofAhmedabadUrbanDevelopmentAuthorityv/s
Sharadkumar Pasawalla & Ors., (1992) 3 SCC 285 and Bharati
Televenturesv/sStateof Maharashtra, in (2007)4Mh.L.J.105. It
cannot be contended that such a premium charged from the citizen
underastatutoryregulation,isnotafeeorataxasthecitizenhasan
option/choicewhethertodevelophislandorwhethertoerectacellular
tower/base station on a rooftop. The fee is generally payable by a
citizenwhoavailsofservicesrenderedorwhogetssomespecialbenefit.
ThecontentionbytheStatethatnosuchpleahasbeenraised/takenin
the writ petition is not correct. In the objections filed before the
Governmentbythepetitioner'sAdvocate'sletterdated8thAugust,2008,
( W.P, No.2443 of 2008) it has been specifically contended that the
Governmenthadnopowertochargesuchpremiumbyplacingreliance

54

on the decision in Bharati Televentures v/s State of Maharashtra

(supra). Ground(k)ofthepetition,itissubmitted,doesnotrestrict
itselftosection154butspecificallyraisesanissuethattheamendment
effectedtotheDevelopmentControlRegulationsproposingtocharge
premium for such FSI was illegal and ultra vires the MRTP Act.
Similarlyanadditionalgroundisraisedby(ff).Inaddition,itisfurther
submittedthatthereisnopowervestedintheGovernmentunderthe
MRTP Act to levy a premium or charge to the owner for his own
property,namelyFSI.TheonlypowerisSection124AoftheMRTPAct.

33.

On the other hand, on behalf of the State Government, it is

submittedthatneitherthepublicinterestlitigationpetitionernorthe
writpetitionercanbeapersonaggrievedbythepremium.Thepublic
interest litigation petitioner has a public interest at least and hence
wantsatotalbanof0.33FSI.Ifitisotherwisevalid,thepublicinterest
wouldbeinfavourofchargeofpremiumwhichwillbeusedtoaugment
infrastructure. Hence, petitioners have no locus to challenge the
charging of premium as they have not suffered any legal injury on
accountofthepremium.Relianceisplacedonseveraljudgments.Apart
from that,itis submittedthatthe ground(ff)has notbeenraisedin
eitherofthepetitions.InsofarasthegroundinWritPetitionNo.2443

55

of2008isconcerned,itissubmittedthatitisageneralgroundwithno
reference whatsoever to charging of the premium. The premium
chargedistraceabletotheStatepowertoimproveconditionsaspartof
itstownplanningfunctionandcanbetracedtoSection22(m)ofthe
Act.RelianceisplacedonTrishalIndustriesVs.StateofHaryana(2006)
144PLT222.

34.

OnbehalfoftheMunicipalCorporationofGreaterMumbai,itis

submittedthatclause(m)ofSection22oftheAct,empowerstheState
Government to regulate the grant of FSI for economic and social
planningoftheCity.ItissubmittedthatthelearnedCounselforthewrit
petitionerhasconcededthattheStateGovernmenthasthepowerto
regulate the grant of FSI but has contended that the charge for
regulatingmustbefortheadministration/administeringtheRegulation.
Thepetitionerhasnowherestatedthatthechargeexceedsthecostsof
administeringtheRegulation.Judicialnoticecanbetakenofthefact
thatthousandsofcroresofrupeesarespentbythePlanningAuthority
and the State Government to provide infrastructure such as water,
drainage, roads, parks, parking places, gardens, schools, etc. The
concept of taking premium by giving extra concessions to the
developersalreadyexistsintheDCRegulations.

56

35.

On behalf of the Maharashtra Chamber of Housing Industry

IntervenorandotherIntervenors,itissubmittedthatunderEntry20of
ListIII,therelevantentryisEconomicandSocialPlanninganditis
competentfortheStateLegislaturetomakealaw.Thepremiumsought
tobechargedfor0.33FSIisafee.ThispoweroftheStateandthe
PlanningAuthorityundertheMRTPAct,arethepowerswhichareofa
regulatorynatureandakintopolicepowerandthereforeincludethe
power to levy fee. The manner in whichthe use of anylandfalling
within the area of any Planning Authority is to be regulated by a
developmentplaniscontemplatedbySection22oftheMRTPAct.By
virtue of Section 22(m), it would include a power to charge a fee
consideringthatitisapartofsupervisoryand/orregulatoryfunction
flowingoutofthepolicepoweroftheState.Itissubmittedthatthe
fee/premium that is sought to be charged is not in the nature of a
development charge as contemplated under Section 124A but a
regulatoryfeeinordertoregulatetheuseof0.33FSIwhichflowsout
oftheregulatorypowerconferredunderSection22(m)oftheAct.The
Regulation itself contemplates charging of fees by the Planning
Authorityforvariedanddifferentpurposesinexerciseofitsregulatory
power.TheDCRarepartofdelegatedlegislationandassuchlevyis

57

dulyauthorizedbylaw.In thealternative,itissubmittedthatifthe
Court comes to the conclusion that levy/premium is bad or without
authority,insuchanevent,thatpartoftheamendmentbecomesbad
andnottheimpugnednotificationinitsentirety.

36.

Beforedealingwiththeargument,attheoutset,wemaypoint

outthatwearenotimpressedwiththecontentionthatthepetitioners
havenotraisedthepleatochallengetheimposingofthefee.Inthe
public interest litigation petition there are specific grounds and
considering that the petitioner in the writ petition has also filed
objectionsandhavealsoraisedpleawhichhasbeenunderstoodand
dealtwithbytherespondentsasbeingachallengetothelevyoffee,
this technical objection in our opinion is devoid of merits. If the
delegated authorities have no power in the exercise of subordinate
legislationtolevyafeethentechnicalpleas,tothrowtheriderofthe
saddleasnowraisedwillnotpreventawritCourtinpublicinterest,
goingintotheissue.Theissueoflocushasbeendealtearlierandalsoin
Janhit Manch v/s State of Maharashtra and others (supra). We
adoptthesameandevenotherwisewehaverejectedthepreliminary
objection.

58

37.

Under the provisions of MRTP Act certain powers have been

conferredontheStateGovernmentasalsotheDevelopmentAuthority.
Under Section 158, powers have been conferred on the State
Governmenttomakerules.UnderSection158(ii),inparticularthereis
powerundersubSections(xiii),(xv),(xxxia)and(xxxib)tocharge
fee/developmentcharge.UnderSection159thereisapowertomake
regulations.

38.

Under Section 130 of Chapter VIII, there is a provision for

creation of a fund. Under 130(2) the fund shall be applied towards

meeting:
(a)

theexpenditureincurredintheadministrationofthisAct;

(b)

thecostofacquisitionoflandintheareaoftheauthority
concernedincurredforpurposeofdevelopment;

(c)

theexpenditureforanydevelopmentoflandintheareaof
theAuthorityconcernedundertakenbysuchauthority.

Thefundconsistsof:
(a)

allmoneysreceivedbysuchBoardorAuthorityfromthe
State Government by way of grants, loans, advance or
otherwise;

(b)

all fees or charges received by such Board or Authority

59

underthisActorRulesorRegulationsthereunder;
(c)

allmoneysfromanyothersources.

Thiswouldindicatethefundcanincludealsofeeorchargelevied
under the Regulation. But under Section 132 this fund can only be
appliedapartfromtheexpenditureincurredintheadministrationofthe
Act,fordevelopmentofland.Developmenthasbeendefinedunder
Section2(7)oftheAct,withitsgrammaticalvariationsastomeanthe
carryingoutofbuildings,engineering,miningorotheroperationsin,or
over, or under, land or the making of any material change, in any
buildingorlandorintheuseofanybuildingorlandoranymaterialor
structuralchangeinanyheritage;buildingoritsprecinctsandincludes
demolitionofanyexistingbuildingstructureorerectionorpartofsuch
building, structure or erection, etc. All this has reference to only
development of land and the expression has to be construed
accordingly.Inotherwordseveniffeesarecharged,thenthefeesfrom
the fund cannot be used only towards administration, costs of
acquisitionoflandandexpenditurefordevelopmentoflandandforno
otherpurpose.
ChapterVIAwasintroducedbyMaharashtra16of1992.Under
Section 124A power has been conferred on the Authority to levy a
developmentchargeoruseorchangeofuseofanylandorbuildingor

60

developmentofanylandorbuildingforwhichpermissionisrequired.
Under Section 124J Development Fund has to be established of
moneysreceivedbytheAuthorityasdevelopmentchargetogetherwith
interestthereon,whichshallbecreditedtothedevelopmentfundwhich
isdeductedfromtheFundundersection130.Themoneyscreditedto
thisfund,shallbeappliedonlyforthepurposeofprovidingamenitiesin
the area and maintenance and improvement of the area under the
jurisdiction of the said Authority. Section 2(2) defines amenity to
mean 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,dispensariesandhospitals,watersupply,electricitysupply,street
lighting,sewerage,drainage,publicworksandincludesotherutilities,
servicesandconveniences.Itwouldthusbeclearthatitisonlyfromthe
moneysinthedevelopmentfund,whichcanpursuanttoSection124A
beusedforamenities.Theseamenitiesincludewhatmaybedescribed
asinfrastructure.Section124Bprovidetherateswhichcanbecharged
andtheyaresetoutintheSecondSchedule.Theamountsfromthe
fund under section 130 cannot be used in so far as amenities are
concerned. Considering Section 124A and 130, administrative
committeeincludeproposalofinfrastructureasitfallswithinamenities.

61

Therefore,thesefees/chargesundertheAct,RulesorRegulationsother
than under Section 124A can only be used for purposes set out in
section130andinsofarasamenitiesareconcerned,itistheamount
thatcanonlybeexpendedintermsofSection124AreadwithSection
124J. Section 124L, further, makes it clear that the provisions of
Chapter VIA shall have effect, notwithstanding anything inconsistent
therewithcontainedinthisActoranyotherlawforthetimebeingin
force.SubSection(2)ofSection124Lsetsoutthattheprovisionsofthe
chapter shall be in addition to, and not in derogation of, any other
provisions of this Act or any law relating to municipal corporation,
municipalcouncilorotherlocalauthorityoranyurbanarea.Thevery
object whether the funds are sought to be raised as reflected in the
budgetspeechforforminoritydevelopmentorgeneraldevelopmentas
sharedbetweentheStateandtheCorporationisalientothepurposeof
thisAct.

39.

WeshallnowexaminewhetherunderSection22(m)oftheMRTP

Actthereisanypowertolevyafee.Section22(m)readsasunder:
Section22: ContentsofDevelopmentPlanADevelopment
Planshallgenerallyindicatethemannerinwhichtheuse
of land in the area of the Planning Authority shall be

62

regulated, and also indicate the manner in which the

development of land therein shall be carried out. In
particular,itshallprovidesofarasmaybenecessaryforall
or any of the following mattes, that is to say,
................
(m)

provisionsforpermissiontobegrantedforcontrollingand
regulating the use and development of land within the
jurisdiction of a local authority including imposition of
conditionsandrestrictionsinregardtotheopenspaceto
bemaintainedaboutbuildings,thepercentageofbuilding
areaforaplot,thelocation,number,size,height,number
of storeys and character of buildings and density of
population allowed in a specified area, the use and
purposestowhichbuildingsorspecifiedareaoflandmay
ormaynotbeappropriated,thesubdivisionofplotsthe
discontinuanceofobjectionableusersoflandinanyareain
reasonable periods, parking space and loading and
unloading space for any building and the sizes of
projections and advertisement signs and boardings and
othermattersasmaybeconsiderednecessaryforcarrying
outtheobjectsofthisAct.

63

Under our Constitution it is open to the State Legislature

pursuant to Entry 66 of list II to levy fees in respect of any of the
mattersinthelist,butdoesnotincludefeestakeninanycourt.The
StateLegislaturethereforehaspowertolevyfees,whichiscoextensive
withitspowerstolegislatewithrespecttosubstantivemattersandit
maylevyafeewithreferencetotheservicesthatwouldberenderedby
theStateundersuchlaw.TheStatemayalsodelegatesuchpowertoa
localauthority.Theimportantquestionhoweveriswhetherthepower
tolevyafeehasbeenconferredontheauthorityorintheinstantcase
in the State Government and if not conferred, the same has to be
declared as ultra vires. Section 22 falls in Chapter III, under
Development Plan. The entire chapter deals with proposition of a
developmentplanandthecontentsoftheplan.Section22(m)therefore
provides for provisions to be made for granting permission, the
controlling and regulating development of land. In the matter of
chargingfordevelopmentoflandtheLegislaturehasprovidedSection
124A. Therefore, the provisions of what should be contained in the
DevelopmentPlanandtheprovisionsforcontrollingandregulatingthe
developmentoflandcannotbesaidtobeanextrapowertotaxorlevy
afeeorachargeorpremium.UnderD.C.Regulation37(2),thepower

64

tomodifythedevelopmentplanisoftheStateGovernment.

40.

Afeeisapaymentleviedbyanauthorityinrespectofservices

performedbyitforthebenefitofthefeepayerunlikeataxwhichis
payableforthecommonbenefitsconferredbytheauthorityonalltax
payers.Afeeisapaymentmadeforsomespecialbenefitenjoyedbythe
payerandthepaymentisproportionaltosuchbenefit.Moneyraisedby
fee is appropriated for the performance of the service and does not
mergeinthegeneralrevenue.Whilethereisnoquidproquobetweena
taxpayerandtheauthorityincaseofatax,thereisanecessaryco
relationbetweenfeecollectedandtheserviceintendedtoberendered.
Thequidproquoneednotbeunderstoodinmathematicalequivalence
but only in a fair correspondence between the two. Broad co
relationshipisallthatisnecessary.SeeSrikrishnaDasv/sTownArea
Committee,Chirgaon,(1990)3SCC645.

In GuptaModernBreweriesv/sStateofJ&K,(2007)6SCC

317,theSupremeCourtobservedasunder:
Itisnowwellsettledprincipleoflawthattheregulatory
powers are generally to be widely construed. However,
empoweringtheStateGovernmenttoimposetaxes,feesorduties

65

andsuchdemandsmustbeauthorisedbytheStatuteandmust
containsufficientguidelines.

Fromthesejudgments,itwillbeclearthattheremustbespecific
provision under which the State Government or the Local Authority
actingasadelegatecanchargeafeeormakeademand.Afeemaybe
compensatoryorregulatory.Incaseofcompensatoryfee,thereneedbe
aquidproquowhichisnotnecessaryincaseofaregulatoryfee.Inthe
instantcaseconsideringtheargumentsadvancedthatthepremiumif
chargedforregulationithastobeafeeifnotatax.InCCFV/sChhata
SugarCo.Ltd.,(2004)3SCC466,theCourtobservedTheexpression
regulatoryFeeisnotdefined.Fee,therefore,maybeheldtobeafeeif
aserviceisrendered.Whileinsofarasaregulatoryfeealthoughthe
extentofquid.proquowasunderstoodincommonparlancemaynot
exactbutittriflethatregulatoryfeemaybeineffectandsubstancea
tax. Generally speaking taxes are burdens of a pecuniary nature
imposed for defraying the costs of Governmental functions whereas
chargesarefeeswhentheyareimposeduponapersontodefraythe
costofparticularservicesrenderedtohisaccount.

41.

The Development Control Regulations form part of the

66

DevelopmentPlanandaremadebythePlanningAuthoritywiththe
previous approvaloftheStateGovernmentunderSection22read
withsec159(ii)oftheMRTPAct.Itiswellsettledthatataxorfee
canonlybeimposed/chargedbyadelegatedauthorityifthereisan
express provision in the statute authorizing such charge/ levy.
NeitherSection22(m),norSection159(ii)orsection154confer
anyexpresspoweronthePlanningAuthoritytomakeDevelopment
ControlRegulationlevyingapremiumofRs.4900/toRs.23000/
per sq. meter and more as fixed vide above Notification and that
toowithadiscretiontoalterormodifywhichdiscretionisreserved
intheStateGovernment.

In AhmedabadUrbanDevAuthvsS.J.Pasawalia, (supra),
theSupremeCourtupheldaGujaratHighCourt judgmentwhereit
hadbeenheldthatintheabsenceofanyexpress/specificprovision
in the Gujarat Town Planning & Urban Development Act
authorizingthelevyofadevelopmentchargeonplotholderswho
carried out any development/ construction regulations framed by
theAhmedabadUrbanDevelopmentAuthoritypurportingtolevy
a development charge were illegal. Both the High Court and the
SupremeCourtnegatedthecontentionthatevenintheabsenceof

67

anyspecific provision,apowertorecoverafeeforthepurposeof
developmentoftheareainquestion&forimplementingschemesof
development, could be implied in the Act as being incidental or
ancillary to carrying on the functions for which the Development
Authorityhadbeenconstituted undertheTownPlanningAct.The
Supreme Court held "in a fiscal matterit willnot beproperto
hold that even in the absence of express provision, a delegated
authoritycanimposeafeeoratax.Inourview,suchpowerof
impositionoftaxand/orafeebyadelegatedauthority must be
very specific and there is no scope for implied authority for
impositionofsuchtaxorfee.Itappearstousthatthedelegated
authoritymustactstrictlywithintheparametersoftheauthority
delegatedtoitundertheActanditwillnotbepropertobring
the theory of implied intent or the concept of incidental and
ancillarypowerinthematterofexerciseoffiscalpower.

It has been constantly held by this Court that

wheneverthereiscompulsoryexoctionofanymoney,
there should be specific provision for the same and
thereisnoroomforintendment.Nothingistoberead
andnothingistobeimpliedandoneshouldlookfairly

68

tothelanguageused

41.

InfactintheMRTPAct1966ChapterVIA:Sections124A

to 124L, were introduced by Amendment Act 16 of 1992

providingforLevy andrecoveryofdevelopmentschargesatthe
ratespecifiedinthe secondschedulei.e.atratesrangingfroma
minimumofRs.40/toamaximumofRs.250/persq.metersin
Mumbai. The Statement of Objects and reasonsforthe1992Act
state "The MRTP Act 1966 has been enacted to provide for planned
development in urban areas, by providing inter alia for constitution of
Regional Planning Boards. for
preparation of Development

Plans and
creation of new towns by means of constitutionofSpecialPlanning&
Development Authorities. All
these plans

and schemes being capital

intensive,thesaidauthoritieshavenotbeenabletoachievethedesired
results, mainly on account of lack of
adequate funds for effective

implementation of such development plans

or Town Planning
Schemes. It has therefore become imperative to mobilize additional
resourcesforbeingplacedatthedisposalofPlanningorSpecialPlanningor
Development Authority constituted under the Act for effective
implementationoftheprovisionsoftheActandtoprovideforproper
amenities and facilities for the healthy growth

of these cities and

69

towns.Theexistingprovisionsofthe
MRTPAct
donotcontainany,
provisions for levy and collection of development

charges by such
Authority

.ItisthereforedecidedtosuitablyamendthesaidActtoprovide
forlevyassessmentandrecoveryofdevelopmentchargebysuchauthority
oninstitutionofchangeofuseofanylandorbuildingordevelopmentofany
land or building, for which permission is required under the Act .
Accordingly a new chapter VIA is being inserted containing appropriate
provisions......(emphasissupplied).

Sections 158(2)(xxxia) and 158(2)(xxxib) were also

inserted by the said Maharashtra Act 16 of 1992 enabling the
Government to make Rules for the assessment of development
chargespayableondevelopmentofland.

In Bharti Televentures Ltd vs State of Maharashtra,

(2007) 4 Mh.L.J. 105, a Division Bench of Honble Court
quashedrecoveryof"premiumleviedbyaDevelopmentControl
Regulation,asaconditionforgrantofpermissiontoplace/erect
a cellular tower on a rooftop of a building. In that case the
DevelopmentControlRegulation required"premium"tobepaid,
computedontheheightofthecellulartower(perrunningmeter)

70

andthe"premium"leviedwas farinexcessofthedevelopment
chargesstipulatedbyChapterV1A.

Thelevyofpremiumwaschallengedonthegroundthatthe
the DCR's are, framed and approved under section 22(m) of the
MRTP Act which does not confer any power to recover any
lax/premium related to the area or height of the structure as a
condition for granting development/planning permission. This Court
upheldthechallenge,

44.

Section22(m)oftheMRTPActdealswiththecontentsof

a developmentplan"andstipulatesthatadevelopmentplanshall
contain "provisions for permission to be granted for controlling and
regulatingthe useanddevelopmentoflandwithinthejurisdictionofa
local authority. Intervenors (MCHI) has contended as although
Section22(m)doesnotspecificallyauthorizethelevyorcollection
of premium the levy/ recovery of "premium" was permissible in
lawasa regulatoryfee. Reliance is placedon the decisionofthe
SupremeCourtin "StateofWestBengalvsKesoram

Industries"
(2004)10SCC201.

71

InStateofWestBengalvsKesoramIndustries(supra)itis
statedthatitiswellsettledthatthepowertoregulate&controlis
separateanddistinctfromthepowertotax.Theissue beforethe
SupremeCourtwasinfactthepowersoftheStatetolevytaxon
'land'andpoweroftheUniontoregulateandcontrolindustries.

Although a "regulatory fee" can be levied in exercise of the

power toregulate,itiswellsettledthat" inthegarbofexercising
the powertoregulate,anyfeeorlevywhichhasnoconnectionwiththe
cost of or expenses of administering the regulation cannot he
imposed".See State of West Bengal vs Kesoram Industries: This
positionhasbeenreiteratedinthedecisioninthecaseof State
of Uttar Pradesh Vs Yarn Organic Chemicals, AIR 2003 SC
4650. In that case the Supreme Court considered the earlier
decisions including in BSE

B rokers Forum Vs SEBI, (2001) 3

SCC482 whichhasbeen reliedonbytheIntervenors,andthen
reiterated that a regulatory fee " is required to be justified with
referencetothecostofsuchregulation.

45.

ThePremiumleviedisexfacienota"regulatoryfee.

The premium is not for the purpose of meeting the cost or

72

expensesofadministeringtheregulation.Wehaveearlierdealtwith
Sections 124A and 124J. The Government has in its affidavits
contended that it is to meet the costs of infrastructure. The
PremiumleviedislinkedtotheReadyReckonervalueofthe FSI
andrangesfromRs.4,900/persq.metersin Manori/Goraito Rs.
23,000/ per sq. meters and more in Bandra. The costs or
expenses of administering regulation cannot vary according to
thevalueoftheland/location.AspertheimpugnedNotification
the premium is not for meeting the costs of or expenses of
administering the regulation. The amount recovered by way of
premium is to be shared 50:50 between the State Government
and the MCGM. The MCGM is to utilize its 50% for
implementation of the Development Plan & infrastructure.
Charging a premium to raise funds for implementation of the
Development Plan and for creating Infrastructure, is clearly
beyond the permissible scope/ purpose of a regulatory fee i.e.
tomeetthe costs&expenses ofadministeringtheregulation,if
thatcanbeurged.Moreoverthe50%collectedbyGovernment
is not earmarked for any specific purpose on the contrary
the whole intent is to garner resources for extraneous
purposes of Minority Welfare Fund and other general

73

expensestomeetthebudgetarydeficit.

46.

AsalreadynotedbyMaharashtraAct16of1992ChapterVIA

was inserted to provide for the levy of a Development Charge to

enablelocalauthoritiestoraisefunds"foreffectiveimplementationof
the provisions of the Act and to provide for proper amenities and
facilities for the healthy growth of these cities and town . ' as the
MRTP Act did no t c on t ai n an y p r ov i si on s fo r l ev y a n d
c o ll ec ti o n o f development charges by such Authority.
Under Chapter VI (A) of the Act read with the 2nd Schedule
thereto, the permissible levy of Development charges rangesonly
fromRs.40/Rs.250/persqmetersinMumbai.

47.

WemayonceagainrefertothejudgmentinthecaseofStateof

WestBengalv/sKesoramIndustriesLtd.(supra)tounderstandits
trueimpact.Inparagraph104and106ofthesaidJudgment,itisset
outasunder:

104.

Thereisnothinglikeanimpliedpowertotax.The

sourceofpowerwhichdoesnotspecificallyspeakoftaxation
cannotbesointerpretedbyexpandingitswidthastoinclude

74

therein the power to tax by implication or by necessary

inference.StatesCoolyinTaxation(Vol.1,4thEdn.)
Thereisnosuchthingastaxationbyimplication.
Theburdenisalwaysuponthetaxingauthoritytopoint
totheactofassemblywhichauthorizestheimpositionof
thetaxclaimed.

106.

The judicial opinion of binding authority flowing

from several pronouncements of this Court has settled these

principles; (i) in interpreting a taxing statute, equitable
considerationsareentirelyoutofplace.Taxingstatuescannot
be interpreted on any presumption or assumption. A taxing
statute has to be interpreted in the light of what is clearly
expressed;itcannotimplyanythingwhichisnotexpressed;it
cannot import provisions in the statute so as to supply any
deficiency;(ii)beforetaxinganypersonitmustbeshownthat
hefallswithintheambitofthechargingsectionbyclearwords
usedinthesection;and(iii)ifthewordsareambiguousand
open to two interpretations, the benefit of interpretation is
given to the subject. There is nothing unjust in the taxpayer
escapingiftheletterofthelawfailstocatchhimonaccountof

75

thelegislature'sfailuretoexpressitselfclearly.

InKesoramIndustriesLtd.(supra),theissuewaswhetherthe
State under the garb of legislation can impose a tax on land in
respect of a matter that the Central Government had exercised its
power to regulate and control. While considering the expression
Powertoregulateandcontrolandpowertotax,theCourtobserved
thattheprimarypurposeoftaxationistocollectrevenue.Powerto
tax may be exercised for the purpose of regulating an industry,
commerceoranyotheractivity;thepurposeoflevyingsuchtax,an
imposttobemorecorrect,istheexerciseofsovereignpowerforthe
purposeofeffectuatingregulationthoughincidentallythelevymay
contributetotherevenue.Thereafter,referringtoCooleyontaxation,
thelearnedCourtquotedasunder:
Socalledlicensetaxesareoftwokinds.Theoneisatax
for the purpose of revenue. The other, which is, strictly
speaking,notataxatallbutmerelyanexerciseofthepolice
power,isafeeimposedforthepurposeofregulation.

TheCourtthennotedthattheSevenJudgeBenchinSynthetics
andChemicalsLtd.v/sStateofU.P.,(1990)1SCC109,hadagreed

76

thatregulationisanecessaryconcomitantofthepolicepowerofthe
State.However,itwasanAmericandoctrineandintheopinionofthe
Court it was not perhaps applicable as such in India. The Court
recognizedthepowertoregulateasapartofthesovereignpowerof
the State exercisable by the competent legislature. The Court
accepted the position that the State has the power to regulate.
However,inthegarbofexercisingthepowertoregulate,anyfeeor
levy which has no connection with the cost or expenses of
administeringtheregulation,cannotbeimposed.Onlysuchlevycan
bejustifiedascanbetreatedaspartofregulatorymeasure.Thus,the
State'spowertoregulateperhapsnotasemanationofpolicepower
but as an expression of the sovereign power of the state has its
limitation.TheCourtthenheldthattheseobservationsoftheCourt
foundsupporttotheviewformedthatapowertoregulate,develop
orcontrolwouldnotincludewithinitskenapowertolevytaxorfee
exceptwhenitisonlyregulatory.Powertotaxorlevyforaugmenting
revenueshallcontinuetobeexercisablebythelegislatureinwhomit
vestsi.e.theStateLegislatureinspiteofregulationorcontrolhaving
been assumed by another legislature i.e. the Union. It is in that
contextthattheSupremeCourtwaslookingattheexpressionPower
toregulateandcontrol.

77

48.

We then consider the judgment in State of Punjab and

anotherv/sDevansModernBreweriesLtd.&Anr.(supra).Wewill
advert only to the majority judgment. In para 102, two points for
considerationwereframed,whichwere:(a)Whethertheimportfee
levied is the price for parting with the privilege given to the
respondenttoimportliquorintotheStateand,therefore,thesameis
within the competence of the State to impose import fee; and (b)
Whethertheimpositionofimportfeedoesnot,inanyway,restrict
trade,commerceandintercourseamongtheStates.

TheCourt,insofarasthefirstquestionisconcerned,observed
thattheamountchargedisnotafeenorataxbutisinthenatureof
priceofaprivilegewhichthepurchaserhastopaywhilsttradingand
closing business in noxious article/goods. The collection of such
amountintheshapeofimportfeedoesnotformpartofthegeneral
revenue of the State. It is one of the terms and conditions of the
excisepolicyapplicabletoallL1holders.TheCourtthennotedthat
theCourtinseveraljudgmentshasheldthattheStateGovernment
has unfettered powers to regulate the export/import/sale of
intoxicantsandinexerciseofisregulatorypowers,theimportfeehas

78

beenincorporatedasoneofthetermsoftheexcisepolicyonyearly
basis.Insofarasquestion(b)isconcerned,theCourtobservedthat
Articles301and304(a)oftheConstitutionarenotattractedtothe
present case as the imposition of import fee does not, in any way,
restrict trade, commerce and intercourse among the States and the
permissiveprivilegetodealinliquorisnotarightatall.Thelevy
chargedforpartingwiththatprivilegeisneitherataxnorafee.

49.

Inouropinion,therefore,Section22whichfallsunderChapter

IIIandwhichrequireswhatmustbethecontentsofthedevelopment
plan,doesnotexpresslyconferanypowerontheStateGovernment
or the Planning Authority to make a provision for imposing a fee
whetherregulatoryorcompensatory.ModificationunderSection37,
is modification of the plan. Providing for imposition of a premium
whichisnothingbutafee,willhavetobeheldtobeultravires,the
provisions of the MRTP Act. Once the legislature has provided for
developmentchargeunderSection124A,whichchargehastobekept
inaseparatefundtobeusedforprovidingamenities,itisnotopen
for the State or the Planning Authority to contend that under the
guiseofgivinggrantofadditionalFSIof0.33theyareentitledtoa
chargeorafeeforthepurposeofprovidingamenities.

79

50.

The Respondents/State Government has not been able to

show any provision in the MRTP Act expressly/specifically

authorizingthelevyofsuchpremiumbasedontheReadyReckoner
value of land per sq. meter and ranging from Rs.7000/ to Rs.
23000/ sq. meter in different areas and localities of suburbs and
extendedsuburbs.

51.

Thequestionis,whetheritispossibletoseverethenotification

fromgrantofadditionalFSIandchargeofpremium.Inouropinion,
itisnotpossibletodoso.TheexerciseofgrantofadditionalFSIis
onlyonpaymentofpremium.TheobjectbehindamendingtheD.C.
RegulationsandforgrantingadditionalFSIisreflectedinthebudget
speech.Evenotherwisetheregulationisforraisingofrevenue.Inthe
light of that, we have to hold that the entire notification dated 3rd
October, 2008 is ultra vires the MRTP Act and consequently the
notificationonthatpointhastobestruckdown.

52.

Fortheaforesaidreasons,thepetitionshavetobeallowed.Rule

madeabsolutetotheextentthattheimpugnednotificationdated3 rd
October,2008isultravirestheprovisionsoftheMRTPActandhence

80

declarednullandvoid.

Inthecircumstancesofthecase,eachpartytobeartheirown
costs.

(A.A.SAYED,J.)

(F.I.REBELLO,J.)