Karnataka HC Upholds Premium FAR Scheme, Rejects Challenge to Section 18-B of KTCP Act
A Division Bench led by Chief Justice Vibhu Bakhru dismissed challenges to Karnataka's Premium Floor Area Ratio scheme, holding it does not violate Articles 14, 21, 300A or 243ZE of the Constitution.
The High Court of Karnataka at Bengaluru, in a judgment reserved on 29 April 2026 and pronounced on 15 June 2026, dismissed a writ appeal and two connected public interest writ petitions challenging the constitutional validity of the Premium Floor Area Ratio scheme introduced under Section 18-B of the Karnataka Town and Country Planning Act, 1961. Chief Justice Vibhu Bakhru, leading the Division Bench with Justice C.M. Poonacha, authored the judgment. The court rejected every ground of challenge — including alleged violations of Articles 14, 21, 300A and 243ZE of the Constitution, excessive delegation, and procedural infirmities in the impugned notifications — and also upheld Section 38-D of the Bangalore Development Authority Act, 1976, which had been separately assailed as manifestly arbitrary.
The Dispute Before the High Court
The writ appeal, WA No. 1983 of 2025, arose from an order dated 5 December 2025 passed by a learned Single Judge dismissing WP No. 11201 of 2025 filed by Sri Krishnamurthy N., a resident of Bengaluru North. The appellant owned land measuring 432.62 square metres in Survey No. 3/5, Venkateshpura Village, Yelahanka Hobli, Bengaluru North Taluk. BBMP had notified that land on 18 January 2005 for widening the Kogilu-Sampigehalli Main Road. The appellant surrendered the land and opted for Transferable Development Rights under Section 14-B of the KTCP Act instead of monetary compensation. He executed and registered a Relinquishment Deed on 3 September 2015 in favour of BBMP. Despite repeated representations, neither BBMP nor BDA had issued a Development Rights Certificate to him.
The appellant's core grievance was that the Premium FAR scheme, introduced by Section 18-B of the KTCP Act through the Karnataka Town and Country Planning (Fourth Amendment) Act, 2020, eroded the market value of TDRs. Since Premium FAR could be purchased at 28% to 50% of the guidance value of land — without the stamp duty, registration costs, and due diligence expenses that accompany TDR transactions — no developer would purchase TDRs when cheaper Premium FAR was available.
Two connected writ petitions were heard alongside the appeal. WP No. 14959 of 2020 was filed on 11 December 2020 by Vijayan Menon and four other civic activists as a public interest litigation. WP No. 2807 of 2026 was filed on 24 January 2026 by the Citizens' Action Forum, a registered society. Both petitions challenged Section 18-B of the KTCP Act, Rule 37-E of the Karnataka Planning Authority Rules, 1965, and a series of notifications issued by the State Government between February 2025 and February 2026 introducing and amending Chapter 11 of the Zonal Regulations of the Revised Master Plan-2015 for the Local Planning Area of Bengaluru and several other planning areas. WP No. 14959 of 2020 additionally challenged Section 38-D of the BDA Act, inserted by the Bangalore Development Authority (Amendment) Act, 2020.
A Co-ordinate Bench had passed an interim order on 25 May 2021 in WP No. 14959 of 2020 directing that any action taken on the basis of the impugned provisions would be subject to the final outcome of that petition.
The Statutory Framework: FAR, TDR, and Premium FAR
Floor Area Ratio, defined in Explanation (ii) to Section 12(1) of the KTCP Act, is the ratio of the combined gross floor area of all floors of a building to the total area of the plot. It is the primary metric used in town planning to regulate urban density, calibrated against available road width, water supply, sewage, drainage, and other civic infrastructure.
The TDR scheme was introduced by Section 14-B of the KTCP Act, as substituted by Karnataka Act No. 38 of 2015. Under that scheme, a landowner whose land is required by a public authority for road widening, infrastructure projects, parks, affordable housing, or other notified public purposes may surrender the land free of encumbrances and receive Development Rights in the form of “Notional Land” instead of monetary compensation. The Notional Land, when multiplied by the permissible FAR of the recipient plot, yields the additional floor area the TDR holder or a transferee may construct. TDRs may be used on the originating plot or transferred and used on any other plot within the same Local Planning Area.
Section 18-B was inserted in the KTCP Act by the 2020 amendment. It empowers the competent authority to grant permission for Premium FAR — additional FAR over and above the ordinarily permissible FAR — in areas identified in the Zonal Regulations of the Master Plan, on payment of Premium Charges of not less than 50% of the estimated increase in the value of land and building. Rule 37-E of the KPA Rules, notified on 16 June 2021, prescribed that Premium FAR not exceeding 0.6 times the permissible FAR may be allowed on building sites abutting roads of 9 metres width and above, with charges computed at not less than 50% of the guidance value of the additional notional sital area.
The impugned notifications of April 2025 and the 2026 notifications introduced Chapter 11 into the Zonal Regulations, creating a three-slab structure based on road width: 0.2 times the permissible FAR for roads greater than 9 metres and up to 12 metres; 0.4 times for roads greater than 12 metres and up to 18 metres; and 0.6 times for roads wider than 18 metres. Of the maximum additional FAR in each slab, the portion available through Premium Charges was capped at 0.2, 0.3, and 0.4 times respectively, with the balance available only through TDR. Premium FAR was declared non-transferable and usable only at the building site for which it was issued.
Grounds of Challenge
The appellant and the writ petitioners advanced overlapping grounds. Senior Advocate V. Srinivasan Raghavan appeared for the appellant; Senior Advocate Dr. Harish Narasappa appeared for the petitioners in WP No. 14959 of 2020; and Ms. K. Nitya appeared for the Citizens' Action Forum. The Advocate General, Sri K. Shashi Kiran Shetty, countered the submissions for the State, with Senior Advocate Sri Udaya Holla appearing for BDA.
The principal contentions were: first, that Premium FAR erodes TDR values and thereby deprives TDR holders of property without authority of law, violating Article 300A; second, that Section 18-B suffers from excessive delegation because it does not identify the competent authority, lay down planning considerations, or specify the quantum of additional FAR; third, that the impugned notifications were not published in the manner required by Section 13-E of the KTCP Act and operated retrospectively; fourth, that the Premium Charges prescribed in the notifications were inconsistent with the rate formula in Rule 37-E and Section 18-B; fifth, that the scheme violates Article 21 by enabling unplanned high-rise construction that would worsen traffic, strain water supply, and degrade civic life in Bengaluru; sixth, that the scheme is akin to the Akrama Sakrama scheme whose implementation has been stayed by the Supreme Court; and seventh, that the notifications were issued without involving the Bengaluru Metropolitan Planning Committee, violating Article 243ZE of the Constitution.
Dr. Narasappa separately contended that Section 38-D of the BDA Act is manifestly arbitrary because it enables transfer of public lands to illegal occupants, placing them in a more advantageous position than law-abiding citizens, and confers uncanalised power without adequate guidelines.
How the Division Bench Reasoned
Article 300A — TDR value erosion: The bench accepted, for the purpose of analysis, that Premium Charges would be lower than the cost of TDRs. However, it held that Article 300A protects against expropriation or deprivation of property, not against fluctuation in the market value of assets. A policy decision that affects the value of property does not amount to deprivation within the meaning of Article 300A. The court drew an analogy: a State decision to expand city limits and permit conversion of land for residential use may reduce the market value of existing residential land through additional supply, yet that cannot be challenged under Article 300A. The bench also noted that the 2026 notification excluded Premium FAR for plots abutting roads of 9 to 12 metres, leaving TDR as the only route for additional FAR on such plots. It declined to assess the likely demand for TDR on narrow roads, finding the arguments on that point unsupported by empirical data.
The bench further noted that no landowner is compelled to accept TDRs; the option of monetary compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 always remains open. The Advocate General made an unequivocal statement during arguments that the appellant could still opt for compensation under the 2013 Act since TDR certificates had not yet been issued. The appellant's counsel rejected that offer.
Excessive delegation: The bench rejected the contention that Section 18-B delegates essential legislative function. It held that Section 18-B must be read in the context of the KTCP Act as a whole, which already contains the statutory framework for Master Plans, Zonal Regulations, and the grant of building permissions under Section 15. The section identifies that Premium FAR is to be granted in areas specified in the Zonal Regulations, sets a floor for Premium Charges at 50% of the estimated increase in land and building value, and links the grant to an application under Section 15. The details of implementation — including the quantum of additional FAR and the precise charge formula — were appropriately left to delegated legislation and the Zonal Regulations, consistent with the scheme of the Act.
Consistency with Section 14-B and Rule 37-E: The bench held that Sections 14-B and 18-B operate in distinct domains and must be harmoniously construed. Section 14-B governs TDR as compensation for land surrender; Section 18-B creates a separate mechanism for purchasing additional FAR from the State. The impugned notifications were passed in furtherance of Section 18-B and were not inconsistent with Section 14-B. The bench also rejected the contention that the Premium Charges prescribed in the notifications were at variance with Rule 37-E or Section 18-B.
Article 21: The bench rejected the submission that the scheme would lead to unplanned high-rise construction violating the right to a healthy environment. It held that Premium FAR does not alter setback requirements, height restrictions, parking norms, or any other regulatory standard. The scheme increases permissible FAR without relaxing other construction norms. The Advocate General pointed out that FAR norms in Bengaluru are among the lowest for any metropolitan city, and vertical development is the only practical response to land scarcity and population growth. The bench accepted that the grant of Premium FAR is neither unconditional nor unregulated.
Comparison with Akrama Sakrama: The bench rejected the argument that Premium FAR is a surrogate for the Akrama Sakrama scheme. Premium FAR is prospective — it permits additional construction going forward on payment of charges — whereas the Akrama Sakrama scheme was directed at regularising existing unauthorised constructions. The two operate on fundamentally different premises.
Article 243ZE: The bench held that the role of the Bengaluru Metropolitan Planning Committee under Article 243ZE is to prepare a draft development plan providing a guiding and recommendatory framework for coordinated spatial planning, shared resources, and integrated infrastructure. This is distinct from the statutory Master Plan approved under the KTCP Act. Section 13-E of the KTCP Act does not mandate consultation with the BMPC before amending Zonal Regulations.
Section 38-D of the BDA Act: The bench found that Section 38-D is not an exercise in uncanalised power. It applies only where land vested in or acquired by BDA cannot be used on account of an existing building and it is not practicable to include such land in a development scheme or layout. Allotment is restricted to the original owner, a purchaser from the original owner, or a person in settled possession — but not a tenant, licencee, or permissive user. The building and possession must pre-date the commencement of the 2020 Amendment Act by at least 12 years. Allotment is capped at 4,000 sq. ft. and is subject to payment at prescribed rates. The bench noted that BDA had identified approximately 75,000 sites across layouts formed by the City Improvement Trust Board and BDA since 1945 where unauthorised occupants had been in long possession, and that prior court orders in several proceedings had themselves directed BDA to consider regularisation of such structures. The bench held that the guiding principles for the exercise of power are clearly set out in Section 38-D and that the challenge to its validity must fail.
Outcome
The Division Bench dismissed WA No. 1983 of 2025, WP No. 14959 of 2020, and WP No. 2807 of 2026 in their entirety. All pending applications were also dismissed. The judgment was authored by Chief Justice Vibhu Bakhru.