BMC Cannot Contract Away a Landowner's Statutory Right to Amenity TDR, Supreme Court Holds
A Supreme Court bench of Justices J.K. Maheshwari and Atul S. Chandurkar rules that the Brihanmumbai Municipal Corporation cannot use a private agreement to extinguish a landowner's statutory right to additional amenity TDR under the MRTP Act.
The Supreme Court has dismissed a civil appeal by the Brihanmumbai Municipal Corporation (BMC) and held that a landowner's right to additional amenity Transferable Development Rights (TDR) under Section 126(1)(b) of the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act) cannot be extinguished by a letter of intent, an undertaking, or a maintenance agreement. The bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar, deciding Civil Appeal arising out of SLP (C) No. 11541 of 2024, found that the Corporation had impermissibly projected a waiver of statutory compensation as a pre-condition for releasing TDR against the land itself, a manoeuvre the Court said could not be countenanced. The judgment, reported as 2026 INSC 517, affirms the Bombay High Court's order directing the Corporation to grant additional amenity TDR, though on separate reasoning.
How the Dispute Reached the Court
The subject land — CTS Nos. 1A/4, 1A/10, 1A/14 (pt.) and 1A/15, admeasuring 98,369.1 sq. mts. in village Anik, Bhakti Park, Chembur — was reserved for a garden in the Development Plan notified on 04.03.1994 under the MRTP Act. The reservation required the landowner, Vijay Nagar Apartments (a partnership firm), to develop the garden and hand it over to the Corporation.
On 06.07.2001, the landowner applied to the Corporation under Section 126(1)(b) of the MRTP Act for TDR in lieu of surrendering the land. The Corporation issued a Letter of Intent (LOI) dated 13.12.2001 agreeing to grant Development Rights Certificates (DRCs), the physical form of TDR, but on a specific condition: the landowner would develop the garden to Corporation specifications, maintain it for 20 years at its own cost, and “will not claim any amenity TDR towards Development of Garden.”
The landowner signed a conforming undertaking on 10.01.2002 and entered into a Maintenance Agreement on 27.11.2002. Physical possession of the land was handed over between January and October 2002. TDR equivalent to the area of land surrendered was released to the landowner between February 2002 and February 2003. No dispute arose over that first tranche.
The landowner maintained the garden until 2016, when the Corporation, acting on orders from the Lokayukta, who had found the garden was not accessible to the public and was being used as a cricket ground by the elite, demanded and received possession on 02.06.2016. Three years later, on 04.04.2019, the landowner claimed additional amenity TDR for having developed the garden. The Corporation rejected the claim by letter dated 05.11.2019, citing a 17-year delay, the supersession of the Development Control Regulations, 1991 (DCR, 1991) by the Development Control and Promotion Regulations, 2034 (DCPR, 2034), and the contractual bar in the LOI and Maintenance Agreement.
The landowner challenged the rejection before the Bombay High Court in Writ Petition No. 3283 of 2019. The High Court allowed the petition by judgment dated 03.04.2024, holding that the right to maintain the garden and the disclaimer of additional TDR were linked, and that once the Corporation withdrew the maintenance privilege, the disclaimer could not survive. The Corporation appealed to the Supreme Court.
The Statutory Scheme: Two-Part Compensation Under Section 126(1)(b)
The Court set out the compensation framework in detail. Section 126(1)(b) of the MRTP Act (in its pre-2015 form) provides that where land is reserved for a public purpose, the planning authority may acquire it, without monetary payment, by granting the landowner FSI or TDR in two distinct parts: first, against the area of land surrendered free of cost; and second, additional FSI or TDR against the development or construction of the amenity on the surrendered land at the landowner's cost, as the Final Development Control Regulations provide.
Regulation 34 of the DCR, 1991, read with Appendix VII-A, operationalised this. Paragraph 5 of Appendix VII-A fixed the first tranche as equal to the gross area of the reserved plot surrendered. Paragraph 6 provided that where the owner also develops the amenity at his cost and hands it over, he may be granted a further DRC equivalent to the area of the construction or development done.
The Court noted that “garden” falls squarely within the definition of “amenity” under both Section 2(2) of the MRTP Act and Regulation 2(7) of the DCR, 1991. There was therefore no dispute that the landowner had developed a qualifying amenity. The only controversy was whether the contractual bar in the LOI and Maintenance Agreement could defeat the second tranche of compensation.
Waiver: Why the Contractual Bar Could Not Stand
The Corporation's central argument was that the landowner had voluntarily and knowingly agreed not to claim additional amenity TDR, and that a mandatory provision enacted for the benefit of a private individual may be waived by that individual. The Court rejected this at multiple levels.
First, it applied the line of authority running from Godrej & Boyce Manufacturing Co. Ltd. v. State of Maharashtra (2009) 5 SCC 24 (Godrej & Boyce I). In that case, the Corporation had argued that landowners who had agreed to construct roads in exchange for 100% TDR on the land could not claim additional TDR for the road construction itself.
The Court in Godrej & Boyce I rejected that argument, holding that “beyond those conditions there can be no negotiations for surrender of the land, particularly in derogation to the landowner's statutory rights.” The same argument had been raised and rejected again in Municipal Corpn., Greater Bombay v. Yeshwant Jagannath Vaity (2011) 11 SCC 88 and in Kukreja Construction Company and Ors. v. State of Maharashtra and Ors. (2024) 14 SCC 594. The present bench found no reason to take a different view.
Second, the Court examined the specific facts of how the LOI came to be. The landowner's own application of 06.07.2001 had stated, in answer to a question about whether it proposed to develop the amenity under Appendix VII, Regulation 6: “No.” The Corporation then issued the LOI making the development of the garden, and the undertaking not to claim amenity TDR, a stated pre-condition for receiving even the first tranche of TDR against the land. The Court found this was not a case of voluntary, intentional waiver. The Corporation had “portrayed to the Landowner that an undertaking for the development of the garden, its maintenance for 20 years and most importantly, the condition for not claiming additional TDR against development of the garden is a pre-condition or 'requirement' for the grant of DRC/TDR in respect of the land surrendered.”
Third, the Court invoked Article 300A of the Constitution of India. The right to property, though no longer a fundamental right, is a constitutional right and a human right. Statutes that are expropriatory must be strictly construed. The Court drew on Kolkata Municipal Corpn. v. Bimal Kumar Shah (2024) 10 SCC 533, which identified seven sub-rights within Article 300A, including the right to fair compensation. Once the statute and regulations fix the manner of compensation, there is no room for the executive to negotiate a different lesser arrangement with the landowner.
The Court was direct: the Corporation could not get out of the statutory scheme by agreement, just as it could not do so by circular (as was the case in Godrej & Boyce I). The facts here were, if anything, worse, a circular is at least a general policy instrument, whereas the LOI and Maintenance Agreement were bilateral arrangements that purported to strip a specific landowner of a statutory entitlement.
The Court also noted an important concession in the Corporation's own counter-affidavit before the High Court, which stated: “the entitlement of TDR and giving the garden on adoption basis are two separate issues forming parts of two different transactions one having nothing to do with others.” Having taken that position below, the Corporation could not argue before the Supreme Court that the maintenance arrangement was a substitute for the statutory compensation.
The High Court's Reasoning Distinguished
While the Court agreed with the High Court's ultimate conclusion, it disagreed with the High Court's reasoning. The High Court had held that the landowner's right to maintain the garden and its obligation not to claim additional TDR were linked, so that once the Corporation withdrew the maintenance privilege, the disclaimer fell away. The Supreme Court rejected this analysis. The maintenance of the garden on an adoption basis was, as the Corporation itself had admitted, entirely separate from the statutory compensation question. The High Court had erred in treating the two as connected.
Delay and Laches: No Bar to Compensation Claims
The Corporation pressed hard on the 17-year gap between the surrender of land in 2002 and the claim for additional amenity TDR in 2019. The Court rejected this argument by applying Kukreja Construction (supra), which had held that delay and laches cannot defeat a claim for additional TDR against construction of an amenity. The reasoning is that once compensation is determined under the statute in the form of FSI or TDR, it is payable even without a representation being made, a duty is cast on the State to pay it. The Corporation had not shown that any third-party rights had been created that would be disturbed.
The Court also distinguished the Corporation's reliance on Municipal Corpn., Greater Mumbai v. Century Textiles & Industries Ltd. (2025) 3 SCC 183. That case involved a challenge to the acquisition process itself, where the writ petitioner had waited 61 years before approaching the court. The present case involved a claim for fair compensation after acquisition had already occurred, a materially different situation. The Court held that the High Court was correct to rely on Sukh Dutt Ratra & Anr. v. State of Himachal Pradesh and Ors. (2022) 7 SCC 508 for the proposition that delay cannot succeed where there is a continuing cause of action.
On the applicability of the DCPR, 2034, the Court held that the right to fair compensation crystallised on the date of surrender of land in 2002, when the DCR, 1991 was in force. The subsequent supersession of the DCR, 1991 by the DCPR, 2034 in 2018 could not affect rights that had already accrued. The judgment of this Court in T. Vijayalakshmi v. Town Planning Member (2006) 8 SCC 502, relied upon by the Corporation for the proposition that regulations applicable on the date of application govern, was held to have no applicability on these facts.
Nature of the Amenity
The Corporation raised a late argument that the garden was not an “amenity” within the MRTP Act because it had been commercially exploited for private use rather than for the benefit of the public. The Court rejected this on two grounds. First, the argument had not been raised in the Rejection Order of 05.11.2019 or in the Corporation's counter-affidavit before the High Court, and the Corporation could not raise it for the first time at the appellate stage. Second, the Corporation itself had certified the development of the garden, had made development of the garden a pre-condition in the LOI, and the reservation notification of 1994 itself had stipulated that the landowner must develop the garden. The Court found it was not open to the Corporation to now deny that a garden is an amenity under Section 2(2) of the MRTP Act and Regulation 2(7) of the DCR, 1991, both of which expressly include “gardens” in the definition.
On the Lokayukta proceedings and the alleged misuse of the garden, the Court said that any remedy available under the Maintenance Agreement could be pursued separately. The alleged misuse could not affect the landowner's statutory right to compensation under Section 126(1)(b) of the MRTP Act.
Outcome
The Supreme Court dismissed the civil appeal. The Court directed the Corporation to comply with the directions issued by the Bombay High Court, which had directed the Corporation to grant additional amenity TDR in respect of the garden developed on the subject land within two months. All interlocutory applications, if any, were treated as disposed of.