1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL WRIT PETITION NO. 2944 OF 2006 M/s. Naiknavare And Associates ] A partnership firm carrying on ] Business at 1204/4, Ghole Road, ] Shivajinagar, Pune- 411 004. ] ...Petitioners Versus 1. State of Maharashtra ] The Secretary, Urban ] Town Planning Department ] Mantralaya, Mumbai. ] ] 2. Pune Municipal Corporation ] Through the Municipal ] Commissioner,Shivajinagar ] Pune- 411 005. ] ...Respondents ALONG WITH CIVIL WRIT PETITION NO.6877 OF 2007 Lokmangal Constructions Pvt. Ltd., ] A Company incorporated and registered ] Under the Companies Act, 1956 and ] having its office at 108- 110, ] Anil Co-operative Society, ] Opp: Kamla Nehru Park ] 775, Erandwane, Pune- 411 004 through ] its Managing Director Aarun Jethlia ] ...Petitioer Versus 2 1.State of Maharashtra ] The Secretary, Urban ] Town Planning Department ] Mantralaya, Mumbai. ] ] 2.Pune Municipal Corporation ] Through the Municipal ] Commissioner,Shivajinagar ] Pune- 411 005. ]...Respondents Mr. Aspi Chinoy i/b. Vinit Naik for Petitioners Mrs. M.P. Thakur, AGP for Respondent No.1 Mr. R.G. Ketkar with Mr. R.S. Khadapkar for Respondent No.2 CORAM: SMT.RANJANA DESAI & SMT.ROSHAN DALVI, JJ. Date of Reserving the Judgment : 8 th January, 2008 Date of Pronouncing the Judgment : 8 th February, 2008 JUDGMENT (Per Smt. Roshan Dalvi, J.) 1. Both the above Petitioners challenge the same action of the Respondents and have prayed for Writs of Mandamus in respect of the issue of Development Rights Certificate (DRC) under Regulation N-2.4.5 of the Development Control Rules (DCR) of Pune Municipal Corporation (PMC).(R-2). Hence, both the Petitions are heard together and are being disposed of by this common order. 2. The Petitioners are developers of lands which have been 3 reserved/acquired for economically weaker sections (EWS) of the Society in Pune as “RETAINABLE LAND DECLARED UNDER THE URBAN LAND CEILING AND REGULATIONS ACT, 1976.”(ULCRA). Such reserved lands would otherwise have to be surrendered to R-2 for housing EWS by their owners. The owners of such lands would be entitled to compensation for such acquisition. However, if such lands were not to be surrendered, but used for public housing, the owners would be entitled to have the lands developed if they handed over to R-2. 15% of the constructed built- up area as per Appendix Regulation 7 (R-7) to the DCR, which shall be considered presently. 3. The Petitioners have undertaken to develop such reserved lands for a housing project under various survey numbers amalgamated into one plot as per the layout in Development Plans sanctioned by Respondent 2. Consequently the Petitioners' development would be as per the policy under the aforesaid R-7 as averred by them in para 4 of the above Petitions. 4. The Petitioners would also be entitled to certain Transferable Development Rights (TDR) under the aforesaid R-7. Though the entitlement of the Petitioners is admitted by R-2, the extent of the entitlement to the TDR under Condition (b) of R-2 is disputed. 5. Hence the interpretation of the condition (b) in R-7 is only required. It would be prudent to set out the said provision itself. 4 “(b) 15% of the constructed built up area shall be handed over to P.M.C free of cost. The owner/developer shall be entitled for TDR as per Regulation No.2.4 .” 6. Regulation No.2.4 deals with TDR. It sets out the conditions for the grant of TDR under clauses N-2.4.1 to N-2.4.17 . Since the Petitioners would be entitled to TDR as per Regulation No.2.4, their entitlement would be subject to all the conditions under all the clauses of the said Regulation 2.4. It would, therefore, be imperative to read the Regulation as a whole. The Regulation, in separate and distinct clauses, deals with the award of TDR in the form of Floor Space Index (FSI) for the owner or his transferee, the time of the eligibility for the grant (which is after the surrender of the land and after completion of construction), the conditions to which it is subject (being Regulation N-2.4.4 and 2.4.6), the procedural requirements, the compliance of the conditions precedent for the grant (being levelling the land, constructing a compound wall and gate) and the consequences of the surrender (being the vesting of the land in the PMC or the Appropriate Authority and the transfer being effected in the Survey Records in their names). It would, therefore, be prudent to set out the material clauses of Regulation 2-4. Clauses 2.4, .1(A), .2, .5, .6, .7, .8, .10, .11, .12, .13, .14 and .15 and run thus : “N-2.4 Transferable Development Rights (TDR). 5 N-2.4 Regulations for the grant of Transferable Development Rights (TRD) to owners/developers and conditions for grant of such rights. N-2.4.(A).The owner (or lessee) of a plot of land which is reserved for a public purpose, or road construction or road widening, in the development plan and for additional amenities deemed to be reservations provided in accordance with these Regulations, excepting in the case of an existing or retention user or to any required compulsory or recreational open space, shall be eligible for the award of transferable Development Rights (TDRs) in the form of Floor Space Index (FSI) to the extent and on the conditions set out below. Such award will entitle the owner of the land, to FSI in the form of a Development Right Certificate (DRC) which he may use for himself or transfer to any other person. N-2.4.2 Subject to the Regulation N-2.4.1 , above, where a plot of land is reserved for any purpose specified in Section 22 of Maharashtra Regional and Town Planning Act 1966 the owner will be eligible for Development Rights (DRS) Subject to regulations N- 2.4.5 and N-2.4.6 given below after the said land is surrendered free of cost as stipulated in Regulation N-2.4.5 in this rule, and after completion of the development of construction as per rules, if he undertakes the same. N-2.4.5 The built up area for the purpose of FSI credit in the form of DRC shall be equal to the gross area of the reserved plot 6 that is surrendered and will proportionately increase or decrease according to the permissible FSI of the zone wherefrom the TDR has originated. N-2.4.6 When an owner/lessee also develops or constructs the built up area on the surrendered plot at his cost subject to stipulations as may be prescribed by the Commissioner or appropriate authority as the case may be and to their satisfaction and hands over the said developed/constructed built up area to the Commissioner/Appropriate Authority, free of cost he may be granted a further D.R in the form of FSI equivalent to the area of the construction/development done by him, utilization of which etc. will be subjected to the Regulations contained in this Rule. N-2.4.7 A DRC will be issued only on the satisfactory compliance of the conditions prescribed in this Rule. N-2.4.8 A holder of DRC who desires to use the FSI credit therein on a particular plot of land shall attach to his application for development permission valid DRCs to the extent required. N-2.4.10 DRCs may be used on one or more plots of land whether vacant or already developed or by the erection of additional storeys or in any other manner consistent with these Regulations, but not so as to exceed in any plot a total built-up FSI higher than that prescribed. 7 N-2.4.11 a) The FSI on receiving plots shall be allowed to be exceeded not more than 0.4 in respect of DR available for the reserve plots. N-2.4.12 DRs will be granted and DRCs issued only after the reserved land is surrendered to the Corporation, free of cost and free of encumbrances after the owner or lessee has levelled the land to the surrounding ground level and after he has constructed a 1.5m high compound wall (or at a height stipulated by the Commissioner) with a gate at the cost of the owner, and to the satisfaction of the Commissioner. The cost of any transaction involved shall be borne by the owner or lessee. N-2.4.13 With an application of development permission, where an owner seeks utilization of DRs he shall submit the DRC, to the Commissioner who shall endorse thereon in writing, in figures and words the quantum of the proposed FSI/TDR to be utilized, before granting development permission and when the development is complete, the Commissioner shall endorse on the DRC in writing, in figures and words, the quantum of the DR's actually utilized and the balance remaining thereafter. N-2.4.14 A DRC shall be issued by the Commissioner himself as a certificate printed on a bond paper in an appropriate form prescribed by Commissioner. Such a certificate will be a “transferable & negotiable instrument” after due authentication by him of all transactions, etc. relating to grant of utilization of 8 DRC. N-2.4.15 The surrendered reserved land for which a DRC is to be issued shall vest in the Corporation/Appropriate Authority and such land shall be transferred in Survey Records in the name of the Corporation/Authority . The surrendered land so transferred to the Corporation who is not the Appropriate Authority for implementation of the proposal the Appropriate Authority may on application, thereafter be allowed by the Corporation to transfer the land in favour of that Appropriate Authority on appropriate terms as may be decided by the Corporation.” (emphasis supplied) 7. It can be seen from the reading of the aforesaid clauses of R-2.4 that the grant of TDR is subject to the conditions laid down in its aforesaid clauses thus : .1(A). The owner's entitlement is to the FSI in the form of the DRC which may be used by himself or which could be transferred to any other person. .14. It therefore becomes a “Transferable and Negotiable Instrument ”. .2. The eligibility of the owner to DRs is subject to clauses .5 and .6 and is to be granted only after the land for which the TDR is claimed is surrendered free of cost to the 9 Corporation as envisaged in clauses .5 and .6. .5. The FSI Credit that would be granted in the DRC is equivalent to the gross area of the reserved plot (land ) that is surrendered. That area to be mentioned in the Certificate would proportionately increase or decrease according to the permissible FSI on that plot. .6. If the owner instead, constructs upon such plot or develops such plot and hands over the constructed/developed/built- up area also, he would be entitled to a further TDR/FSI equivalent to the area of such development. Such development is to be to the satisfaction of the Commissioner of Respondent No.2. Hence, it must be within and in consonance with the D.C.Rs . e.g. If the construction is as per a layout in a sanctioned plan, which is on an amalgamated plot of land, it would have to confirm to the Regulations relating to open area, amenity spaces etc., which would be for the plot as a whole. If, after putting up such construction the plot can be surrendered as per the other conditions in Regulation 2.4, the owner/developed would be entitled to FSI for the plot as well as FSI of the construction. 10 .7. The Certificate cannot be granted merely upon the constructed area of 15% being given to Respondent No.2. All the conditions in the Regulation must be complied. These conditions are set out in clauses .8,.12 & .15. .8. After the certificate is issued an application is to be made by the developer for crediting the extent of the FSI required. .14. The developer is required to level the land , put up a compound wall and a gate . This clause contemplates that only an actual, divisible, independent plot which is capable of being bounded by and enclosed within a compound wall and which has an independent right of way thereto and is ready for being developed on a levelled surface can be surrendered or handed over. A notional plot without specified independent boundaries cannot be so surrendered . A plot which cannot be immediately developed is also not eligible for surrender to claim TDR thereupon. .15. Upon surrender, the land vests in Respondent No.2 and the Survey Records must reflect that fact. Hence if the 11 plot cannot be separately transferred to Respondent No.2, and if it cannot vest in Respondent No.2, it cannot be eligible for TDR upon surrender – invaluable plot which cannot confer title upon Respondent No.2 and which cannot be immediately developed, or having no bearing such potential cannot be surrendered to claim TDR. 8. A reading of the Regulation 2.4 as a whole clearly shows that the plot worthy of development alone and if it is made developable can be surrendered . 9. A part of the plot in a layout which is not an independent plot, capable of development cannot be surrendered and consequently cannot beget TDR from Respondent No.2. 10. The Petitioners have developed plots of lands which were reserved for E.W.S under ULCRA. They have amalgamated 2 or 3 plots and developed them under layout. The entire plots, being reserved, were otherwise liable for acquisition for EWS under Section 126 of th Maharashtra Regional & Town Planning Act, 1966 (MRTP Act). The Petitioners would have been entitled to compensation for such acquisition under Section 126(1)(a) of the MRTP Act. The Petitioners desired to develop the plots for public housing instead. Hence, they were allowed to develop if they handed over 15% of the constructed built up area to Respondent No.2 free of cost and were also allowed TDR/FSI to the extent of the said construction under 12 Section 126 (1) (b) of the MRTP Act. Consequently, for giving up 15% of the area constructed, the Petitioners got released 85% of the remainder of the land for themselves for development as per DC Regulations. 11. The handing over of the fully constructed 15% area of the plots is itself adequate consideration for the release of the remainder 85% of the area of the plots for which Respondent No.2 forbears to acquire/reserve. Aside from such forbearance, under Appendix R-7, the Petitioners are further entitled to TDR for such construction. This constitutes further consideration/compensation for the Petitioner's handing over 15% of constructed built up area of the plots to be developed. This further grant is subject to Rules in that behalf. These Rules are contained in Regulation 2.4. Each of the conditions in the regulation must be complied for the Petitioners to be eligible to obtain the TDR equivalent to the built up area of 15% of the plots. 12. The Petitioners have constructed a number of buildings as per the sanctioned plans. 2 out of those buildings are earmarked by the Petitioners as 15% area liable to be handed over to Respondent No.2. The Petitioners demand TDR for the 15% construction as the plot of land so developed by way of those buildings and for the land beneath those buildings. 13. The Petitioners have entered into correspondence with 13 Respondent NO.2 in that behalf. The Petitioners have offered to give “physical possession of the land ” under what they call “the Notional Sector D on the layout plan ” and the buildings constructed on such land. 14. Mr. Chinoy on behalf of the Petitioners contended that the Petitioners are entitled to TDR under Regulation No.2.4.5 and 2.4.6, the former for the land/buildable area/FSI utilised by them i.e., the plot and the latter for the built up construction. He argued that if the reserved plots were to be surrendered undeveloped and vacant, the Petitioners/or the owners would be entitled to FSI available on such plot. Hence, if the Petitioners developed the plot by putting up construction thereon, at their cost, they should be entitled to further FSI equivalent to such construction also. He contended that the Regulation 2.4 includes both clauses .5 and .6 and the entitlement of the Petitioners must be construed and interpreted as such. If not so done, it would tantamount to expropriation of the land by interpretation, which is impermissible. The construction of Regulation 2.4 as a whole leaves us to conclude that this argument is misconceived by over simplification. 15. The Petitioner's seminal case is based on Appendix R7 and not on Regulation .5 or .6. R7 grants the entitlement as per Regulation 2.4. Whichever clause of the Regulation that would apply to the Petitioner's case, would determine their entitlement. The Petitioners are required to give any part of their construction aggregating of 15% 14 of the built up area to Respondent No.2. This could well be a part of the building comprising few flats therein. Since the Petitioner's construction is for development of a large amalgamated plot, the 15% requirement is represented by 2 buildings. The land below these buildings are a part of the layout. It is a part of the amalgamated plot. Hence it cannot be subdivided and enclosed by a compound wall and a gate which is a necessary requirement for surrender of the “plot” - i.e., the land below those 2 buildings. If Regulation 2.4 – more specially clauses .12 and .15 cannot be complied, the plot/land cannot be surrendered. Knowing that the land below these buildings is not divisible and enclosable within a compound wall, the Petitioners have chosen to call it “Notional Sector D”. The mandatory requirement of a compound wall rules out any notional Sector. The notional Sector itself shows the incapability of the Petitioners in complying with the Regulation to be eligible to the grant of TDR for the plot/FSI/buildable area. 16. Mr. Ketkar on behalf of Respondent No.2 contended that if the Petitioners were to develop the entire plot and hand it over to the Respondent No.2, they would be entitled to FSI for the plot surrendered as also the construction put up thereon. That would be possible only if the plot is a sub- divided, independent plot capable of vesting in the PMC. If the plot cannot vest in the PMC, it cannot compensate the Petitioners. Hence the PMC cannot grant TDR for any notional plot. He drew our attention to the Annexure R7 under which the TDR/FSI grantable by Respondent No.2 is for 15% of the 15 constructed built up area only. Such construction, he reasoned, could be anywhere on the plot - it may be a few flats in a building constituting its 15% constructed built- up area. Such area could not accompany any land beneath it. 17. Mr. Ketkar drew our attention to the definition of built up area in Rules 2.13 of the D C Rules as “the area covered immediately above the plinth level by the building or extended area of any upper floor”. Hence, built- up area excludes land. In case some flats are handed over, each such flat cannot be taken to have land underneath it which could be stated to be even notionally surrendered. Hence, in case of development of a plot, the TDR is only grantable for the construction handed over to the PMC. Only already developed plots, when surrendered upon reservation, can fetch TDR for the plot as well as for the construction thereon under clauses .5 and .6. Hence, Mr. Ketkar further contended that the expression “On the surrendered plot” meant and implied not a surrender in specie, but must be taken to be read as “used for public purpose ”. 18. Mr. Ketkar arithmetically explained the legal position accounting for the gross area of the amalgamated plot in which Petition No.2944 of 2006 alongside the area under layout, deducting the open spaces, amenity areas, internal road to derive the not balance plot area, so as to compute the allowable FSI vis a vis the notional land area under the 2 buildings to be handed over to the Respondent No.2 as 16 15% of the total built- up area under the sanctioned layout plan to demonstrate how the construction of the 2 buildings would far exceed the permissible FSI. That logical deduction deserves to be illustrated. Sr. No. Particulars Area in sq. mtrs. 1 Gross Total area of the amalgamated plot 73400 2 Gross Area under Layout 53838.69 3 Less 10% open space 5382.87 Less 5% amenity space 2691.43 8074.30 Balance Plot Area 45754.39 - Allowable FSI is 45754.39 (Since FSI is 1 for the plot) 15% of the total plot/FSI allowable .6863.16 Area of land under the 2 buildings to be handed handed over 3600 Less 10% open space required on the plot 360 Actual open space on the plot 231.53 Constructed built- up area of the 2 buildings 5391.64 Hence, Mr. Ketkar rightly argued that upon such arithmetical calculation, the FSI consumed on the plot under the 2 buildings would be 1.5 which is impermissible. 19. Consequently it is clear that in an amalgamated plot in a layout, the requirement of 15% constructed built- up area would beget only such TDR/FSI as corresponds with the actual construction, and 17 excludes any land/plot notional or otherwise underneath it. Such construction, even if it is contained in a separate building cannot be partible from the main plot consisting of the remaining 85% of construction. It does not carry its separate, independent access road, open spaces or amenity spaces and is an inseparable, unsub- dividable part of the whole amalgamated plot. Further it is incapable of being bounded by a compound wall or having its own gate. It has no building potential and cannot vest in the reserving authority free from encumbrances. In such a case, no land or buildable area is surrendered to the reserving authority. It therefore, cannot have any separate value and hence no TDR/FSI can be allowed thereupon. Hence, there cannot be compensation for the land cost and compensation for the construction cost in such cases. Consequently, the argument of Mr. Chinoy that under Appendix R7, compensation specified under Regulation No.2.4.5 is not denied and hence must be granted must be rejected. Hence, the plea of Mr. Chinoy that both clauses 2.4.5 and 2.4.6 of the Regulation are required to be applied to all cases of construction cannot be accepted. Indeed it would be too myopic to refer only to clauses 2.4.5 and 2.4.6 to the exclusion of the other clauses, more specifically 2.4.12 and 2.4.15. A reading of Regulation 2.4 as a whole clearly excludes the application of clause 2.4.5 to the construction in both these Petitions. 20. Hence both the Petitions are dismissed with costs. Rule in both the Petitions stand discharged. 18 (SMT. ROSHAN DALVI, J.) (SMT.RANJANA DESAI, J.)