Case: Chennai Metropolitan Development Authority Rep. by its Member- Secretary &amp; Anr Vs. Prestige Estates Project Ltd

Tamil Nadu v Hind Stone (1981) 2 SCC 205 , Justice O Chinnappa Reddy speaking for a Bench of two learned judges of this Court, while interpreting the provisions of Rule 2 (A) of the Mines and Minerals (Regulation and Development) Act 1957 observed : 13…While it is true that such applications should be dealt with within a reasonable time, it cannot on that account be said that the right to have an application disposed of in a reasonable time clothes an applicant for a lease with a right to have the application disposed of on the basis of the rules in force at the time of the making of the application. No one has a vested right to the grant or renewal of a lease and none can claim a vested right to have an application for the grant or renewal of a lease dealt with in a particular way, by applying particular provisions. In the absence of any vested rights in anyone, an application for a lease has necessarily to be dealt with according to the rules in force on the date of the disposal of the application despite the fact that there is a long delay since the making of the application. We are, therefore, unable to accept the submission of the learned counsel that applications for the grant of renewal of leases made long prior to the date of GOMs No. 1312 should be dealt with as if Rule 8-C did not exist. The same principle was followed by another two judge Bench of this Court in Howrah Municipal Corporation v Ganges Rope Co. Ltd.(2004) 1 SCC 663 . Justice D M Dharmadhikari speaking for the court held : 17…The statutory provisions regulating sanction for construction within the municipal area are intended to ensure proper administration of the area and provide proper civic amenities to it. The paramount considerations of regulatory provisions for construction activities are public interest and convenience. On the subject of seeking sanction for construction, no vested right can be claimed by any citizen divorced from public interest or public convenience. This Court held that the provisions contained in the Howrah Municipal Corporation Act 1980 contemplate an express sanction before a person can be allowed to construct or erect a building. Hence, in ordinary course, no vested right is created merely by the submission of an application for sanction to construct a building. Adverting to the decision in Usman Gani J. Khatri of Bombay v Cantonment Board (1992) 3 SCC 455 , the Court held thus: 30. This Court, thus, has taken a view that the Building Rules or Regulations prevailing at the time of sanction would govern the subject of sanction and not the Rules and Regulations existing on the date of application for sanction. In Commissioner of Municipal Corporation, Shimla v Prem Lata Sood (2007) 11 SCC 40 , Justice S B Sinha speaking for a two judge Bench observed thus: 30…even in the order of sanction passed in favour of the respondents by the State, a condition was imposed that before undertaking the development activities by way of erection of the building, the respondents would take the requisite sanction from the Municipal Corporation. Even if such a condition had not been imposed, the provisions of the Municipal Corporation Act, as noticed hereinbefore, would operate. 36. It is now well settled that where a statute provides for a right, but enforcement thereof is in several stages, unless and until the conditions precedent laid down therein are satisfied, no right can be said to have been vested in the person concerned. The law operating in this behalf, in our opinion is no longer res integra. The same view has been taken by a Bench of three judges of this Court in New Delhi Municipal Council v Tanvi Trading and Credit Private Limited (2008) 8 SCC 765. Justice J M Panchal speaking for the court held : 39. It is well settled that the law for approval of the building plan would be the date on which the approval is granted and not the date on which the plans are submitted. This is so in view of para 24 of the decision of this Court in Usman Gani J. Khatri v. Cantonment Board [(1992) 3 SCC 455] . It would not be out of place to mention that on 7-2-2007, the Master Plan, 2021 has been approved in which the LBZ guidelines have been incorporated and since the plan submitted by the respondents was not approved up to the date of coming into force of Master Plan of 2021, the LBZ guidelines will apply with full force to the plan submitted by the respondents and the plan which is contrary to the LBZ guidelines could not have been directed to be sanctioned. 26. Mr Rana Mukherjee, learned Senior Counsel appearing on behalf of the respondent sought to make a distinction on the ground that this principle will apply as regards regulatory aspects of the development regulations, not in regard to the demand of Premium FSI charges. We are unable to accept the contention simply because the demand on account of Premium FSI charges arises upon the grant of planning permission to avail of Premium FSI. The respondent, as the developer, is liable to pay the revised charges which are applicable post 1 April 2012 when planning permission has been granted. Learned counsel for the respondent also relied on the decision in Union of India v Mahajan Industries Ltd.(2005) 10 SCC 203 . The case is clearly distinguishable since the judgment of this Court adverted to the position which was laid down in a judgment of the Delhi High Court that the crucial date for calculating conversion charges has to be the date of the receipt of the application for conversion. Significantly, the counsel for the Union of India did not contest the correctness of the view of the High Court in that regard. The factual situation in the present case is clearly distinguishable.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]17. Premium FSI is the Floor Space Index over and above that which is normally allowable and is not to exceed 0.5 for special buildings and group developments or 1.0 for multi-storeyed buildings in specific areas. The rates for premium FSI are prescribed with the approval of the Government18. On 27 March 2012, the appellant raised a demand on the respondent for the payment of charges including:(i) I & A charges of Rs. 8,34,40,000/-; andFSI charges for 78690.55 sq.mtrs in the amount of Rs. 44,75,88,000/-While raising the demand, the respondent was informed of the conditions required to be complied with in order to ensure the grant of planning permission. The letter specifically stated that while the grant of planning permission depended upon the fulfillment of the conditions stipulated in the letter, pre-payment of the development charges and other charges would not entitle the respondent to planning permission but only to a refund if planning permission were to be refused19. On 28 March 2012, the Housing and Urban Development Department of the Government of Tamil Nadu issued G.O.Ms No. 86 stipulating that:(i) The minimum and maximum rates as specified in Rule 4 of the I & A Rules 2008 shall be done away with; and(ii) The I & A charges for different categories and buildings falling under the jurisdiction of the appellant and of the Commissioner of Town and Country Planning were to stand increased by 50 per cent over the then prevailing rates. Thus, for instance, the I & A charges for multi-storeyed residential buildings were sought to be revised for the Chennai Metropolitan Development Planning Areas from Rs. 250 per sq. mtr to Rs. 375 per sq.mtr20. It was in view of the provisions contained in clause (6) extracted above that the Division Bench in its judgment dated 1 August 2014 recorded, having enquired of the Advocate General, as to whether any proposal for the amendment of the rules had been initiated. The Advocate General informed the High Court that while steps to amend the rules had been initiated, it would take about two months to complete the process of amending them. It was in this view of the matter and the statement of the Advocate General that the High Court recorded that as on the date of its judgment, no amendment was made to the Rules 2008 for the purpose of increasing the I & A charges. Rule 4 as it stands prescribes the minimum and the maximum rates for the levy of I & A chargesRule 5(2) empowers the Vice-Chairman of Chennai Metropolitan Development Authority to fix the rates for the Chennai Metropolitan Development Planning Areas, while observing the minimum and the maximum rates set out in Rule 4. The proposal which was initiated by the government on 28 March 2012 envisaged the elimination of the minimum and maximum rates specified in Rule 4 as a result of which clause (6) of G.O.Ms. 86 incorporates a requirement of amending the Rules 2008. Absent an amendment to the Rules 2008, the High Court held that the demand for I & A charges at the revised rate could not be enforced against the respondent. A revision of the I & A charges could have been effected by the Vice-Chairman of the appellant in terms of Rule 5(2) without a formal amendment to the Rules 2008, so long as the minimum and maximum provided in Rule 4 is not breached. However, it appears that the government took the view that an amendment to the rules was necessitated since the table specifying the minimum and maximum in Rule 4 was to be abrogated. It was for the above reason that the High Court came to the conclusion that a revised demand for I & A charges could not be enforced in the absence of an amendment to the Rules 2008. Section 63B requires that the minimum and maximum rates should be prescribed. This will have to be borne in mind by the government. Subordinate legislation has to be in conformity with parent legislation21 The High Court also adverted to the Internal Office Circular/Order dated 16 April 2012 of the appellant which specified that while the revised I & A charges were leviable with effect from the issuance of G.O.Ms. No. 86 on 28 March 2012:i.The revised rate of Infrastructure & Amenities charges are applicable for the Planning Permission Applications, where Development Charges advice was sent on or after 28.03.2012. In the case of Planning Permission Applications for which DC advice dated prior to 28.03.2012, the pre-revised rates only applicableIn terms of the above office order, cases where the Development Charges advice was sent prior to 28 March 2012 would be governed by the pre-revised rates. The government is bound by its own decision. Consequently, on this aspect of the matter, we are in agreement with the view of the High Court that the revised I & A charges were not lawfully demanded from the appellant to whom the development charges advice had been issued prior to 28 March 2012The levy of Premium FSI charges under Regulation 36 is incident to the planning authority allowing Premium FSI over and above the FSI which is normally allowable. In other words, it is upon and subject to the grant of Premium FSI that the authority can demand Premium FSI charges. If no Premium FSI is sanctioned, obviously there would be no occasion to demand a charge for Premium FSI. Similarly, if planning permission were to be refused, the deposit which is made by the developer would be refunded. This was categorically stated in the demand which was raised on the respondent on 27 March 201223. Planning permission is granted by the planning authority upon an application for permission which is made under Section 49 of the Planning Act 1971. In the present case, the planning permission was granted upon an interim order of the High Court, subject to the deposit of Rs. 10 Crores on 13 March 2013. Though the appellant received the approval of the Housing and Urban Development Department on 5 January 2012 following the recommendation of the Multi-storyed Building Panel, the grant of planning permission was still to be considered by the Planning Authority. The letter dated 5 January 2012 of the Housing and Urban Development Department contemplates that several steps were still to be taken including the transfer to the road widening portion to Chennai Metropolitan Development Authority, the issuance of an NOC by the Sewerage Board and the fulfillment of all requisite conditions under the development regulations. Moreover, even after compliance with those conditions, the appellant had to process the grant of planning permission. The letter of demand that was issued by the appellant on 27 March 2012 similarly required the fulfillment of several conditions precedent upon which the application for the grant of planning permission would be considered24. On 27 March 2012, while issuing a demand notice to the respondent, it was made clear by the appellant that the planning permission was still to be issued. The submission of the application for permission and the steps taken by the respondent to comply with the conditions and the deposit of the charges did not confer a vested right in the respondent for the grant of planning permission. The grant of planning permission would only ensue upon the appellant scrutinizing the application and determining that the permissions which were sought were in accordance with the development regulations and all other planning requirements holding the field. Before the planning permission was issued, the revised charges for Premium FSI came to be enforced. Once the revised charges came into force with effect from 1 April 2012, the respondent, as the applicant for planning permission, was bound to pay the revised charges. As on 1 April 2012, the respondent had no planning permission in its favour. The submission of the respondent that planning permission was issued in May 2012 evidently will not advance the case of the respondent. The grant of any permission post the revision of the Premium FSI charges would necessarily be subject to the revised charges. Hence, in raising the demand on the basis of the revised charges on 22 August 2012, the appellant was acting in accordance with law26. Mr Rana Mukherjee, learned Senior Counsel appearing on behalf of the respondent sought to make a distinction on the ground that this principle will apply as regards regulatory aspects of the development regulations, not in regard to the demand of Premium FSI chargesWe are unable to accept the contention simply because the demand on account of Premium FSI charges arises upon the grant of planning permission to avail of Premium FSI. The respondent, as the developer, is liable to pay the revised charges which are applicable post 1 April 2012 when planning permission has been granted. Learned counsel for the respondent also relied on the decision in Union of India v Mahajan Industries Ltd.(2005) 10 SCC 203 . The case is clearly distinguishable since the judgment of this Court adverted to the position which was laid down in a judgment of the Delhi High Court that the crucial date for calculating conversion charges has to be the date of the receipt of the application for conversion. Significantly, the counsel for the Union of India did not contest the correctness of the view of the High Court in that regard. The factual situation in the present case is clearly distinguishable.