CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY REP. BY ITS MEMBER-SECRETARY & ANR. versus PRESTIGE ESTATES PROJECT LTD.
[2019] 9 S.C.R. 859, Supreme Court of India, 2019
Outcome: Disposed off
Segment: Ratio
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CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY
REP. BY ITS MEMBER-SECRETARY & ANR.
v.
PRESTIGE ESTATES PROJECT LTD.
(Civil Appeal No. 5642-5643 of 2019)
JULY 29, 2019
[DR. DHANANJAYA Y CHANDRACHUD AND
INDIRA BANERJEE, JJ.]
Tamil Nadu Town and Country Planning Act, 1971 – ss.48,
49 and 63B – Tamil Nadu Town and Country Planning (Levy of
Infrastructure and Amenities charges) Rules, 2008 – r.4 – Second
master plan for Chennai Metropolitan Area 2006 (Regulation) –
regulation 36 – Respondent submitted application on 22.03.2011
for planning permission to construct a multi-storeyed building
complex – Appellant issued a demand notice to the respondent to
deposit some charges including Infrastructure & Amenities charge
(I & A) and premium FSI charge amounting in order to process its
application – Appellant demanded the charges on 27.03.2012 and
the respondent paid the same on 28.03.2012 – On 26.03.2012, the
Government revised the guideline value with effect from 01.04.2012
– On 28.03.2012, G.O.Ms No.86 was issued whereby the I & A
charges for different categories and building falling under the
jurisdiction of the appellant stood increased – Pursuant thereto, a
demand notice was issued on 22.08.2012 by the appellant by which
demand was revised under two heads, i.e. balance I & A charges
and balance premium FSI charge – Writ petition by the respondent
against the said demand notice – Single Judge of the High Court
allowed the writ petition and held that a right had
accrued to the
respondent to obtain planning permission and that it could not be
divested by the subsequent amendment with effect from 01.04.2012
– Writ appeal was dismissed – On appeal, held: R.4 of the Rules,
2008 as it stands prescribes the minimum and maximum rates for
the levy of I & A charges – The proposal which was initiated by the
government on 28.03.2012 envisaged the elimination of the minimum
and maximum rates specified in r.4 as a result of which cl.(6) of
   [2019] 9 S.C.R. 859
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G.O.Ms No.86 incorporates a requirement of amending the Rules,
2008 – However, Rules, 2008 were not amended – 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 – The order of the High Court insofar as the demand
for I & A charges are concerned is maintainable – Insofar, levy of
premium FSI charges are concerned, the levy of premium FSI charges
under regulation 36 of Regulations, 2006 is incident to the planning
authority allowing premium FSI over and above the FSI which is
normally allowable – On 27.03.2012, 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 deposit of the charges did not confer
a vested right in the respondent for grant of planning permission –
Once the revised charges came into force with effect from
01.04.2012, the respondent, as the applicant for planning
permission, was bound to pay the revised charges – The grant of
any permission post the revision of the premium FSI charges would
necessarily be subject to the revised charges – Thus, respondent,
as the developer is liable to pay revised charges.
Respondent applied for planning permission to construct a
multi-storeyed building complex
on 22.03.2011. The appellant-
planning authority under the provisions of the Act, 1971, was
required to consider the application for the grant of planning
permission u/s.49. The appellant issued a demand notice to the
respondent to deposit some charges including Infrastructure &
Amenities charge (I & A) amounting to Rs.8,34,40,000/- and
premium FSI charge amounting to Rs. 44,75,88,000/- in order to
process its application. The appellant demanded the charges on
27.03.2012 and the respondent paid the same on 28.03.2012. On
26.03.2012, the Government revised the guideline value with
effect from 01.04.2012.  On 28.03.2012, G.O.Ms No.86 was issued
whereby the I & A charges for different categories and building
falling under the jurisdiction of the appellant stood increased.
Pursuant thereto, a demand notice was issued on 22.08.2012 by
the appellant by which demand was revised under two heads, i.e.
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balance I & A charges amounting to Rs. 4,17,15,000/- and balance
premium FSI charge amount to Rs.90,76,75,000/-. The
Respondent filed writ petition against the said demand notice,
which was allowed. The writ appeal was dismissed by the Division
Bench of the High Court. Hence, the present appeals.
Disposing of the appeals, the Court
HELD: 1.  It was in view of the provisions contained in
clause (6) of G.O.Ms No.86 which contemplates an amendment
to the Tamil Nadu Town and Country Planning (Levy of
Infrastructure and Amenities charges) Rules, 2008, the Division
Bench of the High Court 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  charges.
Rule 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
CHENNAI METROPOLITAN DEV. AUTH. v. PRESTIGE
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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 of the Tamil Nadu
Town and Country Planning Act, 1971 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 legislation. [Para 20] [879-E-H;
880-A-C]
2.  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. In
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, this
Court is 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 2012. [Para 21] [880-D, F]
3.  The second aspect of the matter which needs scrutiny is
in regard to the levy of Premium FSI charges. The levy of
Premium FSI charges under
Regulation 36 of Second master plan
for Chennai Metropolitan Area 2006 (Regulation) 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 2012. [Para 22] [880-G-H; 881-A]
4. Planning permission is granted by the planning authority
upon an application for permission which is made under Section
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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 considered. [Para 23] [881-B-E]
5. 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.
CHENNAI METROPOLITAN DEV. AUTH. v. PRESTIGE
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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
law. [Para 24] [881-E-H; 882-A-B]
State of Tamil Nadu v. Hind Stone (1981) 2 SCC 205 :
[1981] 2 SCR 742 ; Howrah Municipal Corporation v.
Ganges Rope Co. Ltd. (2004) 1 SCC 663 : [2003] 6
Suppl. SCR 1212 ; Usman Gani J. Khatri of Bombay v.
Cantonment Board (1992) 3 SCC 455 : [1992] 3 SCR 
1 ; Commissioner of Municipal Corporation, Shimla v.
Prem Lata Sood (2007) 11 SCC 40 : [2007] 6 SCR 
898 ; New Delhi Municipal Council v. Tanvi Trading
and Credit Private Limited (2008) 8 SCC 765: [2008]
12 SCR 867 – relied on.
Union of India v. Mahajan Industries Ltd. (2005) 10
SCC 203 – distinguished.
Union of India v. Mahajan Industries Ltd. (2014) 5 SCC
199 – referred to.
Case Law Reference
(2014) 5 SCC 199
referred to
Para 11
[1981] 2 SCR 742
relied on
Para 25
[2003] 6 Suppl. SCR 1212
relied on
Para 25
[1992] 3 SCR 1
relied on
Para 25
[2007] 6 SCR 898
relied on
Para 25
[2008] 12 SCR 867
relied on
Para 25
(2005) 10 SCC 203
distinguished
Para 26
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 5642-
5643 of 2019.
From the Judgment and Order dated 01.08.2014 of the High Court
of Judicature at Madras in W.A. Nos. 147 and 148 of 2013.
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K. M. Nataraj, AG, Ms. Jaswanthi, K. M. Ramkumar, K. V.
Vijayakumar, Advs. for the Appellant.
Rana Mukherjee, Sr. Adv., Chitranshul A. Sinha, Arjun Suresh,
Ms. Sonali Khanna (for M/S. Dua Associates),  Advs. for the
Respondent.
The Judgment of the Court was delivered by
DR. DHANANJAYA Y CHANDRACHUD, J.
1. These appeals arise from a judgment of a Division Bench of
the High Court of Judicature at Madras in a Writ Appeal, affirming the
judgment of a learned Single Judge in proceedings under Article 226 of
the Constitution. The High Court set aside a demand raised by the
appellant for revised charges on account of (i) Infrastructure and
Amenities1; and (ii) Premium Floor Space Index2.
2 The respondent submitted an application on 22 March 2011 for
planning permission to construct a multi-storeyed building complex at
Ayyappan Thangal Village, Thiruperumbudur Taluk. The Housing and
Urban Development Department of the Government of Tamil Nadu, to
which the application was forwarded for approval in terms of the
Development Regulations3, accorded its approval to the recommendation
of the Multi-storeyed Building Panel.
3. On 5 January 2012, the State government in a letter to the
appellant approved the recommendation, subject to the following
conditions:
“(i) Chennai Metropolitan Development Authority should ensure
that the applicant gifts the road widening portions marked in
the plan to the Chennai Metropolitan Development Authority
along with OSR spaces before
issue of Planning Permission.
(ii)
The applicant shall furnish ‘No Objection Certificate’ from
Chennai Metropolitan Water Supply and Sewerage Board
for using their land in S. Nos. 51/1B2 and 1C2 for access
before issue of Development Charges advice.
(iii) Subject to other usual condition.”
1 I & A
2 Premium FSI
3 DR
CHENNAI METROPOLITAN DEV. AUTH. v. PRESTIGE
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The letter stated that before the issuance of planning permission,
an undertaking should be obtained from the respondent to fulfill
(i) The provisions contained in the DR; and
(ii) The conditions imposed by the Director of Fire and Rescue
Service and other Departments.
The appellant, as the planning authority, was requested to take up
further action for issuance of a planning permission.
4. The appellant, which is a planning authority under the provisions
of the Tamil Nadu Town & Country Planning Act 19714, was required to
consider the application for the grant of planning permission under Section
49. The Chennai Metropolitan Water Supply and Sewerage Board5
addressed a letter on 6 February 2012 to the respondent stating that it
would consider the issuance of its No Objection Certificate6 subject to
the acceptance of the following conditions:
“1. RCC Compound wall shall be constructed on the boundaries
of the proposed land adjacent to CMWSSB land with gate
provisions of 6m. span at both ends as accesses to reach the
other side of the proposed multistoried residential buildings as
accepted in your Lr. dt. 28.01.2012.
2. The design and estimate for proposed R.C.C culvert of suitable
length and width should be submitted for approval of CMWSSB,
before construction of culvert.
3.The proposed R.C.C  culverts with clearance of 1.5mtr all-
round the pipeline should be constructed at both crossings to reach
the property under
the supervision of CMWSS Board.
4. Supervision charge @ 21% of the estimated construction cost
should be deposited to CMWSSB before construction of culvert.
5. The existing pipeline should not be damaged at any point of
time and if any damage is caused at the time of construction of
4 The Planning Act 1971
5 The Sewerage Board
6 NOC
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culverts/compound wall, the entire repair cost should be borne by
you.
6. If any leak or burst occurs in the pipeline in future within the
culvert portion, the culvert will be demolished by the Board for
attending leak/burst in future and the same has to be reconstructed
at your risk and cost.
7. You should not have any rights, whatsoever to claim the
ownership of the above board’s land.
8. The Board reserves the right to enter upon the premises for
any inspection and to cancel the “No Objection Certificate” at
any point of time without assigning any reason in the interest of
public.”
5. On 2 March 2012, the respondent addressed a communication
to the appellant, stating that it had accepted the conditions imposed by
Sewerage Board by its letter dated 18 February 2012 and that a formal
NOC was expected shortly. The appellant was requested to process the
planning permission and to issue a notice of demand for development
charges in order to enable the respondent to arrange for the funds
required. The respondent, in its above letter dated 2 March 2012 stated:
“Now we expect the formal NOC from CMWSSB very shortly.
In view of the above progress on the NOC, we request that the
processing of Planning Permit and the notice for development
charges may kindly be issued to assess the fees amount involved
and also to make arrangement for the funds required. We further
assure you that before the payment of fees is effected by us the
formal NOC from CMWSSB will be
submitted.”
6. On 7 March 2012, the appellant requested the Sub-Registrar,
Chennai South to furnish the guideline value of urban land for the survey
numbers where development was proposed by the respondent for
assessing the Premium FSI charges in relation to the development
proposal. This was furnished by the Sub-Registrar on 7 March 2012.
7. On 27 March 2012, the appellant issued a demand notice
requiring the respondent to deposit the following charges in order to
facilitate the processing of its application:
CHENNAI METROPOLITAN DEV. AUTH. v. PRESTIGE ESTATES
PROJECT LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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The appellant also required the respondent to comply with the
following requisitions :
“a.
Furnish the letter of your acceptance for the following
conditions stipulated by virtue of provisions available under
DR 4(i) d of Annexure III:-
(i)
The construction shall be undertaken as per sanctioned plan
only and no deviation from the plans should be made without
prior sanction. Construction done in deviation is liable to be
demolished.
(ii)
In cases of Multi-storied Building both qualified Architect
and qualified structural Engineer who should be a Class-I
Licensed Surveyor shall be associated and the above
information to be furnished.
(iii) A report in writing shall be sent to Chennai Metropolitan
Development Authority by the Architect/Class-I Licensed
Surveyor who supervises the construction just before the
commencement of the erection of the building as per the
i)
Development 
charge for land and 
building under Sec. 
59 of the T&CP 
Act, 1971 
Rs. 63,10,000/-
(Rupees sixty three Lakh and ten 
Thousand Only) 
ii) 
Balance 
Scrutiny 
Fee 
Rs. 
50,000/- 
(Rupees 
fifty 
Thousand only) 
iii) 
Regularisation 
charge 
for 
unauthorized 
sub 
division 
& 
amalgamation  
Rs. 25,10,000/- (Rupees twenty 
five lakh and ten thousand only) 
iv) 
Security 
Deposit 
(For Building) 
Rs. 4,64,15,000/- (Rupees four 
crore sixty four lakh and fifteen 
thousand Only)
v)
Security Deposit for 
Display Board 
Rs. 
10,000/-
(Rupees 
Ten
Thousand Only)
vi) 
Security Deposit for 
STP 
Rs. 27,15,000/- (Rupees twenty 
seven lakh and fifteen Thousand 
Only) 
vii) 
Infrastructure 
& 
Amenities Charges 
Rs. 8,34,40,000/- (Rupees eight 
crore thirty four lakh and forty 
Thousand Only)
viii) 
Premium 
FSI 
charge 
for 
78690.55 sq.m.
Rs. 44,75,88,000/- (Rupees Forty 
four crore and seventy five lakh 
eighty thousand only)
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sanctioned plan, similar report shall be sent to CMDA when
the building has reached up to plinth level and thereafter every
three months at various stages of the construction
development certifying that the work so far completed is in
accordance with the approved plan. The Licensed Surveyor
and Architect shall inform this Authority immediately if the
contract between him/them and the owner/developer, has
been cancelled or the construction is carried out in deviation
to the approved plan.
(iv) The owner shall inform Chennai Metropolitan Development
Authority of any change of the Licensed Surveyor/Architect.
The newly appointed Licensed Surveyor/Architect shall also
confirm to CDMA that he has agreed for supervising the
work under reference and intimate the stage of construction
at which he has taken over. No construction shall be carried
on during the period intervening between exit of the previous
Architect/Licensed Surveyor and entry of the new appointee.
(v)
On completion of the construction the applicant shall intimate
CDMA and shall not occupy the building or permit it to be
occupied until a completion certificate is obtained from
CMDA.
(vi) While the applicant makes application for service connection
such as Electricity, Water Supply, Sewerage he should enclose
a copy of the completion certificate issued by CMDA along
with his application to the concerned Department/Board
Agency.
(vii) When the site under reference is transferred by way of sale
lease
or any other means to any person before completion of
the construction, the party shall inform CMDA of such
transaction and also the name and address of the persons to
whom the site is transferred immediately after such transaction
and shall bind the purchaser to those conditions to the Planning
Permission.
(viii) In the Open space within the site, trees should be planted
and the existing trees preserved to the extent possible;
(ix) If there is any false statement, suppression or any
misrepresentation of acts in the applicant, planning permission
CHENNAI METROPOLITAN DEV. AUTH. v. PRESTIGE ESTATES
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will be liable for cancellation and the development made, if
any will be treated as authorized.
(x)
The new building should have mosquito proof overhead tanks
and wells.
(xi) The sanction will be revoked, if the conditions mentioned
above are not complied with.
(xii) Rainwater conservation measures notified by CMDA should
be adhered to strictly.
(a)
Undertaking (in the format prescribed in Annexure
XIV to DCR, a copy of it enclosed in Rs. 20/- stamp
paper duly executed by all the land owner, GPA holders,
builders and promoters separately. The undertakings
shall be duly attested by a Notary Public.
(b)
Details of the proposed development duly filled in the
format enclosed for display at the site. Display of the
information at site is compulsory in cases of Multi
storied buildings, Special buildings and Group
developments”
The letter further stipulated that :
“7. The issue of planning permission depends on the
compliance/fulfilment of the conditions/payments stated
above. The acceptance by the Authority of the pre-payment
of the Development charge and other charges etc. shall
not entitle the person to the Planning Permission but only
refund of the Development Charge and other charges
(excluding Scrutiny Fee) in cases of refusal of the
permission for non-compliance of the conditions stated
above or any of the provisions of DR, which has to be
complied before getting the Planning permission or any
other reason provided
the construction is not commenced
and claim for refund is made by the applicant.”
(Emphasis supplied)
8. On 28 March 2012, the respondent paid the charges which
were demanded by the appellant on 27 March 2012. In the meantime,
on 26 March 2012, the Government revised the guideline values with
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effect from 1 April 2012. One of the conditions subject to which the
State government had granted its approval to the respondent was the
obtaining of an NOC from the Sewerage Board. On 28 March, 2012,
G.O.Ms No. 86 was issued by the Housing and Urban Development
Department whereby 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. The Sewerage Board
issued its NOC on 30 March 2012, subject to the condition that the
respondent execute a gift deed in respect of a piece of land. This
requirement was complied with on 27 April 2012. When the file pertaining
to the grant of planning permission to the respondent was under
consideration, guideline values were revised by the State government
with effect from 1 April 2012. A demand notice was issued on 22 August
2012 by the appellant by which the demand was revised for charges
under two heads:
9. The demand notice was questioned by the respondent in writ
proceedings before the High Court. A learned Single Judge, by a judgment
dated 13 December 2012, allowed the writ petition holding that a right
had accrued to the respondent to obtain planning permission and that it
could not be divested by the subsequent amendment made with effect
from 1 April 2012. The demand was quashed and set aside. The Writ
Appeal has been dismissed by a Division
Bench of the High Court on 1
August 2014. The Division Bench held that :
(i)
Insofar as the levy of I & A Charges are concerned, no
amendment has been made to the Tamil Nadu Town and
Country Planning (Levy of Infrastructure and Amenities
Charges) Rules 20087 and in consequence, the demand of
Rs. 4,17,15,000/- is without the authority of law;
i)
Balance 
I 
& 
A 
Charges  
Rs. 
4,17,15,000/-
(Rupees Four Crore 
Seventeen Lakh and 
Fifteen 
thousand 
Only) 
ii) 
Balance 
Premium 
FSI Charge  
Rs. 
90,76,75,000/-
(Rupees 
ninety 
crore 
seventy six 
lakh 
and 
seventy 
five thousand only) 
CHENNAI METROPOLITAN DEV. AUTH. v. PRESTIGE ESTATES
PROJECT LTD. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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(ii)
The respondent had remitted the I & A charges and Premium
FSI charges on 29 March 2012;
(iii)
Office Order No. 7/2012 dated 16 April 2012 made it clear
that the I & A charges were applicable for applications for
planning permission where the advice for the payment of
development charges was sent on or after 28 March 2012.
In the present case, since the demand had been remitted
prior to 28 March 2012, the pre-revised  I & A charges
were applicable; and
(iv)
The charges for Premium FSI as revised with effect from
1 April 2012 could not be made applicable to the respondent.
The NOC of the Sewerage Board was dated 30 March
2012 and the mere fact that it was received by the appellant
on 2 April 2012 was not a valid ground for the demand
notice and hence the demand could not be justified.
10. Assailing the decision of the High Court, Mr K M Nataraj,
learned Additional Solicitor General of India formulated two issues which
need to be addressed in these proceedings:
“(i) Whether charges namely Infrastructure & Amenities charges
and Premium FSI charges are required to be collected as per
rates prevailing as on the date of submission of planning permission
application or on the date of granting approval of planning
permission;
(ii) Whether the respondent herein has accrued any vested right
before granting approval of planning permission merely because
they remitted the charges as per demand notice dated 27-03-2012.”
The
learned ASG urged that the appellant, as a planning authority,
is under a statutory obligation to levy and collect the charges as applicable
when planning permission is granted. The pendency of an application or
the deposit of the payment earlier by the applicant does not create a
vested right. If the planning permission is not granted, the planning
authority would have to refund the amount deposited. Hence, the crucial
date for determining the applicable charges is the date on which planning
permission is granted by the planning authority. In the present case, the
planning permission was granted only in 2013, pursuant to the interim
7 The Rules 2008
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order of the High Court subject to a further deposit of Rs 10 Crores as
ordered. Insofar as I & A charges are concerned, it was urged that the
High Court erroneously relied on the Office Order dated 16 April 2012
which records that the old rates would be applicable where the
development charges’ advice was sent before 28 March 2012. This, it
has been urged, is in conflict with the GO dated 28 March 2012 according
to which, I & A charges were to stand increased by 50 per cent over the
then prevailing rates. The learned ASG argued that an amendment to
the Rules was not necessary since the charges are determined and are
leviable under an order issued pursuant to Section 63B while according
building permission and hence the order of the High Court needs to be
interfered with.
11. On the other hand, Mr Rana Mukherjee, learned Senior Counsel
appearing on behalf of the respondents submitted that:
(i) As regards I & A charges:
(a)
Clause 6 of G.O.Ms No. 86 by which the charges were
revised required that the Commissioner of Town and
Country Planning submit a proposal for an amendment to
the Rules of 2008. As a matter of fact, no amendment
has been carried out; and
(b)
Clause (i) of the Office Order dated 16 April 2012, states
that revised I & A charges shall be applicable for demands
made on or after 28 March 2012. Hence, the revised
charges would not be applicable to the respondent against
whom a demand had been raised on 27 March 2012 by
the appellant.
(ii) As
regards charges for Premium FSI :
(a)
 All payment related obligations were completed by the
appellant on 29 March 2012 prior to the revision of the
guideline values on 1 April 2012. Consequently, the revised
rates would not be applicable and if any date after payment
is to be taken into account that would only enable the
government to unlawfully and unfairly delay the issuance
of permissions and thereafter raise enormous demands.
To obviate this, the cut-off date ought to be treated as the
date of payment;
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(b)
The principle which has been enunciated in the judgment
of this Court in Union of India v Mahajan Industries
Ltd.8 is applicable; and
(c)
The subject matter of the demand pertains to payment
levied by the respondent and not a change in the
development control rules such as involving a change in
floors, setbacks etc.
Moreover, it was urged that the planning permission in the present
case was granted on 30 May 2012 and therefore the withholding of a
copy and the basis of the impugned demand is a mere after thought. The
revised demand does not indicate any reasons or basis.
12. The rival submissions now fall for consideration.
13. Section 48 of the Planning Act 1971 imposes a restraint upon
the construction of buildings and making a material change in the use of
land except with the written permission of the planning authority and in
accordance with the conditions specified in the grant of permission9.
Section 49 which provides for an application for permission is in
the following terms:
“49. Application for permission.- (1) Except as otherwise
provided by rules made in this behalf, any person not being any
State Government or the Central Government or any local authority
intending to carry out any development on any land or building on
or after the date of the publication of the resolution under sub-
section (2) of section 19 or of the notice in the Tamil Nadu
Government Gazette under section 26, shall make an
application
in writing to the appropriate planning authority for permission in
such form and containing such particulars and accompanied by
such documents as may be prescribed.
8 (2014) 5 SCC 199
9 48. Restrictions on buildings and lands, in the area of the planning authority.-
On or after the date of the publication of the resolution under sub-section (2) of section
19 or of the notice in the Tamil Nadu Government Gazette under section 26, no person
other than any State Government or the Central Government or any local authority,
shall, erect any building or make or extend any excavation or carry out any mining or
other operation, in, on, over or under any land or make any material change in the use
of land or construct, form or layout any work except with the written permission of the
appropriate planning authority and in accordance with the conditions, if any, specified
therein.
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(2) The appropriate planning authority shall, in deciding whether
to grant or refuse such permission, have regard to the following
matters, namely:-
(a) the purpose for which the permission is required;
(b)the suitability of the place for such purpose;
(c) the future development and maintenance of the planning area
(3) When the appropriate planning authority refuses to grant a
permission to any person, it shall record in writing the reasons for
such refusal and furnish to that person, on demand, a brief
statement of the same.”
The Planning Act 1971 requires the grant of planning permission
before development or a change in the use of land can take place. The
mere filing of an application does not entitle the applicant to permission.
Nor is there a vested right to the grant of permission.
Section 63B provides for the levy of I & A charges:
“63-B. Levy of infrastructure and amenities charges .-(1) Every
local authority or the planning authority, as the case may be, while
according building permit under the relevant laws or according
permission under this Act, as the case may be, shall levy charges
on the institution of use or change of use of land or building or
development of any land or building in the whole area or any part
of the planning area so as to meet the impact of development and
for ensuring sustainable development of urban and rural areas by
providing adequate infrastructure and basic amenities at the rates
as determined in accordance with such
procedure as may be
prescribed which shall not be less than minimum and not more
than the maximum as may be prescribed, and different rates may
be prescribed for different parts of the planning area and for
different uses.
(2) The infrastructure and amenities charges shall be leviable on
any person who undertakes or carries out any such development
or institutes any use or changes any such use.
(3) The collection of the infrastructure and amenities charges shall
be made in such manner as may be prescribed.
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Explanation.- For the purpose of this Section “relevant laws”
means in case of-
(i) the Chennai Metropolitan Development Authority, the Tamil Nadu
Town and Country Planning Act, 1971 (T.N.Act 35 of 1972);
(ii) the Chennai City Municipal Corporation, the Chennai City
Municipal Corporation Act, 1919 (T.N.Act 4 of 1919);
(iii) the Madurai City Municipal Corporation, the Madurai City
  Municipal Corporation Act, 1971 (T.N.Act 15 of 1971);
(iv) the Coimbatore City Municipal Corporation, the Coimbatore City,
Municipal Corporation Act, 1981 (T.N.Act 25 of 1981);
(v) the Tiruchirappalli City Municipal Corporation, the Tiruchirappalli
City Municipal Corporation Act, 1994 (T.N.Act 27 of 1994);
(vi) the Tirunelveli City Municipal Corporation, the Tirunelveli City
Municipal Corporation Act, 1994 (T.N.Act 27 of 1994);
(vii) the Salem City Municipal Corporation, the Salem City Municipal
 Corporation Act, 1994 (T.N.Act 29 of 1994);
(viii) the Municipalities and Town Panchayats, the Tamil Nadu District
  Municipalities Act, 1920 (T.N.Act 5 of 1920); and
(ix) the Panchayat Unions and Village Panchayats, the Tamil Nadu
Panchayats Act, 1994 (T.N.Act 21 of 1994).”
Section 63B provides for the levy of I & A charges while according
a building permit either under relevant laws or while according permission
under the Planning Act 1971. These charges are leviable on the institution
of use or change of use of land or building or  development
of any land
or building. The rates are determined in accordance with such procedure
as may be prescribed. The rates are not to be less than the minimum and
more than the maximum that is prescribed.
14. Rule 4 of the Rules 2008 contains provisions for the imposition
of the I & A charges:
“4. Infrastructure and Amenities Charges. – The
infrastructure and amenities charges shall be collected for new
construction, additions to existing constructions and change of use
of existing buildings at the rates not exceeding the maximum rate
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and not less than the minimum rates indicated in the Table below,
in case of different categories of buildings referred to in the Table:
15. Rule 5 empowers the Director Of Town and Country Planning
to fix the rates of charges in respect of areas other than the Chennai
Metropolitan Planning Area. In respect of the Chennai Metropolitan
Planning Area, the power to fix the charges, subject to due observance
of the minimum and the maximum specified in Rule 4, is conferred on
the Vice-Chairman of the Chennai Metropolitan Development Authority.
Rule 5 (2) provides thus:
“5. Fixation of rates of Charges.-
(2) In respect of the Chennai Metropolitan Planning Area, the
Vice Chairman, Chennai Metropolitan Development Authority
shall fix the rates of such charges for each of the above categories
Sl No. 
Type of building 
Minimum rates per 
square metre  
Maximum 
rates per 
square 
metre  
(1)
(2)
(3)
Rs.  
(4)
Rs.
1. 
Multistoryed 
buildings 
accommodating 
residential or commercial 
or 
Information 
technology or industrial 
of 
institutional 
or 
combination 
of 
such 
activities   
500 
1,000 
2. 
Commercial 
building. 
Information Technology 
building, 
Group 
development 
and 
Special 
building 
(not 
covered under Sl. No. 1) 
200 
500 
3. 
Institutional building (not 
covered under Sl. No.I)
100 
200 
4. 
Industrial building (not 
covered under Sl. No. 1)
TIME TABLE
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of buildings which shall not be less than the minimum and not
more than the maximum as prescribed in Rule 4, taking into account
the various aspects of developments including infrastructure needs.
He may fix different rates for different categories of buildings or
for different areas.”
16. The power to levy charges for the Premium FSI is in Regulation
36 of the Second Master Plan for Chennai Metropolitan Area 2006
(Regulation)10. Regulation 36 is in the following terms :
“36. Premium FSI.- The Authority  may allow premium FSI
over and above the normally allowable FSI, in any case not
exceeding 0.5 for special building and group developments, and
not exceeding 1.0 for multistoreyed buildings in specific areas
which may be notified, on collection of a charge at the rates as
may be prescribed with the approval of the Government. The
amount collected shall be kept in an escrow amount for utilizing it
for infrastructure development in that area as may be decided by
the Government.”
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 Government.
18. 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/-; and
(ii)
Premium FSI 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 refused.
10 Regulation 2006
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19. 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.mtr.
Clause (6) of G.O.Ms contemplates an amendment to the Rules 2008 :
“6) The Commissioner of Town and Country Planning is directed
to send necessary proposal on amendment to the Tamil Nadu
Town and Country Planning (Levy of Infrastructure and Amenities
Charges) Rules, 2008 to Government accordingly.”
20. 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 charges. Rule
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
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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
legislation.
21. 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 applicable.”
In 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 2012.
22. The second aspect of the matter which needs scrutiny is in
regard to the levy of Premium FSI charges. The 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
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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 2012.
23. 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 considered.
24. 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
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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 law.
25. The principle which we have adopted accords with a consistent
line of precedent of this Court. In State of Tamil Nadu v Hind Stone11,
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.12. 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
11 (1981) 2 SCC 205
12 (2004) 1 SCC 663
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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 Board13,
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 Sood14, 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 Limited15.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.
13 (1992) 3 SCC 455
14 (2007) 11 SCC 40
15 (2008) 8 SCC 765
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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.16. 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.
27. For the above reasons, we allow these appeals in part by
setting aside the impugned judgment and order of the High Court insofar
as it quashed the demand raised by the appellant on 22 August 2012 for
the levy of Premium FSI charges.
28. The appellant, in our view, was justified in demanding Premium
FSI charges at the revised rates and would be entitled to enforce its
demands. However, we maintain the order of the High Court insofar as
the demand for I & A charges is concerned.
29. The appeals are disposed of. There shall be no order as to
costs.
16 (2005) 10 SCC 203
Ankit Gyan
Appeals disposed of.