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

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 Regulations, accorded its approval to the recommendation of the Multi-storeyed Building Panel3. 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 conditionThe 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 DepartmentsThe appellant, as the planning authority, was requested to take up further action for issuance of a planning permission4. The appellant, which is a planning authority under the provisions of the Tamil Nadu Town & Country Planning Act 1971, was required to consider the application for the grant of planning permission under Section 49. The Chennai Metropolitan Water Supply and Sewerage Board addressed a letter on 6 February 2012 to the respondent stating that it would consider the issuance of its No Objection Certificate 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. 28.01.20122. 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 culvert3.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 Board4. Supervision charge @ 21% of the estimated construction cost should be deposited to CMWSSB before construction of culvert5. The existing pipeline should not be damaged at any point of time and if any damage is caused at the time of construction of culverts/compound wall, the entire repair cost should be borne by you6. 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 cost7. You should not have any rights, whatsoever to claim the ownership of the above boards land8. 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 public5. 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 submitted6. 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 20127. 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: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 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 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 developmentsThe 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 applicant9. 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 2008 and in consequence, the demand of Rs. 4,17,15,000/- is without the authority of law;(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 itwas 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.

Court's reasoning:
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.