Bombay High Court Upholds TDR Premium Policy Under MRTP Act; UDCPR Amendment and Notification Held Valid

Writ petitions under Article 226 of the Constitution of India challenging the validity of a government notification issued under the MRTP Act and amendment to the UDCPR concerning TDR utilisation and urban development.

The petitioners sought quashing and setting aside of the Notification dated 7th October 2024 and Clause 10.16 of the UDCPR, alleging that the same was arbitrary, ultra vires the MRTP Act and violative of statutory provisions.

The first petition, Writ Petition No. 6746 of 2024, was initially filed against the Notice dated 15 March 2024 because the proposed amendment was sought to be brought into immediate operation. Following issuance of the final Notification dated 7 October 2024, the petition was amended to challenge the final Notification and incorporate additional grounds. Writ Petition (Stamp) No. 17210 of 2024 specifically challenged the period between the draft Notice of 15 March 2024 and final Notification dated 7 October 2024, including the alleged retrospective implementation of the amendment.

No previous decisions were mentioned in the provided judgment text; the case was heard together and disposed of by this common judgment

Whether the Notification dated 7 October 2024 introducing Clause 10.16 into the UDCPR was ultra vires the MRTP Act? Whether the State Government possessed statutory authority under Sections 22(m), 37 and 159 of the MRTP Act to introduce the impugned regulatory provision? Whether permitting utilisation of 75% of the permissible TDR component upon payment of premium amounted to an impermissible levy without authority of law under Article 265? Whether Clause 10.16 unlawfully interfered with the TDR compensation mechanism under Section 126 of the MRTP Act? Whether the impugned amendment substantially altered the Development Plan and therefore required compliance with the mandatory procedure under Section 37? Whether the procedure prescribed under Section 37(1AA) was duly followed? Whether the impugned Notification was arbitrary or unreasonable and consequently violated Article 14? Whether the Notification affected the petitioners' property rights under Article 300A? Whether the petitioners had established that the impugned measure substantially diminished the value of TDR? Whether the challenge to the original Notice dated 15 March 2024 survived after issuance of the final Notification?

The petitioners contended that TDR and additional FSI are legally distinct concepts. According to them, additional FSI could be obtained upon payment of premium, whereas TDR constituted compensation for surrender of land under Section 126. Therefore, premium could not be imposed merely for utilisation of TDR in the absence of express statutory authority. It was further argued that: Clause 10.16 diminished the commercial value of TDR--it effectively altered the statutory compensation scheme under Section 126--the amendment substantially modified the development control framework--the amendment had the effect of increasing the effective FSI--the mandatory procedure under Section 37 had not been properly followed--objections raised by affected parties had not been adequately considered--the measure violated Articles 14, 265 and 300A--the State action allegedly favoured developers at the expense of landowners. These submissions are recorded as the petitioners' contentions and were not accepted by the Court. Retrospective implementation The petitioners also argued that Section 154 could not be used to introduce legislative changes and that the State could not bypass the procedure under Section 37 by bringing the amendment into immediate effect. B. Respondents' Submissions The State argued that Clause 10.16 was introduced to address the shortage and concentration of TDR in the Panvel Municipal Corporation area. According to the State, approximately 76.08% of the Corporation's area was not covered by a sanctioned Development Plan, resulting in limited TDR generation and an imbalance between demand and supply. The State relied upon the possibility of concentration and cartelisation of TDR as part of the justification for the policy. The State submitted that: Clause 10.16 merely provided an additional option--developers could still utilise TDR--25% of the permissible TDR component had to be procured in TDR form--there was no compulsion upon landowners to surrender land--the value of TDR was determined by market forces--Section 22(m) provided statutory authority for the regulation--judicial review of delegated legislation was limited.--CREDAI and the developer respondent additionally argued that TDR had no statutorily guaranteed monetary value and that its value was determined by market demand and supply.

The principal ratio of the judgment is that Clause 10.16 does not alter the maximum permissible TDR but merely provides an alternative mechanism for utilisation of part of that TDR component upon payment of premium, and such regulation falls within the statutory framework of the MRTP Act. The Court noted that the maximum permissible TDR of 1.40 remained unchanged. What Clause 10.16 changed was the source of utilisation: up to 75% of the permissible TDR component could be utilised from the respondent authority upon payment of premium, while the balance 25% continued to require TDR. The Court further held that Section 22(m) empowered the planning authority to regulate development and impose fees, charges and premiums at rates fixed by the State Government or planning authority. Therefore, the impugned amendment was within the statutory framework and did not amount to an unconstitutional tax or levy under Article 265. A further important principle was that Sections 126(1)(a) and 126(1)(b) contemplate agreement between the landowner and acquiring authority. The landowner retains the choice whether to surrender land in exchange for TDR; if the landowner does not opt for those modes, the authority may proceed under Section 126(1)(c). There was also no compulsion under Clause 10.16 to utilise TDR.

On compliance with Section 37(1AA) “the requirements prescribed under clauses (a), (b), and (c) of Section 37(1AA) of the MRTP Act are complied” The Court recorded that objections were invited, objections were forwarded to the concerned authority, responses were obtained, objectors were heard, a report was prepared and recommendations were thereafter submitted to the State Government. On the landowner's choice under Section 126 “it is for the landowner whose land is affected by a reservation, to decide whether such land is to be surrendered in lieu of TDR.” The Court held that if the landowner does not choose the agreement-based modes under Section 126(1)(a) or (b), the authority may proceed under Section 126(1)(c). On the nature of the amendment The Court observed that the maximum permissible TDR remained 1.40, and Clause 10.16 only modified the source from which up to 75% of the TDR component could be obtained. On delegated legislation The Court applied the principles governing judicial review of delegated legislation and held that the impugned amendment was not beyond the rule-making power conferred under the MRTP Act.

On 2nd December 2020, UDCPR was sanctioned for Maharashtra -- On 28th April 2023, representation made by respondent no.5 highlighting TDR difficulties -- On 5th September 2023, Panvel Municipal Corporation opposed the policy -- On 19th January 2024, Urban Development Department recommended considering representations -- On 15th March 2024, draft notification issued under Section 37(1)(AA) of MRTP Act -- On 10th April 2024, Panvel Municipal Corporation filed objections -- On 7th October 2024, impugned Notification issued -- Writ petitions filed and heard together -- Judgment reserved on 10th December 2025 -- Judgment pronounced on 13th February 2026

• Maharashtra Regional and Town Planning Act, 1966: Section 37(1AA)(c), Section 31(1)
• Constitution of India: Article 226