Article 300A Doesn't Protect Property Values From Policy-Induced Fluctuations: Karnataka High Court

The Karnataka High Court has recently dismissed a batch of petitions challenging the State's Premium Floor Area Ratio scheme (Premium FAR) while observing that the impugned scheme is not in contravention of Article 300A of the Constitution. [2026 LiveLaw (Kar) 210]

The Division Bench of Chief Justice Vibhu Bakhru and Justice C.M Poonacha observed that variations in property value due to change in economic policies would not amount to 'deprivation of property', in contravention of Article 300A.

For context, the Court was hearing a batch of petitions filed by landowners who had been granted Transferable Development Rights (TDRs) in lieu of monetary compensation for land acquired for public purposes. They challenged the State's Premium Floor Area Ratio (Premium FAR) scheme on ground of violating property rights.

The pleas primarily claimed that the concept of premium floor area ratio upon additional fee would detrimentally lower the market value of TDRs, which in turn, amounts to a violation of right to property under Article 300A of the TDR holders.

Rejecting this contention, the High Court said,

"The assumption that values of properties are preserved under Article 300A of the Constitution is plainly erroneous...The policy decision of the executive that results in fluctuation of the values of property (immovable or otherwise) would not render the policy as violative of Article 300A of the Constitution of India. Almost all decisions relating to fiscal and economic policy affect the value of assets held by citizens. However, these decisions cannot be challenged as violative of Article 300A of the Constitution of India, as by their nature they do not expropriate or deprive the citizens of their property."

Explaining illustratively, the Court said many States address the scarcity of land for residential purposes in urban areas by expanding city limits and permitting conversion of the land for residential or commercial use. Such expansion may reduce the market value of residential land due to additional supply. However, the same would not constitute violation of Article 300A.

"If we accept the contention that it is incumbent on the State to preserve values of properties, such an action of the State would also be vulnerable to a challenge on the ground of violating Article 300A of the Constitution of India. Plainly, this is not the import of the constitutional guarantee under Article 300A of the Constitution," the Court said.

For context, the Premium FAR scheme, as per the 2026 notifications, permits additional FAR up to 0.6 times the ordinarily permissible FAR for sites abutting roads with a minimum width of 9 meters. From 9 Meters up until 12 meters, only TDRs can be utilised for the development of the plot and no Premium FARs can be utilised to reach the additional FAR. The maximum additional FAR that can be acquired through Premium FAR alone is capped at 0.4 times the base FAR, with the balance of 0.2 times the base FAR to be utilised through TDRs.

Relying on the same, the Court also pointed out that the Advocate General submitted before the court that 85,000 out of 1,08,233 roads in Bengaluru is in the category of 9 to12 metre roads where Premium FAR is unavailable, which would mean that only TDRs would be applicable for additional floor area there.

The Court also added that no landowner whose land is acquired are compelled to accept TDRs instead of monetary compensation. It will always be open to the landowner to accept fair compensation under the 2013 Act, the court added.

"In view of the above, the appeal and the writ petitions are dismissed. Pending applications, if any, shall stand dismissed”, the court concluded.

Case title: Krishnamurthy M v. State of Karnataka & Ors and Connected Matters

Case No: WA 1983/2025 & Connected Matter

Citation: 2026 LiveLaw (Kar) 210

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