Landowners Can't Be Forced To Forgo Statutory Compensation To Receive Other Statutory Benefits : Supreme Court

The Supreme Court on Wednesday (May 20) held that a statutory right to compensation cannot be waived through contractual conditions imposed by civic authorities. The Court clarified that once a law grants a person the right to compensation, such right cannot be treated as surrendered merely because the landowner agreed to forgo it as a precondition for receiving another statutory benefit or amenity.

A bench of Justice JK Maheshwari and Justice Atul S. Chandurkar dismissed an appeal filed by the Brihanmumbai Municipal Corporation (“BMC”), who assailed the High Court's decision to allow the Respondent-Landlord to claim statutory compensation under the Maharashtra Regional and Town Planning (MRTP) Act, without compelling them to give up part of that compensation as a condition for acquisition or grant of Transferable Development Rights (TDR) for development of the garden.

“Once the statute read with the regulations framed thereunder provides for compensation to be granted in a certain manner, there was no occasion for the officials of the Corporation to enter into further negotiations with the Landowner to come up with a new mechanism for payment of compensation in derogation of the same. There was no occasion for the authorities to contract out of the statutory conditions for payment of compensation. Such an act cannot be countenanced and sustained in law, and it therefore deserves interference by this Court.”, the court observed.

A dispute between the Brihanmumbai Municipal Corporation and Vijay Nagar Apartments arose concerning land admeasuring over 98,000 square metres situated at Bhakti Park, Chembur, Mumbai, which had been reserved as a “garden” under the Development Plan notified under the MRTP Act.

Under Section 126(1)(b) of the MRTP Act, a landowner surrendering reserved land free of cost is entitled to TDR not only for the surrendered land but also for development or construction of an “amenity” on that land at the owner's expense. Since “garden” is expressly included within the statutory definition of “amenity,” the landowner claimed additional TDR for developing the garden.

However, the BMC had denied the claim relying on conditions incorporated in a Letter of Intent (LOI), undertaking, and maintenance agreement executed in 2001–2002, under which the landowner had agreed not to claim amenity TDR for garden development.

Refusing to interfere with the impugned outcome, the judgment authored by Justice Maheshwari observed that the statutory right of the Landowner under Section 126(1)(b) of the MRTP Act could not have conjured a pre-condition for them to abjure part of the compensation in order to receive the other part i.e., TDR for garden development.

“…the agreement between the Landowner and the Corporation where the Landowner has purportedly 'given up' statutory rights which accrue in its favour, pales into insignificance, especially when giving up of such rights has been projected as a pre-condition at the very first step.”, the court observed.

“The conditions… subject to which the landowner may offer to surrender the designated plot of land to municipal authority and the latter may accept the offer are enumerated in detail in the statutory provisions. Beyond those conditions there can be no negotiations for surrender of the land, particularly in derogation to the landowner's statutory rights,” the Court noted while quoting the Godrej & Boyce Manufacturing Co. Ltd. v. State of Maharashtra & Ors., (2009) 5 SCC 24.

In view of the aforesaid, the appeal was dismissed.

Headnote

Maharashtra Regional and Town Planning Act, 1966 – Section 126(1)(b) – Development Control Regulations for Greater Bombay, 1991 – Regulation 34 & Appendix VII-A – Acquisition of Reserved Land – Grant of Additional Transferable Development Rights (TDR) / Floor Space Index (FSI) for Development of Amenity - The Landowner surrendered land reserved for a 'garden' and developed the amenity at its own cost as per Municipal specifications - The Appellant-Corporation released TDR for the bare land but rejected the claim for additional amenity TDR, citing an Letter of Intent (LOI), a registered Undertaking, and a Maintenance Agreement wherein the Landowner had agreed not to claim amenity TDR in exchange for maintaining the garden on an "adoption basis" for 20 years – Held that Statutory compensation under Section 126(1)(b) is two-fold - (i) FSI/TDR equal to the area of land surrendered, and (ii) additional FSI/TDR against the development/construction of the amenity - Once statutory compensation is ordained, the executive cannot impose extra-statutory conditions or contract out of the statute via negotiations to derogate from the landowner's rights - There is an inherent imbalance of bargaining power between the acquiring authority and the landowner - The condition in the LOI, Undertaking, and Maintenance Agreement forcing the landowner to abjure a part of statutory compensation is invalid - Granting maintenance rights on an adoption basis is independent of the statutory right to acquisition compensation and cannot substitute it. [Paras 43 - 49, 51 - 56]

Constitution of India – Article 300A – Right to Property – Fair Compensation - The right to receive fair statutory compensation upon the compulsory deprivation of property is an intrinsic sub-right encapsulated within the sacrosanct constitutional and human right under Article 300A - Statutes that are expropriatory must be strictly construed, and the State cannot abdicate its responsibility or deprive a person of property without strict compliance with the prescribed statutory compensation mechanism. [Paras 41 - 62]

Delay and Laches – Continuing Cause of Action – Land Acquisition Compensation -The Appellant-Corporation resisted the 2019 claim for additional amenity TDR on the ground of an unexplained delay of 17 years since the surrender of land in 2002 – Held that neither the doctrine of delay and laches nor the principle of abandonment or waiver applies when a relief in the nature of statutory compensation (FSI/TDR) is sought - The right to fair compensation under Section 126(1)(b) of the MRTP Act crystallizes upon the surrender of the land, and a duty is cast on the State to pay it proactively, even in the absence of a representation - noted that between 1996 and 2009, the law regarding the scaling down of additional amenity TDR remained in "suspended animation" due to executive circulars, which was clarified only by the Supreme Court in 2009 - A clear distinction must be drawn between a delayed challenge to the acquisition process itself and a delay in seeking fair statutory compensation; the latter constitutes a continuing cause of action. [Relied on Godrej & Boyce Manufacturing Co. Ltd. v. State of Maharashtra & Ors., (2009) 5 SCC 24; Kukreja Construction Company and Ors. v. State of Maharashtra and Ors., (2024) 14 SCC 594; Municipal Corpn., Greater Bombay v. Yeshwant Jagannath Vaity, (2011) 11 SCC 88; Godrej & Boyce Mfg. Co. Ltd. v. Municipal Corpn., Greater Mumbai, (2023) 15 SCC 110; Sukh Dutt Ratra & Anr. v. State of Himachal Pradesh and Ors., (2022) 7 SCC 508; olkata Municipal Corpn. v. Bimal Kumar Shah, (2024) 10 SCC 533; Paras 58 – 70]

Cause Title: BRIHANMUMBAI MUNICIPAL CORPORATION AND ORS. VERSUS VIJAY NAGAR APARTMENTS AND ORS.

Citation : 2026 LiveLaw (SC) 523

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Appearance:

For Petitioner(s) Mr. R Venkataramani, Attorney General for India Mr. Dhruv Mehta, Sr. Adv. Mr. Chirag J Shah, Adv. Mr. Utsav Trivedi, Adv. Ms. Shivani Bhushan, Adv. Mr. Sandeep Patil, Adv. Ms. Ameyavikrama Thanvi, Adv. Mr. Kartikeya Agarwal, Adv. Mr. Kartikey Sharma, Adv. Mr. Harsh Pandya, Adv. Mr. Gaurav Sharma, Adv. M/S. Tas Law, AOR

For Respondent(s) Mr. Mukul Rohatgi, Sr. Adv. Mr. Pravin Kumar Samdani, Sr. Adv. Mr. Shukla Samit Dilip, Adv. Ms. Devanshi Singh, Adv. Ms. Delnavaz Patel, Adv. Mr. Mustafa Nulwala, Adv. M/S. Trilegal Advocates On Record, AOR Mr. Mohit Paul, AOR Ms. Yugandhara Pawar Jha, Adv. Mr. Siddharth Dharmadhikari, Adv. Mr. Aaditya Aniruddha Pande, AOR Mr. Shrirang B. Varma, Adv.