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.

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

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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.