CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY REP. BY ITS MEMBER-SECRETARY & ANR. versus PRESTIGE ESTATES PROJECT LTD. on 29 July 2019

CHENNAI METROPOLITAN DEVELOPMENT AUTHORITYREP. BY ITS MEMBER-SECRETARY & ANR.

v.

PRESTIGE ESTATES PROJECT LTD.

(Civil Appeal No. 5642-5643 of 2019)

JULY 29, 2019

[DR. DHANANJAYA Y CHANDRACHUD AND

INDIRA BANERJEE, JJ.]

Tamil Nadu Town and Country Planning Act, 1971 – ss.48,49 and 63B – Tamil Nadu Town and Country Planning (Levy ofInfrastructure and Amenities charges) Rules, 2008 – r.4 – Secondmaster plan for Chennai Metropolitan Area 2006 (Regulation) –regulation 36 – Respondent submitted application on 22.03.2011for planning permission to construct a multi-storeyed buildingcomplex – Appellant issued a demand notice to the respondent todeposit some charges including Infrastructure & Amenities charge(I & A) and premium FSI charge amounting in order to process itsapplication – Appellant demanded the charges on 27.03.2012 andthe respondent paid the same on 28.03.2012 – On 26.03.2012, theGovernment revised the guideline value with effect from 01.04.2012– On 28.03.2012, G.O.Ms No.86 was issued whereby the I & Acharges for different categories and building falling under thejurisdiction of the appellant stood increased – Pursuant thereto, ademand notice was issued on 22.08.2012 by the appellant by whichdemand was revised under two heads, i.e. balance I & A chargesand balance premium FSI charge – Writ petition by the respondentagainst the said demand notice – Single Judge of the High Courtallowed the writ petition and held that a right had accrued to therespondent to obtain planning permission and that it could not bedivested by the subsequent amendment with effect from 01.04.2012– Writ appeal was dismissed – On appeal, held: R.4 of the Rules,2008 as it stands prescribes the minimum and maximum rates forthe levy of I & A charges – The proposal which was initiated by thegovernment on 28.03.2012 envisaged the elimination of the minimumand maximum rates specified in r.4 as a result of which cl.(6) of

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AG.O.Ms No.86 incorporates a requirement of amending the Rules,2008 – However, Rules, 2008 were not amended – Absent anamendment to the Rules, 2008, the High Court held that the demandfor I & A charges at the revised rate could not be enforced againstthe respondent – The order of the High Court insofar as the demandfor I & A charges are concerned is maintainable – Insofar, levy ofBpremium FSI charges are concerned, the levy of premium FSI chargesunder regulation 36 of Regulations, 2006 is incident to the planningauthority allowing premium FSI over and above the FSI which isnormally allowable – On 27.03.2012, while issuing a demand noticeto the respondent, it was made clear by the appellant that theCplanning permission was still to be issued – The submission of theapplication for permission and the steps taken by the respondent tocomply with the conditions and deposit of the charges did not confera vested right in the respondent for grant of planning permission –Once the revised charges came into force with effect from 01.04.2012, the respondent, as the applicant for planningDpermission, was bound to pay the revised charges – The grant ofany permission post the revision of the premium FSI charges wouldnecessarily be subject to the revised charges – Thus, respondent,as the developer is liable to pay revised charges.

Respondent applied for planning permission to construct aEmulti-storeyed building complex on 22.03.2011. The appellant-planning authority under the provisions of the Act, 1971, wasrequired to consider the application for the grant of planningpermission u/s.49. The appellant issued a demand notice to therespondent to deposit some charges including Infrastructure &

Conclusion

FAmenities charge (I & A) amounting to Rs.8,34,40,000/- andpremium FSI charge amounting to Rs. 44,75,88,000/- in order toprocess its application. The appellant demanded the charges on27.03.2012 and the respondent paid the same on 28.03.2012. On26.03.2012, the Government revised the guideline value witheffect from 01.04.2012. On 28.03.2012, G.O.Ms No.86 was issuedGwhereby the I & A charges for different categories and buildingfalling under the jurisdiction of the appellant stood increased.Pursuant thereto, a demand notice was issued on 22.08.2012 bythe appellant by which demand was revised under two heads, i.e.

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balance I & A charges amounting to Rs. 4,17,15,000/- and balancepremium FSI charge amount to Rs.90,76,75,000/-. TheRespondent filed writ petition against the said demand notice,which was allowed. The writ appeal was dismissed by the DivisionBench of the High Court. Hence, the present appeals.

Disposing of the appeals, the Court

HELD: 1. It was in view of the provisions contained inclause (6) of G.O.Ms No.86 which contemplates an amendmentto the Tamil Nadu Town and Country Planning (Levy ofInfrastructure and Amenities charges) Rules, 2008, the DivisionBench of the High Court in its judgment dated 1 August 2014recorded, having enquired of the Advocate General, as to whetherany proposal for the amendment of the rules had been initiated.The Advocate General informed the High Court that while stepsto amend the rules had been initiated, it would take about twomonths to complete the process of amending them. It was in thisview of the matter and the statement of the Advocate Generalthat the High Court recorded that as on the date of its judgment,no amendment was made to the Rules 2008 for the purpose ofincreasing the I & A charges. Rule 4 as it stands prescribes theminimum and the maximum rates for the levy of I & A charges.Rule 5(2) empowers the Vice-Chairman of Chennai MetropolitanDevelopment Authority to fix the rates for the ChennaiMetropolitan Development Planning Areas, while observingthe minimum and the maximum rates set out in Rule 4. Theproposal which was initiated by the government on 28 March2012 envisaged the elimination of the minimum and maximumrates 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 heldthat the demand for I & A charges at the revised rate could notbe enforced against the respondent. A revision of the I & Acharges could have been effected by the Vice-Chairman of theappellant in terms of Rule 5(2) without a formal amendment tothe Rules 2008, so long as the minimum and maximum providedin Rule 4 is not breached. However, it appears that thegovernment took the view that an amendment to the rules was A

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Anecessitated since the table specifying the minimum and maximumin Rule 4 was to be abrogated. It was for the above reason thatthe High Court came to the conclusion that a revised demand forI & A charges could not be enforced in the absence of anamendment to the Rules 2008. Section 63B of the Tamil NaduTown and Country Planning Act, 1971 requires that the minimumBand maximum rates should be prescribed. This will have to beborne in mind by the government. Subordinate legislation has tobe in conformity with parent legislation. [Para 20] [879-E-H;880-A-C]

2. The High Court also adverted to the Internal OfficeCCircular/Order dated 16 April 2012 of the appellant whichspecified that while the revised I & A charges were leviable witheffect from the issuance of G.O.Ms. No. 86 on 28 March 2012. Interms of the above office order, cases where the “DevelopmentCharges advice” was sent prior to 28 March 2012 would beDgoverned by the pre-revised rates. The government is bound byits own decision. Consequently, on this aspect of the matter, thisCourt is in agreement with the view of the High Court that therevised I & A charges were not lawfully demanded from theappellant to whom the development charges advice had beenissued prior to 28 March 2012. [Para 21] [880-D, F]E

3. The second aspect of the matter which needs scrutiny isin regard to the levy of Premium FSI charges. The levy ofPremium FSI charges under Regulation 36 of Second master planfor Chennai Metropolitan Area 2006 (Regulation) is incident tothe planning authority allowing Premium FSI over and above theFFSI which is normally allowable. In other words, it is upon andsubject to the grant of Premium FSI that the authority can demandPremium FSI charges. If no Premium FSI is sanctioned, obviouslythere would be no occasion to demand a charge for PremiumFSI. Similarly, if planning permission were to be refused, theGdeposit which is made by the developer would be refunded. Thiswas categorically stated in the demand which was raised on therespondent on 27 March 2012. [Para 22] [880-G-H; 881-A]

4. Planning permission is granted by the planning authorityupon an application for permission which is made under Section H

49 of the Planning Act 1971. In the present case, the planningpermission 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 andUrban Development Department on 5 January 2012 following therecommendation of the Multi-storyed Building Panel, the grantof planning permission was still to be considered by the PlanningAuthority. The letter dated 5 January 2012 of the Housing andUrban Development Department contemplates that several stepswere still to be taken including the transfer to the road wideningportion to Chennai Metropolitan Development Authority, theissuance of an NOC by the Sewerage Board and the fulfillment ofall requisite conditions under the development regulations.Moreover, even after compliance with those conditions, theappellant had to process the grant of planning permission. Theletter of demand that was issued by the appellant on 27 March2012 similarly required the fulfillment of several conditionsprecedent upon which the application for the grant of planningpermission would be considered. [Para 23] [881-B-E]

5. On 27 March 2012, while issuing a demand notice to therespondent, it was made clear by the appellant that the planningpermission was still to be issued. The submission of the applicationfor permission and the steps taken by the respondent to complywith the conditions and the deposit of the charges did not confera vested right in the respondent for the grant of planningpermission. The grant of planning permission would only ensueupon the appellant scrutinizing the application and determiningthat the permissions which were sought were in accordance withthe development regulations and all other planning requirementsholding the field. Before the planning permission was issued, therevised charges for Premium FSI came to be enforced. Once therevised charges came into force with effect from 1 April 2012,the respondent, as the applicant for planning permission, wasbound to pay the revised charges. As on 1 April 2012, therespondent had no planning permission in its favour. Thesubmission of the respondent that planning permission was issuedin May 2012 evidently will not advance the case of the respondent.

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AThe grant of any permission post the revision of the PremiumFSI charges would necessarily be subject to the revised charges.Hence, in raising the demand on the basis of the revised chargeson 22 August 2012, the appellant was acting in accordance withlaw. [Para 24] [881-E-H; 882-A-B]

BState of Tamil Nadu v. Hind Stone (1981) 2 SCC 205 :[1981] 2 SCR 742 ; Howrah Municipal Corporation v.Ganges Rope Co. Ltd. (2004) 1 SCC 663 : [2003] 6Suppl. SCR 1212 ; Usman Gani J. Khatri of Bombay v.Cantonment Board (1992) 3 SCC 455 : [1992] 3 SCR 1 ; Commissioner of Municipal Corporation, Shimla v.CPrem Lata Sood (2007) 11 SCC 40 : [2007] 6 SCR 898 ; New Delhi Municipal Council v. Tanvi Tradingand Credit Private Limited (2008) 8 SCC 765: [2008]12 SCR 867 – relied on.

Union of India v. Mahajan Industries Ltd. (2005) 10DSCC 203 – distinguished.

Union of India v. Mahajan Industries Ltd. (2014) 5 SCC199 – referred to.

From the Judgment and Order dated 01.08.2014 of the High Courtof Judicature at Madras in W.A. Nos. 147 and 148 of 2013.

K. M. Nataraj, AG, Ms. Jaswanthi, K. M. Ramkumar, K. V.Vijayakumar, Advs. for the Appellant.

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Rana Mukherjee, Sr. Adv., Chitranshul A. Sinha, Arjun Suresh,Ms. Sonali Khanna (for M/S. Dua Associates), Advs. for theRespondent.

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The Judgment of the Court was delivered by DR. DHANANJAYA Y CHANDRACHUD, J.

1. These appeals arise from a judgment of a Division Bench ofthe High Court of Judicature at Madras in a Writ Appeal, affirming thejudgment of a learned Single Judge in proceedings under Article 226 ofthe Constitution. The High Court set aside a demand raised by theappellant for revised charges on account of (i) Infrastructure andAmenities[1]; and (ii) Premium Floor Space Index[2].

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2 The respondent submitted an application on 22 March 2011 forplanning permission to construct a multi-storeyed building complex atAyyappan Thangal Village, Thiruperumbudur Taluk. The Housing andUrban Development Department of the Government of Tamil Nadu, towhich the application was forwarded for approval in terms of theDevelopment Regulations[3], accorded its approval to the recommendationof the Multi-storeyed Building Panel.

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3. On 5 January 2012, the State government in a letter to theappellant approved the recommendation, subject to the followingconditions:

“(i) Chennai Metropolitan Development Authority should ensurethat the applicant gifts the road widening portions marked inthe plan to the Chennai Metropolitan Development Authorityalong with OSR spaces before issue of Planning Permission.

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(ii) The applicant shall furnish ‘No Objection Certificate’ fromChennai Metropolitan Water Supply and Sewerage Boardfor using their land in S. Nos. 51/1B2 and 1C2 for accessGbefore issue of Development Charges advice.

(iii) Subject to other usual condition.”

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2 Premium FSI

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AThe 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 RescueBService and other Departments.

The appellant, as the planning authority, was requested to take upfurther action for issuance of a planning permission.

4. The appellant, which is a planning authority under the provisionsof the Tamil Nadu Town & Country Planning Act 1971[4], was required toCconsider the application for the grant of planning permission under Section49. The Chennai Metropolitan Water Supply and Sewerage Board[5]addressed a letter on 6 February 2012 to the respondent stating that itwould consider the issuance of its No Objection Certificate[6] subject tothe acceptance of the following conditions:

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“1. RCC Compound wall shall be constructed on the boundariesof the proposed land adjacent to CMWSSB land with gateprovisions of 6m. span at both ends as accesses to reach theother side of the proposed multistoried residential buildings asaccepted in your Lr. dt. 28.01.2012.E

2. The design and estimate for proposed R.C.C culvert of suitablelength and width should be submitted for approval of CMWSSB,before construction of culvert.

3. The proposed R.C.C culverts with clearance of 1.5mtr all-Fround the pipeline should be constructed at both crossings to reachthe property under the supervision of CMWSS Board.

4. Supervision charge @ 21% of the estimated construction costshould be deposited to CMWSSB before construction of culvert.

G5. The existing pipeline should not be damaged at any point oftime and if any damage is caused at the time of construction of 4 The Planning Act 1971

5 The Sewerage Board

H6 NOC

culverts/compound wall, the entire repair cost should be borne byyou.

6. If any leak or burst occurs in the pipeline in future within theculvert portion, the culvert will be demolished by the Board forattending leak/burst in future and the same has to be reconstructedat your risk and cost.

7. You should not have any rights, whatsoever to claim theownership of the above board’s land.

8. The Board reserves the right to enter upon the premises forany inspection and to cancel the “No Objection Certificate” atany point of time without assigning any reason in the interest ofpublic.”

5. On 2 March 2012, the respondent addressed a communicationto the appellant, stating that it had accepted the conditions imposed bySewerage Board by its letter dated 18 February 2012 and that a formalNOC was expected shortly. The appellant was requested to process theplanning permission and to issue a notice of demand for developmentcharges in order to enable the respondent to arrange for the fundsrequired. 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 theprocessing of Planning Permit and the notice for developmentcharges may kindly be issued to assess the fees amount involvedand also to make arrangement for the funds required. We furtherassure you that before the payment of fees is effected by us theformal NOC from CMWSSB will be submitted.”

6. On 7 March 2012, the appellant requested the Sub-Registrar,Chennai South to furnish the guideline value of urban land for the surveynumbers where development was proposed by the respondent forassessing the Premium FSI charges in relation to the developmentproposal. This was furnished by the Sub-Registrar on 7 March 2012.

7. On 27 March 2012, the appellant issued a demand noticerequiring the respondent to deposit the following charges in order tofacilitate the processing of its application:

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i)Development Rs. 63,10,000/-charge for land and (Rupees sixty three Lakh and ten building under Sec. Thousand Only) 59 of the T&CP Act, 1971 ii) Balance Scrutiny Rs. 50,000/- (Rupees fifty Fee Thousand only) iii) Regularisation Rs. 25,10,000/- (Rupees twenty charge for five lakh and ten thousand only) unauthorized sub division & amalgamation iv) Security Deposit Rs. 4,64,15,000/- (Rupees four (For Building) crore sixty four lakh and fifteen thousand Only)v)Security Deposit for Rs. 10,000/-(Rupees Ten Display Board Thousand Only)vi) Security Deposit for Rs. 27,15,000/- (Rupees twenty STP seven lakh and fifteen Thousand Only) vii) Infrastructure & Rs. 8,34,40,000/- (Rupees eight Amenities Charges crore thirty four lakh and forty Thousand Only)viii) Premium FSI Rs. 44,75,88,000/- (Rupees Forty charge for four crore and seventy five lakh 78690.55 sq.m.eighty thousand only)

The appellant also required the respondent to comply with thefollowing requisitions :

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“a.Furnish the letter of your acceptance for the followingconditions stipulated by virtue of provisions available underDR 4(i) d of Annexure III:-

(i) The construction shall be undertaken as per sanctioned planonly and no deviation from the plans should be made withoutFprior sanction. Construction done in deviation is liable to bedemolished.

(ii) In cases of Multi-storied Building both qualified Architectand qualified structural Engineer who should be a Class-ILicensed Surveyor shall be associated and the aboveGinformation to be furnished.

(iii) A report in writing shall be sent to Chennai MetropolitanDevelopment Authority by the Architect/Class-I LicensedSurveyor who supervises the construction just before thecommencement of the erection of the building as per the H

sanctioned plan, similar report shall be sent to CMDA whenAthe building has reached up to plinth level and thereafter everythree months at various stages of the constructiondevelopment certifying that the work so far completed is inaccordance with the approved plan. The Licensed Surveyorand Architect shall inform this Authority immediately if theBcontract between him/them and the owner/developer, hasbeen cancelled or the construction is carried out in deviationto the approved plan.

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(iv) The owner shall inform Chennai Metropolitan DevelopmentAuthority of any change of the Licensed Surveyor/Architect.CThe newly appointed Licensed Surveyor/Architect shall alsoconfirm to CDMA that he has agreed for supervising thework under reference and intimate the stage of constructionat which he has taken over. No construction shall be carriedon during the period intervening between exit of the previousArchitect/Licensed Surveyor and entry of the new appointee.D

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(v) On completion of the construction the applicant shall intimateCDMA and shall not occupy the building or permit it to beoccupied until a completion certificate is obtained fromCMDA.

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(vi) While the applicant makes application for service connectionsuch as Electricity, Water Supply, Sewerage he should enclosea copy of the completion certificate issued by CMDA alongwith his application to the concerned Department/BoardAgency.

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(vii) When the site under reference is transferred by way of salelease or any other means to any person before completion ofthe construction, the party shall inform CMDA of suchtransaction and also the name and address of the persons towhom the site is transferred immediately after such transactionand shall bind the purchaser to those conditions to the PlanningPermission.

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(viii) In the Open space within the site, trees should be plantedand the existing trees preserved to the extent possible;

(ix) If there is any false statement, suppression or anymisrepresentation of acts in the applicant, planning permission H

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will be liable for cancellation and the development made, ifany will be treated as authorized.

(x) The new building should have mosquito proof overhead tanksand wells.

(xi) The sanction will be revoked, if the conditions mentionedabove are not complied with.

(xii) Rainwater conservation measures notified by CMDA shouldbe adhered to strictly.

(a) Undertaking (in the format prescribed in AnnexureXIV to DCR, a copy of it enclosed in Rs. 20/- stamppaper duly executed by all the land owner, GPA holders,builders and promoters separately. The undertakingsshall be duly attested by a Notary Public.

(b) Details of the proposed development duly filled in theformat enclosed for display at the site. Display of theinformation at site is compulsory in cases of Multistoried buildings, Special buildings and Groupdevelopments”

The letter further stipulated that :

“7. The issue of planning permission depends on thecompliance/fulfilment of the conditions/payments statedabove. The acceptance by the Authority of the pre-paymentof the Development charge and other charges etc. shallnot entitle the person to the Planning Permission but onlyrefund of the Development Charge and other charges(excluding Scrutiny Fee) in cases of refusal of thepermission for non-compliance of the conditions statedabove or any of the provisions of DR, which has to becomplied before getting the Planning permission or anyother reason provided the construction is not commencedand claim for refund is made by the applicant.”

(Emphasis supplied)

8. On 28 March 2012, the respondent paid the charges whichwere demanded by the appellant on 27 March 2012. In the meantime,on 26 March 2012, the Government revised the guideline values with effect from 1 April 2012. One of the conditions subject to which theState government had granted its approval to the respondent was theobtaining of an NOC from the Sewerage Board. On 28 March, 2012,G.O.Ms No. 86 was issued by the Housing and Urban DevelopmentDepartment whereby the I & A charges for different categories andbuildings falling under the jurisdiction of the appellant and of theCommissioner of Town and Country Planning were to stand increasedby 50 per cent over the then prevailing rates. The Sewerage Boardissued its NOC on 30 March 2012, subject to the condition that therespondent execute a gift deed in respect of a piece of land. Thisrequirement was complied with on 27 April 2012. When the file pertainingto the grant of planning permission to the respondent was underconsideration, guideline values were revised by the State governmentwith effect from 1 April 2012. A demand notice was issued on 22 August2012 by the appellant by which the demand was revised for chargesunder two heads:

i)Balance I & A Rs. 4,17,15,000/-Charges (Rupees Four Crore Seventeen Lakh and Fifteen thousand Only) ii) Balance Premium Rs. 90,76,75,000/-FSI Charge (Rupees ninety crore seventy six lakh and seventy five thousand only)

9. The demand notice was questioned by the respondent in writproceedings before the High Court. A learned Single Judge, by a judgmentdated 13 December 2012, allowed the writ petition holding that a righthad accrued to the respondent to obtain planning permission and that itcould not be divested by the subsequent amendment made with effectfrom 1 April 2012. The demand was quashed and set aside. The WritAppeal has been dismissed by a Division Bench of the High Court on 1August 2014. The Division Bench held that :

(i) Insofar as the levy of I & A Charges are concerned, noamendment has been made to the Tamil Nadu Town andCountry Planning (Levy of Infrastructure and AmenitiesCharges) Rules 2008[7] and in consequence, the demand ofRs. 4,17,15,000/- is without the authority of law; A

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A(ii)The respondent had remitted the I & A charges and PremiumFSI charges on 29 March 2012;

(iii) Office Order No. 7/2012 dated 16 April 2012 made it clearthat the I & A charges were applicable for applications forplanning permission where the advice for the payment ofBdevelopment charges was sent on or after 28 March 2012.In the present case, since the demand had been remittedprior to 28 March 2012, the pre-revised I & A chargeswere applicable; and

(iv) The charges for Premium FSI as revised with effect fromC1 April 2012 could not be made applicable to the respondent.The NOC of the Sewerage Board was dated 30 March2012 and the mere fact that it was received by the appellanton 2 April 2012 was not a valid ground for the demandnotice and hence the demand could not be justified.

D10. Assailing the decision of the High Court, Mr K M Nataraj,learned Additional Solicitor General of India formulated two issues whichneed to be addressed in these proceedings:

“(i) Whether charges namely Infrastructure & Amenities chargesand Premium FSI charges are required to be collected as perErates prevailing as on the date of submission of planning permissionapplication or on the date of granting approval of planningpermission;

(ii) Whether the respondent herein has accrued any vested rightbefore granting approval of planning permission merely becausethey remitted the charges as per demand notice dated 27-03-2012.”F

The learned ASG urged that the appellant, as a planning authority,is under a statutory obligation to levy and collect the charges as applicablewhen planning permission is granted. The pendency of an application orthe deposit of the payment earlier by the applicant does not create avested right. If the planning permission is not granted, the planningGauthority would have to refund the amount deposited. Hence, the crucialdate for determining the applicable charges is the date on which planningpermission is granted by the planning authority. In the present case, theplanning permission was granted only in 2013, pursuant to the interim order of the High Court subject to a further deposit of Rs 10 Crores asordered. Insofar as I & A charges are concerned, it was urged that theHigh Court erroneously relied on the Office Order dated 16 April 2012which records that the old rates would be applicable where thedevelopment charges’ advice was sent before 28 March 2012. This, ithas been urged, is in conflict with the GO dated 28 March 2012 accordingto which, I & A charges were to stand increased by 50 per cent over thethen prevailing rates. The learned ASG argued that an amendment tothe Rules was not necessary since the charges are determined and areleviable under an order issued pursuant to Section 63B while accordingbuilding permission and hence the order of the High Court needs to beinterfered with.

11. On the other hand, Mr Rana Mukherjee, learned Senior Counselappearing on behalf of the respondents submitted that:

(i) As regards I & A charges:

(a) Clause 6 of G.O.Ms No. 86 by which the charges wererevised required that the Commissioner of Town andCountry Planning submit a proposal for an amendment tothe Rules of 2008. As a matter of fact, no amendmenthas been carried out; and (b)Clause (i) of the Office Order dated 16 April 2012, statesthat revised I & A charges shall be applicable for demandsmade on or after 28 March 2012. Hence, the revisedcharges would not be applicable to the respondent againstwhom a demand had been raised on 27 March 2012 bythe appellant.

(ii) As regards charges for Premium FSI :

(a) All payment related obligations were completed by theappellant on 29 March 2012 prior to the revision of theguideline values on 1 April 2012. Consequently, the revisedrates would not be applicable and if any date after paymentis to be taken into account that would only enable thegovernment to unlawfully and unfairly delay the issuanceof permissions and thereafter raise enormous demands.To obviate this, the cut-off date ought to be treated as thedate of payment; A

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A(b)The principle which has been enunciated in the judgmentof this Court in Union of India v Mahajan IndustriesLtd.[8]is applicable; and

(c) The subject matter of the demand pertains to paymentlevied by the respondent and not a change in theBdevelopment control rules such as involving a change infloors, setbacks etc.

Moreover, it was urged that the planning permission in the presentcase was granted on 30 May 2012 and therefore the withholding of acopy and the basis of the impugned demand is a mere after thought. TheCrevised demand does not indicate any reasons or basis.

12. The rival submissions now fall for consideration.

13. Section 48 of the Planning Act 1971 imposes a restraint uponthe construction of buildings and making a material change in the use ofland except with the written permission of the planning authority and inDaccordance with the conditions specified in the grant of permission[9].

Section 49 which provides for an application for permission is inthe following terms:

“49. Application for permission.- (1) Except as otherwiseprovided by rules made in this behalf, any person not being anyEState Government or the Central Government or any local authorityintending to carry out any development on any land or building onor after the date of the publication of the resolution under sub-section (2) of section 19 or of the notice in the Tamil NaduGovernment Gazette under section 26, shall make an applicationFin writing to the appropriate planning authority for permission insuch form and containing such particulars and accompanied bysuch documents as may be prescribed.

8 (2014) 5 SCC 199

9 48. Restrictions on buildings and lands, in the area of the planning authority.-GOn or after the date of the publication of the resolution under sub-section (2) of section19 or of the notice in the Tamil Nadu Government Gazette under section 26, no personother than any State Government or the Central Government or any local authority,shall, erect any building or make or extend any excavation or carry out any mining orother operation, in, on, over or under any land or make any material change in the useof land or construct, form or layout any work except with the written permission of theappropriate planning authority and in accordance with the conditions, if any, specifiedHtherein.

(2) The appropriate planning authority shall, in deciding whetherto grant or refuse such permission, have regard to the followingmatters, namely:- (a) the purpose for which the permission is required; (b)the suitability of the place for such purpose;

(c) the future development and maintenance of the planning area

(3) When the appropriate planning authority refuses to grant apermission to any person, it shall record in writing the reasons forsuch refusal and furnish to that person, on demand, a briefstatement of the same.”

The Planning Act 1971 requires the grant of planning permissionbefore development or a change in the use of land can take place. Themere filing of an application does not entitle the applicant to permission.Nor is there a vested right to the grant of permission.

Section 63B provides for the levy of I & A charges:

“63-B. Levy of infrastructure and amenities charges .-(1) Everylocal authority or the planning authority, as the case may be, whileaccording building permit under the relevant laws or accordingpermission under this Act, as the case may be, shall levy chargeson the institution of use or change of use of land or building ordevelopment of any land or building in the whole area or any partof the planning area so as to meet the impact of development andfor ensuring sustainable development of urban and rural areas byproviding adequate infrastructure and basic amenities at the ratesas determined in accordance with such procedure as may beprescribed which shall not be less than minimum and not morethan the maximum as may be prescribed, and different rates maybe prescribed for different parts of the planning area and fordifferent uses.

(2) The infrastructure and amenities charges shall be leviable onany person who undertakes or carries out any such developmentor institutes any use or changes any such use.

(3) The collection of the infrastructure and amenities charges shallbe made in such manner as may be prescribed.

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AExplanation.- For the purpose of this Section “relevant laws”means in case of-

(i) the Chennai Metropolitan Development Authority, the Tamil NaduTown and Country Planning Act, 1971 (T.N.Act 35 of 1972); B(ii) the Chennai City Municipal Corporation, the Chennai CityMunicipal Corporation Act, 1919 (T.N.Act 4 of 1919);

(iii) the Madurai City Municipal Corporation, the Madurai City Municipal Corporation Act, 1971 (T.N.Act 15 of 1971);

(iv) the Coimbatore City Municipal Corporation, the Coimbatore City,CMunicipal Corporation Act, 1981 (T.N.Act 25 of 1981);

(v) the Tiruchirappalli City Municipal Corporation, the TiruchirappalliCity Municipal Corporation Act, 1994 (T.N.Act 27 of 1994);

(vi) the Tirunelveli City Municipal Corporation, the Tirunelveli CityMunicipal Corporation Act, 1994 (T.N.Act 27 of 1994);D

(vii) the Salem City Municipal Corporation, the Salem City Municipal Corporation Act, 1994 (T.N.Act 29 of 1994);

(viii) the Municipalities and Town Panchayats, the Tamil Nadu District Municipalities Act, 1920 (T.N.Act 5 of 1920); andE(ix) the Panchayat Unions and Village Panchayats, the Tamil NaduPanchayats Act, 1994 (T.N.Act 21 of 1994).”

Section 63B provides for the levy of I & A charges while accordinga building permit either under relevant laws or while according permissionunder the Planning Act 1971. These charges are leviable on the institutionFof use or change of use of land or building or development of any landor building. The rates are determined in accordance with such procedureas may be prescribed. The rates are not to be less than the minimum andmore than the maximum that is prescribed.

14. Rule 4 of the Rules 2008 contains provisions for the impositionGof the I & A charges:

“4. Infrastructure and Amenities Charges. – Theinfrastructure and amenities charges shall be collected for newconstruction, additions to existing constructions and change of useof existing buildings at the rates not exceeding the maximum rate and not less than the minimum rates indicated in the Table below,in case of different categories of buildings referred to in the Table:

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TIME TABLESl No. Type of building Minimum rates per Maximum Bsquare metre rates per square metre (1)(2)(3)(4)Rs. Rs.1. Multistoryed buildings 500 1,000 Caccommodating residential or commercial or Information technology or industrial of institutional or combination of such activities 2. Commercial building. 200 500 DInformation Technology building, Group development and Special building (not covered under Sl. No. 1) 3. Institutional building (not 100 200 covered under Sl. No.I)E4. Industrial building (not covered under Sl. No. 1)

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15. Rule 5 empowers the Director Of Town and Country Planningto fix the rates of charges in respect of areas other than the ChennaiMetropolitan Planning Area. In respect of the Chennai MetropolitanPlanning Area, the power to fix the charges, subject to due observanceof the minimum and the maximum specified in Rule 4, is conferred onthe Vice-Chairman of the Chennai Metropolitan Development Authority.Rule 5 (2) provides thus:

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“5. Fixation of rates of Charges.-

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(2) In respect of the Chennai Metropolitan Planning Area, theVice Chairman, Chennai Metropolitan Development Authorityshall fix the rates of such charges for each of the above categories H

Aof buildings which shall not be less than the minimum and notmore than the maximum as prescribed in Rule 4, taking into accountthe various aspects of developments including infrastructure needs.He may fix different rates for different categories of buildings orfor different areas.”

B16. The power to levy charges for the Premium FSI is in Regulation36 of the Second Master Plan for Chennai Metropolitan Area 2006(Regulation)[10]. Regulation 36 is in the following terms :

“36. Premium FSI.- The Authority may allow premium FSIover and above the normally allowable FSI, in any case notCexceeding 0.5 for special building and group developments, andnot exceeding 1.0 for multistoreyed buildings in specific areaswhich may be notified, on collection of a charge at the rates asmay be prescribed with the approval of the Government. Theamount collected shall be kept in an escrow amount for utilizing itfor infrastructure development in that area as may be decided byDthe Government.”

17. Premium FSI is the Floor Space Index over and above thatwhich is normally allowable and is not to exceed 0.5 for special buildingsand group developments or 1.0 for multi-storeyed buildings in specificareas. The rates for premium FSI are prescribed with the approval ofEthe Government.

18. On 27 March 2012, the appellant raised a demand on therespondent for the payment of charges including:

(i) I & A charges of Rs. 8,34,40,000/-; and F(ii)Premium FSI charges for 78690.55 sq.mtrs in the amount ofRs. 44,75,88,000/-.

While raising the demand, the respondent was informed of theconditions required to be complied with in order to ensure the grant ofplanning permission. The letter specifically stated that while the grant ofGplanning permission depended upon the fulfillment of the conditionsstipulated in the letter, pre-payment of the development charges andother charges would not entitle the respondent to planning permissionbut only to a refund if planning permission were to be refused.

19. On 28 March 2012, the Housing and Urban DevelopmentDepartment of the Government of Tamil Nadu issued G.O.Ms No. 86stipulating that:

(i) The minimum and maximum rates as specified in Rule 4 ofthe I & A Rules 2008 “shall be done away with”; and

(ii) The I & A charges for different categories and buildingsfalling under the jurisdiction of the appellant and of theCommissioner of Town and Country Planning were to standincreased by 50 per cent over the then prevailing rates. Thus,for instance, the I & A charges for multi-storeyed residentialbuildings were sought to be revised for the ChennaiMetropolitan Development Planning Areas from Rs. 250per sq. mtr to Rs. 375 per sq.mtr.

Clause (6) of G.O.Ms contemplates an amendment to the Rules 2008 :

“6) The Commissioner of Town and Country Planning is directedto send necessary proposal on amendment to the Tamil NaduTown and Country Planning (Levy of Infrastructure and AmenitiesCharges) Rules, 2008 to Government accordingly.”

20. It was in view of the provisions contained in clause (6) extractedabove that the Division Bench in its judgment dated 1 August 2014recorded, having enquired of the Advocate General, as to whether anyproposal for the amendment of the rules had been initiated. The AdvocateGeneral informed the High Court that while steps to amend the ruleshad been initiated, it would take about two months to complete the processof amending them. It was in this view of the matter and the statement ofthe Advocate General that the High Court recorded that as on the dateof its judgment, no amendment was made to the Rules 2008 for thepurpose of increasing the I & A charges. Rule 4 as it stands prescribesthe minimum and the maximum rates for the levy of I & A charges. Rule5(2) empowers the Vice-Chairman of Chennai MetropolitanDevelopment Authority to fix the rates for the Chennai MetropolitanDevelopment Planning Areas, while observing the minimum and themaximum rates set out in Rule 4. The proposal which was initiated bythe government on 28 March 2012 envisaged the elimination of theminimum and maximum rates specified in Rule 4 as a result of whichclause (6) of G.O.Ms. 86 incorporates a requirement of amending theRules 2008. Absent an amendment to the Rules 2008, the High Court

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Aheld that the demand for I & A charges at the revised rate could not beenforced against the respondent. A revision of the I & A charges couldhave been effected by the Vice-Chairman of the appellant in terms ofRule 5(2) without a formal amendment to the Rules 2008, so long as theminimum and maximum provided in Rule 4 is not breached. However, itappears that the government took the view that an amendment to theBrules was necessitated since the table specifying the minimum andmaximum in Rule 4 was to be abrogated. It was for the above reasonthat 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 tothe Rules 2008. Section 63B requires that the minimum and maximumCrates should be prescribed. This will have to be borne in mind by thegovernment. Subordinate legislation has to be in conformity with parentlegislation.

21. The High Court also adverted to the Internal Office Circular/Order dated 16 April 2012 of the appellant which specified that whileDthe revised I & A charges were leviable with effect from the issuanceof G.O.Ms. No. 86 on 28 March 2012:

“i.The revised rate of Infrastructure & Amenities charges areapplicable for the Planning Permission Applications, whereDevelopment Charges advice was sent on or after 28.03.2012. InEthe case of Planning Permission Applications for which DC advicedated prior to 28.03.2012, the pre-revised rates only applicable.”

In terms of the above office order, cases where the “DevelopmentCharges advice” was sent prior to 28 March 2012 would be governedby the pre-revised rates. The government is bound by its own decision.FConsequently, on this aspect of the matter, we are in agreement with theview of the High Court that the revised I & A charges were not lawfullydemanded from the appellant to whom the development charges advicehad been issued prior to 28 March 2012.

22. The second aspect of the matter which needs scrutiny is inGregard to the levy of Premium FSI charges. The levy of Premium FSIcharges under Regulation 36 is incident to the planning authority allowingPremium FSI over and above the FSI which is normally allowable. Inother words, it is upon and subject to the grant of Premium FSI that theauthority can demand Premium FSI charges. If no Premium FSI issanctioned, obviously there would be no occasion to demand a chargeH

for Premium FSI. Similarly, if planning permission were to be refused,the deposit which is made by the developer would be refunded. Thiswas categorically stated in the demand which was raised on therespondent on 27 March 2012.

23. Planning permission is granted by the planning authority uponan application for permission which is made under Section 49 of thePlanning Act 1971. In the present case, the planning permission wasgranted upon an interim order of the High Court, subject to the depositof Rs. 10 Crores on 13 March 2013. Though the appellant received theapproval of the Housing and Urban Development Department on 5January 2012 following the recommendation of the Multi-storyed BuildingPanel, the grant of planning permission was still to be considered by thePlanning Authority. The letter dated 5 January 2012 of the Housing andUrban Development Department contemplates that several steps werestill to be taken including the transfer to the road widening portion toChennai Metropolitan Development Authority, the issuance of an NOCby the Sewerage Board and the fulfillment of all requisite conditionsunder the development regulations. Moreover, even after compliancewith those conditions, the appellant had to process the grant of planningpermission. The letter of demand that was issued by the appellant on 27March 2012 similarly required the fulfillment of several conditionsprecedent upon which the application for the grant of planning permissionwould be considered.

24. On 27 March 2012, while issuing a demand notice to therespondent, it was made clear by the appellant that the planning permissionwas still to be issued. The submission of the application for permissionand the steps taken by the respondent to comply with the conditions andthe deposit of the charges did not confer a vested right in the respondentfor the grant of planning permission. The grant of planning permissionwould only ensue upon the appellant scrutinizing the application anddetermining that the permissions which were sought were in accordancewith the development regulations and all other planning requirementsholding the field. Before the planning permission was issued, the revisedcharges for Premium FSI came to be enforced. Once the revised chargescame into force with effect from 1 April 2012, the respondent, as theapplicant for planning permission, was bound to pay the revised charges.As on 1 April 2012, the respondent had no planning permission in itsfavour. The submission of the respondent that planning permission was A

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Aissued in May 2012 evidently will not advance the case of the respondent.The grant of any permission post the revision of the Premium FSI chargeswould necessarily be subject to the revised charges. Hence, in raisingthe demand on the basis of the revised charges on 22 August 2012, theappellant was acting in accordance with law.B25. The principle which we have adopted accords with a consistentline of precedent of this Court. In State of Tamil Nadu v Hind Stone[11],Justice O Chinnappa Reddy speaking for a Bench of two learned judgesof this Court, while interpreting the provisions of Rule 2 (A) of the Minesand Minerals (Regulation and Development) Act 1957 observed :

C“13…While it is true that such applications should be dealt withwithin a reasonable time, it cannot on that account be said that theright to have an application disposed of in a reasonable time clothesan applicant for a lease with a right to have the application disposedof on the basis of the rules in force at the time of the making ofthe application. No one has a vested right to the grant or renewalDof a lease and none can claim a vested right to have an applicationfor the grant or renewal of a lease dealt with in a particular way,by applying particular provisions. In the absence of any vestedrights in anyone, an application for a lease has necessarily to bedealt with according to the rules in force on the date of the disposalEof the application despite the fact that there is a long delay sincethe making of the application. We are, therefore, unable to acceptthe submission of the learned counsel that applications for thegrant of renewal of leases made long prior to the date of GOMsNo. 1312 should be dealt with as if Rule 8-C did not exist.”

The same principle was followed by another two judge Bench ofFthis Court in Howrah Municipal Corporation v Ganges Rope Co.Ltd.[12]. Justice D M Dharmadhikari speaking for the court held :

“17…The statutory provisions regulating sanction for constructionwithin the municipal area are intended to ensure properadministration of the area and provide proper civic amenities to it.GThe paramount considerations of regulatory provisions forconstruction activities are public interest and convenience. Onthe subject of seeking sanction for construction, no vested right 11 (1981) 2 SCC 205H12 (2004) 1 SCC 663

can be claimed by any citizen divorced from public interest orpublic convenience.”

This Court held that the provisions contained in the HowrahMunicipal Corporation Act 1980 contemplate an express sanction beforea person can be allowed to construct or erect a building. Hence, inordinary course, no vested right is created merely by the submission ofan application for sanction to construct a building. Adverting to thedecision in Usman Gani J. Khatri of Bombay v Cantonment Board[13],the Court held thus:

“30. This Court, thus, has taken a view that the Building Rules orRegulations prevailing at the time of sanction would govern thesubject of sanction and not the Rules and Regulations existing on the date of application for sanction.”

In Commissioner of Municipal Corporation, Shimla v PremLata Sood[14], Justice S B Sinha speaking for a two judge Bench observedthus:

“30…even in the order of sanction passed in favour of therespondents by the State, a condition was imposed that beforeundertaking the development activities by way of erection of thebuilding, the respondents would take the requisite sanction fromthe Municipal Corporation. Even if such a condition had not beenimposed, the provisions of the Municipal Corporation Act, asnoticed hereinbefore, would operate.

36. It is now well settled that where a statute provides for a right,but enforcement thereof is in several stages, unless and until theconditions precedent laid down therein are satisfied, no right canbe said to have been vested in the person concerned. The lawoperating in this behalf, in our opinion is no longer res integra.”

The same view has been taken by a Bench of three judges of thisCourt in New Delhi Municipal Council v Tanvi Trading and CreditPrivate Limited[15].Justice J M Panchal speaking for the court held :

“39. It is well settled that the law for approval of the building planwould be the date on which the approval is granted and not thedate on which the plans are submitted. This is so in view of para24 of the decision of this Court in Usman Gani J.13 (1992) 3 SCC 45514 (2007) 11 SCC 4015 (2008) 8 SCC 765

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AKhatri v. Cantonment Board [(1992) 3 SCC 455] . It would notbe out of place to mention that on 7-2-2007, the Master Plan,2021 has been approved in which the LBZ guidelines have beenincorporated and since the plan submitted by the respondents wasnot approved up to the date of coming into force of Master Planof 2021, the LBZ guidelines will apply with full force to the planBsubmitted by the respondents and the plan which is contrary tothe LBZ guidelines could not have been directed to be sanctioned.”

26. Mr Rana Mukherjee, learned Senior Counsel appearing onbehalf of the respondent sought to make a distinction on the ground thatthis principle will apply as regards regulatory aspects of the developmentCregulations, not in regard to the demand of Premium FSI charges.

We are unable to accept the contention simply because the demandon account of Premium FSI charges arises upon the grant of planningpermission to avail of Premium FSI. The respondent, as the developer, isliable to pay the revised charges which are applicable post 1 April 2012Dwhen planning permission has been granted. Learned counsel for therespondent also relied on the decision in Union of India v MahajanIndustries Ltd.[16]. The case is clearly distinguishable since the judgmentof this Court adverted to the position which was laid down in a judgmentof the Delhi High Court that the “crucial date” for calculating conversioncharges has to be the date of the receipt of the application for conversion.ESignificantly, the counsel for the Union of India did not contest thecorrectness of the view of the High Court in that regard. The factualsituation in the present case is clearly distinguishable.

27. For the above reasons, we allow these appeals in part bysetting aside the impugned judgment and order of the High Court insofarFas it quashed the demand raised by the appellant on 22 August 2012 forthe levy of Premium FSI charges.

28. The appellant, in our view, was justified in demanding PremiumFSI charges at the revised rates and would be entitled to enforce itsdemands. However, we maintain the order of the High Court insofar asGthe demand for I & A charges is concerned.

29. The appeals are disposed of. There shall be no order as tocosts.

Ankit Gyan

H16 (2005) 10 SCC 203

Appeals disposed of.