Chennai Metropolitan Development Authority Rep. by Its Member-Secretary & Anr. vs Prestige Estates Project Ltd.

49 and 63B – Tamil Nadu Town and Country Planning (Levy of Infrastructure and Amenities charges) Rules, 2008 – r.4 – Second master plan for Chennai Metropolitan Area 2006 (Regulation) – regulation 36 – Respondent submitted application on 22.03.2011 for planning permission to construct a multi-storeyed building complex – Appellant issued a demand notice to the respondent to deposit some charges including Infrastructure & Amenities charge (I & A) and premium FSI charge amounting in order to process its application – Appellant demanded the charges on 27.03.2012 and the respondent paid the same on 28.03.2012 – On 26.03.2012, the Government revised the guideline value with effect from 01.04.2012 – On 28.03.2012, G.O.Ms No.86 was issued whereby the I & A charges for different categories and building falling under the jurisdiction of the appellant stood increased – Pursuant thereto, a demand notice was issued on 22.08.2012 by the appellant by which demand was revised under two heads, i.e. balance I & A charges and balance premium FSI charge – Writ petition by the respondent against the said demand notice – Single Judge of the High Court allowed the writ petition and held that a right had accrued to the respondent to obtain planning permission and that it could not be divested 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 for the levy of I & A charges – The proposal which was initiated by the government on 28.03.2012 envisaged the elimination of the minimum and maximum rates specified in r.4 as a result of which cl.(6) of G.O.Ms No.86 incorporates a requirement of amending the Rules, 2008 – However, Rules, 2008 were not amended – Absent an amendment to the Rules, 2008, the High Court held that the demand for I & A charges at the revised rate could not be enforced against the respondent – The order of the High Court insofar as the demand for I & A charges are concerned is maintainable – Insofar, levy of premium FSI charges are concerned, the levy of premium FSI charges under regulation 36 of Regulations, 2006 is incident to the planning authority allowing premium FSI over and above the FSI which is normally allowable – On 27.03.2012, while issuing a demand notice to the respondent, it was made clear by the appellant that the planning permission was still to be issued – The submission of the application for permission and the steps taken by the respondent to comply with the conditions and deposit of the charges did not confer a 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 planning permission, was bound to pay the revised charges – The grant of any permission post the revision of the premium FSI charges would necessarily be subject to the revised charges – Thus, respondent, as the developer is liable to pay revised charges. Respondent applied for planning permission to construct a multi-storeyed building complex on 22.03.2011. The appellantplanning authority under the provisions of the Act, 1971, was required to consider the application for the grant of planning permission u/s.49. The appellant issued a demand notice to the respondent to deposit some charges including Infrastructure & Amenities charge (I & A) amounting to Rs.8,34,40,000/- and premium FSI charge amounting to Rs. 44,75,88,000/- in order to process its application. The appellant demanded the charges on 27.03.2012 and the respondent paid the same on 28.03.2012. On 26.03.2012, the Government revised the guideline value with effect from 01.04.2012. On 28.03.2012, G.O.Ms No.86 was issued whereby the I & A charges for different categories and building falling under the jurisdiction of the appellant stood increased. Pursuant thereto, a demand notice was issued on 22.08.2012 by the appellant by which demand was revised under two heads, i.e. balance I & A charges amounting to Rs. 4,17,15,000/- and balance premium FSI charge amount to Rs.90,76,75,000/-. The Respondent filed writ petition against the said demand notice, which was allowed. The writ appeal was dismissed by the Division Bench of the High Court. Hence, the present appeals.

Disposing of the appeals, the Court

HELD: 1. It was in view of the provisions contained in clause (6) of G.O.Ms No.86 which contemplates an amendment to the Tamil Nadu Town and Country Planning (Levy of Infrastructure and Amenities charges) Rules, 2008, the Division Bench of the High Court in its judgment dated 1 August 2014 recorded, having enquired of the Advocate General, as to whether any proposal for the amendment of the rules had been initiated. The Advocate General informed the High Court that while steps to amend the rules had been initiated, it would take about two months to complete the process of amending them. It was in this view of the matter and the statement of the Advocate General that the High Court recorded that as on the date of its judgment, no amendment was made to the Rules 2008 for the purpose of increasing the I & A charges. Rule 4 as it stands prescribes the minimum and the maximum rates for the levy of I & A charges. Rule 5(2) empowers the Vice-Chairman of Chennai Metropolitan Development Authority to fix the rates for the Chennai Metropolitan Development Planning Areas, while observing the minimum and the maximum rates set out in Rule 4. The proposal which was initiated by the government on 28 March 2012 envisaged the elimination of the minimum and maximum rates 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 held that the demand for I & A charges at the revised rate could not be enforced against the respondent. A revision of the I & A charges could have been effected by the Vice-Chairman of the appellant in terms of Rule 5(2) without a formal amendment to the Rules 2008, so long as the minimum and maximum provided in Rule 4 is not breached. However, it appears that the government took the view that an amendment to the rules was necessitated since the table specifying the minimum and maximum in Rule 4 was to be abrogated. It was for the above reason that 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 to the Rules 2008. Section 63B of the Tamil Nadu Town and Country Planning Act, 1971 requires that the minimum and maximum rates should be prescribed. This will have to be borne in mind by the government. Subordinate legislation has to be in conformity with parent legislation. [Para 20] [879-E-H; 880-A-C]

2. The High Court also adverted to the Internal Office Circular/Order dated 16 April 2012 of the appellant which specified that while the revised I & A charges were leviable with effect from the issuance of G.O.Ms. No. 86 on 28 March 2012. In terms of the above office order, cases where the “Development Charges advice” was sent prior to 28 March 2012 would be governed by the pre-revised rates. The government is bound by its own decision. Consequently, on this aspect of the matter, this Court is in agreement with the view of the High Court that the revised I & A charges were not lawfully demanded from the appellant to whom the development charges advice had been issued prior to 28 March 2012. [Para 21] [880-D, F]

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

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

49 of the Planning Act 1971. In the present case, the planning permission 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 and Urban Development Department on 5 January 2012 following the recommendation of the Multi-storyed Building Panel, the grant of planning permission was still to be considered by the Planning Authority. The letter dated 5 January 2012 of the Housing and Urban Development Department contemplates that several steps were still to be taken including the transfer to the road widening portion to Chennai Metropolitan Development Authority, the issuance of an NOC by the Sewerage Board and the fulfillment of all requisite conditions under the development regulations. Moreover, even after compliance with those conditions, the appellant had to process the grant of planning permission. The letter of demand that was issued by the appellant on 27 March 2012 similarly required the fulfillment of several conditions precedent upon which the application for the grant of planning permission would be considered. [Para 23] [881-B-E]

5. On 27 March 2012, while issuing a demand notice to the respondent, it was made clear by the appellant that the planning permission was still to be issued. The submission of the application for permission and the steps taken by the respondent to comply with the conditions and the deposit of the charges did not confer a vested right in the respondent for the grant of planning permission. The grant of planning permission would only ensue upon the appellant scrutinizing the application and determining that the permissions which were sought were in accordance with the development regulations and all other planning requirements holding the field. Before the planning permission was issued, the revised charges for Premium FSI came to be enforced. Once the revised charges came into force with effect from 1 April 2012, the respondent, as the applicant for planning permission, was bound to pay the revised charges. As on 1 April 2012, the respondent had no planning permission in its favour. The submission of the respondent that planning permission was issued in May 2012 evidently will not advance the case of the respondent. The grant of any permission post the revision of the Premium FSI charges would necessarily be subject to the revised charges. Hence, in raising the demand on the basis of the revised charges on 22 August 2012, the appellant was acting in accordance with law. [Para 24] [881-E-H; 882-A-B]

State 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] 6 Suppl. 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. Prem Lata Sood (2007) 11 SCC 40 : [2007] 6 SCR

898 ; New Delhi Municipal Council v. Tanvi Trading and Credit Private Limited (2008) 8 SCC 765: [2008]

12 SCR 867 – relied on.

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

Union of India v. Mahajan Industries Ltd. (2014) 5 SCC

199 – referred to.