Bombay HC: There is no development fee for projects built on government land.

MUMBAI: On Thursday, the Bombay High Court ruled that a Maharashtra town planning law does not exempt developers from paying development charges for projects on civic or government land, including redevelopment.

The legislation was never intended to allow a developer or any third party seeking to redevelop a plot owned by a public body or government for personal gain to claim exemption simply because the land belongs to the government or such body, according to a bench of Justices R D Dhanuka and Kamal Khata.

The bench dismissed 103 petitions, the vast majority of which were filed by builders and housing societies with projects on civic or state property across the city. The petitioners had challenged development fee notices issued by public bodies. It is estimated that the total amount in these notices is Rs 800 crore.

The builders and societies contended that the term “development” in the Maharashtra Regional and Town Planning Act (MRTP) could not be interpreted to include demolishing existing structures to make way for new ones. According to the HC, “if the building is required to be redeveloped, it cannot be finished unless the existing structures are demolished…the definition of ‘development’ includes redevelopment.”

Among the builders were SD Corporation, Keystone Realtors, and Shivaji Nagar Rahivashi CHS, as well as Epitome Residency Pvt Ltd, Teachers Colony CHSL, Juhu Shantivan CHSL, and Bene Israel Home for Destitutes and Orphans.

They claimed that Section 124 F of the MRTP Act exempts them from developing on government, MHADA, or C-owned land. They notified the Maharashtra Development Housing and Area Development Authority (Mhada) and the Brihan Mumbai Municipal Corporation (BMC).

On the other hand, MHADA and the BMC claimed that their request was justified and that the Act was worded ambiguously. The court considered the definition of the term “vest.” According to the C, it was of “ambiguous import,” citing a Supreme Court ruling, and would appear to mean vested in possession or use of. The Court of Appeal agreed that the law was ambiguous and required “purposeful interpretation” to be consistent with the MRTP Act’s goal of “providing for planned urban development.”

“The exemption benefits are offered solely to the State Government, Central Government, or Planning Authorities who seek to bring out development for their own reasons, not to their tenants who would receive permanent alternate shelter on an ownership basis,” according to the HC.

The High Court noted, “The intent of awarding such exemption to the State Government, Central Government, or any Planning Authority, who owned the land…cannot be construed to mean that Developers, who are third parties and suggest to bring out the redevelopment with a commercial bargain.”

“Section 124 F does not imply a legislative intent to exempt third-generation growth from development cost liability…the MRTP Act’s levy is person-centric rather than property-centric.”