REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9336 OF 2019

(Arising out of SLP(C) No.35685 of 2016)

CHENNAI METROPOLITAN DEVELOPMENT

AUTHORITY REPRESENTED BY ITS

MEMBER SECRETARY ...Appellant

VERSUS

D. RAJAN DEV AND OTHERS …Respondents

J U D G M E N T

R. BANUMATHI, J.

Leave granted.

2.This appeal arises out of the impugned judgment dated

03.08.2016 passed by the Division Bench of the High Court of

Madras in W.A. No. 2376 of 2013 filed by the first respondent in and

by which the Division Bench set aside the order of Single Judge and

allowed the writ appeal thereby directing the appellant Chennai

Metropolitan Development Authority (CMDA) to calculate the

Premium FSI charges at the rate prevalent as on the date of filing of

application by the first respondent Rajan Dev.

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3.Respondent No.1 is a developer carrying on construction

activities under the name and style of M/s. Ben Foundation. He

submitted an application dated 07.05.2009 for planning permission

to construct a residential-cum-shopping building at Survey Nos.

223, 224 and 225, Padi Village, Padi Kuppam Road, Chennai for

196 dwelling units. He proposed construction of Block A – Stilt

floor(part) + GF(part) + 6 floors + 7

th

floor part; Block B and C – Stilt

+ 6 floors and Block D – Stilt + 7 floors with floor area of 14082.26

sq.mt. and height of 22.80 mt. The planning permission was granted

by the appellant CMDA on 01.07.2009. Initially, the sanction was

mistakenly accorded for 14889 sq.mts. (1.84 FSI) instead of 14164

sq.mts. (1.75 FSI). The excess area for which sanction was wrongly

granted is 725 sq.mts. While the construction was in progress, on

09.09.2009 vide G.O.Ms.No.163-Housing and Urban Development,

respondent No.2-Government of Tamil Nadu introduced a scheme

called “Premium FSI Scheme”, wherein the Government permitted

any builder willing to pay FSI charges to increase FSI above the

normally permitted FSI. Additional benefit by way of Premium FSI

accrued to the developer is related to the proportionate land extent.

As per the guidelines for Premium FSI, the amount payable by the

applicant towards the Premium FSI charge shall be equivalent to

the cost of the proportionate land as per the Guideline value of the

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Registration Department. On 04.05.2011, the first respondent made

an application along with revised proposal for permission to have

additional FSI area of 11,860 sq.ft. (= 1102 sq. mt.) under the

“Premium FSI Scheme” for extra fourteen dwelling units i.e. one

floor each in two blocks. The said application was returned by the

appellant on 10.02.2012 with the direction to furnish revised plan for

rectifying sixteen defects as pointed out by the appellant. The first

respondent submitted revised plans on 24.02.2012. The appellant-

CMDA vide its letter dated 30.03.2012 forwarded the revised plan to

the Government seeking to accord approval to the recommendation

of the Multi-storeyed building panel and for issue of planning

permission. In the meantime, the State Government revised the

guideline value of the land w.e.f. 01.04.2012.

4.While the application of the first respondent for revised

proposal was pending, the guideline value of the land was revised

w.e.f. 01.04.2012 from Rs.1,650/- per sq.ft. to Rs.5,000/- per sq.ft.

for the area which the first respondent has put up construction.

After inspection of the site and recommendation of the multi-

storeyed building panel, on 29.05.2012, the Government granted

approval for the Premium FSI. Pursuant to the sanction granted by

the Government, the appellant-CMDA vide letter dated 02.07.2012

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called upon the first respondent to remit “Premium FSI Charges”

quantified at Rs.7,96,50,000/- for 1479.81 sq.mts. of the land area

based on the revised guideline value of the property as revised

w.e.f. 01.04.2012 by the Government and as provided at the time of

the approval for the proposed construction.

5.Vide letter dated 19.07.2012, the first respondent raised

objections to the aforesaid calculation and also as regards the area.

The first respondent submitted that the first respondent originally

proposed to construct 14,889 sq.mts. of built up area of an extent of

land of 8093.64 sq.mts. It was stated that the projected FSI at 1.74

by adopting the total built up area was calculated as 14089 sq.mts.

as against 14,889 sq.mts. and the same was a human error and the

same led to all the confusion. The first respondent has also raised

objection stating that he made the application during May, 2011

itself and that he may be allowed to make payment of “Premium FSI

Charges” by adopting the guideline value existed on both the dates

of their application (04.05.2011) and the approval by the CMDA

panel (30.03.2012). In the representation, the first respondent

stated that they are ready to pay the “Premium FSI Charges” for

both the projected built up area of 800 sq.mt. in the already

approved plan and for the proposed built up area of 1102 sq.mts.

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(proposed extra FSI of 0.24) by adopting the guideline value existed

on the date of their application i.e. 04.05.2011. The said

representation was rejected by the CMDA vide letter dated

31.08.2012. The appellant by its letter dated 19.07.2012 modified

the revised “Premium FSI Charges” for 1479.81 sq.mts. of the land

area from Rs.7,96,50,000/- to Rs.7,61,40,000/-. By the time the

plan was sanctioned, the guideline value had increased from

Rs.1,650/- per sq.ft. to Rs.5,000/- per sq.ft. As per the revised

guideline, the Premium FSI charges were calculated at the rate of

Rs.5,000/- per sq.ft. and the same was quantified at

Rs.7,61,05,480/-.

6.The first respondent made further representation dated

14.12.2012 requesting the appellant-CMDA to calculate the

“Premium FSI Charges” taking into account the guideline value

prevailing as on the date on which the application was submitted

and not to levy “Premium FSI Charges” as per the revised guideline

value. The first respondent also requested to deduct all balcony

and duct wall area which is within the limit of 10% allowance. The

representation made by the first respondent requesting for reduction

of “Premium FSI Charges” was rejected by the appellant-CMDA by

order dated 19.04.2013, affirming its earlier order dated 31.08.2012.

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By its letters dated 23.05.2013 and 14.06.2013, first respondent

sought for further thirty days’ time for remitting the Premium FSI

charges as demanded by the appellant. By communication dated

19.06.2013, the appellant-CMDA granted time till 15.07.2013 to pay

Premium FSI charges.

7.After so taking time, the first respondent filed the writ petition

in WP No.18238 of 2013 before the Madras High Court. During the

pendency of the writ petition, construction of 196 dwelling units was

completed and a partial completion certificate dated 17.06.2013

was granted. The learned Single Judge dismissed the writ petition

by holding that the first respondent is liable to pay the “Premium FSI

Charges” as per the guideline value prevailing on the date of

approval of the plan. The learned Single Judge held that the builder

would not acquire any right by merely submitting application for

building plan and the right to the builder would accrue only after the

approval of the plan. The learned Single Judge also held that there

was no undue delay on the part of CMDA or the second

respondent-Government in disposing of the application of the first

respondent.

8.Being aggrieved by the dismissal of the writ petition, the first

respondent preferred the writ appeal before the Division Bench

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which came to be allowed by the impugned judgment. Relying upon

Union of India and another v. Mahajan Industries Ltd. and another

(2005) 10 SCC 203, the Division Bench held that the appellant-

CMDA is entitled to calculate levy of “Premium FSI Charges” taking

into account the guideline value prevalent as on the date of the

application for approval of the additional construction and not from

the date on which the approval is being granted. During the

pendency of the writ appeal, an amount of Rs.3,80,00,000/- was

deposited by the first respondent pursuant to the order dated

17.02.2014 passed by the Division Bench. A provisional completion

certificate dated 16.10.2014 was granted for a total of 210 dwelling

units. Being aggrieved, the appellant-CMDA has preferred this

appeal.

9.Mr. Jayanth Muthuraj, learned Senior counsel appearing for

the appellant-CMDA submitted that under the “Premium FSI

Scheme”, the application was returned for rectification of defects on

10.02.2012 and the first respondent resubmitted the application on

25.02.2012. Placing reliance upon Chennai Metropolitan

Development Authority represented by its Member-Secretary and

another v. Prestige Estates Project Ltd. 2019 (10) SCALE 78, it was

submitted that the crucial date for determining the applicable rate for

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Premium FSI Charges is the date on which the authority grants

planning permission. It was submitted that mere pendency of the

application or any payment made does not create any right under

law in favour of the applicant till his application is considered and

sanction is granted as laid down by the Supreme Court in Usman

Gani J. Khatri of Bombay v. Cantonment Board and others (1992) 3

SCC 455. The learned Senior counsel submitted that the

judgments relied upon by the Division Bench viz. Union of India and

others v. Dev Raj Gupta and others (1991) 1 SCC 63 and Union of

India and another v. Mahajan Industries Ltd. and another (2005) 10

SCC 203 are not applicable to the case in hand as both the

judgments deal with the application for conversion and not

application for building permission. The learned Senior counsel

further submitted that the first respondent being an experienced

builder with for more than three decades experience, is well aware

of the procedure to be followed in making an application seeking

planning permission, but had deliberately filed a defective

application and therefore, the first respondent is not right in

contending that there was delay on the part of the appellant-CMDA

in processing the application.

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10.Per contra, reiterating the findings of the Division Bench, Mr.

K.V. Vishwanathan, learned Senior counsel appearing for the first

respondent submitted that as rightly held by the Division Bench that

the crucial date for determining Premium FSI has to be the date of

receipt of the application by the first respondent. It was submitted

that the first respondent has submitted the application for

permission to have additional FSI under the “Premium FSI Scheme”

way back on 04.05.2011 and the same was returned on 10.02.2012

by the appellant for rectifying the defects nearly after a delay of nine

months. It was further submitted that the application of the first

respondent was pending consideration for quite some time with the

appellant-CMDA and the Multi-Storeyed Building Panel discussed

the application of the first respondent and forwarded the proposal to

the Government with recommendation for approval even on

30.03.2012. The learned Senior counsel further submitted that the

Division Bench of the High Court rightly held that the FSI charges is

payable on the date of filing of the application for conversion and

not on the date of the approval and the impugned judgment

warrants no interference.

11.We have considered the submissions and carefully perused

the impugned judgment and other materials on record. The point

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falling for consideration is whether the High Court was right in

holding that the Premium FSI charges are payable only as per the

pre-revised guideline value as on 04.05.2011 i.e. the date of filing of

application with revised plan, by the first respondent?

12.On 07.05.2009, the first respondent submitted an application

for construction of residential-cum-shopping complex at Padi

Village, Padi Kuppam Road, Chennai. The planning permission was

granted for the original plan by the appellant-CMDA on 01.07.2009.

When the construction was in progress, the Government of Tamil

Nadu introduced the “Premium FSI (Floor space Index) Scheme”

vide G.O.Ms.No.163, Housing and Urban Development (UD-I) dated

09.09.2009 as per which the Government permitted willing builders

to increase FSI above the normally permitted FSI subject to a

maximum of one relating the same to the road width parameters by

paying premium FSI charges.

13.Regulation 36 deals with “Premium FSI”, which reads as

under:-

“36. Premium FSI:- The Authority may allow Premium FSI over and

above the normally allowable FSI subject to a maximum of 1 (one)

relating the same to the road width parameters as follows:-

Serial

Number

Road width Premium FSI

(% of normally

allowable FSI)

(i) 18 meters and above

(60’ and above)

40%

10

(ii)12 meters – below 18 meters

(40’ – below 60’)

30%

(iii)9 meters – below 12 meters

(30’ – below 40’)

20%

The premium FSI shall be allowed in specific areas as may be notified,

subject to Guidelines and on collection of charge at the rates as may be

prescribed by the Authority with the approval of the Government. The

amount so collected towards the award of Premium FSI shall be remitted

into the Government account to be allotted separately for the purpose for

utilizing it for infrastructure development in that area as may be directed

by the Government.”

14.The first respondent sought to avail the benefits of Premium

FSI and submitted an application on 04.05.2011 seeking approval

of additional FSI under the Premium FSI Scheme. The said

application was returned by the appellant-CMDA on 10.02.2012 for

rectification of defects. Thereafter, on 24.02.2012, first respondent

submitted the revised plan after rectification of the defects.

15.The Multi-Storeyed Building Panel considered the revised

plan of the first respondent and the appellant-CMDA by its letter

dated 30.03.2012 forwarded the proposal to the Government with

recommendation for approval subject to the conditions indicated

thereon. In the meanwhile, the Registration Department revised and

notified the revised guideline value w.e.f. 01.04.2012 as per which

the guideline value of Padi Kuppam Road was increased from

Rs.1,650/- per sq.ft. to Rs.5,000/- per sq.ft. On 29.05.2012, the

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Government granted approval to the revised plan of the first

respondent. Based upon the revised guideline value, the appellant-

CMDA by its letter dated 02.07.2012 informed the first respondent

that the Premium FSI has been levied at Rs.7,96,50,000/-. The

same was later modified as Rs.7,61,40,000/-.

16.Learned Senior counsel for the respondent contended that

only the date of application for revised building plan has to be taken

into consideration and the first respondent cannot be levied with the

revised FSI Premium charges because of the time taken by CMDA

in processing the application. The learned Senior counsel mainly

relied upon the recommendation made by the appellant-CMDA to

content that pre-revised guideline would only be applicable for

calculation of the Premium FSI charges. The forwarding of the

revised proposal by the appellant-CMDA to the Government reads

as under:-

“AGENDA ITEM NO:2/203 FILE NO: C3(N)/6476/2011

Sub: CMDA – APU – MSB (North) Division – Planning

Permission Application for the revised approval for the

construction of Block A: Stilt/GF (Shop cum Parking) + 7

Floors; Block-B, C and D: Stilt + 7 Floors Commercial cum

Residential building with 210 dwelling units at T.S.No.113/2,

Block No.65, Ward I, Old S.No.224/1 (part) of Padi Village,

Padikuppam Road, Mogappair, Chennai – Applied by Thiru.

D. Rajan Dev – Recommended for Approval – Reg

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The MSB Panel discussed the subject in detail and

recommended to forward the proposal to the Government

recommending for approval subject to the following conditions:

i) undertaking accepting conditions of NOCs to be obtained

before issue of Planning Permission; and

ii) undertaking to furnish IAF NOC before issue of completion

certificate to be obtained before issue of Planning

Permission.

Sd./XXXX

30.3.2012

MEMBER SECRETARY”

By reading of the above, it is seen that it is only forwarding of the

proposal to the Government with recommendation for approval of

the revised plan which is as per the procedure involved. Such

forwarding of the proposal to the Government with recommendation

for approval, does not create any right in favour of the respondent.

In terms of Regulation 36, Premium FSI shall be allowed in specific

areas as notified subject to guidelines with the approval of the

Government and on collection of charges at the rates as may be

prescribed by the authority. Thus, for the award of Premium FSI,

inter-alia the conditions “collection of charges at the rates as may be

prescribed by the authority” and “approval of the Government”, are

mandatory. The collection of FSI Premium charges is subject to the

guidelines. The revised guideline came into force w.e.f. 01.04.2012.

Be it noted that the first respondent’s application was considered

and finally approval was granted by the Government on 29.05.2012

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only after revised guideline came into force. At the time of granting

approval by the Government on 29.05.2012, when the revised

guideline was in force, the High Court ought not to have held that

the guideline value as on 04.05.2011, that is, the date of application

of the first respondent, should be considered for the purpose of

calculating Premium FSI charges. The right would accrue to the first

respondent only after the Government grants approval to the

revised plan sanctioning the Premium FSI. Thus, the date on which

the approval was granted by the Government i.e. 29.05.2012 ought

to have been taken into consideration for calculating the Premium

FSI charges.

17.It is well settled that no right accrues to an applicant until the

application for approval is considered and sanctioned. The first

respondent has given the proposal for revised building plan under

Regulation 36 with a view to avail the benefit of Premium FSI. As

pointed out earlier, the process of grant of Premium FSI is

completed only after the grant of approval by the Government.

Regulation 36 clearly provides that the Premium FSI shall be

allowed in specific areas with the approval of the Government and

the approval of the Government therefore is mandatory. Only when

the Government grants approval, the right would accrue to the

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builder and not before that. Therefore, the date of approval is the

crucial date.

18.Learned Senior counsel for the appellant has submitted that

the builder would not acquire any legal right by merely submitting an

application for approval of the building plan and the right would

accrue only after sanction of the revised plan by the Government. In

this regard, we may usefully refer to Usman Gani J. Khatri of

Bombay v. Cantonment Board and Others (1992) 3 SCC 455 which

has been referred to by the learned Single Judge in the order

passed in the writ petition wherein, the Supreme Court held as

under:-

“24. …….The petitioners did not acquire any legal right in respect of

building plans until the same were sanctioned in their favour after having

paid the total amount of conversion charges in lump sum or in terms of

sanctioned instalments and getting conversion of their land in freehold

tenure…….”.

19.As pointed out by the learned Single Judge, in Usman Gani,

the Supreme Court in order to explain the unsustainability of the

claim made by the builders has also explained a reverse case as

under:-

“24. ……..If we consider a reverse case where building regulations are

amended more favourably to the builders before sanctioning of building

plans already submitted, the builders would certainly claim and get the

advantage of the regulations amended to their benefit.”

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Learned Single Judge has also referred to State of W.B. v. Terra

Firma Investments & Trading Pvt. Ltd. (1995) 1 SCC 125 and other

judgments wherein, the Supreme Court held that no right accrues to

the builder by mere submission of a plan for construction of a

building which has not been sanctioned by the competent authority.

20.In the impugned judgment, the High Court relied upon the

decision in Union of India and Another v. Mahajan Industries Ltd.

And Another (2005) 10 SCC 203 wherein, the Supreme Court had

followed the decision of the Delhi High Court in the case of Ansal &

Saigal Properties (P) Lts. bs. L & DO, holding that the crucial date

for calculating the conversion charges has to be the date of receipt

of application for conversion of land use. It is the submission of the

appellant that the decision in the said case is not applicable to the

case in hand as the said judgment deals with application for

conversion of land and not the application for building permission.

Apart from that, there was delay of more than three years in

deciding the said application. We find merit in the submission of the

appellant that the decision in Mahajan Industries is not applicable to

the facts of the present case. Though the application was filed on

04.05.2011 and resubmitted after rectification of defects on

24.02.2012, the Government approved the revised proposal only on

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29.05.2012. In the meanwhile, the revised guideline value was

introduced for implementation w.e.f. 01.04.2012. As rightly held by

the learned Single Judge that the first respondent/builder does not

acquire any legal right until the plan is sanctioned.

21.Mere pendency of the application for planning permission

does not create a vested right in an applicant. Right accrues only

when the permission/sanction is granted by the

Government/concerned authorities. This is because planning

permission is accorded on the basis of scrutiny of application form

and the concerned documents. There is always possibility of an

application not meeting the requisite criteria for carrying out the

proposed development and being rejected. Until and unless an

application complete in all respect is approved, it remains a mere

application and no right can be claimed on the basis of such an

application. A proposal cannot be equated with an approval,

otherwise the later will lose all significance. The obvious logical

conclusion is that the right to an applicant accrues when the

permission has been granted. Further, as a corollary, it can be said

that the rates prevailing at the time of granting of permission are the

rates which an applicant has to pay. The respondent/applicant

cannot claim the benefit of the earlier guideline value existing prior

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to the date when approval was granted by the government. In our

considered view, the respondent will have to pay FSI Premium

charges based on the guideline value as existing on the date of

grant of approval.

22.Learned Senior counsel for the appellant has placed reliance

upon Chennai Municipal Development Authority v. Prestige Estates

Projects Limited 2019 (10) Scale 78. In Prestige Estates, despite

the payment having been made by the builder on 28.03.2012, the

Supreme Court held that the developer is liable to pay Premium FSI

charges based on the revised guideline value which are applicable

post 01.04.2012. In Prestige Estates, after referring to Usman Gani

and other judgments, the Supreme Court held that the demand on

account of Premium FSI charges arises only upon the grant of

approval by the Government to avail Premium FSI. The ratio of the

decision in Prestige Estates is squarely applicable to the present

case. In the present case, since the sanction for revised plan was

granted by the Government on 29.05.2012, the first respondent in

the present case is liable to pay the Premium FSI charges based on

the revised guideline value which came into force w.e.f. 01.04.2012.

23.Learned Senior counsel for the first respondent inter-alia

contended that there was inordinate delay on the part of appellant-

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CMDA in processing the application and the first respondent cannot

be burdened with extra charges on account of delay caused by the

appellant. Learned Senior counsel further submitted that the

application of the first respondent dated 04.05.2011 for revised

proposal was returned after nine months on 10.02.2012 and the

respondent cannot be blamed for the delay caused by the appellant

in processing the application of the first respondent. This contention

does not merit acceptance. The appellant-CMDA is a body

entrusted with the task of examination and approval of multitude of

building applications throughout the planning area. That apart, the

appellant-CMDA is a single window system and it has to verify

various documents with the connected Departments at various

levels. The application was processed at various levels and it was

sent to the departments like police, Fire, etc. for clearance.

Considering the fact that different departments and agencies are

involved with the process of approval, we feel that, there was no

undue delay on the part of the appellant-CMDA or the State

Government. As rightly pointed out by the learned Single Judge, the

first respondent submitted the application after rectification of

defects only on 24.02.2012 and within a period of one month, the

application was placed before the meeting. Therefore, it cannot be

said that there was undue delay on the part of the appellant-CMDA

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or Government to consider the first respondent’s application for

approval of the revised plan.

24.In the impugned judgment, the Division Bench has relied upon

Union of India and Others v. Dev Raj Gupta and Others (1991) 1

SCC 63 and Mahajan Industries Limited. The ratio of those

decisions is not applicable to the case in hand as those decisions

relate to application for conversion of the land and not building

permission application. That apart, in those cases, there was a

delay of more than three years in deciding the application. In the

present case, as discussed above, there was no delay on the part of

the appellant-CMDA or the Government to consider the first

respondent’s application for approval.

25.As submitted by the learned Senior counsel for the appellant-

CMDA, the conduct of the first respondent is also to be taken note

of. After the levy of Premium FSI charges calling upon the first

respondent to pay a sum of Rs.7,61,40,000/-, the first respondent

submitted a representation on 19.07.2012 requesting to revise the

Premium FSI charges by considering the guideline value prevailing

as on the date of the application i.e. 04.05.2011. The said

representation was rejected by the appellant-CMDA by its letter

dated 31.08.2012 and the first respondent was directed to make

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payment of Premium FSI Charges. The first respondent was also

informed that if the payment was not made within sixty days, the

application will be returned. The first respondent’s further

representation dated 14.12.2012 also came to be rejected.

Thereafter, by letters dated 23.05.2013 and 14.06.2013, the first

respondent had prayed for thirty days’ time for remitting the

Premium FSI charges as demanded by the appellant-CMDA. By

communication dated 19.06.2013, the first respondent was granted

time upto 15.07.2013 to pay Premium FSI charges. After so getting

extension of time, the first respondent filed writ petition before the

High Court challenging the order of CMDA dated 31.08.2012 and

prayed for quashing the demand. It is to be pointed out that the

learned Single Judge also commented on the conduct of first

respondent in obtaining extension of time to remit the Premium FSI

charges and thereafter, filing the writ petition before the High Court

challenging the demand.

26.The Division Bench did not keep in view the well settled

principle that no right accrued to the applicant-builder by mere filing

of application for approval and the right accrues only after approval

is granted by the Government/concerned authorities. The impugned

judgment is contrary to the well settled principle that the applicant

21

does not acquire any right under law till his application is considered

and sanctioned. Regulation 36 clearly provides that the Premium

FSI shall be allowed in specific areas only with the approval of the

Government. Unless and until the Government grants approval, no

right accrued to the first respondent. When the Government

sanctioned the approval on 29.05.2012, the Division Bench erred in

directing the appellant to calculate the FSI charges as per the

guideline value as on 04.05.2011. The impugned judgment is

therefore liable to be set aside.

27.In the result, the impugned judgment dated 03.08.2016

passed by the High Court of Madras in W.A. No.2376 of 2013 is set

aside and this appeal is allowed. The appellant-CMDA is at liberty to

recover the balance Premium FSI charges from the first respondent

in accordance with its regulations and rules. No costs.

………………………..J.

[R. BANUMATHI]

………………………..J.

[A.S. BOPANNA]

.………………………..J.

[HRISHIKESH ROY]

New Delhi;

December 11, 2019.

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