The Bombay High Court has delivered a significant ruling, providing relief to both developers and flat purchasers by affirming the applicability of a 50% rebate on additional Floor Space Index (FSI) granted by the Maharashtra Government during the Covid-19 pandemic. This rebate, designed to support the real estate sector, will extend until the completion of the respective projects. The court's decision, articulated by a division bench comprising Justices GS Patel and Kamal Khata, includes directives to the Municipal Corporation of Greater Mumbai (MCGM) to re-issue Intimations of Disapproval (IoDs) and Commencement Certificates (CC) to petitioner developers without requiring any additional payment.
The ruling is grounded in the context of the 2021 Government Resolution (GR), which outlined conditions for availing the rebate. The court emphasized that the difference amount in the rebate couldn't be recovered subsequently. It specifically addressed the Municipal Corporation's demand for additional premium payments when the IoDs lapsed after a year, contending that this was inconsistent with the relief-oriented nature of the GR.
The Floor Space Index (FSI) plays a crucial role in urban development, representing the ratio of plot area to the built-up area. In the case of Greater Mumbai, the standard FSI is 1.33, while for the suburbs, it is 1. Developers can purchase additional space beyond this limit by paying a premium to the civic body. The 2021 GR, issued on January 14, offered a 50% rebate on the premium for additional FSI if the builder paid 100% stamp duty for flat purchasers. This incentive was applicable until December 31, 2021.
The court acknowledged that developers faced challenges during the Covid-19 pandemic, and the GR aimed to provide them with a boost while also easing the burden on flat purchasers. The decision underscored that the rebate was not intended to be illusory and that developers must continue to absorb the stamp duty burden until the project areas for which the benefit was obtained had been sold. It rejected the argument that if IoDs lapsed after a year without construction commencement, it constituted a fresh IoD and proposal, and thus, concessional rates could not be availed.
The developers who sought relief through the High Court included Prestige Estate Projects Ltd, Sugee Two Developers LLP, Sugee Nine Developers LLP, Sugee Fifteen Developers LLP, Ankur Premises Developers LLP, Relcon Infraprojects Ltd, Mayfair Housing Pvt Ltd, and Evershine Builders Pvt Ltd. The court's decision highlighted the interconnected nature of the Municipal Corporation's decisions and the Government Resolution, stating that the former is not independent and cannot override the latter.
The court acknowledged the legitimate entitlement of developers to additional FSI under the GR and recognized that this was not a 'property' protected under Article 300-A of the Constitution, as claimed by the petitioners. It also commented on the broader context, noting that open space deficiencies required for general health and well-being could be addressed by paying a fee, reflecting on the Development Control & Promotion Regulation 2034 (DCPR).
The ruling emphasized that the additional FSI, obtained by paying the rebated premium, should continue without requiring additional payments until the completion of the project, as long as the undertaking to pay stamp duty persisted. The court concluded that this applies only to projects that availed the benefits of the GR and adhered to its conditions.
In sum, the Bombay High Court's decision provides a nuanced interpretation of the 2021 GR, aiming to balance the interests of developers and flat purchasers amid the challenges posed by the Covid-19 pandemic. The ruling underscores the importance of fulfilling the conditions stipulated in the GR for availing the benefits and prevents the rebate from being rendered illusory through subsequent demands for additional premiums. This legal development holds implications for various stakeholders in the real estate sector, setting a precedent for similar cases and reinforcing the interconnected nature of government resolutions and municipal decisions in the realm of urban development.
TAGS: Bombay High Court Floor Space Index (FSI) Maharashtra Government Covid-19 pandemic Rebate
