The Bombay High Court today struck down the governments April 2008 notification that increased the floor space index (FSI) in the suburbs from 1 to 1.33,crushing the governments plan to earn revenue by loading such FSI for a premium. The judgment came in response to a petition filed by advocate Y P Singh,representing Tardeo resident Amit Maru. According to the petition,the notification suffered from at least 10 violations in the decision-making process. In May 2008,the court had stayed the notification. During arguments,Sudhakar Nangnure,deputy secretary in the urban development department,had said in an affidavit,I deny that the order changes the entire character of the city and it is necessary to curb hoarding and trading of TDR at the hands of the a TDR cartel who are the real petitioners in the case. It was said the prices had skyrocketed because of the TDR cartel. If the delegate was of the opinion that the price of flats was rising because of a cartel of TDR holders charging exorbitantly,it is not for the court to exercise that wisdom. Legislature has to exercise that wisdom, the division bench of Justice F I Rebello and Justice Amjad Sayed said. Delhi-based counsel Mukhul Rohatgi,appearing for the petitioners,had argued 750 million sq ft of built-up space could be loaded on suburban properties by paying some money. It is not a locality or a few buildings here. We are talking about every building in the suburbs. In 2008,based on data compiled from various ward books,Rohatgi informed the court that only 20 per cent of 190 million square feet of FSI under the transfer of development rights (TDR) had been used till date. The government had then clarified that the premium they would charge from those using the extra FSI would be treated as neither tax nor a fee. Builders had pointed out that under the Maharashtra Regional Town Planning Act,under which the notification was issued,there is no charging section to impose a fee. Advocate General Ravi Kadam submitted that the premium was neither a tax nor a fee but a condition imposed to avail the extra FSI,which the government is empowered to do under Section 22(m) of the MRTP Act. The judgment said the state has not been able to show any provision in the MRTP Act specifically authorising the levy of such a premium based on the ready reckoner value of land per sq metre and ranging from Rs 7,000 to Rs 23,000 per sq metre in different areas and localities of the suburbs and extended suburbs. The states contention that the premium can be used for boosting city infrastructure also crumbled. The judgment says once the legislature has provided for a development charge. to be used for providing amenities,it is not open for the state or the Planning Authority to contend that under the guise of giving grant of additional FSI they are entitled to a charge or a fee for the purpose of providing amenities. The court rejected the petitioners contention that the character of the city will change if the notification is implemented. As for the environmental impact,the court upheld the petitioners contentions and held environment approval is required. Kadam sought an eight-week stay on the judgment; the court refused. What it means* Real estate analysts say the ruling will affect TDR (transfer of development rights) rates and in turn property rates. TDR (transfer of development rights) rates are around Rs 2,500-3,000; this is bound to shoot up now. The increase in cost of raw material will impact property rates, said Gulam Zia,national director,research and advisory services at Knight Frank.* TDR rates had plunged to Rs 1,400 per sq ft after the government had raised the FSI,reducing developers dependence on TDR. The BMC had approved 276 projects with the increased FSI,earning a total revenue of Rs 413 crore.* TDR is generated when a developer agrees to house slum dwellers or project-affected persons free of cost and can be used by the developer anywhere north of the plot. Ccan also sell TDR.
