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Chennai Metropolitan Development Authority v. Prestige Estates Project Ltd.

Civil Appeal · 2019 INSC 821Decided 29 Jul 2019
Civil Appeal Nos. 5642-5643 of 2019
Dr. Justice D.Y. Chandrachud · Justice Indira Banerjee

Background

The respondent, a real-estate developer, applied for planning permission to build a multi-storeyed complex near Chennai and paid the development charges demanded by the Chennai Metropolitan Development Authority (CMDA) in March 2012, while still completing conditions like obtaining a No-Objection Certificate from the water board. Before planning permission was actually granted (which happened only in May 2012), the Tamil Nadu government revised upward, effective 1 April 2012, both the "Infrastructure and Amenities" (I&A) charges and the guideline values used to calculate "Premium Floor Space Index" (Premium FSI) charges. CMDA then raised a fresh demand in August 2012 for the difference based on the new, higher rates, which the Madras High Court (Single Judge and Division Bench) quashed entirely, reasoning the developer had already paid under the rates prevailing when it applied and complied with conditions.

Decision Breakdown

The Supreme Court held that, following a consistent line of its own precedent (including State of Tamil Nadu v. Hind Stone and Howrah Municipal Corporation v. Ganges Rope Co.), merely applying for and paying charges toward a permission does not create a vested right to have that application decided or charged under the old rules: the charges applicable are generally those in force on the date permission is actually granted, not the date of application. Since planning permission was only granted in May 2012, after the revised Premium FSI rates took effect on 1 April 2012, the Court held CMDA was legally entitled to demand and collect the higher Premium FSI charges, and restored that part of the demand. However, the Court distinguished and upheld the High Court's quashing of the revised I&A charges demand, leaving that part of the High Court's order undisturbed. The appeals were thus allowed only in part, with no order as to costs.

Lesson Learnt

When a law, rule, or official charge changes while a government approval is still pending, the party seeking approval generally has no vested right to be governed by the rates in force when they first applied: the rates applicable on the date the approval is finally granted will usually control, unless a specific statutory provision says otherwise.

Official source (sci.gov.in)View Judgment (PDF)

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