Statutory Compensation Under MRTP Act Cannot Be Waived By Contract: Supreme Court Reaffirms Landowners’ Right To Additional TDR
The Court held that delay, waiver clauses, or maintenance agreements cannot defeat compensation under MRTP Act.
The Supreme Court has reaffirmed that landowners surrendering land under Section 126(1)(b) of the Maharashtra Regional and Town Planning (MRTP) Act, 1966 are entitled to full statutory compensation, including additional Transferable Development Rights (TDR) for development of amenities on the surrendered land. The Court held that such entitlement cannot be defeated through contractual undertakings, executive conditions, allegations of delay, or claims of waiver.
The Court observed that compensation payable upon acquisition of land is intrinsically linked to Article 300A of the Constitution of India and that authorities cannot compel landowners to relinquish statutory rights as a pre-condition for grant of development rights. It further held that delay and laches cannot defeat claims seeking fair compensation for acquisition of property.
Justice J.K. Maheshwari and Justice Atul S. Chandurkar observed, “The plea that the Landowner had surrendered its right to claim additional amenity TDR under Section 126(1)(b) of the MRTP Act against the construction or development of amenity cannot be countenanced or sustained. The said provision of statute is a manifestation of Article 300A of the Constitution of India and once fair compensation as against surrender of land is prescribed under statute, in terms of Section 126(1)(b) of the MRTP Act when read with the relevant regulations, no deprivation of land without strict compliance thereof can be permissible”.
“…Once the statute read with the regulations framed thereunder provides for compensation to be granted in a certain manner, there was no occasion for the officials of the Corporation to enter into further negotiations with the Landowner to come up with a new mechanism for payment of compensation in derogation of the same. There was no occasion for the authorities to contract out of the statutory conditions for payment of compensation. Such an act cannot be countenanced and sustained in law, and it therefore deserves interference by this Court…”, it observed.
R. Venkataramani, AG, Senior Advocate Dhruv Mehta appeared for the appellants and Senior Advocates Mukul Rohatgi, Pravin Kumar Samdani appeared for the respondents.
The Bench examined a dispute concerning surrender of land reserved for a garden under the Development Control Regulations, 1991. The landowner had surrendered the land to the Municipal Corporation in 2002 and had also developed the garden as required under the statutory scheme. Although TDR for the surrendered land was granted, the Corporation denied additional amenity TDR on the basis of conditions contained in a Letter of Intent, undertaking, and maintenance agreement executed by the landowner, wherein it had agreed not to claim such additional TDR.
Before the Court, the Corporation contended that the landowner, having accepted the contractual conditions and maintained the garden for several years, was estopped from asserting any further claim. It was also argued that the claim, raised nearly seventeen years after surrender of the land, was barred by delay and laches.
Rejecting the contention, the Court held that statutory compensation under Section 126(1)(b) could not be diluted through private agreements or executive stipulations. The Bench observed that once the statute prescribes the manner of compensation, authorities cannot “contract out” of statutory obligations. It further held that there existed inherent inequality in bargaining power between planning authorities and landowners whose lands had already been reserved for public purposes.
The Court relied extensively upon its earlier decisions in Godrej & Boyce I, Godrej & Boyce II and Kukreja Construction Company and Ors. v. State of Maharashtra and Ors. (2024) 14 SCC 594, reiterating that additional TDR constitutes part of fair compensation for acquisition.
On the issue of delay, the Court held that compensation determined in the form of FSI/TDR becomes payable upon surrender of land itself and does not depend upon representations being repeatedly made by landowners. It observed that the Corporation had failed to demonstrate any prejudice or creation of third-party rights arising from the alleged delay.
“…the plea of delay may not succeed where there is a continuing cause of action especially in the facts of the instant case. It goes without saying that questions relating to delay in approaching Courts for relief heavily depend on facts and circumstances of each case and in the present set of facts, we are of the opinion that delay and laches cannot defeat that claim of the Landowner to fair compensation under Section 126(1) of the MRTP Act”, it noted.
The Court also rejected the Corporation’s argument that the garden was not an “amenity” within the meaning of the MRTP Act. It noted that the Corporation itself had required development of the garden as a condition for grant of TDR and had issued completion certificates acknowledging the amenity.
“…as admitted by the Corporation before the High Court, the maintenance of the garden is completely independent from the acquisition of the subject land after development of the garden. It is difficult to accept the contention of the Corporation that the alleged misuse of the garden would in any manner affect the statutory right of the Landowner to receive fair compensation under Section 126(1)(b) of the MRTP Act”, the Bench said.
“…The maintenance of a garden on adoption basis has nothing to do with the statutory rights of the Landowner for compensation accruing under Section 126(1)(b) of the MRTP Act. Having specifically admitted so in the counter affidavit before the High Court, it does not lie in the mouth of the Corporation to claim the opposite before this Court. The issue of grant of maintenance rights on adoption basis to the Landowner and its subsequent withdrawal cannot be made the subject matter of the instant dispute since the agreement for maintenance can be said to be an alternative manner of compensation which has been conjured by the Corporation in complete and abject ignorance of the statutory provisions”, it noted further.
Accordingly, the Court dismissed the Corporation’s appeal and directed compliance with the High Court’s directions within two months, including release of the balance TDR/FSI due to the landowner.
Cause Title: Brihanmumbai Municipal Corporation & Ors. v. Vijay Nagar Apartments & Ors. (Neutral Citation: 2026 INSC 517)
Appearances:
Appellants: R. Venkataramani, AG, Dhruv Mehta, Sr. Adv., Chirag J. Shah, Utsav Trivedi, Shivani Bhushan, Sandeep Patil, Kartikeya Sharma, Harsh Pandya, Gaurav Sharma, Ameyavikrama Thanvi, M/S. Tas Law, AOR, Advocates.
Respondents: Mukul Rohatgi, Sr. Adv., Pravin Kumar Samdani, Sr. Adv., Shukla Samit Dilip, Devanshi Singh, Delnavaz Patel, Mustafa Nulwala, M/s Trilegal Advocates On Record, AOR, Mohit Paul, AOR, Yugandhara Pawar Jha, Siddharth Dharmadhikari, Aaditya Aniruddha Pande, AOR, Shrirang B. Varma, Advocates.