Justice Dipankar Datta, Justice Satish Chandra Sharma, Supreme Court

While directing the authorities to refund the premium for residential construction to the litigants, the Supreme Court has held that a distinction cannot be drawn between additional FSI for educational and medical institutions, institutional buildings and star category hotels as opposed to additional FSI for any other constructions, including residential.

The Apex Court was dealing with the issue of the denial of a refund of premium for residential construction to the appellants.

The Division Bench of Justice Dipankar Datta and Justice Satish Chandra Sharma held, “The further distinction that has been drawn between additional FSI for educational and medical institutions, institutional buildings and star category hotels as opposed to additional FSI for any other constructions, including residential, equally defies logic. The authorities’ decision in this regard does not manifest any reason as to why such benefit should be limited only to those identified buildings and to no other. Their action, therefore, suffers from sheer arbitrariness. That apart, discrimination is writ large on the face of it. Further, the refusal by the authorities to refund the premium paid by the appellants is also contrary to the principle of fairness, a facet of non-arbitrariness, intrinsic to and inherent in Article 14 of the Constitution.”

"The policy of the authorities in permitting refund of the premium paid for unutilized additional FSI in the case of the aforestated identified constructions while denying such relief to the appellants on the ground that they proposed to put up a group housing project on their land, therefore, defies comprehension and is, thus, clearly whimsical. The distinction drawn in that regard smacks of arbitrariness on the part of the authorities. The appellants would, therefore, be entitled to refund of the premium paid by them for the unutilized additional FSI, subject to deduction of 10% thereof towards administration charges, as was made applicable to the identified buildings under the extant policy”, it added.

Advocate Sangramsingh R. Bhonsle represented the Appellant while Advocate Bharat Bagla represented the Respondent.

Factual Background

The appellants owned an extent of agricultural land and wanted to develop this land under the scheme for homogenous development in areas adjoining municipal corporation limits, formulated by the Government of Maharashtra, which enabled modification of the regional plan. In 2012, they sought conversion of the use of their land so as to undertake group housing construction thereon. In terms of the regulations framed, a premium was payable for construction over and above what was permissible under the Floor Space Index (FSI) Regulations. In 2012, premium rates were notified by the District Collector, Pune District and upon the appellants’ request for extra FSI, the premium payable was determined.

The appellants paid ₹30,46,290 to the authorities, and the Sub-Divisional Officer, Khed, Pune, granted permission for such conversion and construction. However, the appellants abandoned their group housing construction plan and wanted to make plots instead. Their application in this regard was accepted, and permission was granted to take up the plotting, vide an order making it clear that the terms and conditions of the order would remain in force. In 2015, the appellants applied for a refund of the premium of ₹30,46,290 paid by them, as they had not utilised the extra FSI. Their plea was rejected by the Assistant Director, Town Planning, Pune Branch, on the ground that there was no provision in the Development Control Regulations permitting such a refund. This order was challenged by the appellants before the High Court by way of a Writ Petition.

The writ petition was dismissed by way of the impugned order. The Division Bench noted that the State was not to blame for the failure of their project, and it was the appellants themselves who had abandoned it. The Bench opined that the decision not to utilise the privilege was entirely that of the appellants and, having relinquished the privilege granted, it was not open to them to seek a refund of the premium from the public exchequer. The writ petition was accordingly dismissed. When no action was taken by the authorities, the appellants approached the High Court by way of a Writ Petition and the authorities were asked to take a decision on the appellants’ request for refund of the premium paid by them. The Assistant Director, Town Planning, Pune Branch, passed the order permitting the refund of premium paid for additional FSI for educational, medical institutions and star hotels, but as the present case involved premium for residential construction, those directions were not applicable. Reiterating this view, the Assistant Director rejected the appellants’ plea for return of the premium.

Reasoning

On a perusal of the facts of the case, the Bench noted that the appellants never undertook construction on their land as proposed by them, and the payment of ₹30,46,290 made by them was for additional FSI for the group housing construction that they proposed to take up on their land. “The verbal jugglery in the counter affidavit, so as to make out a difference between additional FSI and ‘exemption of certain components from FSI computation’ is ludicrous, as the effect of both is one and the same, i.e., extra FSI. In any event, the construction plan was given up and the appellants proposed to plot their land, which was permitted by the authorities on 19.04.2014”, it added.

The Bench was of the view that premium paid for unutilized additional FSI for a residential/group housing project, which would eventually impact either an individual homebuyer or a developer, who would invariably pass it on to his homebuyer, should stand on a higher footing when compared to premium paid for unutilized additional FSI for commercial/semi-commercial buildings, wherein educational or medical institutions or any other institution or a star category hotel would be operated.

The Bench thus held the appellant entitled to a refund of the premium paid by them for the unutilized additional FSI, subject to a deduction of 10% thereof towards administration charges, as was made applicable to the identified buildings under the extant policy.

Thus, allowing the appeal and setting aside the impugned judgment of the Bombay High Court as well as the rejection order passed by the Assistant Director, Town Planning, Pune Branch, the Bench held that the appellants would be entitled to a refund of the premium paid by them towards additional FSI, which was never utilised by them.

Cause Title: Prasad Pandurang Tapkir and another v. The Assistant Director of Town Planning, Pune District, Pune and others (Neutral Citation: 2026 INSC 683)

Appearance

Appellant: Advocates Sangramsingh R. Bhonsle, Swapnil Tingare, AOR Samridhi S. Jain, Advocates Nrupal A. Dingankar, Pushkara A. Bhonsle, Sneha Bhonsle, Chaitanya Dixit, Sanmitra Pol, Shivam Singh Rathour, Shruti Sharma

Respondent: Advocates Bharat Bagla, Siddharth Dharmadhikari, AOR Aaditya Aniruddha Pande, Advocate Shrirang B. Varma

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