The Bombay High Court has reaffirmed that the Municipal Corporation of Greater Mumbai (MCGM) lacks authority to levy 100% premium for staircase relaxation under Regulation 33(5) of the Development Control Regulations (DCR) 1991. The Court directed MCGM to refund Rs. 3,48,67,540, the excess premium paid by the petitioner, with 6% interest from the date of deposit, within 10 weeks. This judgment reinforces the binding precedent set by the Division Bench in Wadhwa Estate & Developers (I) Pvt. Limited vs. MCGM, which was upheld by the Supreme Court, clarifying the permissible premium rate for such relaxations.
Background & Facts
The Dispute
The petitioner, Kalpataru Ltd., a company incorporated under the Companies Act, 2013, challenged the levy of 100% premium for staircase relaxation imposed by MCGM under Regulation 33(5) of the DCR 1991. The petitioner argued that the demand was contrary to the provisions of the DCR and sought refund of the excess premium paid, amounting to Rs. 3,48,67,540.
Key Facts
- The petitioner was subjected to demand notices dated 20.06.2014, 07.07.2015, and 17.05.2017, requiring payment of 100% premium for staircase relaxation under Regulation 33(5).
- The petitioner paid the demanded premium under protest.
- A representation was filed by the petitioner seeking recalculation of the premium at 10%, which was rejected by MCGM on 17.02.2018 on the grounds that:
- MCGM had filed a Special Leave Petition (SLP) in the Supreme Court against a similar order of the Bombay High Court.
- The earlier order pertained to premium for open space deficiency due to loading of fungible FSI, not staircase relaxation.
Procedural History
- 14.11.2017: Division Bench of Bombay High Court in Wadhwa Estate & Developers (I) Pvt. Limited vs. MCGM & Ors. (WP No. 187/2016) held that MCGM cannot levy 100% premium for open space deficiency under Regulation 33(5). The Court directed refund of excess premium at 10% of the normal rate.
- 10.08.2023: Supreme Court dismissed MCGM’s Civil Appeal No. 11967/2018, upholding the Division Bench’s order. The Apex Court directed refund of the excess premium with interest within 6 weeks.
- 2019: The present Writ Petition No. 97 of 2019 was filed by Kalpataru Ltd. challenging the staircase premium levy.
Relief Sought
The petitioner sought the following reliefs:
- Prayer (a): Quashing of the demand notices dated 20.06.2014, 07.07.2015, and 17.05.2017 under Article 226 of the Constitution.
- Prayer (b): Direction to MCGM to recalculate the staircase premium at 10% of the normal premium and refund the excess amount of Rs. 3,48,67,540 with interest.
The Legal Issue
The central question before the Court was whether MCGM has the authority under Regulation 33(5) of the DCR 1991 to levy 100% premium for staircase relaxation, and if not, whether the petitioner is entitled to refund of the excess premium paid with interest.
Arguments Presented
For the Petitioner
- Relied on the Division Bench judgment in Wadhwa Estate & Developers (WP No. 187/2016), which held that MCGM cannot levy 100% premium for relaxations under Regulation 33(5).
- Submitted that the Supreme Court’s dismissal of MCGM’s SLP (Civil Appeal No. 11967/2018) on 10.08.2023 upheld the Division Bench’s findings, making the legal position binding.
- Argued that the circular dated 26.12.2013, which authorized 100% premium, was ultra vires Regulation 33(5) and Regulation 33(10) of the DCR.
- Contended that the object of Regulation 33(5), which grants concessions for slum rehabilitation and EWS/LIG/MIG schemes, would be frustrated by levying 100% premium.
For the Respondents
- MCGM contended that the Division Bench judgment in Wadhwa Estate was distinguishable as it pertained to open space deficiency, not staircase relaxation.
- Argued that the SLP dismissal by the Supreme Court did not explicitly address the staircase premium issue, leaving room for MCGM to levy 100% premium.
- Submitted that the circular dated 26.12.2013 was issued in exercise of powers under the DCR and was legally valid.
The Court's Analysis
The Court examined the Division Bench judgment in Wadhwa Estate & Developers and noted that it categorically held that MCGM lacks authority to levy 100% premium for relaxations under Regulation 33(5). The Court observed:
"The circular issued by the Corporation, to charge 100% premium is totally unsustainable, in view of clear and unambiguous provision of Regulation 33. It is also specifically observed that by Regulation 33 of the Regulations, the Authority has decided to grant certain relaxations to slum development scheme and the schemes of MHADA that were meant for EWS/LIG and MIG tenements at concessional premium and the very object of the Regulation 33(5) and 33(10) would stand frustrated by the issuance of circular dated 26/12/2013."
The Court further relied on the Supreme Court’s order dated 10.08.2023, which dismissed MCGM’s appeal and directed refund of the excess premium with interest. The Apex Court’s direction in Para 3 of its order mandated refund of the excess premium (after deducting 10%) with interest within 6 weeks. The Bombay High Court held that this direction was binding and left no room for MCGM to contest the petitioner’s claim.
The Court rejected MCGM’s argument that the Wadhwa Estate judgment was distinguishable, holding that the legal principle established - that MCGM cannot levy 100% premium under Regulation 33(5) - applies equally to staircase relaxations. The Court emphasized that the object of Regulation 33(5) is to provide concessions for affordable housing schemes, and levying 100% premium would defeat this purpose.
The Verdict
The Court allowed the writ petition and issued the following directions:
- Quashed the demand notices dated 20.06.2014, 07.07.2015, and 17.05.2017 issued by MCGM.
- Directed MCGM to recalculate the staircase premium at 10% of the normal premium and refund the excess amount of Rs. 3,48,67,540 to the petitioner.
- Ordered payment of 6% interest on the refunded amount from the date of deposit till the date of refund.
- Set a compliance timeline of 10 weeks for the refund, including interest.
- Permitted MCGM to adjust the refunded amount against any other dues payable by the petitioner to the Corporation.
What This Means For Similar Cases
MCGM’s Premium Levy Powers Are Strictly Limited Under DCR 33(5)
- The judgment reinforces that MCGM cannot unilaterally levy 100% premium for relaxations under Regulation 33(5) of the DCR. Any circular or demand notice imposing such a levy is ultra vires the DCR and liable to be quashed.
- Developers and stakeholders can rely on this judgment to challenge similar demands for open space deficiency, staircase relaxations, or other concessions under Regulation 33(5).
Binding Precedent from Supreme Court Strengthens Legal Certainty
- The Supreme Court’s dismissal of MCGM’s SLP (Civil Appeal No. 11967/2018) lends finality to the legal position that 100% premium is impermissible under Regulation 33(5).
- Lower courts and tribunals are bound by this precedent, and MCGM cannot contest similar claims on the ground that the earlier judgment was distinguishable.
Refund with Interest: A Remedy for Excess Payments
- The Court’s direction to refund excess premium with 6% interest sets a precedent for recovery of unlawfully levied charges.
- Practitioners should note the quantified relief (interest rate, timeline) and cite this judgment to seek similar refunds in cases where premiums were paid under protest.
- The 10-week compliance timeline underscores the urgency of adhering to court directions, failing which contempt proceedings may lie.
