Mumbai: In a setback to the BMC, the Bombay High Court has said that the corporation cannot deny benefit of 50% rebate in premium that was granted to construction projects during the Covid-19 pandemic, at the time of renewal of the intimation of disapproval (IoD).
The high court has directed the BMC to issue commencement certificates (CC) to eight projects in the city that had come to a standstill due to non-payment of full premium amount by the developers.
IoD means planning permission for construction projects. It is valid for one year and has to be renewed.
“We dispose of all these petitions by directing the MCGM to revalidate or renew the IoDs in question without insisting upon payment of an additional or differential premium but only in respect of those developers / projects that have met the conditions of the January 14, 2021, GR,” a division bench of Justices Gautam Patel and Kamal Khata said on October 16.
The order copy was made available on Monday.
The HC was hearing different petitions filed by nine developers – Prestige Estate Projects, Sugee Fifteen Developers, Evershine Builders, Mayfair Housing, Relcon Infraprojects, Ankur Premises Developers, Prestige Estate Projects, Sugee Nine Developers and Sugee Two Developers – challenging the BMC’s decision denying them the rebate in premium while renewing the IoD.
During the Covid-19 lockdown, the real estate sector was badly hit. The state, on January 14, 2021, issued a government resolution (GR) granting a 50% rebate in payment of premium on utilisation of additional FSI (floor space index) in projects cleared by December 31 that year.
Several builders took the benefit and the BMC granted them 50% concession in premium amount. They were accordingly issued IoD, which was valid for one year.
Corporation rejected applications contending developers did not pay full premium amounts
When the developers applied for renewal of IoD and issuance of CC, the corporation rejected their applications contending that they had not paid full premium amounts. They were asked to pay rates as per the current rates for renewal of IoD and CC.
Eight developers challenged this before the HC contending that the BMC’s demand for full premium rates was contrary to the law and defeated the purpose behind issuance of 2021 GR.
Senior advocate Aspi Chinoy and advocate Joel Carlos, appearing for the BMC, said IoD has a life span of one year and CC, three years and extendable by one more year.
Chinoy argued that if the project proponent obtains an IoD and does not “commence work” within one year, then the statute specifically requires that the IoD must be sought afresh. There is no question of the Premium FSI surviving the lapse of the IoD. In that scenario, the project proponent must necessarily seek Premium FSI afresh.
Disagreeing, the judges said that if the corporation’s arguments were accepted then the rebate would be wiped out and in addition, the developers would have to bear 100% of the stamp duty burden – accepted by them as a pre-condition to avail the rebate.
“That could not have been the intention of the GR at all… It follows, therefore, that the additional FSI by paying the rebated premium would necessarily have to continue without being required to pay additional premium until completion of the project so long as the undertaking to pay stamp duty continues,” the bench said in a detailed 89-page judgment.
Benefit and precondition go hand in hand and can't be separated: Court
The court said that the benefit and the precondition go hand in hand and cannot be separated. Besides, on a correct interpretation of the GR, IoD was liable to be revalidated and CCs be issued without a requirement to pay an additional or differential premium.
The BMC requested the court to stay the order saying that there were some developers who had paid the differential premium although they were participants in the rebate scheme.
“That is not a ground to stay the operation of this order. Any stay would result in a further delay in revalidation. Apart from the impact on developers, a delay in revalidation affects third party flat purchasers and, perhaps most importantly, those awaiting rehabilitation because without a revalidated IoD, there can be no CC and no further work on site,” the bench said.
The court directed the BMC to issue CC to those projects where the CC was rejected for non-payment of full premium payments, subject to other compliances.
