Case Note: A Challenge to regulations for the construction of affordable housing in Mumbai

In a recent case, the Bombay High Court heard, and rejected a challenge to the state’s policy on building inclusive housing. DB Realty and Others v State of Maharashtra and others (Writ Petition 366 of 2014) was heard by Chief Justice Mohit Shah and Justice MS Sanklecha of the Bombay High Court, and the judgment was delivered on 5th February 2015.

In Maharashtra, Maharashtra Regional and Town Planning Act, 1966 (“MRTP Act”) regulates urban planning. Under this Act, the State through various authorities frames ‘Development Control Regulations’ from time to time: these regulations  (the “DCR”) contain detailed policies on housing, building and construction, fire safety norms and zoning.

The notification that was being challenged in DB Realty modified the DCRs for Mumbai city in 2001. The notification required the construction of housing for economically weaker sections of society (EWS Housing) on any residential land measuring 4000 square metres or more. 20% of the total area of the land was to be devoted to EWS housing, either in the form of developed plots for housing, or handed over undeveloped to the State, which would then have the same developed. In return for this, the developers would gain additional FSI (floor space index), i.e. the right to build taller buildings on the remaining land. If the plots were not bought by the state within 6 months of the offer, then the seller could sell these at commercial value. Landowners could also go ahead and build EWS housing to hand over to the State, provided it complied with certain requirements.

The Court in this case identified three questions for consideration.

  • Did the amendment to the DCRs effectively amount to land acquisition by the State?
  • Did the amendments violate the MRTP Act and constitutional provisions on local government?
  • Did the amendments violate the constitutional rights of the respondents; specifically the right to equality before the law (Article 14), the right to freedom of trade, occupation and business [Article 19(1)(g)] and the right against being deprived of property unless done by authority of law (Article 300A).

Land Acquisition: The claim of the petitioners was that the requirement for inclusive housing effectively amounted to land acquisition by the State. In that case, they argued, the State had to follow the process under the federal Land Acquisition Act 2013, which would override state laws on the same subject. The Court held that this was not a land acquisition law, and so would not be overridden by federal law. The purpose of the MRTP Act was urban planning, and this could be correlated to the state’s legislative powers regarding local government, and not the power to legislate on land acquisition. Since both laws were in different fields, there was no overlap.

Local Government, MRTP and the Constitution: The petitioners then claimed that the amendments to the DCRs violated Article 243ZE of the Constitution. Article 243ZE, introduced in 1993, requires each metropolitan area to have a Metropolitan Planning Committee, which prepared a draft development plan for the area. The MRTP Act, accordingly, was invalid and the State had no power to issue DCRs under it for metropolitan planning. The Court held, without elaborating, that there was no inconsistency between the MRTP Act and Article 243ZE. The MRTP Act and DCRs, in any case, pre-dated Article 243ZE. Since they were not inconsistent, they were saved and continue to operate.

The petitioners also argued that the notifications violated the MRTP Act itself. The act, they claimed, only allowed the State to reserve land for acquisition. Without following the procedure for acquisition, the State could not reserve any land for use, such as the EWS housing. The High Court held that this was not acquisition. Relying on an earlier judgment, they held that “..there is a distinction between property vesting in the planning authority and one which is only to enable re-allotment for the purpose of achieving the objectives of town planning.” This, the Court held, was not acquisition but regulation. Nor was this, the Court held, a modification to the DCRs sufficient to warrant a complete public re-hearing and plan revision.

Rights to equality, business and property: The Petitioners argued, finally, that they were being deprived of their property without the authority of law and this violated Article 300A of the Constitution. The Court held that there was no deprivation of property, and that the Petitioners were being compensated with additional FSI as well as being paid value for the land.  The Court noted that in any case, the law applicable was the MRTP Act and the DCRs, which were duly followed. The DCRs, although delegated legislation, were sufficiently authoritative to allow this reservation. This was also a reasonable restriction on the petitioner’s fundamental rights to trade and for equal treatment.

DB Realty is an important decision from the Bombay High Court, which raises questions about land reallocation, urban planning and property rights, and the power of the State to intervene in these issues.