It is a decision that could jeopardise the Mumbai Metropolitan Region Development Authority's (MMRDA) plans to create a mini-Manhattan in the Bandra-Kurla Complex (BKC).
The environment department has refused approval to The Capital, a 19-storey commercial tower by Raghuleela Leasing and Real Estates (promoted by the Wadhwa Group) at BKC saying the Floor Space Index (FSI) granted to it is very high.
The project was being developed under the MMRDA's global FSI concept. The panel has questioned this concept and asked the state "to discontinue it or put a 'reasonable' cap on FSI granted".
The FSI of a plot is the ratio of the built-up area to the plot size and determines how high a developer can build on it. Global FSI allows FSI from unused, underutilised plots in an area to be transferred as additional development rights to other plots.
In 2008, MMRDA hiked the FSI at BKC from 2 to 4. Since the FSI for the 330-acre G block was underutilised, MMRDA decided to redistribute development rights among existing corporates and developers for a premium.
At least 18 corporates have sought additional development rights under this scheme.
The Capital got FSI of 11.8 for its two-acre plot.
The state expert appraisal committee (SEAC) that scrutinises mega construction projects rejected The Capital's proposal in October, saying the FSI granted to it would strain infrastructure.
The developers appealed to the State Environment Impact Assessment Authority (SEIAA) last month, but it refused to overrule the SEAC's decision.
"The SEIAA has asked us to explain the concept of global FSI to the panel. After that, there shouldn't be a problem getting a go-ahead," said Vijay Wadhwa, of the Wadhwa Group.
He said his project would not strain the infrastructure because G block continues to have FSI of 4 and has enough open spaces and parking.
An MMRDA official, requesting anonymity because he is not authorised to speak to the media, said: "Global FSI is common internationally. These green concerns are a misunderstanding."
He claimed many new builders had anticipated an increase in FSI and the plinths were capable of handling additional storeys.
"Some developers are demolishing old buildings to construct new ones," he said.
"All new constructions will need new structural certification and guarantees."