BMC can’t deny pandemic period rebate to builders while renewing approval, says HC

The Bombay High Court has ruled that the Brihanmumbai Municipal Corporation (BMC) cannot deny a 50% rebate in premium for construction projects approved during the pandemic. The court directed the BMC to issue commencement certificates for eight projects that were delayed due to non-payment of the full premium by developers. The ruling stated that the rebate and the pre-condition of paying stamp duty go hand in hand, and developers should not be required to pay an additional premium until the project is completed.

The Brihanmumbai Municipal Corporation (BMC) cannot deny the benefit of 50% rebate in premium, granted for construction projects cleared during the pandemic, at the time of renewal of the intimation of disapproval (IOD), the Bombay high court has said.

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A division bench of justice Gautam Patel and justice Kamal Khata directed the civic body to issue commencement certificates (CC) for eight projects that were held up due to non-payment of the full premium by the developers. Intimation of disapproval means planning permission for construction projects.

The order, issued by HC on October 16, became available to the public on Monday.

As the real estate sector was badly hit by Covid-19, 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 conditional benefit and were accordingly granted concession in premium by BMC. However, this year, when the developers applied for renewal of IOD and issuance of CC, the civic body rejected their pleas for want of full payment of the premium. Eight of them approached the high court contending that the demand of full premium at 2023 rates was contrary to the law and defeated the purpose behind issuance of the GR.

BMC, in its response, claimed that once IOD lapsed it stood obliterated. That means anything that is attached to IOD, whether it is a benefit or otherwise, lapses with it as well, the civic body said.

The civic body further said that IOD had a life span of one year and therefore the developers should have started work at their sites within that period to avail themselves of the benefit of concession.

The bench, however, said if BMC’s argument were accepted the resultant situation would be that the rebate would be all but 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,” HC said. “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 the benefit and the pre-condition “go hand in hand and cannot be separated” and added that the 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.