HC strikes down fine, premium imposed by MMRDA on developer
In a major reprieve for a city developer, the Bombay high court (HC) recently struck down a notice issued by the Mumbai Metropolitan Region Development Authority (MMRDA), asking the construction firm to pay an amount of ₹34.40 crore as premium for balcony enclosures in seven residential buildings constructed by the company at Wadala Truck Terminus (TT). The metropolitan commissioner had also imposed a penal interest of ₹1.17 lakh on the developer, accruing since June 20, 2014.
The division bench of justice KK Tated and justice Sarang Kotwal struck down the demand notice issued to Macrotech Developers Limited, primarily on the ground that MMRDA failed to prove that the metropolitan commissioner had the authority to charge premium for enclosure of balconies from the developer.
In December 2014, MMRDA asked the builder to pay ₹34.40 crore, which was pending as of June 20, 2014, for the enclosed balconies. The authority said a further penal interest of ₹1.17 lakh had been accruing since the date lapsed on June 20, 2014, following which the developer challenged the notice in HC in 2015.
The developer’s counsel argued that MMRDA had no power to fix the rates of premium for enclosed balconies. In July 2011, MMRDA had fixed ₹2,000 as the premium for one enclosed balcony, which the developer had agreed to pay.
The developer contended that although MMRDA assured the court to take the firm’s representation over the issue into consideration, officials from the authority hiked the premium to ₹20,000 per balcony, taking the payable amount to ₹34.40 crore till June 2014.
MMRDA contended that the metropolitan commissioner, exercised his discretion and fixed the premium rate for balcony enclosure at ₹20,000 per balcony.
The argument, however, failed to impress upon the bench. The court held that the metropolitan commissioner had no power to levy premium at any rates.