Reference Lies to the LARR Authority, Not the Civil Court: Bombay High Court Settles Forum for MRTP Acquisitions Straddling the 2013 Act and Re-fixes Andheri Land Compensation at About Rs. 1,572 Crore

Land in Andheri (West), Mumbai, reserved for a garden, recreation ground and DP road, was acquired under Section 126 of the MRTP Act by a notification of 19.06.2012; the Collector’s award came on 03.05.2017, after the 2013 Act was in force, and the LARR Authority enhanced compensation on a reference under Section 64. Rejecting MCGM’s plea that only a reference to a court under Section 18 of the LA Act lay, the Division Bench held that the remedy of reference is a vested right but the forum is procedural; since compensation had to be determined under Sections 26 to 30 of the 2013 Act (also Rule 19(3) of the 2014 Rules and the 2015 amendment to the MRTP Act), the reference lay only before the LARR Authority under Section 64 (Paras 53–70). On valuation, the ready-reckoner and sale-instance methods under Section 26(1)(a) and (b) are mutually exclusive, the higher value being payable, and the residual land value technique cannot be founded on flat sales from a single scheme (Paras 81–85). Reservation of the land does not depress its market value (Paras 72–74). Correcting the LARR Authority’s blanket rate and additions, the Court fixed a weighted-average rate of Rs. 72,817 per sq. m., re-computed total compensation at Rs. 1572,00,48,407.23 and partly allowed both appeals (Paras 86–108).

Key Proposition: Where acquisition under Section 126 of the MRTP Act began before the 2013 Act but the award was made after it, compensation is determined under Sections 26 to 30 of the 2013 Act and the reference lies only to the LARR Authority under Section 64, because the right of reference is a vested right while its forum is procedural; and the ready-reckoner and sale-instance methods under Section 26(1)(a) and (b) are mutually exclusive, the higher value being payable.

Background / Synopsis :

The final development plan of Greater Mumbai (16.02.1991) reserved the claimant’s land in Villages Ambivali (47,002 sq. m.) and Oshiwara (1,895.60 sq. m.), totalling 48,897.60 sq. m., for a garden, recreation ground and a 27.45 m DP road.

01.07.2011: the claimant served a purchase notice under Section 127 of the MRTP Act; 19.06.2012: the State issued a notification under Section 126(2) read with 126(4), deemed a declaration under Section 6 of the LA Act; 15.10.2012: notices under Sections 9(1) and 9(2) were issued.

01.01.2014: the 2013 Act came into force; 27.08.2014: Maharashtra Rules of 2014 (Rule 19(3)) came into force; 29.08.2015: Section 126 of the MRTP Act was amended to replace references to the LA Act with the 2013 Act.

03.05.2017: the Deputy Collector (LAO) No. 7 passed the award determining compensation at Rs. 5,11,48,81,199.

12.06.2017: the claimant sought a reference; LAR No. 1 of 2018 was filed in this Court on 10.01.2018 and transferred to the LARR Authority, Nagpur, by order dated 10.01.2019; MCGM’s Review Petition No. 7 of 2020 against that transfer remains pending, with parties agreeing the jurisdiction point be decided here.

30.03.2021: the LARR Authority enhanced compensation by Rs. 15,91,12,24,012.30, making the total Rs. 21,01,20,23,522.30.

Present proceedings: the claimant (FA 268/2021) sought further enhancement; MCGM (FA 541/2021) sought restoration of the Collector’s award and declaration that the LARR award is a nullity.

Issues For Consideration :

• Whether the impugned award passed by the LARR Authority is without jurisdiction and hence a nullity.
• Whether the reference under Section 64 of the 2013 Act was maintainable, or could only be pursued under Section 18 of the LA Act, the acquisition having been initiated under the MRTP Act read with the LA Act.
• Whether market value has to be assessed under Section 26(1)(a) (ready-reckoner method) or Section 26(1)(b) (sale-instances method) of the 2013 Act.
• Whether the residual land value technique could be applied to assess the market value of the subject land under Section 26.
• Whether the LARR Authority was justified in enhancing compensation, and whether the award deserves interference.
• What is the quantum of compensation payable to the claimant.

Submissions Of Parties :

• Claimant (S. N. Desai Hospitalities & Developers LLP):

MCGM, as beneficiary, has no right to seek a reference and cannot object to the forum; it participated fully before the LARR Authority and suffered no prejudice.

Only the forum changed from court to LARR Authority, which is procedural; the vested right of reference survives under Section 114 of the 2013 Act and Section 6 of the General Clauses Act (Rajeev L. Sangtani (FB); Maria Cristina De Souza Sodder; Custodian of Evacuee Property v. Khan Saheb Abdul Shukoor; SEBI v. Sterlite Industries).

The LARR Authority wrongly used only the ready-reckoner method; the residual land value technique based on flat sales in the vicinity (Godrej & Boyce; Vincent Daniel) justified higher value.

The Oshiwara portion falls in Zone 50/240A (Rs. 90,600 per sq. m.); a weighted average should apply; 40% for TDR, fungible FSI, large plot size, two-road frontage, levelling and compound-wall costs should be added (Chimanlal Hargovinddas).

• MCGM (acquiring body):

The award is a nullity: under Girnar Traders (3), the LA Act is incorporated and ‘frozen’ in the MRTP Act, so only a Section 18 reference to the court lay; Rajeev L. Sangtani concerned LA Act acquisitions and expressly left MRTP acquisitions open (paras 110–111); reliance also on Sahebrao Kalate, Mehtab Laiq Ahmed Shaikh and Garikapatti Veeraya.

Ready-reckoner and sale-instance methods are distinct; where sale instances exist (including a 2007 conveyance of part of the land), the residual land value technique cannot be used, and flats from one scheme are inadequate.

The Oshiwara portion falls in Zone 50/239 (Rs. 33,800 per sq. m.); no addition for TDR or fungible FSI on reserved land; deductions of 15% (DCR 35), 15% (guideline 17) and 10% for the hillock are due; levelling done after notification cannot benefit the claimant.

Court's Observations & Analysis :

• Re: Issues (i) and (ii): Jurisdiction of the LARR Authority

The Full Bench in Rajeev L. Sangtani held that the right of reference is a vested right but there is no vested right in a forum; the LARR Authority conducts judicial proceedings (Paras 54–57).

Girnar Traders (3) was rendered before the 2013 Act; by the time of the 2017 award, Rule 19(3) of the 2014 Rules applied Sections 26 to 30 and the MRTP Act itself referred only to the 2013 Act, so the LA Act cannot be treated as ‘frozen’ in the MRTP Act (Paras 58–62).

The source of the right of reference is the right to compensation; since compensation had to be determined under Sections 26 to 30 of the 2013 Act, only the LARR Authority under Section 69 can test whether the Collector followed those parameters – a Section 18 reference would be unworkable (Paras 63–68).

MCGM, as beneficiary, has no right of reference and can show no prejudice (Para 69).

Held: The award was within the LARR Authority’s jurisdiction and is not a nullity. (Para 70)

• Re: Issues (iii) and (iv): Valuation method and residual land value technique

Following Sahebrao Kalate, the relevant valuation date is 19.06.2012, the date of the Section 126 notification (Para 71).

Reservation cannot be used by the acquiring body to depress market value (MCGM v. B. J. Development Corporation; Govindram Brothers) (Paras 72–74).

Under Vincent Daniel, values under clauses (a), (b) and (c) of Section 26(1) are not averaged; the highest applies, and Explanations 1 to 4 are integral (Paras 77–78).

MCGM’s sale instances – a 2017 auction sale under the MPID Act, a 2009 conveyance of tenanted land and a 2006–07 transaction – were not of willing buyers, outside the three-year window, or unproved (Para 81).

The claimant relied on flat sales only in ‘Oberoi Springs’; Explanations 1 to 3 require sale instances from more schemes on comparable plots, and Godrej & Boyce (an LA Act case) is distinguishable (Paras 82–84).

Held: The LARR Authority rightly applied the ready-reckoner method under Section 26(1)(a). (Para 84)

Notable Observations:

“The substantive right of remedy of reference is indeed retained in the Act of 2013 and only the forum changes to the LARR Authority.” (Para 66)

“This Court is of the firm opinion that the two methods i.e. ready reckoner on the one hand and sale instances method on the other are mutually exclusive and compensation, whichever is higher, is ultimately payable to the claimant.” (Para 85)

Decision & Directions :

Both appeals disposed of; the LARR Authority’s award dated 30.03.2021 modified – both appeals partly allowed. (Paras 107–109)

Compensation fixed as follows (Para 107):

1. Rate per sq. m. on weighted average: Rs. 72,817; base market value Rs. 356,05,76,539.20.

2. Deductions of 15% (DCR 35(1)/Guideline 17) and 5% (DCR 27); additions of 40% (TDR), 25.2% (fungible FSI), 25% (largeness), plus Rs. 2,06,72,012 for compound wall and storm water drains – total market value Rs. 608,07,73,281.72.

3. 100% solatium under Section 30(1) and 12% component for 1,780 days – total compensation Rs. 1572,00,48,407.23; enhanced compensation Rs. 1061,92,48,897.23 after Rs. 510,07,99,510 already paid.

4. The Rs. 250 crore already withdrawn by the claimant shall be adjusted and its undertaking discharged; interest at 9% p.a. for the first year from the date of possession and 15% p.a. thereafter till realisation (Para 108).

5. MCGM granted 12 weeks to pay the balance (Para 112).

Separate Opinions: None (judgment authored by Manish Pitale, J., for the Bench).

Legal Provisions Discussed & Precedents Cited :

• Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act) – Sections 24(1)(a), 26, 28, 30, 64, 69 and 114 – applicability to pending acquisitions, market value, solatium, reference to the LARR Authority, its scope of review, and repeal and saving.
• Land Acquisition Act, 1894 (LA Act) – Sections 6, 9, 18 and 23 – declaration, notices, reference to court and parameters of compensation.
• Maharashtra Regional and Town Planning Act, 1966 (MRTP Act) – Sections 125 to 129, including Sections 126 and 127 (as amended w.e.f. 29.08.2015) – acquisition of reserved land.
• Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Maharashtra) Rules, 2014 – Rule 19(3) – MRTP acquisitions to continue under Sections 26 to 30 of the 2013 Act.
• General Clauses Act, 1897 – Section 6 – effect of repeal on vested rights and remedies.
• Development Control Regulations – DCR 35(1) and DCR 27; Ready Reckoner guidelines 3 and 17 – deductions and TDR valuation.
• Doctrines applied: legislation by incorporation vs. legislation by reference; no vested right in a forum; willing buyer–willing seller test; weighted average; reasoned ‘guesstimate’ in valuation.

Case Details :

• Case / Party Name: S. N. Desai Hospitalities & Developers LLP v. Deputy Collector (Land Acquisition Officer) No. 7, Mumbai & Anr.
• Case Number(s): First Appeal No. 268 of 2021 with First Appeal No. 541 of 2021
• Coram / Judges: Manish Pitale and Shreeram V. Shirsat, JJ. – Division Bench
• Counsel Appearances: For MCGM (appellant in FA 541/2021 and respondent in FA 268/2021): Mr. Girish Godbole, Senior Advocate, a/w Mr. Shivraj Patne, Mr. Rahul Soman and Ms. Pallavi Khale, i/b Komal Punjabi. For the claimant (appellant in FA 268/2021 and respondent No. 1 in FA 541/2021): Mr. C. M. Korde, Senior Advocate and Mr. F. E. De Vitre, Senior Advocate, a/w Mr. Rohaan Cama, Mr. Pheroze Mehta, Mr. M. S. Federal, Ms. Rashne Mulla-Feroze, Mr. Shrinivasan Mudaliar, Ms. Sejal Jain and Mr. Dinkar Desai, i/b M/s. Federal and Company. For the State: Mr. Dinesh J. Haldankar, AGP.

Disclaimer: This summary is an editorial aid and does not form part of the judgment. Refer to the original judgment before citing.