Introduction
The Bombay High Court has clarified an important aspect of planning law under the Maharashtra Regional and Town Planning Act, 1966. The Court has held that surrender of land reserved under a Development Plan, in exchange for planning benefits such as higher FSI or waiver of mandatory open space requirements, constitutes a valid acquisition by agreement under Section 126 of the MRTP Act. Formal land acquisition proceedings are not mandatory in such cases.

Facts in Brief
Milan Co-operative Housing Society Limited owned a large parcel of land in Pune. While seeking approval of its layout, the Society was unable to comply with the requirement of keeping 10% of the net plot area as compulsory open space. To accommodate all its members, the Society agreed to surrender land equivalent to this 10% area. The surrendered land was reserved for a shopping centre under the sanctioned Development Plan.

In return, the Pune Municipal Corporation waived the open space requirement and granted development permission. A possession receipt was executed in October 1970. Construction permissions were availed and acted upon.

Nearly 28 years later, the Society filed a suit seeking a declaration that it continued to hold title to the surrendered land and was entitled to develop it. The Society contended that there was no valid acquisition since no proceedings were initiated under Sections 77 and 78 of the Bombay Provincial Municipal Corporation Act, 1949 or under Section 126 of the MRTP Act.

The suit was dismissed by the Trial Court and the dismissal was confirmed in appeal. The Society approached the High Court in Second Appeal.

Issues for Consideration
The principal question before the Court was whether land reserved under a Development Plan can vest in the Municipal Corporation solely on the basis of surrender and possession, without formal acquisition proceedings, where the surrender is made in exchange for development benefits.

Findings of the Court
The High Court answered the issue against the Society and upheld the concurrent findings. The Court held that Section 126 of the MRTP Act expressly recognises acquisition of reserved land by agreement. Such agreement need not always involve monetary compensation. Consideration may validly be in the form of FSI, development rights or waiver of planning restrictions. The Court observed that FSI has clear monetary value. Where a landowner or society receives permission to construct beyond what would otherwise be permissible, such benefit constitutes valuable consideration. In the present case, the Society consciously surrendered land equivalent to the compulsory open space requirement. In return, it obtained waiver of that requirement and secured development permission enabling it to accommodate all its members. This constituted a concluded contract between the parties. Once possession was handed over pursuant to such agreement, the land stood validly acquired and vested in the Corporation under Section 126 of the MRTP Act. The Court further held that Sections 77 and 78 of the 1949 Act apply to acquisitions for municipal purposes generally. Acquisition of land reserved under a sanctioned Development Plan is governed by Section 126 of the MRTP Act and not by those provisions.

Delay and Discretion
The Court also emphasised that the reliefs of declaration and injunction are discretionary. The Society had taken full advantage of the waiver and construction permissions for decades. It challenged the surrender only after 28 years. In such circumstances, the Court held that it would be inequitable to permit the Society to resile from a transaction from which it had derived substantial benefit.

Conclusion
This judgment settles that surrender of Development Plan reserved land in exchange for planning benefits is not a gratuitous transfer. Where higher FSI or relaxation from planning norms is granted, the transaction is supported by valid consideration and amounts to acquisition by agreement under Section 126 of the MRTP Act. Co-operative societies and landowners cannot accept planning concessions, act upon them for years and later contend that the land continues to vest in them for want of formal acquisition proceedings.¹

By - Chaitanyaa Bhandarkar