Bombay High Court Rules Reservation on Land Lapsed Under Section 127 of MRTP Act, Directs Government to Publish Gazette Notification and Grants Landowners Right to Develop Property

1. Court’s Decision:

• The High Court ruled in favor of the petitioners, declaring that the reservation imposed on their land had lapsed under Section 127 of the MRTP Act.
• The Court directed the state government to publish a notification in the Official Gazette confirming the lapsing of the reservation.
• It also held that the petitioners have the right to develop the land without further obstruction from authorities.
• The municipal corporation cannot delay development permissions, as the notification in the Official Gazette is a mere ministerial act and not a fresh decision-making process.

2. Facts of the Case:

• The petitioners owned a large parcel of land that was originally agricultural but later incorporated into municipal limits.
• The municipal corporation, as the planning authority, reserved portions of the petitioners’ land for a primary and high school under a Development Plan (1999).
• The petitioners applied for development permission, which was granted but required conversion from agricultural to non-agricultural land.
• In 2004, the state government sanctioned the development plan, keeping the reservation in force.
• The municipal corporation issued a certificate in 2016 confirming the reservation still applied.
• The petitioners issued a purchase notice in 2019 under Section 127, claiming that no steps had been taken for acquisition in over ten years.
• The municipal corporation requested additional documentation, but no actual acquisition steps were initiated.
• The petitioners filed a writ petition in 2022, seeking a declaration that the reservation had lapsed.

3. Issues Before the Court:

1. Did the reservation lapse under Section 127 of the MRTP Act due to the failure of authorities to take acquisition steps within the statutory time limit?
2. Does offering Transferable Development Rights (TDR) or Floor Space Index (FSI) constitute an effective acquisition step under the law?
3. Can the petitioners develop the land without further legal obstacles?

4. Petitioner’s Arguments:

• The municipal corporation failed to acquire the land within ten years, triggering their right to issue a purchase notice under Section 127.
• The corporation had 24 months from the purchase notice (2019) to acquire the land, but it did nothing substantive.
• Offering TDR or FSI is not equivalent to initiating land acquisition, as per Supreme Court rulings.
• Since the statutory 24-month period expired without acquisition, the reservation automatically lapsed.
• The petitioners now have full rights to develop the property under permissible land use rules.

5. Respondent’s Arguments (Municipal Corporation & State):

• The petitioners did not submit necessary documents with their purchase notice, which delayed the process.
• The municipal corporation offered TDR/FSI as compensation, which it claimed should be treated as an acquisition step.
• The petitioners rejected TDR/FSI, slowing down the resolution of the matter.
• The state and municipal authorities argued that procedural delays should not automatically lead to lapsing of reservation.

6. Analysis of the Law:

• Section 127 of the MRTP Act states that if a land reserved for public use is not acquired within ten years, the owner can serve a purchase notice.
• After such a notice, the planning authority has 24 months to either:
  1. Acquire the land, or
  2. Take effective steps to do so.
• If neither happens, the reservation lapses by law, and the land must be treated as unreserved.

7. Precedent Analysis:

• Girnar Traders v. State of Maharashtra (2007)
  • The Supreme Court held that merely applying for acquisition is not enough.
  • Actual steps (such as issuing a declaration under the Land Acquisition Act) must be taken.
• Shrirampur Municipal Council v. Satyabhamabai Bhimaji Dawkher (2013)
  • Failure to act within the statutory timeframe results in automatic lapsing of reservation.
• Arun Motiram Nimkar v. Municipal Corporation of City of Amravati (2013)
  • Once reservation lapses, landowners can develop the land without unnecessary bureaucratic hurdles.

8. Court’s Reasoning:

• The municipal corporation failed to take effective steps toward acquisition within 24 months of the purchase notice.
• TDR or FSI is not a substitute for land acquisition.
• The municipal corporation engaged in unnecessary correspondence instead of acquiring the land.
• The law explicitly states that if no action is taken within the statutory period, the reservation lapses automatically.
• The state government’s role in publishing a notification is ministerial—it cannot be used to obstruct the petitioners’ rights.

9. Conclusion:

• The High Court declared the reservation had lapsed due to the failure of authorities to act within the legal timeframe.
• It directed the state government to issue an Official Gazette notification confirming the lapse within six weeks.
• The petitioners can proceed with development without further bureaucratic delays.

10. Implications of the Judgment:

Strengthens landowners’ rights: Ensures that authorities cannot indefinitely reserve land without compensation.
Encourages timely action: Planning authorities must act within statutory timeframes to avoid losing control over reserved land.
Clarifies the limits of TDR/FSI: This ruling reinforces that offering TDR or FSI does not count as a step toward land acquisition.
Reduces administrative delays: Once reservation lapses, landowners should not face unnecessary delays in obtaining permissions.
Influences future town planning decisions: Encourages better planning and accountability in land reservation policies.

Also Read – Karnataka High Court Upholds ITAT’s Decision, Dismissing Revenue’s Appeal and Ruling That No Penalty Under Section 271C of the Income Tax Act Is Warranted for Bona Fide Non-Deduction of TDS Based on Professional Advice and Absence of Mala Fide Intent