Holding

The final Town Planning Scheme regulations prevail over the 1991 Development Control Regulations, and the appellants are not entitled to additional FSI or TDR; the arbitrator’s award is final and the State’s direction cannot override the Scheme.

Summary

The appellants' original land was acquired under a Town Planning Scheme and they were awarded two final plots and monetary compensation by an arbitrator. They later sought additional Floor Space Index (FSI) and Transferable Development Rights (TDR) under the 1991 Development Control Regulations, which allowed such benefits even when the final plot did not form part of the original plot. The State Government issued a direction to apply the 1991 Regulations to the final Scheme, but the Scheme’s own regulations stipulated that FSI could be granted only when the final plot formed part of the original plot. The Supreme Court held that the proviso in Regulation 1(2) of the 1991 Regulations makes the Scheme regulations prevail over the Regulations in case of conflict, and that the arbitrator’s award became final and binding, precluding any further rights. Consequently, the appellants were not entitled to additional FSI or TDR, and the State’s direction could not override the statutory scheme provisions.

Issues considered

Whether the 1991 Development Control Regulations can be applied to grant additional FSI and TDR to appellants whose final plots do not form part of the original plot.
Whether the proviso to Regulation 1(2) of the 1991 Regulations makes the Town Planning Scheme regulations prevail over the Regulations in case of conflict.
Whether the award of the arbitrator became final and binding, thereby extinguishing any further claim for development rights.
Whether a direction issued by the State Government under Section 154 of the Maharashtra Regional and Town Planning Act can override the Scheme’s statutory provisions.
Whether a legal right to additional FSI or TDR can be claimed in the absence of a specific statutory provision.

Legislation cited

Development Control Regulations for Greater Bombay, 1991s. Regulation 1(2), s. Regulation 33, s. Regulation 34
Maharashtra Regional and Town Planning Act, 1966s. 126, s. 154, s. 2(9A), s. 72, s. 73(2), s. 79, s. 86, s. 88

Subjects

Town Planning SchemeDevelopment Control RegulationsFloor Space IndexTransferable Development RightsStatutory interpretationProvisoArbitral awardMaharashtra Regional and Town Planning Act

Judgment

LAXMINARAYAN R. BHATTAD AND ORS. A
v.
STATE OF MAHARASHTRA AND ANR.

APRIL 4, 2003

[BRIJESH KUMAR AND S. B. SINHA, JJ. ] B

Maharashtra Regional and Town Planning Act, 1966 I Development
Control Rules, 1967 I Development Control Regulations for Greater Bombay,
1991-Sections 2(9A), 72, 73(2), 79, 86, 88, 126 and 154 I Rule 10(2) I C
Regulation I (2) proviso thereto, and Regulations 33 and 34-Acquisition of
land for Town Planning Sche111e-ln lieu of acquired original plot monetary
co111pensation and two final plots granted by Arbitrator to the claimant-Pal'/
of the original plot affected by the Scheme-Final plots not forming part of
original plot-1967 Rules and final scheme regulations providing/or grant of
additional Floor Space Index (FSI) and additional Transferable Develop111ent D
Rights (TDR) only when final plotfor111s part of original plot-1991 Regulations
superseding 1967 Rules and providing for granting FSI and TDR even when
final plot not part of original plot-Claim for FSJ and TDR under 1991
Regulations-Denial of by Alllhorities and High Court-On appeal, held :
Appellants not entitled to grant of FSI and TDR-Once the draft Scheme E
became final, the provisions thereof shall prevail over the provisions of the
Regulations in terms of the proviso appended to Regulation I (2) of 1991
Regulations-A legal right to have an additional FS/ or TDR can be claimed
only in terms of a statute or slatuto1:v regulations and not otherwise-Once a
Scheme is approved, no deviation therefi·om can be made for purposes other
than referred to in the Scheme itself unless the same is amended or modified F
by the State Governme/1/ in accordance with law-Applicability of 1967 Rules
and Town Planning Scheme Regulations lo 1991 Regulations by reference has
no relevance, as the 1991 Regulations themselves are not applicable.

Administrative Law:
G
Right created under order of statutmJ' authoril)~Enforceabilil)~To
make such right enforceable ii mus/ be com11111nicated.

Statu101y Law-Proviso to a Provision-Purpose of-Discussed.

409 H
410 SUPREME COURT REPORTS [2003] 3 S.C.R.

A legislation-Incorporation of statute by reference an_d Referential
legislation-Distinction between.

law and Equity-Preferential applicability of-Held: In case of conflict
between the two, law will prevail over equity.

B Doctrines-Doctrine of 'Relating back '-Applicability of

The land of the appellant got affected by a Town Planning Scheme.
Arbitrator, by his award, allotted two final plots and additional monetary
compensation to the appellant in lieu of the original plot. The final plots
did not form part of the original plot. Under Rule I 0(2) of Development
C Control Rules, 1967 additional Floor Space Index (FSI) could be granted
only when the final plot formed part of original plot. An appeal was filed
against the award questioning the quantum of compensation and the same
was dismissed. In 1985 a Policy Resolution had been passed by the
Corporation granting benefit of additional FSI in lieu of compensation in
D respect of the plots covered by the Scheme, sanctioned prior to the
Development Control Rules, 1967 came into force. Appellants did not agree
for additional FSI because the Corporation had asked the appellants to
bear the betterment charges. Thereafter Development Control Regulations
for Greater Bombay, 1991 came into force replacing 1967 Rules, which
provided grant of FSI and additional Transferable Development Rights
E (TDR) in lieu of compensation. Under the regulations there was no such
condition that for grant of additional FSI new plot should form part of
original plot. State Government by its letter dated 2.3.1993 issued
instructions to the Corporation to make 1991 regulations applicable.
Appellants made a claim for TDR under 1991 Regulations in 1994. Even
F before any decision by the authority, appellant filed writ petition.
Subsequent to filing of writ petition the Town Planning Scheme was
finalized by State Notification dated 26.7.1995 whereby FSI could be
granted only when the final plot formed part of the original plot. High
Court directed the authority to decide the claim of TDR of the appellant.
Concerned authority rejected the claim of the appellant on the grounds
G that benefit of additional FSI under Rule No. 10(2) of 1967 Rules was ~ot
granted; there was no provision in Town Planning Regulations for
granting TDR on plots falling in Town Planning Scheme; and because
compensation for acquisition had already been granted under the Town
Planning Scheme. In the writ petition, legality of the order of authority
H rejecting his claim for TDR was also challenged, High Court dismissed
L.R. BHATTADv. STATE 411

the writ petition. A
In appeal to this Court appellant contended that in view of the 1991
Regulations they have derived a right for grant of FSI and TDR in relation
to final plots; that non-grant of benefit of FSI, by the Corporation was
illegal as the same was specifically asked for by them; that in view of object
of Maharashtra Regional and Town Planning Act, 1966, the original plot B
did not automatically vest in the Government; that in terms of the 1991
Regulations as a new right had come into being, Arbitration award became
non-est in the eye of law; and that the 1967 Rules and Town Planning
Scheme Regulations are applicable to the 1991 Regulations, by way of
reference.
c
Respondents contended that appellants having preferred an appeal
against the award of the arbitrator, the same became final and binding;
that in terms of Section 88 of the Act, the original plot vested in the State
and that final plots vested in the appellants; that in view of final scheme,
grant of TOR in favour of the appellants had lost relevance; that the D
Government instructions were not applicable to the case; that concept of
TOR under the 1967 Rules was different from the 1991 Regulations; and
that in view of the 1967 Rules, the 1991 Regulations are not applicable.

Dismissing the appeal, the Court
E
HELD: I. The Development Control Regulations for Greater
Bombay, 1991 or Section 2(9A) of Maharashtra Regional and Town
Planning Act, 1966 could not affect the draft Scheme, save and except for
the matters, if any, as provided for therein. The 1991 Regulations although
had superseded Development Control Rules, 1967 and by reason of the
former the latter was replaced, the proviso appended to Regulation 1(2) F
of the 1991 Regulations in no uncertain terms provides that in the event
of any conflict between the requirements of the 1991 Regulations and the
Scheme Regulations, the latter shall prevail. 1427-B-DI

2. It cannot be said that the Regulation 1(2) of the 1991 Regulations G
will apply and not the proviso appended thereto. A proviso may serve
different purpose (i) qualifying or excepting certain provisions from the
main enactment; (ii) it may entirely change the very concept or the
intendment of the enactment by insisting on certain mandatory conditions
to be fulfilled in order to make the enactment workable; (iii) it may be so
embedded in the Act itself as to become an integral part of the enactment H
412 SUPREME COURT REPORTS [2003] 3 S.C.R.

A and thus acquire the tenor and colour or the substantive enactment itselr;
and (iv) it may be used merely to act as an optional addenda to the
enactment with the sole object of explaining the real intendment of the
statutory provision. By reason of the proviso appended to sub-Regulation
(2) of Regulation I, certain provisions or the main enactment stood
B qualified. The proviso will, therefore, act as an exception to the main
provision. (432-C-GI

S. Sundaram Pillai, etc. v. V. R. Pattabiraman, AIR (1985) SC 582,
referred to.

3. It is not the case or any party that a revised Development Plan
C had not been validly sanctioned by the State. Once it is held that the 1991
Regulations would not be applicable in the case of the appellants having
regard to the sanction of the Scheme. prepared by the Arbitrator the
question of grant of any benefit thereunder in favour of the appellants
herein would not arise. .tn view of principle of 'Generalia specialiabus non
D derogant, the special provision shall prevail over the general provision of
a statute. (432-H; 433-A]

4. Special Regulation No. 8 of the Town Planning Scheme
Regulations as also the proviso appended to sub-Regulation (2) of
Regulation l of the 1991 Regulations read with the Town Planning Scheme,
E leave no matter of doubt whatsoever that the appellants were not entitled
to grant of TDR thereunder. (427-F[

5. The appellants claimed right to have additional TDR having
regard to (a) the request made by them to the Bombay Municipal
Corporation; and (b) in terms of communication of the State dated 2nd
F March, 1993. It is true that certain correspondences were exchanged by
and between the appellant and respondent-Corporation as regard grant
of additional FSI and TDR. But the correspondences exchanged between
the parties did not fructiry into a binding agreement. The rights and
obligations of the parties, therefore, despite those correspondences
G continued to be governed by the terms of the award of the Arbitrator as
also the provisions of the Scheme. It is true that the State Government in
its letter dated 7/12 May, 1992 issued certain directions in the light of
Regulation 33 of the 1991 Regulations but the offer made thereby by the
State was subject to certain conditions and was not an absolute one. The
instructions issued by the State Government dated 2. 3. 1993 were issued
H keeping in view the new ~cgulations in respect or the areas where finally
L.R. BHATTADv. STATE 413
sanctioned Town Planning Scheme had come into effect without waiting A
for compliance in the proceedings of variation of the Town Planning
Scheme Regulations. The Town Planning Scheme does not refer to grant
of any TOR and that the development permission was required to be
strictly scrutinized in accordance with the sanctioned Development Control
Regulations. A direction of the State Government in terms of Section 154 B
of the Act cannot supersede the statutory provisions contained either in
the main enactment or the statutory regulations. The State had absolutely
no jurisdiction to issue any directive contrary to the statute or the statutory
regulations. Once the draft Scheme became final, the provisions thereof
shall prevail over the provisions of the Regulations in terms of the proviso
appended to sub-regulation (2) of Regulation I of the 1991 Regulations. C
In such event, the doctrine of 'relating back' shall apply. In terms of the
provisions of the Act the Arbitrator's award became final. The directive
of the State Government could have been enforced till the Scheme received
sanction and made final but not thereafter. Furthermore, Regulations 33
and 34 of the 1991 Regulations provide for enabling provisions. No legal
right to get additional TOR was created thereby. The appell~nts merely D'
had a right to be considered. The said regulations confer wide
discretionary power on the part of the authorities. Each case was required
to be considered on its own merit. 1427-G, H; 428-A; 431-B-Fj

6. The correspondences exchanged between the parties also do not E
show that the minutes drawn fructified in an order conferring any legal
right upon the appellant. By reason of the endorsement in the note sheet
no policy decision had been taken. A right created under an order of a
statutory authority must be communicated so as to confer an enforceable
right. 1431-G, HI
F
Bachhillar Singh v. State of Punjab and Anr., AIR (1963) SC 395,
referred to.

7. It cannot be said that Rule 10(2) of the 1967 Rules and Town
Planning Scheme Regulation are applicable by way of reference. The
question as to when an earlier Act or some of its provisions arc G
incorporated by a reference into a latter Act is a legislative device adopted
for the sake of convenience in order to avoid verbatim/ reproduction of
the earlier Act into the latter but the same has to be distinguished from a
referential legislation. In the present case the applicability of the rule of
incorporation of a statute by reference has no relevance inasmuch as the H
--
414 SUPREME COURT REPORTS [2003] 3 S.C.R.

A 1991 Regulations themselves would not be applicable in the case of the
appellants. So far as the letter of the State of Maharashtra is concerned,
the manner in which a statutory authority had understood the application
of a statute would not confer any legal right upon a party unless the same
finds favour with a Court of Law dealing with the matter. The Corporation
B or the State while seeking to justify application of the 1991 Regulations
as regard the pending Scheme did not have any occasion to consider the
applicability of sub-Regulation (2) of Regulation 1 or the proviso thereof.
The question required consideration only having regard to the sanction
of final Scheme by the State and not prior thereto. It, therefore, cannot
be said that the Corporation entertained such belief and/or the State
C Government issued such direction is a matter of little or no consequence --..r
at this stage. [433-B-FI

Nagpur improvement Trust v. Vasantrao and Ors., 120021 7 SCC 657,
referred to.

D 8. The State while granting sanction could have modified the Scheme
prepared by the Arbitrator. While doing so it was permissible for the State
to make any modification with the Arbitrator's Scheme stating that TDR
in lieu of compensation would be granted. Having not said so it is not for
the appellant to contend that the State would be bound by its purported
directives despite statutory interdicts contained in Sections 86 and 88 of
E the Act. 1433-GI

9. A legal right to have an additional FSI or TDR can be claimed
only in terms of a statute or statutory regulations and not otherwise. In
terms of the provisions of the Act, the statutory vesting took place only
F upon sanctioning of the Scheme in terms of Section 88 thereof and not
prior thereto, wherefor the amonnt of compensation as determined by the
Arbitrator would be payable to the appellants. 1434-B; 436-CJ

10. When there is a conflict between law and equity the former shall
prevail. The legal right of the petitioners, if any, as on the day of filing of
G the Writ Petition having been lost in view of the subsequent event, namely,
sanctioning of the Scheme by the State Government, the award of the
Arbitrator as also the order of the Tribunal became final and conclusive
and binding on all parties including the planning authority in terms of
Section 73 and sub-section (2) of Section 79. Once a Scheme is approved,
no deviation therefrom can be made for purposes other than referred to
H in the Scheme itself unless the same is amended or modified by the State
r

L.R. BHATT AD v. STATE [S.B. SINHA. J.) 415
Government in accordance with law. 1437-F, GI A
11. Only because the Corporation did not take any action on the
appellant's application, the same by itself would not clothe the -appellant
with any legal right after the Scheme is sanctioned in terms of Section 86
of the Act. [437-HI
B
12. The contents of the Scheme, therefore, will prevail over any policy
decision taken by the Corporation or by the State. Having regard to the
provisions of the Act and the Regulations, particularly having regard to
the fact that it is not the contention of the appellant that the State lacked
inherent jurisdiction in approving the Scheme in terms of Section 86 of C
the Act, the Scheme became part of the Act. (438-B, CJ

State of Gujarat v. Shanti/a/ Manga/das and Ors., (196911 SCC 509
and Priyanka Overseas Pvt. Ltd. and Anr. v. Union of India and Ors., [ 19911
Supp. I SCC 102, distinguished.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6345 of2001. 0
From the Judgment and Order dated 31.7.2001 of the Mumbai High
Court in W.P. No. 1631 of 1995.

H. Devarajan, N.V. Vimadalal, P.N. Gupta, V. Ramaswamy and E
Ms. Happy for the Appellants.

K.K. Singhvi, S.H. Ujjainwalla, Ms. Suchitra Atul Chitale, A.Y. Chitale,
U.U. Lalit, S.S. Shinde and V.N. Raghupathy for the Respondents.

The Judgment of the Court was delivered by
F
S.B. SINHA, J. Writ Petitioners are the appellants herein. They are
aggrieved by and dissatisfied with the Judgment and order dated 31.07 .200 I
passed by the Bombay High Court in Writ Petition No. 1631 of 1995,
dismissing their Writ Petition.

A plot of land being C.S. No. 820, Survey No. I I 5A admeasuring G
5476. 45 sq. metres originally belonged to one Gokuldas Jeevraj Dayal. By
reason of a consent decree passed by the Bombay High Court on 30th March,
1982, the said land vested in the appellants herein. It formed a part of R-
Ward wherefor a draft Development Plan was published by the Bombay
Municipal Corporation (Corporation) on 18th September, 1958. A I 00 feet H
416 SUPREME COURT REPORTS (2003] 3 S.C.R.

A wide Development Plan road was proposed to be constructed and admittedly
the said land was shown to be affected in the draft Development Plan which
came into force on or about Ist November, 1965 being sanctioned. A Town
Planning Scheme being No. Ill ofR-Ward came into being in the year 1961.
upon a declaration made in this behalf by the Corporation. A draft Scheme
B was published on 17th July, 1976 wherein the plot as referred to hereinbefore
was given a new number being original plot No. 433. With a view to give
effect to the said Scheme and determining the rights and interests of the
persons holding plots coming within the purview of the Scheme an Arbitrator
in terms of Section 72 of the Maharashtra Regional and Town Planning Act,
1996 (hereinafter called and referred to for the sake of brevity 'the Act') was
C appointed. The Arbitrator in his award dated 30th October, 1987 while making
a Town Planning Scheme allotted final. plot No. 694 admeasuring 1240.90
sq. metres and final plot No. 713 admeasuring 2079 sq metres aggregating
to 3319. 90 sq. metres in lieu of original plot No. 433. It is not in dispute that
only 854 sq. metres of land out of original plot No. 433 belonging to the
appellant did not form part of the road. For acquisition of the said land as
D also for the structures standing thereupon a compensation of Rs. 4,97,567,20
apart from allotment of the said two plots was awarded in favour of the
appellant. An Appeal against the said award questioning the quantum of
compensation was preferred by the appellant in terms of Sub-section (I) of
Section 74 of the Act, which was dismissed.
E
It is not in dispute that as final plot Nos. 694 and 713 did not form part
of the original plot, additional Floor Space Index (FSI) under Rule 10(2) of
the Development Control Rules, 1967 was not awarded by the Arbitrator.

Allegedly, on or about 30th January, 1985 a Policy Resolution was
F passed by the Corporation granting benefit of additional FSI in lieu of
compensation in respect of plots covered by Town Planning Schemes which
had been sanctioned prior to the Development Control Rules, 1967 came into
force. Certain correspondences were exchanged between the appellants and
the Corporation in terms of letters dated 8th December, 1989, 8th February,
1990, 6th June, 1991 and 26th June, 1991; pursuant whereto and in furtherance
G whereof the parties toyed with the idea of grant of additional FSI in lieu of
compensation to the appellants. The Corporation imposed certain conditions
in respect thereof but it appears that the appellants did not agree thereto. The
matter ended there.

H However, on 25th March, 1991 the Development Control Regulations
L.R. BHATT AD v. STATE [S.B. SINHA, J.] 417
for Greater Bombay, 1991 came into force replacing the Development Control A
Rules, 1967. Regulations 33, 34 read with appendix VII (5 and 6) postulated
grant of FSI and additional Transferable Development Rights (TDR) in lieu
of compensation. It is not is dispute that whereas in terms of the Rule I 0(2)
of the Development Control Rules, additional FSI could be granted only
when the new plot formed part of the original plot but in terms of new B
regulations the same was available even in respect of a final plot.

The Scheme which was finalized on 30.10.1987 was notified on 8th
October, 1991 and was made final by reason of a notification of the State of
Maharashtra dated 26.7.1995 with effect from 3.10.1995.

In the Town Planning Scheme in question no provision exists for transfer
c
of any development rights. Under the said Scheme provisions have been
made to grant FSI for the area gone under road to the extent of 40% of the
final plot area provided the original plot included in sanetioned scheme and
the final plot allotted formed part of the original plot and not otherwise.
D
Allegedly, certain decisions were taken to give benefit of the new
regulations in favour of the appellants which, however, were not
communicated. The appellants herein made a claim for grant of TDR under
the Development Control Regulations, 1991 for the first time on 20th January,
1994. However, as no decision thereupon was taken, the Writ Petition was E
filed by the appellant on 31.8.1995. The High Court by an order dated 5.9.1995
directed the second respondent to decide the claim of the appellant made in
tem1s of their application dated 20th June, 1994 and in obedience thereof an
order dated 15.9.1995 was passed rejecting the said application on the
following grounds:
F
(a) Under the sanctioned Town Planning Scheme, the benefit of
additional FSI under D.C. Rule No. 10(2) is not granted.
(b) There is no provision in the Town Planning Regulations for
granting TDR on plots falling in Town Planning Scheme.
(c) The area going in Town Planning road and affected structures G
has been compensated by awarding compensation of Rs. 4,97,562.
20 under the Town Planning Scheme.

An application for amendment of the Writ Petition challenging the
legality of the said order dated 15th September, 1995 was filed which was
~~. H
418 SUPREME COURT REPORTS [2003] 3 S.C.R.

A The High Court by reason of the impugned judgment dismissed the
Writ Petition of the appellants.

Mr. H. Devarajan, the learned counsel appearing on behalf of the
appellant took us through the provisions of the 1966 Act and the 1991
Regulations and made the following submissions.
B
(i) Having regard to the provision contained in the 1991 Regulations,
the appellants herein derived an indefeasible right for grant of
additional FSI and TDR in relation to final plot Nos. 694 and
713 .
c •
(ii) The Corporation, having regard to the decisions of the State
directing grant of such benefits in favour of those who had not
received compensation was bound to give effect thereto in terms
of Section 126 of the Act.

(iii) The Corporation committed an illegality in not granting the said
D benefit to the appellants despite the fact that the same had been
specifically asked for by the appellants in terms of their
application dated 2.6.1994.

(iv) The respondent now, therefore, cannot take advantage of their
own wrong taking umbrage under the consequences of grant of
E a final scheme in terms of notification dated 26-7-1995. Reliance
in this connection has been placed on Priyanka Overseas Pvt.
Ltd. and Anr. v. Union of India and Ors., [1991] Supp I SCC
102.

F (v) In any event having regard to the purport and object of the Act,
plot No. 433 did not automatically vest in the Government as no
care in this behalf was made by the appellants in terms of the
1966 Act and the Rules framed thereunder. Reliance in this behalf
has been placed on Stale of Gujarat v. Shanti/al Manga/das and
Ors., [1969] 1 SCC 509.
G
(vi) In terms of the 1991 Regulations as a new right in favour of the
appellants had come into being the Arbitrator's award has become
non-est in the eye of the law.

Mr. K.K. Singhvi, the learned senior counsel appearing on behalf of the
H respondent-Corporation, on the other hand, would submit :
L.R. BHATT AD v. STATE (S.B. SINHA, J.] 419

(i) that the appellants having preferred an appeal against the award A
of the Arbitrator, the same became final and binding on the-
parties.

(ii) In terms of Section 88 of the Act plot No. 433 vested in the State
and plot Nos. 694 and 713 vested in the appellants.

(iii) During pendency of this appeal the appellant has handed over
B
possession of plot No. 433 to the Corporation whereafter, a 100
feet wide road in terms of the Scheme has been constructed and,
thus, no relief can be granted to the appellants at this stage.

(iv) In view of the final Scheme, grant of TOR in favour of the C
appellants has lost relevance as the parties are bound by the final
Scheme.

(v) The Government instructions whereupon reliance has been placed
by the appellants are not applicable to the fact of the case.

Mr. U.U. Lalit, the learned counsel appearing on behalf of the State of D
Maharashtra, would submit:

(a) that the concept of grant of TDR under the 1967 Regulations
was absolutely different from the 1991 Regulations.
(b) As the Scheme referred to Rule 10(2) of the 1967 Regulations, E
the 1991 Regulations would not apply in the instant case.

(c) The plea of the appellant for grant of TOR and FSI although was
at one point of time considered by the Corporation, as he did not
agree to pay the bettennent charges, and as admittedly no decision
thereupon had been taken, the appellant did not derive any F
enforceable right in relation thereto.

The primal question which arises for consideration in this appeal is as
to whether the appellant can claim the benefit of land potential in lieu of
compensation awarded in his favour by the Arbitrator.
G
However, before embarking upon the said question, we may notice the
Scheme of the Act and the Regulations.

The Act was enacted to make provisions for planning the development
H
-
and use of land in Regions established for that purpose and for the constitution
of Regional Planning Boards therefore; to make better provision for the
420 SUPREME COURT REPORTS [2003] 3 S.C.R.

A preparation of Development plans with a view to ensuring that town planning
schemes are made in a proper manner and their execution is made effective
to provide for the creation of new towns by means of Development Authorities;
to make provisions for the compulsory acquisition of land required for public
purposes in respect of the plans; and for purposes connected with the matters
B aforesaid.

The relevant provisions of the Act read as under:

"2(9) "Development plan" means a plan for the development or re-
development of the area within the jurisdiction of a Planning Authority
and in~ludes revision of a development plan and proposals of a special
c planning Authority for development of land within its jurisdictions.

2(9A) "development right" l)leans right to carry out development or
to develop the land or building or both and shall include the
transferable development right in the form of right to utilise the Floor
D Space Index of land utilisable either on the remainder of the land
partially reserved for a public purpose or elsewhere, as the final
D~velopment Control Regulations in this behalf provide.

2(13) "final plot" means a plot allotted in a final town planning
scheme.
E
2(13A) "Floor Space Index" means the quotient or the ratio of the
combined gross floor area to the total area of the plot, viz:-
Total covered area of all floors
Floor Space Index -
Plot area

F 2(22) "reconstituted plot" means a plot which is altered in ownership
or in any other way by making of a town planning scheme.

2(30) "scheme" includes a plan relating to a town planning scheme."

Chapter III of the Act deals with preparation, submission and sanction
G of the Development Plan for the entire region. Section 22 provides for the
contents of the Development Plan which would include 'land' user and the
percentage thereof. Section 31 provides for grant of sanction to draft
Development Plan.

Before according sanction the State Government is required to take into
H
---
L.R. BHATT AD v. STATE (S.B. SINHA, J.) 421
consideration such objections and suggestions and the Report of the Officer A
appointed in terms of Sub-section (2) thereof. Sub-section (4) of Section 31
provides that in fixing the date on which the final Development Plan shall
come into operation, the State Government shall grant at least one month's
time. By reason of Sub-section (6) the Development Plan becomes final and
the same is binding on the planning authority.
B
Section 39 of the Act reads thus;

"39. Variation of town planning scheme by Development plan. Where
a final Development plan contains proposals which are in variation,
or modification of those made in a town planning scheme which has
been sanctioned by the State Government before the commencement C
of this Act, the Planning Authority shall vary such scheme suitably
under section 92 to the extent necessary by the proposals made in the
final Development Plan. "

Chapter IV of the Act provides for control of development and use of D
land included in Development Plans. Section 43 contemplates restrictions on
development of land. Section 46 enjoins upon the planning authority to give
due regard to the provisions of any draft or final plan before an application
for permission is considered. Section 49(l)(b) of the Act imposes an obligation
upon the State to acquire land on refusal of permission or on grant of
permission in certain cases. Section 52 to 57 provides for the restrictions E
relating to carrying out the Development Works.

Chapter V of the Act provides for the Town Planning Scheme. The
planning authority in terms of provisions of Section 60 is entitled to make
and publish a draft Scheme. The mode and manner of such publication has
been laid down in Section 61. Section 64 provides for the matters which F
would be the contents of the draft Scheme. Section 68 empowers the State
Government to sanction draft Scheme. Section 69 provides for restrictions on
use and development of land after declaration for town planning scheme.
Section 72 provides for appointment of the Arbitrator for purposes of planning
schemes received by the State Government for sanction. Sub-section (3) of G
Section 72 provides for the powers and functions of the Arbitrators. It includes
the estimate of the amount of compensation payable to an owner of land.

Clauses (i), (ii), (iii) and (iv) of Sub-Section (3) of Section 72 read
thus;
H
422 SUPREME COURT REPORTS [2003] 3 S.C.R.

A "72. Arbitrator; his powers and duties-

(3) In accordance with the prescribed procedure, ev~ry Arbitrator
shall,-

(i) after notice given by him in the prescribed manner define,
demarcate and decide the areas allotted to, or reserved, for the
B
public purpose or purposes of the Planning Authority, and also
the final plots;
(ii) after notice given by him in the prescribed manner, decide the
person or persons to whom a final plot is to be allotted; when
such plot is to be allotted; and when such plot is to be allotted
c to persons in ownership in common, decide the shares of such
person;
(iii) estimate the value of and fix the difference between the values
of the original plots and the values of the final plots included in
the final scheme, in accordance with the provisions contained in
D clause (t) of Sub-section (I) of section 97;
(iv) estimate the compensation payable for the loss of the area of the
original plot in accordance with the provisions, contained in clause
(t) of sub-section (1) of section 97 in respect of any original plot
which is wholly acquired under the scheme. "
-
E
Section 73 provides that in respect of the matters specified therein
except clauses (iv) to (xi), (xiv), (xv) and (xvi) of Sub-section (3) of Section
72 all decisions of the Arbitrator shall be final and conclusive and binding
on all parties including the planning authority.

F The decisions of the Arbitrator under clauses (iv) to (xi), (xiv), (xv)
and (xvi) of Sub-section (3) of Section 72, however, shall be subject to an
appeal before the Tribunal.

Sub-Section (2) of Section 79 of the said Act provides that every decision
of the Tribunal of Appeal shall be final and conclusive and binding on all
G persons and parties including the planning authority.

Section 86 empowers the State Government to grant sanction to final
Scheme. Sub-section (2)(b) of Section 86 reads thus:

"86 (2). If the State Government sanctions such scheme, it shall state
H in the notification-
-
L.R. BHATTAD v. STATE [S.B. SINHA, J.] 423

(a) ......' A
(b) adate (which shall not be earlier than one month after the date
of the publication of the notification) on which all the liabilities
created by the scheme shall take effect and the final scheme shall
come into force. "

Section 88 provides for the effect of final Scheme and reads as under:
B

"88. Effect offinal scheme. - On and after the day on which a final
scheme comes into force -
(a) all lands required by the Planning Authority shall, unless it is
otherwise determined in such scheme, vest absolutely in the C
Planning Authority free from all encumbrances;
(b) all rights in the original plots which have been reconstituted
shall determine and the reconstituted plots shall become subject
to the rights settled by Arbitrator;
D
(c) the Planning Authority shall hand over possession of the final
plots to the owners to whom they are allotted in the final scheme."

Section 97 provides for the cost of the Scheme.

Chapter VII provides for compulsory acquisition of land needed for the E
purpose of regional plan, development plan or town planning etc. Such
acquisition in terms of Section 126 of the Act was to be made for public
purposes specified in the Plan and Scheme under the said Act.

Section 154 provides for the control by the State Government and reads
as under:
F
"154. ( 1) Every Regional Board, Planning Authority and Development
Authority shall carry out such directions or instrudions as may be
issued from time to time by the State Government for the efficient
administration of this Act.
(2) If in, or in connection with, the exercise of its powers and G
discharge of its functions by any Regional Board, Planning
Authority or Development Authority under this Act, any dispute
arises between the Regional Board, Planning -Authority or
Development Authority, and the State Government, the decision
of the State Government on su~h dispute shall be final. " H
424 SUPREME COURT REPORTS [2003] 3 S.C.R.

A Rule 10(2) of Development Control Rules, 1967 (then in force) provide
as under:

"Rule 10(2):

With the previous approval of Government the Floor Space Indices
B specified above, may be permitted to be exceeded in respect of
buildings of Educational and Medical Relief Institutions and
Government and Semi-Government Offices and luxury Hotels and in
respect of any building on the top of which any revolving structure
is to be constructed as a place of Public entertainment or amusement.

c The Municipal Commissioner shall permit additional floor-space index
on I 00% of the area required for road-widening or for constructing
new roads proposed under the Development Plan or those proposed
under any provision of the Bombay Municipal Corporation Act, if the
owner (including a lessee) of such land is prepared to release such
area for road widening or for constructing new roads without claiming
D any compensation thereof. Such 100% of the area going under such
road-widening or road construction shall be limited to 40% of the
area of the plot measuring after release of the land required for such
road widening or road construction. "

The State Government in exercise of its power conferred upon it under
E Sub-Section (3) of Section 3 l of the Act upon taking into consideration the
report of the officer made in terms of Sub-Section (2) thereof made regulations
known as Development Control Regulations for Greater Bombay, 1991. The
said Regulations came into force with effect from 20th February, 1991. Sub-
regulation (2) of Regulation 1 and the proviso appended thereto read thus:
F
"(2) Jurisdiction-These Regulations apply to building activity and
development work in areas under the entire jurisdiction of the
Municipal Corporation of Greater Bombay (hereinafter called "the
Corporation"). lfthere is a conflict between the requirements of these
Regulations and those of any other rules or bye-laws, these Regulations
G shall prevail;

Provided, however, that in respect of areas included in a finally
sanctioned Town Planning Scheme the Scheme regulations shall
prevail, if there is a conflict between the requirements of these
Regulations and the Scheme regulations. "
H
L.R. Bl-IATTAD v. STATE [S.B. SINHA, J.) 425
(Underlining is mine for emphasis) A
Regulations 33, 34 and Appendix VII (I) which are relevant for the
purpose of this case are as under:-

"Regulation 33(/):- Additional Floor Space lnde;x which may be
allowed to certain categories:- B
(I) Road widening and Construction of new Roads:-

The Commissioner may permit additional floor space index on I00
per cent of the area required for road widening or for construction of
new roads proposed under the development plan or those proposed C
under the Bombay Municipal Corporation Act, 1888, excluding areas
of internal means of access, if the owner (including the lessee) of
such land surrenders such land for road widening or new road
construction without claiming any compensation in lieu thereof and
hands over the same to the Corporation ji-ee of encumbrances to the
satisfaction of the Commissioner. Such 100 per cent of the F. S. I. on D
land so surrendered to the Corporation will be utilisable on the
remainder of the land upto a limit of 40 per cent of the area of plot
remaining after such surrender and the balance F. S. I. remaining
thereafter shall be allowed to be utilized as a Development Right in
accordance with regulations governing Transfer of Development Rights E
(TDRs) in Appendix VII, or the full FSI on the land is surrendered
to the Corporation· may be allowed to be used as a Development
Right in accordance with the regulations governing Transfer of
Development Rights (TDRs) in Appendix VII. Thereafter the road
land shall be transferred in the city survey records in the name of the
Corporation and shall vest in it becoming part of a public street as F
defined in sub-section (3) of section 288 of the Bombay Municipal
Corporation Act, I 888.

Regulation 34: Transfer of Development Rights- In certain
circumstances, the development potential of a plot of land may be
separated from the land itself and may be made available to the G
owner of the land in the form of Transferable Development Rights
(TDR). These Rights may be made available and be subject to the
Regulations in Appendix VII hereto.

Appendix-Vil- (I) The owner (or lessee) of a plot of land which is
reserved for a public purpose in the development plan and for H
426 SUPREME COURT REPORTS [2003) 3 S.C.R.

A additional amenities deemed to be reservations provided in accordance
with these Regulations, excepting in the case of an existing or retention
user or any required compulsory or recreational open space, shall be
eligible for the award of Transferable Development Rights (TD Rs) in
the form ofFloor Space Index (FSI) to the extent and on the conditions
set out below. Such award will entitle the owner of the land to FSI
B in the form of a Development Right Certificate (DRC) which he may
use himself or transfer to any other person.

(Emphasis Supplied)

2 ........... ..
c 3 ............ .

4 .,........... .

5. The built-up area for the purpose of FSI credit in the form of a
DRC shall be equal to the gross area of the reserved plot to be
D surrendered and will proportionately increase or decrease according
to the pennissible FSI of the zone where from the TDR has originated.

6. When an owner of lessee also develops or constructs the amenity
on the surrendered plot at his cost subject to such stipulations as may
be prescribed by the Commissioner or the appropriate authority, as
E the case may be and to their satisfaction and hands over the said
developed/constructed amenity to the Commissioner/Appropriate
authority, free of cost, he may be granted by the Commissioner a
further DR in the fonn of FSI equivalent to the area of the construction/
development done by him, utilization of which etc. will be subject to
F the Regulations contained in this Appendix. "

Applicability of the 1991 Regulations is one of the primal questions
which arises for consideration herein.

A bare perusal of Rule I 0(2) of Development Control Rules, 1967
G would clearly show that additional FSI in lieu of compensation was provided
only in certain cases but the appellant herein was not entitled thereto inasmuch
as the original plot belonging to them or any part thereof to did not form part
of the final plots which were allotted to them. From the map of the plots in
question, which has been placed before us, it is evident that the final plots
which were allotted to them were also not affected by the road.
H
L.R. BHATT AD v. STATE [S.B. SINHA, J.) 427
The 1991 Regulations although had superseded the 1967 Rules and by A
reason of the former the latter was replaced, the proviso appended to Sub-
regulation (2) of Regulation I in no uncertain terms provides that in the event
of any conflict between the requirements of the 1991 Regulations and the
Scheme Regulations, the latter shall prevail. Indisputably, by reason of the
award of the Arbitrator the appellants herein, in lieu of original plot No. 433 B
the Appellants were allotted final plot Nos. 694 an~ 713 besides monetary
compensation. The appellants were not satisfied with the amount of
compensation awarded in their favour by the Arbitrator and preferred an
appeal before the Tribunal. The said appeal was dismissed. The said award,
therefore, became final and binding on the parties.

The 1991 Regulations or Section 2(9A) of the Act, could not, therefore,
c
affect the draft Scheme, save and except for the matters, if any, as provided
for therein.

Furthermore, Special Regulation No. 8 of the Town Planning Scheme
Regulations reads thus: D
"No. F.S.J. benefits (T.D.R. ) in lieu of compensation shall be given
in respect of area of original plots affected fully/partly either under
Scheme Reservation or under reconstitution as they are acquired in
the final scheme under provisions of M. R. T. P. Act and prevailing
on the date of declaration of intention to prepare the scheme. " E
The said provision as also the proviso appended to Sub-regulation (2)

' of Regulation I read with the aforementioned Town Planning Scheme, leave
no manner of doubt whatsoever that the appellants were not entitled to grant
of TDR thereunder.
F
The appellants herein claimed right to have additional TDR having
regard to :

(a) the request made by them to the Bombay Municipal Corporation;
and
(b) in terms of communication of the State dated 2nd March, 1993.
G

It is not in dispute that certain correspondences were exchanged by and
between the appellant and respondent-Corporation as regards grant of
additional FSI and TOR. From a perusal of the said correspondences, however,
it would appear that the Corporation asked the petitioner to bear the betterment II
·1....
428 SUPREME COURT REPORTS [2003) 3 S.C.R. I
A charges. A request was made by the architect of the appellant not to charge
betterment charges on the additional FSI of the D.P. road land as the appellant
was agreeing to forgo compensation in respect thereof and was further ready
to bear the cost of construction of road and S.W. Drains and provisions of
street lights etc. However, the Chief Engineer in his note-sheet dated 7 .10.1991
B and whereupon the Director (Engineering Service & Projects) made an
endorsement, observed:

"We should not consider the Architect's request not to charge
betterment charges on the additional F.S.I. of the D.P. Road land as
proposed by the Dy. Ch. E. (D.P.) vide Item No. 3 at P. 85.

C In view of the above circumstances, the M.C. 's orders are please
requested to negotiate with the architect to hand over the D.P. Road
on the terms and conditions mentioned at P. 1-2 (Portion sidelined
'A' at P. 84). However, the Architect shall have to pay the betterment
charges on the additional F.S.I. of the D.P. Road land.

D Submitted for orders please. "

The respondent in their affidavit, however, stated that the appellants
also did not remove the encroachment from the said land and further did not
agree to the Condition No. (3) of their letter dated 6.6.1991.

E It is, therefore, evident that the correspondences exchanged between
the parties did not fructify into a binding agreement.

The rights and obligations of the parties, therefore, despite those
,
correspondences continued to be governed by the terms of the award of the
F Arbitrator as also the provisions of the Scheme.

It is true that the State Government in its letter dated 7/12 May, 1992
issued certain directions in the light of Regulations 33, the relevant portions
whereof are as under:

"Subsequently, the matter was re-examined by government in this
G Department letter No. DCR-1091/3197/UD-11, dated 17th December
1991, the Corporation has been addressed as under:

"(10) Regulation 33(1) (page 38):

In the definition in regulation 2(3)(7) at page 2 "amenity" means
H roads, streets .... "According to Appendix VII (regulation 6 on page
429

--
L.R. BHATT AD v. STA TE [S.B. SINHA, J.]

84), construction of "Amenity" on surrendered plot at owner's cost, A
etc. entitled the owner to further Development Rights in the form of
FSI equivalent to area of construction of an "Amenity" and since
"Amenity" covers roads, further Development Rights in lieu of road
construction would be admissible according to Appendix VII, clause
(6) (at page 83-84). The concurrence given earlier by this Department B
to the BMC's views should be corrected accordingly. However, this
will not apply where the owner constructs the road on his own, for
his own use. But where through a land which is sought to be developed
a D.P. Road as shown in the Development plan passes, construction
thereof as a d. p. Road for its full width shall not be insisted upon by
T the Corporation initially while granting the development permission. C
It shall be sufficient if the internal road with local specifications as
required as per normal D.C. Regulations is provided for in the lay-
out plan and the Corporation shall not insist while approving the lay-
out plan for construction of the whole of the D.P. Road with its full
width. This regulation pennitted further development rights in lieu of
D.P. Road construction will apply only where on the prescription of D
the Commissioner, the entire road width shown in the Development
Plan is required to be constructed or has been constructed in accordance
with the stipulations prescribed by the Commissioner.

From this, it is clear that if an individual owner constructs the road E
and wants the FSI for the construction also, he has to construct it in
accordance with the stipulations by the Municipal Commissioner and
to his satisfaction. Such stipulations may cover the matters in relation
to or incidental to the construction of such road, such as construction
of storm water drain, if any, required for construction of such road,
material to be used, and width of the road as shown in the Development F
plan."

It is, therefore, evident that the offer made thereby by the State was
subject to certain conditions and was not an absolute one. Such offers were
circumscribed by conditions.
G
Yet again on or about 2nd March, 1993, the Government of Maharashtra
in a letter addressed to the Municipal Commissioner of the Corporation stated:

"'Sub:- Applicability of the sanctioned D.C. Regulations for Greater
Bombay town Plannning Schemes of Greater Bombay.
H
430 SUPREME COURT REPORTS (2003) 3 S.C.R.

A Sir,

Please refer to your letter No. Ch. /E. OT/2093/TPS Gen. Dated
24th September 1992 from the Director, Engineering Services &
Projects and discussions he had with the Secretary in October 1992
wherein he has explained difficulties faced by him because of the
B conflicting provisions of some of the Town Planning Scheme
Regulations and the provisions of the sanctioned D.C. Regulations
for Greater Bombay, I 991. He feels that there are number of areas
where D.C. Regulations for Greater Bombay provide for more
satisfactory solutions and it would be desirable that the Town Planning
c Schemes Regulations are forthwith replaced by D. C. Regulations.

2. Governmenc concurs with the view that effect be given to the D.C.
Regulations for Greater Bombay, 1991 in the areas of the finally
sanctioned Town Planning Schemes without waiting for compliance
on the proceedings of variation of the Town Planning Scheme
D Regulations. I am therefore directed to convey directive under section
I 54 of the Maharashtra Regional & Town Planning Act, I 996 as
follows:

(i) The development permissions shall be strictly scrutinized in
accordance with the sanctioned D.C. Regulations of Greater
E Bombay, even in the area of the finally sanctioned Town Planning
Schemes pending the procedure of variation of the scheme.

(ii) The Special Scheme Regulations which have been designed to
give concessions in marginal open spaces, permitting increased
height in smaller plots, ensure enjoyment of full development
F potential of the plots etc., and the special Town Planning Scheme
Regulations pertaining to architectures control should, however,
not get superseded due to making applicability of the D.C.
Regulations in Town Planning Scheme areas.
Yours faithfully
G Sd/-
(N.S. Kulkarni)
Under Secretary to Government."
The power of the State to issue such directions is undisputed. But as
has been found by the High Court, the said directive of the State was not
H applicable in the instant case.
L.R. BHATT AD v. STATE [S.B. SINHA, J.) 431
The said instructions were issued keeping in view the new Regulations A
in respect of the areas where finally sanctioned Town Planning Scheme had
come into effect without waiting for compliance in the proceedings of variation
of the Town Planning Scheme Regulations. The directive of the State
Government issued in tenns of Section 154 of the 1966 Act clearly states that
the development pennission shall be strictly scrutinized in accordance with B
the sanctioned Development Control Regulations of Greater Bombay even in
the area where finally sanctioned Town Planning Scheme pending the
procedure of variation of the Scheme.

The said Scheme does not refer to grant of any TOR and it will bear
repetition to state that the development pennission was required to be strictly C
scrutinized in accordance with the sanctioned Development Control
Regulations. A direction of the State Government in tenns of Section 154 of
the Act cannot supersede the statutory provisions contained either in the main
enactment or the statutory regulations. The State of Maharashtra had absolutely
no jurisdiction to issue any directive contrary to the statute or the statutory
regulations. Once the draft Scheme became final, the provisions thereof shall D
prevail over the provisions of the Regulations in tenns of the proviso appended
to Sub-Regulation (2) of Regulation I of the 1991 Regulations. In such
event, the doctrine of 'relating back' shall apply. As indicated hereinbefore,
in terms of the provisions of the said Act the Arbitrator's award became final.
The directive of the State Government could have been enforced till the E
Scheme received sanction and made final but not thereafter. Furthermore,
Regulations 33 and 34 of the 1991 Regulations provide for enabling provisions.
No legal right to get additional TOR was created thereby. The appellants
merely had a right to be considered. The said regulations confer wide
-~
discretionary power on the part of the authorities. Each case was required to
be considered on its own merit. F

The correspondences exchanged between the parties also do not show
that the minutes drawn fructified in an order conferring any legal right upon
the appellant. By reason of the endorsement in the note-sheet no policy
_J
1 decision had been taken. It is now well-known that a right created under an G
order of a statutory authority must be communicated so as to confer an
enforceable right. See Bachhittar Singh v. State of Punjab and Anr. reported
in AIR (1963) SC 395.

Admittedly the appellant did not file any application in terms of the
1991 Regulations for a long time. Such an application came to be filed only H
432 SUPREME COURT REPORTS [2003] 3 S.C.R.

A on 20th June, 1994. It is true that the said application wa~ not immediately
attended to and the appellant had to file a Writ Petition. But the same was
disposed of by the respondent-Corporation in terms of the order of the High
Court dated 5-9-1995.

Each of the reasons assigned by the Corporation is valid. In terms of
B the proviso appended to Sub-Regulation (2) of Regulation I of the 1991
Regulations, it will bear repetition to state, the Scheme Regulations shall
prevail thereover in case of any conflict. Submission of Mr. Devarajan to the
effect that the Sub-Regulation (2) of Regulation I will apply and not the
proviso appended thereto is misplaced.
c A proviso, as is well-known, may serve different purpose:

(i) qualifying or excepting certain provisions from the main
enactment;
(ii) it may entirely change the very concept or the intendment of the
D enactment by insisting on certain mandatory conditions to be
fulfilled in order to make the enactment workable;
(iii) it may be so embedded in the Act itself as to become an integral
part of the enactment and thus acquire the tenor and colour of
the substantive enactment itself; and
E
(iv) it may be used merely to act as an optional addenda to the
enactment with the sole object of explaining the real intendment
of the statutory provision.

(See S. Sundaram Pillai, etc. v. V.R. Patlabiraman reported in AIR
F (1985) SC 582).

By reason of the proviso appended to Sub-regulation (2) of Regulation
I, certain provisions of the main enactment stood qualified. The proviso will,
therefore, act as an exception to the main provision.

G Furthermore, it is not the case of any party that a revised Development
Plan had not been validly sanctioned by the State. Once it is held that the
1991 Regulations would not be applicable in the case of the appellants having
regard to the sanction of the Scheme prepared by the Arbitrator the question
of grant of any benefit thereunder in favour of the appellants herein would
H not arise. It is well-settled in view of principle of 'Generalia specialiabus non
derogant; that the special provision shall prevail over the general provision
L.R. BHATTAD v. STATE [S.B. SINHA, J.] 433
of a statute. A
Had the Scheme been not sanctioned, possibly the appellant could have
claimed the TDR benefit in lieu of compensation. It is further incorrect to
contend that Rule I 0(2) of the 1967 Rules and T.P. Scheme Regulation are
applicable by way of reference.
B
The question as to when an earlier Act or some of its provisions are
incorporated by a reference into a latter Act is a legislative device adopted
for the sake of convenience in order to avoid verbatim/reproduction of the
eariier Act into the latter but the same has to be distinguished from a referential
legislation. (See Nagpur Improvement Trust v. Vasantrao and Ors., reported
in (2002) 7 sec 657). C

In this case the applicability of the rule of incorporation of a statute by
reference has no relevance inasmuch as, as noticed hereinbefore, the 1991
Regulations themselves would not be applicable in case of the appellants. So
far as the letter of the State of Maharashtra is concerned, the manner in which D
a statutory authority had understood the application of a statute would not
confer any legal right upon a party unless the same finds favour with a court
of law dealing with the matter. The Corporation or the State while seeking
to justify application of the 1991 Regulations as regards the pending Scheme
did not have any occasion to consider the applicability of Sub-Regulation (2)
of Regulation I or the proviso thereof. The question required consideration E
only having regard to the sanction of final Scheme by the State and not prior
thereto. It is, therefore, idle to contend that the Corporation entertained such
belief and/or the State Government issued such direction is a matter of little
or no consequence at this stage.

The State while granting sanction could have modified the Scheme F
prepared by the Arbitrator. While doing so it was permissible for the State
to make any modification with the Arbitrator's Scheme stating that TDR in
lieu of compensation would be granted. Having not said so it is not for the
appellant to contend that the State would be bound by its purported directives
despite statutory interdicts contained in Section 86 and 88 of the Act. G
In view of our findings aforementioned the third reason assigned by the
Corporation must also be upheld. We may notice that the appellant herein has
given up the question of applicability of Rule l 0(2) before the High Court.
The High Court in its impugned judgment recorded "we may add that under
Rule 10(2) of the D.C. Rules of 1967, additional FSI in lieu of the H
434 SUPREME COURT REPORTS (2003) 3 S.C.R.

A compensation was provided in certain cases. There is, however, no dispute
that petitioners were not eligible for grant of additional FSI under the said
Rule I0(2) inasmuch as the original plot belonging to the petitioners or any
part thereof did not form part of the final plots which were allotted to them
nor were the plots allotted to the petitioners affected by the road. "

B A legal right to have an additional FSI or TOR can be claimed only in
terms of a statute or statutory regulations and not otherwise.

By reason of the provisions contained in Section 88 of the Act, original
plot No. 433 vested in the State whereas the final plots Nos. 694 and 713
C became the property of the appellants. Title on the land having been conferred
under a statute, it is idle to contend that there is no automatic vesting.

Reliance placed by Mr. Devarajan on State of Gujarat (supra) is
misplaced. In that case the question which arose for consideration related to
a draft Scheme sanctioned by the Government on 17th August, 1942 under
D the Bombay Town Planning Act, 1915. The Scheme which had commenced
under the 1915 Act continued under the Bombay Town Planning Act, 27 of
1955. The Respondents' land was acquired under the Scheme where after the
plot was reconstituted into two, one each reserved for the respondent and the
local authority respectively. A compensation was awarded for reservation of
the said land in the local authority on the basis of market value as on 18th
E April, 1927. The said order having been questioned, construction of Section
53 of the Bombay Town Planning Act came up for consideration. This Court
held:

"27. The principle argument which found favour with the High Court
in holding Section 53 ultra vires is that when a plot is reconstituted
F and out of that plot a smaller area is given to the owner and the
remaining area is utilised for public purpose, the area so utilised vests
in the local authority for a public purposes, and since the Act does
not provide for giving compensation which is a just equivalent of the
land expropriated at the date of extinction of interest, the guaranteed
G right under Article 31 (2) is infringed. While adopting that reasoning
counsel for the first respondent adopted another line of approach
also. Counsel contended that under the scheme of the Act the entire
area of the land belonging tq the owner vests in the local authority,

..
and when the final scheme is framed, in lieu of the ownership of the

H
original plot, the owner is given a reconstituted plot by the local
authority, and compensation in money is determined in respect of the
-.
L.R. BHATT AD v .. STATE [S.B. SINHA, J.] 435
land appropriated to public purposes according to the rules contained A
in Section 67 and 71 of the Act. Such a scheme for compensation is,
it was urged, inconsistent with the guarantee under Article 31 (2) for
two reasons- (I) that compensation for the entire land is not provided;
and (2) that payment of compensation in money is not provided even
in respect of land appropriated to public use. The second branch of B
the argument is not sustainable for reasons already set out, and the
first branch of the argument is wholly without substance. Section 53
does not provide that the reconstituted plot is transferred or is to be
deemed to be transferred from the local authority to the owner of the
original plot. In terms Section 53 provides for statutory re-aajustment
of the rights of the owners of the original plots of lands. When the C
scheme comes into .force all rights in the original plots are extinguished
and simultaneously therewith ownership springs in the reconstituted
plots. There is no vesting of the original plots in the local authority
nor transfer of the rights of the local authority in the reconstituted
plots. A part or even the whole plot belonging to an owners may go
to form a reconstituted plot which may be allotted to another person, D
or may be appropriated to public purpose under the scheme. The
source of the power to appropriate the whole or a part of the original
plot in forming a reconstituted plot is statutory. It does not predicate
ownership of the plot in the local authority, and no process-actual or
notional-of transfer is contemplated in that appropriation. The lands E
covered by the scheme are subjected by the Act to the power of the
local authority to re-adjust titles, but no reconstituted plot vests at
any stage in the local authority unless it is needed for a purpose of
the authority. Even under clause (a) of Section 53 the vesting in a

-· local authority of land required by it is on the coming into force of
the scheme. The concept that lands vest in the local authority when F
the intention to make a scheme is notified is against the plain
intendment of the Act. "

(Emphasis supplied.)

The observations of this Court to the effect that there was no vesting G
of the original plots in the local authority nor was there any question of
transfer of the rights in the reconstituted plots, were made having regard to
the arguments made, therein that the entire original plot as such vested in the
local authority. This Court held that right in the original plot extinguished
and the ownership in the reconstituted plot stood transferred only with the H
436 SUPREME COURT REPORTS (2003 I 3 S.C.R.

A coming into force the Scheme and not prior thereto. In that case, the Scheme
was held to be intra vires Article 31 of the Constitution.

Furthermore in this case the original plot and the reconstituted plot is
not the same as was the case in the State of Gujarat (supra).

B In terms of the provisions of the Act, the statutory vesting took place
only upon sanctioning of the Scheme in terms of Section 88 thereof and not
prior thereto, wherefor the amount of compensation as determined by the
Arbitrator would be payable to the appellants.

It may be true that when the appellant applied for grant of additional
C TDR and FSI in terms of the 1991 Regulations, the same was not promptly
attended to by the Corporation. The question, however, is that whether
equitable consideration can outweigh the statutory compulsion. Answer to
the said question must be rendered in the negative. In Priyanka Overseas Pvt.
ltd (supra) this Court was concerned with the applicability of the rate of
D duty and tariff evaluation on the imported goods which are changed from
time to time and were applicable on actual removal of goods. As in that case,
the concerned officer failed to discharge his duties by making illegal demand
for deposit of redemption fine, it was held that the appellant herein could not
be held liable to pay any duty stating:

E "42. There is no dispute that the remaining goods were also stored in
a private warehouse and the appellant had filed the bills of entry and
complied with all the required formalities for debonding and clearance
of the goods on January 28, 1988, therefore the appellant was entitled
to an order cancelling the licence of the private warehouse enabling

F
it to remove the goods. Had the customs authorities passed order in
accordance with law the same result would have followed as had
been done on December 17, 1987. The Central Manual published by
·-
the Director of Publications, Customs and Central Excise contains
directions for determining the actual date of removal of goods from
warehouse in terms of Section 15(l)(b) of the Act. The functioning
G of private warehousing has been elaborated therein. Clause IO of the
Manual prescribes the type of buildings which can be approved as
private warehouse under Section 58 of the Act. Para 15 of the Manual
provides for purposes of Section 15( I )(b) of the Act, that if the goods
are in private warehouse the date of cancellation of the licence of the
private warehouse should be taken as the actual removal of the goods
H for the purposes of Section 15( I(b) of the Act. Para 15 as already
L.R. BHATT AD v. STATE [S.B. SINHA, J.] 437

stated was followed in the appellant's own case on December 17, A
1987 in releasing the goods. There is no valid reason as to why the
same procedure should not have been followed in respect of the
remaining goods in respect of which the bills of entry were filed on
January 28, 1988 for debonding and clearance of goods. Merely
because the officer failed to discharge his duties by making illegal B
demand for deposit of redemption fine, the appellant could not be
held liable to pay duty. The appellant is therefore entitled to the
delivery of goods without paying any duty as on January 28, 1988 on
duty was payable on the goods."

Therein, therefore, a finding of fact was arrived at that the order passed C
by the authority was illegal and only by reason thereof the appellant therein
cou Id not remove the goods.

The said decision, therefore, has no application in the facts of the
present case.
D
Even if some order was passed by the Corporation, having regard to the
action of the State in sanctioning the draft Scheme which was done upon
taking into consideration objections raised in relation thereto, the benefits
granted in favour of the appellant were required to be restituted.

It is now well settled that when there is a conflict between law and E
equity the former shall prevail. The legal right of the petitioners, if any, as
on the day of filing of the Writ Petition having been lost in view of the
subsequent event, namely, sanctioning of the Scheme by the State Government;
the award of the Arbitrator as also the order of the Tribunal became final and
conclusive and binding on all parties including the planning authority in
terms of Section 73 and Sub-Section (2) of Section 79. Once a Scheme is F
approved, no deviation therefrom can be made for purposes other than referred
to in the Scheme itself unless the same is amended or modified by the State
Government in accordance with law.

Only because the Corporation did not take any action on the appellant's G
application, the same by itself would not clothe the appellant with any legal
right after the Scheme is sanctioned in terms of Section 86 of the Act. As
noticed hereinbefore, in terms of clause (b) of Sub-section (2) of Section 86
the State is required to specify a date in the notification on which date all the
liabilities created by the Scheme shall come into force, and furthermore in
terms of Sub-Section (3) of Section 86 a Town Planning Scheme shall have H
,.
I

438 SUPREME COURT REPORTS [2003] 3 S.C.R.

A effect as if it were enacted in the said Act.
The contents of the Scheme, therefore, will prevail over any policy
decision taken by the Corporation or by the State. Having regard to the
aforementioned provisions, particularly having regard to the fact that it is not
the contention of the appellant that the State lacked inherent jurisdiction in
B approving the Scheme in terms of Section 86 of the Act, the Scheme became
part of the Act.

For the aforementioned reasons, we do not find any merit in this appeal,
and it is dismissed accordingly. However, in the facts and circumstances of
th is case there shall be no order as to costs.
c
K.K.T. Appeal dismissed.