Karnataka High Court Supports Premium FAR Scheme, Upholds Property Rights

The Karnataka High Court has upheld the constitutional validity of the State government's Premium Floor Area Ratio (FAR) scheme, dismissing petitions that argued it violated property rights and diminished the value of Transferable Development Rights (TDRs). A Division Bench comprising Chief Justice Vibhu Bakhru and Justice C.M. Poonacha delivered the verdict, asserting that the scheme does not contravene Articles 14, 21, or 300A of the Constitution of India.

The Premium FAR scheme, introduced under Section 18-B of the Karnataka Town and Country Planning (KTCP) Act, 1961, permits property owners to purchase additional construction rights beyond the ordinarily permissible FAR by paying prescribed premium charges. This policy aims to facilitate vertical development and generate revenue for urban local bodies.

Petitioners, including Citizens’ Action Forum, Vijayan Menon, and landowner Krishnamurthy N.A., contended that the scheme undermines the value of TDRs. They argued that developers could acquire additional building rights under Premium FAR at rates significantly lower than the market cost of TDRs, effectively rendering TDRs "nugatory." Concerns were also raised about premium charges, ranging from 28% to 50% of the notional land value, which allegedly placed TDR holders at a disadvantage, especially when factoring in additional costs like stamp duty on TDR transfers.

However, the Bench rejected these arguments, emphasizing that fluctuations in property values resulting from policy decisions do not render such policies unconstitutional under Article 300A. The court also noted that landowners are not compelled to accept TDRs as compensation, as they retain the option to choose monetary compensation instead.

While analyzing the zonal framework for additional FAR in Bengaluru, the Bench clarified that Premium FAR is not universally applicable to all properties. It highlighted a protected zone for TDR holders on plots abutting roads with widths between 9 and 12 metres. In this zone, developers are restricted from utilizing Premium FAR and must acquire TDRs for additional FAR. The court underscored that government data shows approximately 85,000 out of 1,08,240 roads fall within this category, ensuring sustained demand for TDRs in such areas.

For plots abutting roads wider than 12 metres, the court noted that developers face limitations on Premium FAR usage. The maximum Premium FAR that can be loaded is capped at 0.4 times the base FAR, while an additional 0.2 times can only be utilized through TDRs. Developers seeking to maximize additional FAR must acquire TDRs for at least 0.2 times the base FAR.

The Bench also addressed concerns about Bengaluru's permissible FAR, stating that it is among the lowest compared to several cities globally. It observed that the State government has indicated sufficient scope to increase FAR without negatively impacting the quality of life in the city, a claim the petitioners failed to substantiate.

This ruling reaffirms the legality of the Premium FAR scheme, balancing urban development needs with safeguards for TDR holders.