Developers get temporary relief from paying compound fee to civic body

Pune: A Bombay High Court directive has provided temporary relief to the city developers association by stopping the Pune Municipal Corporation (PMC) from recovering the compound fee from the builders for regularising illegal constructions. The court has asked the PMC to form proper rules first and then get them approved from the State government in this regard.

The PMC was charging a compound fee from developers since 2011 following a General Body resolution. 

Under the resolution, the civic body could charge compound fee to regularise unauthorised constructions. The fee was based on the ready reckoner rates. The compound fee is recovered from developers for constructing without obtaining the Plinth Checking Certificate, construction beyond the permissible Floor Space Index (FSI) without purchasing the TDR from the market in anticipation that they would be able to obtain TDRs and/or the Plinth Checking Certificate and thereafter get the construction or development regularised.

In 2012, Pravin Shinde, Managing Committee Member of Marathi Bandhkam Vyavasayik Association, and Hemant Sathye, Executive Committee Member of Architects, Engineers and Surveyors Association (AESA), challenged the resolution and filed a writ petition against the State government and the PMC. 

On April 3, 2019, a bench comprising Justice BP Colabawalla and Justice CS Dharmadhikari directed the PMC to stop recovering the compound fee. The direction stated that on scanning the entire law, the bench found an absence of any provision authorising or backing the imposition and recovery of such fee. Hence, it had no alternative but to quash it. Both, the resolution and the circular issued while recovering the fee, therefore, were unsustainable in law.

Commenting on the High Court order, Abhijit Kulkarni, PMC panel lawyer in High Court, said, “The  Pune Municipal Corporation can propose rules. The State government has rights to finalise and approve them.

Therefore, the PMC cannot charge a compound fee until they frame proper rules and get them approved from the State government. After the State government approval, the PMC can charge the fee compound.”
He said the court has said nothing regarding the refund of compound fee to developers. Hence, the PMC cannot refund the fee to developers who have paid it.

Rajendra Raut, Superintendent Engineer of PMC Building Permission and Development Department, said, “After the court order, the PMC cannot charge the compound fee. The court has admitted the civic body’s right to charge the compound fee, provided the PMC forms the rules and gets them approved from the State government.”
Till date, the PMC has collected Rs 173 crore as compound fees. Now, it has to send a proposal to the State Urban Development Department for its approval to charge the fee.