Karnataka HC strikes down amendment laws on civic body's retrospective levies

Time of India

21 hours ago

BENGALURU
: In a major setback for the state govt and more particularly
BBMP
, the high court has struck down the
Karnataka
Municipal Corporations and Certain Other Law (Amendment) Acts of 2021 and 2023. These acts aimed to validate previous collections of various fees from Bengaluru residents and builders.
The 2021 Amendment Act was enacted to override the high court's earlier decision in the Sundaram Shetty case rendered in 2021, which declared the practice of linking levies to guidance value as illegal. While litigation against the legislation was under way, the govt promulgated a second amendment in Aug 2023, introducing further definitions of "ground rent," "guidance value," and "scrutiny fee," amending Section 240A of the BBMP Act and attempting once again to validate past levies retrospectively.
The petitioners, comprising developers and property owners, challenged the levies imposed by BBMP and BDA during the layout and building approval process. These included scrutiny fees, ground rent, licence fees, security deposits, lake rejuvenation fees, and compound wall charges under the BBMP Act 2020, and water supply cess, slum cess, surcharges for mass rapid transit and ring road, administrative charges, and betterment charges under the Karnataka Town and Country Planning Act, 1961 (KTCP Act).
In his order, Justice R Devdas noted that after a coordinate bench ruling in Oct 2021 (Sundaram Shetty case) declared these levies unenforceable, the authorities had an opportunity to reconsider the rates. However, they maintained similar rates through govt circulars without proper justification or empirical data collection, as suggested in that order.
Development plan
The judge also declared the provisions contained in Section 18A of KTCP Act (collection of cess and surcharge by a planning authority), read with rules 37-A and 37-C of Karnataka Planning Authority Rules, 1965, are applicable only in respect of a development plan for construction on plots measuring over 20,000sqm and not for plots measuring less than that. If a fee was earlier collected for a change of land use or while approving a layout plan, a fee shall not be collected for a subsequent development plan, the judge added.
While the govt and BBMP retain the right to establish new standards based on empirical data, Justice Devdas also suggested implementing a one-time settlement scheme to resolve the situation. The court highlighted that the fee collection was intended for large construction projects but was being applied indiscriminately. Citizens began objecting after a Sept 4, 2015, circular revised ground rents and linked them to guidance values.
The provision made in clause 3.8 of the building by-laws permitting a person to stock building materials on public land/roads/pavements would be directly in the teeth of the statutory provision contained in Section 229(2) of the BBMP Act, 2020, which empowers the zonal commissioner to summarily evict any encroachment, either temporary or permanent, caused on a public street including footpaths, the judge pointed out while emphasising that public safety should not be compromised, particularly regarding road and pavement maintenance. The court noted that the fees should correspond to the services provided by BBMP, following the principle of quid pro quo.
The petitioners demonstrated through BBMP's financial records that relevant factors weren't considered when determining fees. The court agreed that service charges should be uniform across localities and vary only based on plot size and construction extent, rather than property's guidance market values.