Illegally cancelled DRCs must be restored and utilized under the regime prevailing at cancellation.

The Petitioner surrendered land bearing Survey No. 6A/1 at Bopodi, Pune, to the Pune Municipal Corporation (“PMC”) for construction of a Sewage Treatment Plant.

On 17 October 2000, PMC issued possession receipts for 13,117 sq. mtrs. and 220 sq. mtrs., aggregating to 13,337 sq. mtrs. PMC thereafter issued 27 Development Rights Certificates (“DRCs”) for 13,117 sq. mtrs. on 16 November 2000.

Eleven of those DRCs, aggregating to 3,690.01 sq. mtrs., were subsequently withheld and cancelled by PMC through an order dated 8 July 2005 and communication dated 9 December 2005, without granting the Petitioner a hearing.

The Petitioner challenged the cancellation and also claimed DRCs for the additional 220 sq. mtrs.

Although the High Court initially allowed the petition in 2023, the Supreme Court remanded the matter after directing a fresh measurement and requiring the Railway authorities and the State/Irrigation authorities to be heard.

The Court Commissioner reported that 9,948 sq. mtrs. of the Petitioner’s land was in PMC’s possession, while certain strips of land were disputed.

On remand, the Railways, the State, and the Maharashtra Krishna Valley Development Corporation stated that they had no claim over the subject property.

Whether PMC’s cancellation of the eleven DRCs, issued as compensation for the surrender of the Petitioner’s land, was lawful when the cancellation was effected without notice, hearing, or adequate legal basis?

Whether the Petitioner was entitled to claim additional DRCs for the surrendered area of 220 sq. mtrs. for which no DRCs had been issued?

Whether the restored DRCs were to be utilised under the development-control regime prevailing in 2005 or under the prevailing/current regime?

The Court applied the constitutional protection under Article 300A, holding that compensation payable for compulsory surrender or acquisition of property cannot be arbitrarily withdrawn once the right to such compensation has crystallised.

The Court also considered Rule N.2.4.12 of the Development Control Rules and Regulation 11.2.4(b) of the UDCPR, relied upon by PMC concerning surrender of reserved land and construction of a compound wall.

Further, relying on Brihanmumbai Municipal Corporation v. Vijay Nagar Apartments, 2026 SCC OnLine SC 904, it held that where FSI/TDR/DRC constitutes compensation and the entitlement has crystallised, subsequent changes in the development-control regime cannot deprive the landowner of the accrued benefit; the applicable regime is the one relevant to the crystallised entitlement or unlawful cancellation.

The Court also applied the principles of natural justice and held that the unilateral cancellation of the DRCs was impermissible.

It relied on the possession receipts, PMC’s mutation request and entries in the 7/12 extract, internal PMC communications, and the DRCs issued under the applicable development-control framework as evidence of the completed surrender and acceptance of possession.

The Court held that PMC’s contemporaneous conduct conclusively supported surrender and acquisition of 13,337 sq. mtrs.

PMC had issued possession receipts, caused its name to be entered in the 7/12 extract for the entire area, issued 27 DRCs, and had itself acknowledged that possession of 13,117 sq. mtrs. had been taken pursuant to the joint measurement plan.

The later Court Commissioner’s measurement of 9,948 sq. mtrs. did not displace these records because it was conducted approximately 24 years after the surrender and primarily reflected the area within or around the subsequently constructed compound wall.

The fact that portions of the land lay outside the compound wall, or that third parties had initially raised unsupported claims, could not retrospectively invalidate the surrender accepted by PMC.

Since the Petitioner had surrendered the land and PMC had issued DRCs as compensation, their subsequent unilateral cancellation—without notice, hearing, or demonstrated statutory authority—was arbitrary and violated the Petitioner’s accrued property interest.

The Court further held that the DRCs had to be restored and used under the regime prevailing when they were cancelled in 2005, since the Petitioner should not suffer due to PMC’s illegal action.

The PMC’s order dated 8 July 2005 and communication dated 9 December 2005 were quashed and set aside, and DRC Nos. 2667, 2676, 2677, 2680, 2686, 2687, 2688, 2689, 2691, 2692 and 2693, aggregating to 3,690.01 sq. mtrs., were restored.

The restored DRCs were permitted to be utilised within one year from the judgment under the development-control regime prevailing in 2005.

The Petitioner was granted liberty to apply for DRCs for the additional 220 sq. mtrs. within eight weeks, and PMC was directed to decide that application within a further eight weeks.

The Court left open PMC’s claim regarding contribution towards construction of the compound wall, with all contentions on that issue expressly reserved.