Karnataka High Court Upholds Constitutional Validity Of Premium FAR Scheme, Rejects Challenge Over TDR Value

The Karnataka High Court recently upheld the state's Premium Floor Area Ratio (Premium FAR) scheme, rejecting challenges that it unfairly allowed developers to buy additional building rights from the government at the cost of landowners holding Transferable Development Rights (TDRs).

A Division Bench of Chief Justice Vibhu Bakhru and Justice C.M. Poonacha dismissed a writ appeal filed by a landowner who had opted for Transferable Development Rights (TDRs) in lieu of monetary compensation for land acquired for a public purpose, along with two connected public interest litigations challenging the scheme.

The court held that permitting developers to obtain additional FAR on payment of premium charges to the State does not violate Articles 21 or 300A of the Constitution.

"...Apart from the general arguments that the increase in FAR and urbanisation would have an adverse effect on the quality of life – which the State stoutly disputes – there is no material to establish that an increase in FAR would deprive the residents of their quality of life…It is not disputed that there are several cities in the world, where the permissible FAR is higher. The permissible FAR in Bengaluru is amongst the lowest. According to the State, there is enough headroom to increase FAR. The appellant and the petitioners have been unable to establish that an increase in FAR would be debilitating to the quality of life in the city," the court observed while rejecting the challenge under Article 21.

The petitioners primarily contended that allowing developers to obtain Premium FAR on payment of additional charges would reduce the demand for TDRs, thereby lowering their market value and violating the TDR holders' right to property under Article 300A.

However, the Court held that Article 300A does not guarantee preservation of the market value of property and does not insulate property owners from the effects of policy decisions or market forces.

"...we are unable to accept that providing additional FAR on payment of premium charges, which may be relatively lower than the costs of acquiring TDR, would offend Article 300A of the Constitution of India. The appellant's challenge on the same being violative of Article 300A of the Constitution of India is founded on an erroneous assumption that the Premium FAR scheme is expropriatory or amounts to depriving the TDR holders of their property," the court ruled.

The petitioners had also argued that the introduction of Section 18-B of the Karnataka Town and Country Planning (KTCP) Act, 1961, which enabled the Premium FAR scheme, would reduce the demand for TDRs because developers would prefer obtaining Premium FAR from the State instead of acquiring TDRs.

For context, the 2026 notifications permit additional FAR of up to 0.6 times the ordinarily permissible FAR for plots abutting roads of at least nine metres, subject to the applicable conditions governing the use of Premium FAR and TDR.

For plots abutting roads between nine metres and less than 12 metres in width, the additional FAR can be achieved only through TDRs, with no Premium FAR permitted. For plots abutting roads of 12 metres and above, up to 0.4 times the base FAR may be obtained through Premium FAR, while the remaining 0.2 times the base FAR must be obtained through TDRs.

"The 2026 notifications provides that only TDRs can be used for development on plots abutting roads of width equal to or greater than 9 metres but less than 12 metres. In respect of plots abutting roads of width of 12 metres and above, the entire 0.6 times of the base FAR may be utilised only by loading a minimum of Premium FARs and TDR " the court observed while rejecting the contention that the Premium FAR scheme rendered TDRs redundant.

The court also distinguished the Premium FAR scheme introduced under Section 18-B from the Akrama Sakrama Scheme for regularisation of unauthorised buildings and plan deviations, whose implementation has remained stayed by the Supreme Court since 2017. The petitioners had argued that the Premium FAR scheme was a backdoor attempt to revive the Akrama Sakrama Scheme.

"Clearly, the Premium FAR scheme does not seek to regularize unauthorised construction; it changes the law uniformly, permitting additional construction by availing Premium FAR to the extent provided on payment of a charge. Under the Premium FAR scheme, additional FAR is available not only for new construction on land but also for additional construction on buildings constructed in accordance with law. By virtue of the Premium FAR scheme, the owner of such buildings can raise additional construction subject to seeking necessary approvals and sanctions. Thus, the substratum of the Premium FAR scheme is not to regularize any unauthorised construction but to amend the extent of construction permissible under the Zonal regulations." the court ruled.

Separately, the court also upheld the constitutional validity of Section 38-D of the Bangalore Development Authority Act. It held that the provision contains adequate statutory safeguards and does not amount to an arbitrary mechanism for regularising illegal occupation of public land.

The petitioners had argued that the provision enabled the transfer of public land to unauthorised occupants without any rational basis, rendering it manifestly arbitrary.

Accordingly, the court dismissed the writ appeal and the connected petitions

For Appellant: Senior Advocate V. Srinivasan Raghavan, along with Advocate Nayana Tara B.G. (also for interveners)

For Petitioners: Senior Advocate Dr. Harish B. Narasappa, along with Advocate Anarghya K. Chandar, Advocate Poornima Hatti, Advocate Aakash Sherwal, Advocate Moulya Subbaramaiah, and Advocate Saurav Sunil; Advocate Kaligotla Nitya

For Respondents: Advocate General K. Shashi Kiran Shetty; High Court Government Pleader Anukanksha Kalkeri; Additional Government Advocate Niloufer Akbar; Advocate Adoorya Bomakka Harish; Advocate Adithya C. Shukapuri; Advocate Pradeep C. Patil; Senior Advocate Udaya Holla, along with Advocate K. Krishna; and Advocate K.B. Monesh Kumar.