Supreme Court Orders Refund of Unutilized FSI Premium, Strikes Down Arbitrary Distinction as Violative of Article 14

Case Snapshot

Case Name: Prasad Pandurang Tapkir & Anr. v. The Assistant Director of Town Planning, Pune District & Ors.

Citation: 2026 INSC 683

Bench: Justice Sanjay Kumar and Justice K. Vinod Chandran

Date of Judgment: July 13, 2026

Area of Law: Town Planning Law, Constitutional Law, Administrative Law

The Judgment in One Line

State cannot retain premium paid for unutilized FSI; arbitrary distinction between residential and institutional projects violates Article 14, refund ordered with interest.

Why This Judgment Matters

This judgment strikes down arbitrary State action in retaining premiums paid for unutilized additional Floor Space Index (FSI). The Supreme Court held that while regulations permitted refund for educational and medical institutions, the same logic must apply to residential projects. The distinction drawn between Mumbai and other areas, and between residential and institutional projects, was found irrational and violative of Article 14. The Court reaffirmed that equality and arbitrariness are sworn enemies, and State action must be fair, just, and reasonable in all spheres, including contractual matters. This judgment ensures that citizens are not penalized for abandoning projects when no tangible benefit accrues.

Background

The appellants owned agricultural land in Pune District and sought to develop it for group housing. On August 30, 2012, they paid ₹30,46,290 as premium for additional FSI. However, they abandoned the group housing plan and instead proposed plotting, which was permitted on April 19, 2014. On August 13, 2015, t

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