The Karnataka High Court on December 11, 2025, declined to grant interim relief staying the operation of Section 18B of the Karnataka Town and Country Planning Act, 1961, which enables the sale of Premium Floor Area Ratio (PFAR), while issuing notice in a writ appeal challenging the constitutional validity of the provision and allied zoning regulations.

Challenge to Single Judge Order

The ruling came in Writ Appeal No.1983 of 2025, filed by Sri Krishnamurthy N, who questioned an order dated December 5, 2025 passed by a learned Single Judge in W.P. No.11201 of 2025, connected with W.P. No.6347 of 2025.

The appellant had assailed the insertion of Section 18B into the Karnataka Town and Country Planning Act through Act No.25 of 2020, contending that the provision was unconstitutional and inconsistent with Section 14B of the Act .

The appeal was heard by a Division Bench comprising Chief Justice Vibhu Bakhru and Justice C.M. Poonacha.

Background

At the heart of the dispute is the statutory scheme permitting plot owners to purchase additional FAR over and above the permissible limit by paying prescribed charges to the planning authorities.

The appellant, a landowner whose property had been acquired by the State, was granted Transferable Development Rights (TDRs) in lieu of monetary compensation under the Right to Fair Compensation and Transparency in Land Acquisition Act, 2013 .

The appellant argued that the introduction of PFAR severely erodes the value of TDRs, since developers would prefer purchasing additional FAR directly from the authorities at substantially lower cost rather than acquiring TDRs from land losers.

Illustration on Alleged Loss of TDR Value

To demonstrate the alleged discrimination, the appellant placed an illustrative comparison before the court.

According to the appellant, for a plot measuring 10,000 square metres with a guidance value of ₹5,000 per square metre, the cost of acquiring additional built-up area through PFAR would be significantly lower than through TDRs.

The appellant claimed that while PFAR would yield about 4,000 square metres of additional built-up area valued at roughly ₹1 crore (at 50% of guidance value), TDRs could generate approximately 6,667 square metres of additional area valued at over ₹3.33 crore, reflecting full guidance value or market value.

This disparity, it was argued, would eliminate any incentive for developers to purchase TDRs .

Allegation of Arbitrary Revenue-Driven Policy

Beyond economic impact, the appellant contended that the PFAR regime was conceived purely as a revenue-generating mechanism without scientific assessment of infrastructure capacity.

FAR limits, it was argued, are fixed after considering road width, access, utilities, and urban infrastructure.

Permitting construction beyond such limits by merely charging a premium would place excessive strain on civic infrastructure and was, therefore, arbitrary and unconstitutional.

The appellant also challenged a notification dated April 2, 2025, which introduced Chapter 11 into the Zonal Regulations, laying down the manner in which premium FAR could be availed, depending on road width.

Single Judge’s Rejection of the Challenge

The learned Single Judge declined to accept these contentions and upheld the statutory amendment as well as the regulatory framework, leading to the present appeal before the Division Bench.

Division Bench on the Presumption of Constitutionality

While issuing notice in the appeal, the Division Bench made it clear that it was not inclined to grant any interim stay.

The court emphasised that a statutory enactment carries a strong presumption of constitutionality and cannot be lightly interfered with at the interim stage.

The Bench observed that it was “unable to readily accept” the argument that Section 18B violated Article 300A of the Constitution, which protects the right to property, or that it suffered from excessive delegation or arbitrariness under Article 14 .

“Article 300A… provides that no person shall be deprived of his property save by authority of law. Thus it would be necessary for the appellant to establish that Section 18B falls foul of any other statutory provision or any other article of the Constitution,”

The court noted.

Court on Market Risk of TDRs

The Bench also expressed prima facie disagreement with the assumption that the State was obligated to maintain or protect the market value of TDRs.

The court pointed out that the appellant had voluntarily opted to receive TDRs instead of cash compensation under the 2013 Act, after evaluating the perceived benefits of that choice.

“TDRs are tradable commodities and therefore, the appellant was at liberty to sell the same at any stage,”

the court observed, adding that the appellant had retained them in the expectation that their value would rise over time. A subsequent fall in value due to a policy change, the Bench held, could not automatically amount to deprivation of property without authority of law.

Offer of Monetary Compensation Not Accepted

Significantly, the court recorded that the State was willing to pay compensation in monetary terms as determined under the 2013 Act, notwithstanding the appellant’s earlier choice to accept TDRs.

However, the appellant was unwilling to accept such compensation, a factor that weighed with the court while declining interim relief.

TDR Demand Not Fully Eliminated

Addressing the argument that PFAR would extinguish the TDR market, the Bench referred to the table in Chapter 11 of the Zonal Regulations.

The regulations mandate that for plots abutting roads wider than 12 metres, a portion of the additional FAR must necessarily be availed through TDRs in conjunction with PFAR.

In the court’s prima facie view, this regulatory structure demonstrated that TDRs would continue to have statutory demand, rendering the appellant’s apprehension of a complete market collapse “erroneous” at least at the threshold stage.

No Interim Stay, Matter to Be Examined

While acknowledging that concerns regarding infrastructure capacity and the scientific basis of PFAR require deeper examination, the court held that such issues could not justify an interim stay of the statutory amendment or the impugned notification at this stage.

Accordingly, the application for interim relief was dismissed, and the writ appeal was directed to be listed for further hearing on February 16, 2026.

Follow The Legal QnA For More Updates…