Delhi Municipal Regulations | Upper Floor Can Be Converted For Commercial Use Only After Paying Conversion Charges : Supreme Court

The Supreme Court on Friday (October 31) upheld the sealing of a commercial establishment in Delhi's New Rajinder Nagar Market for unauthorized use of upper floors meant for residential purposes, while clarifying that such premises may be converted for commercial use upon payment of prescribed conversion charges to the Municipal Corporation of Delhi (MCD).

The Court noted that since the New Rajinder Nagar Market is a "designated LSC" (shop-cum-residence) and not a "planned LSC" (fully commercial), which means the upper floors were originally intended for residential use and can only be used commercially after paying conversion charges.

As per the 2021 Master Plan, where commercial use was permitted, uniformly had a Floor Area Ratio (FAR) of 100 in all the Master Plans for Delhi. For designated LSC's, FAR was always one that was permissible for residential plots which could go up to a maximum of 350 FAR.

The Court found that the applicant's property, with a permissible residential FAR of 260.40 sq. meters, clearly fell into the latter category, meaning the upper floors were legally sanctioned only for residential use and any commercial use required payment of conversion charges.

Since the Applicant's existing construction exceeded the sanctioned FAR by 69.22 sq. meters, constituting unauthorized construction that would attract penalty charges for regularization. The Court provided a pathway for the applicant to legalize the commercial use, directing the MCD to issue a fresh inspection notice detailing the non-compoundable deviations to be removed, the conversion charges payable for the upper floors, and the penalty for the excess FAR.

“The upper floors though eligible for conversion, it can happen only with payment of the conversion charges. The additional FAR as built and existing in excess of that sanction will also have to be regularised by paying penalty charges and any non-compoundable constructions will have to be removed.”, the court observed.

Resultantly, the MCD was directed to issue a fresh inspection notice detailing the non-compoundable deviations to be removed, the conversion charges payable for the upper floors, and the penalty for the excess FAR.

“we direct the MCD to issue a further notice for inspection which shall be jointly done and the violations intimated by a written order specifically pointing out the non-compoundable constructions. The order shall also indicate the conversion charges payable for the upper floors and the penalty charges for regularisation of excess FAR from that sanctioned. The applicant would be entitled to comply with the order passed removing the non-compoundable constructions/ projections and depositing the conversion charges as also the penalty charges for regularisation of the excess FAR so as to carry out commercial activities in the upper floors.”, the court ordered.

Background

A bench of Chief Justice BR Gavai and Justice K. Vinod Chandran heard the case that arose out of the long-standing public interest litigation filed by M.C. Mehta relating to unauthorized constructions and environmental violations in Delhi. The applicant filed an interim application seeking relief on the strength of a general order dated December 18, 2023, issued by a Judicial Committee that had recommended treating the New Rajinder Nagar Market as a fully commercial area. However, the Municipal Corporation of Delhi (MCD) opposed the plea, asserting that the applicant had violated building bye-laws and misused residential areas for commercial activity.

Rejecting the applicant's argument, the Court noted that the Judicial Committee's order was only a general observation and did not automatically entitle individual property owners to de-sealing. The Court emphasized that each case must be examined on its own facts, based on sanctioned building plans, lease deeds, and other documentary evidence.

The Court affirmed the classification of New Rajinder Nagar Market as a "designated Local Shopping Centre (LSC)", a shop-cum-residence complex where only the ground floor is meant for commerce, and the upper floors are residential.

Nevertheless, the Court also provided a route for regularization. It directed the MCD to conduct a fresh inspection of the premises and to issue a detailed order identifying non-compoundable violations that must be demolished, calculating the requisite conversion charges for changing the land use, and imposing penalty charges for the excess construction. The applicant was permitted to seek de-sealing of the property only after removing non-compoundable constructions and paying all prescribed charges in full.

Cause Title: M.C. Mehta Versus Union of India & Ors.

Citation : 2025 LiveLaw (SC) 1050

Click here to read/download the order

Also From Judgment: Supreme Court Upholds Sealing Of Property Misused For Commercial Purpose In Delhi's New Rajinder Nagar Market