Development Authorities can't demand bank guarantee: HC

The Allahabad High Court has ruled that development authorities of cities in Uttar Pradesh could not demand bank guarantee from developers as a means to ensure that they installed rain water harvesting systems in residential colonies.
In a judgement dated on January 12, a Division Bench comprising Justice Arun Tandon and Justice Anjani Kumar Mishra made it clear that while development authorities were "justified in insisting upon rain water system being installed by a developer in residential colonies", they "cannot ask for a bank guarantee in advance on the mere presumption that the developer otherwise would not provide" the facility.

"Necessary conditions can be imposed at the time of sanction of the map/lay out. It should be ensured that such conditions incorporated in the sanctioned map/lay out are actually carried out by the developer," the court said, adding that the development authorities could "always seal the construction and demolish the same" if the developer failed to install rain harvesting systems.
Similarly, the court also termed as "arbitrary" bank guarantees being demanded for construction of houses for economically weaker sections or lower income groups.
"If the building plan has been sanctioned including construction of a certain number of houses for members of lower income group or economically weaker sections of the society and if such constructions are not carried out, the Development Authority can always proceed against the person in whose favour the plan was sanctioned and can even proceed to demolish the construction raised," the court said.

The court passed the order while allowing writ petitions filed by residents of various cities of the state, who had challenged their respective development authorities' levying a number of charges.
The court also declared as "illegal" a number of other charges levied by the authorities like city development charges, impact fee, "sub-division charges", "permit fee, supervision fee, inspection fee and labour cess", and ordered that petitioners who may have "deposited money under the aforesaid heads shall be entitled for refund".