In a very significant ruling, the Bombay High Court today set aside the Maharashtra government's decision to increase floor space index (FSI) in Mumbai's suburbs.

In 2008, the State had increased the FSI for suburbs from existing 1 to 1.33.

A PIL filed by social activist Amit Maru had challenged the decision stating that it would lead to more construction and put a heavy burden on the infrastructure in the suburbs.

Related report:

Realty prices in Mum suburbs to rise after HC judgement on FSI

The already high real estate prices in Mumbai's suburbs are expected to climb a notch higher following today's Bombay High Court judgement setting aside the State Government's order to increase floor space index (FSI) in the suburbs to 1.33 from 1.

The judgement can also have an adverse impact on the city's infrastructure as the money which the Government was supposed to collect from the sale of extra 0.33 FSI at a premium to fund infrastructure projects, will now no longer be available, realty majors told PTI here.

"Not a good news--it will push up prices in the suburbs. It will also hit infrastructure development in the city," Marathon Group Managing Director, Mayur Shah, said.

Property consultant JLLM's Local Director for Development Initiatives, Joy Sanyal, said prices for the end consumer could go up by around three-to-four per cent while in the immediate future, buying pressures on transfer of development rights (TDR) could see its price shoot by 5-10 per cent.

Nirmal Group's Managing Director, Dharmesh Jain, was very forthright with his prediction that "this will impact prices for consumers by 15 to 20 per cent."

However, the Acme group's Chairman, Pravin Doshi, said, "the Government proposal could never be implemented as there was a stay on it soon. Real estate prices, which would have otherwise gone down due to the proposal's implementation, would not go down. I see them remaining intact."

The Government had proposed to increase FSI for the suburbs by 0.33 to 1.33 and charge for this FSI wit the proceeds to go towards an infra fund, especially for sewage and water projects.

Maharashtra Chamber of Housing Industry (MCHI)'s President, Sunil Mantri, said that the State Government which has collected around Rs 1,000-crore through the provision, will now have to refund this amount.

As a solution, he said the Government should amend the Maharashtra Regional and Town Planning (MRTP) Act.

Shah of Marathon group also asked for an amendment saying, "it appears that it was on a technicality that the HC gave its decision saying that the Maharashtra Regional and Town Planning (MRTP) Act does not provide for payment collection in lieu of FSI.