The Supreme Court recently ruled that denying a refund of the premium paid for unutilised additional Floor Space Index (FSI) to housing project owners is arbitrary and violates Article 14. The Court applied the Monopolies and Restrictive Trade Practices Act framework while examining unfair trade practices by development authorities. The judgment affirms that a developer who pays for additional FSI but cannot utilise it due to regulatory or project constraints has a legitimate right to reclaim that premium.

Floor Space Index (FSI), also called Floor Area Ratio (FAR), is the ratio of a building's total floor area to the size of the land on which it is built. State development authorities often allow builders to purchase 'additional FSI' beyond the base permissible limit by paying a premium. This premium is essentially a regulatory fee for a development right. In many housing projects, developers purchase this additional FSI upfront but are later unable to utilise it—due to project redesign, municipal objections, or regulatory changes.

The core legal question before the Supreme Court was: if the additional FSI is paid for but never used, can the development authority retain the premium? The Court held that retention of such premium without providing the corresponding development benefit amounts to unjust enrichment by the State and is arbitrary under Article 14 of the Constitution.

The MRTP Act angle is significant: the Court examined whether the authority's conduct—charging for a benefit it knew or ought to have known could not be fully availed—constituted an unfair trade practice under the MRTP Act. This links static MRTP law (abolished in 2009 and replaced by the Competition Act) to the current constitutional principle of non-arbitrariness. For CLAT PG, this judgment is a rich passage source combining property law, constitutional law (Article 14), regulatory fee jurisprudence, and consumer/trade practices law.