Municipal Corporation Cannot Unilaterally Downgrade Market Value Of Land Acquired For Road Widening To Deny TDR Certificates: Andhra Pradesh High Court

Andhra Pradesh High Court, in a significant ruling dated September 8, 2026, held that municipal authorities cannot unilaterally downgrade the valuation of land surrendered for public infrastructure to avoid the issuance of Transferable Development Rights (TDR) certificates at the agreed-upon market rates.

A bench of Justice Harinath.N observed that when land is acquired for road widening, the state is obligated to provide fair compensation, and arbitrary reclassification of land usage by the corporation to depress valuations is legally unsustainable.

The petitioners, who are property owners in Konkachennaigunta Village, Tirupati, surrendered their lands to the Municipal Corporation for the construction of a 100-feet Masterplan road. As part of the arrangement, the petitioners executed registered gift deeds in favor of the corporation with the expectation of receiving TDR certificates. Despite the corporation successfully laying the road, it failed to issue the promised TDR bonds, leading to multiple rounds of litigation.

Court Reviews Statutory Obligation

The primary question before the court was whether the Tirupati Municipal Corporation could unilaterally revise the market value of the surrendered land to Rs. 17,000/- per square yard, contrary to the valuation of Rs. 37,000/- per square yard recorded in the gift deeds. The court was also called upon to determine if the respondent could arbitrarily classify the petitioners' land as "residential" to deny the benefits associated with the higher market valuation of the property.

Arbitrary Reclassification Challenged

The court noted that the petitioners had surrendered their properties based on the promise of equitable TDR certificates. The respondent-corporation had attempted to justify the lower valuation by claiming that the land was residential, despite the property being a vacant site abutting a major road. The court found that the corporation’s reliance on select door numbers to reclassify the land was a high-handed tactic to avoid its financial obligations to the citizens who facilitated public development.

Valuation Must Reflect Market Reality

Justice Harinath.N emphasized that the market value certificates issued by the competent Sub-Registrar did not support the corporation's discriminatory classification. The court observed that property abutting a main road holds significant potential for both commercial and residential use. Consequently, the corporation cannot cherry-pick values to the detriment of landowners who have already parted with their property for public infrastructure.

"The classification of the petitioners’ property as residential and the unilateral determination of the market value at Rs. 17,000/- per square yard do not withstand the scrutiny of law and logic."

The court rejected the corporation’s attempt to impose a lower valuation, noting that as on the date of the execution of the gift deeds, the property’s value was recognized as Rs. 37,000/- per square yard. The court held that the petitioners are entitled to the issuance of TDR bonds calculated at the original valuation of Rs. 37,000/- per square yard, setting aside the corporation’s impugned orders that sought to limit the entitlement.

Ultimately, the High Court disposed of the batch of writ petitions and directed the Commissioner of the Tirupati Municipal Corporation to issue the TDR bonds to the petitioners within a period of eight weeks. This ruling reinforces the constitutional protection of property rights under Article 300A, ensuring that municipal bodies cannot coerce or trick citizens into surrendering land without providing the promised compensation in the form of TDR rights.

Date of Decision: 08 September 2026