The Supreme Court on Thursday paused the utilisation of Transferable Development Rights (TDRs) worth nearly ₹3,000 crore, granted to the legal heirs of the erstwhile Mysuru royal family in connection with the acquisition of 15 acres of Bangalore Palace grounds.

The matter has now been referred to a special three-judge bench for a final adjudication.

A bench comprising Justices Surya Kant, Dipankar Datta, and N.K. Singh was hearing a plea filed by the Karnataka Government, which has challenged the issuance of the TDRs. The state contends that the land in question had already vested with the government under the Bangalore Palace (Acquisition and Transfer) Act.

Senior Advocate Kapil Sibal, appearing for the state, argued that the relevant provision—Section 14B of the Karnataka Town and Country Planning Act—came into effect only in 2004 and cannot be retrospectively applied in this case. He maintained that the issuance of TDRs to the royal family is legally unsustainable and poses significant financial ramifications for the exchequer.

Respondents countered that the issue had already been scrutinised by multiple benches—at least six in total—underscoring its long-standing and complex nature.

Expressing concern over the interim relief granted to the heirs, Justice Kant remarked, “The legislature has enacted a law. Whether that law is good or bad is for us to decide. Under it, the entire property stands acquired. Yet, through interim orders, the claimants are reaping benefits worth ₹4,000 crore.” The bench further questioned the legal foundation of the earlier judicial directions, observing that the case raised serious questions of public interest versus private entitlement. “This is not merely a property dispute,” the Court noted. “It must be examined in the context of the Bangalore Palace Acquisition Act.”

In its interim order, the Court directed that all TDRs issued under interim or contempt orders are to remain with the Court Registry.

If already in the possession of the appellants, the TDRs must not be used, sold, or transferred. “No third-party interests shall be created, and no personal benefit may be derived from the said TDRs during the pendency of these proceedings,” the Court ordered.

The Karnataka Government’s review petition has been scheduled for hearing in the week commencing July 21, 2025. The current interim arrangement will remain in force subject to the outcome of that petition.

Additionally, the Court clarified that if the review is dismissed, the interim directions will continue for four more weeks or until the special three-judge bench takes up the matter—whichever occurs earlier. To avoid procedural complications, the Court further directed that the effects of earlier orders dated December 10, 2024; May 17, 2022; and May 22, 2025 shall remain in abeyance until further notice.

The case has now been listed for final hearing in the week starting August 18, 2025.