2015 (5) TMI 1234 - HC - Indian Laws

Seeking conversion from leasehold to freehold of its premise - whether under the policy floated by respondent No.2, the petitioner is entitled to conversion of the premises in question from leasehold to freehold or whether the action of respondent No.2 in denying such conversion amounts to a discrimination against the petitioner? HELD THAT - The right of ownership over a property in cases of lease is not determined on the basis of the duration for which the lease is granted to the lessee. Thus, a lease even if for 99 years, does not confer ownership rights on the lessee, unless they are specifically transferred to him in which case it stops being a lease. Even in the cases of lease for long durations, the residuary rights of a leased land belong to the owner of the land and not the lessor. It is a settled law that the length of the lease is not indicative of even permanency of lease much less of ownership - it is abundantly clear that the case of the petitioner falls in all together a different category of properties in which no provision for conversion is provided under the existing scheme. The government cannot be held prisoner to its administrative decisions which are required to be altered from time to time - Clearly the petitioner is a tenant of the property falling in the category of disinvested hotel property. Petitioner, in no way, can compel respondent No.2 to convert their leasehold rights into freehold in the disinvested hotel and the land underneath. Respondent No.2 is well within its right to deny freehold conversion to the petitioner. Petition dismissed.

Summary

Issues Involved:
1. Quashing of the order rejecting the application for conversion from leasehold to freehold.
2. Quashing of the demand notice for ground rent.
3. Writ of prohibition against appropriating the demanded amount from the security deposit.
4. Restraining coercive action for alleged lease deed violations.

Detailed Analysis:

1. Quashing of the Order Rejecting Conversion Application:
The petitioner sought quashing of the order dated 19.10.2006, which rejected its application for converting its property from leasehold to freehold under the conversion policy dated 06.08.2003. The petitioner argued that disinvested hotels should not form a distinct category and should be eligible for conversion as per clause 1.5 of the policy, which includes all commercial and mixed land use properties with conferred ownership rights and executed lease deeds. However, the respondents contended that disinvested hotels, including the petitioner's property, are not covered under the conversion policy and form a separate category. The court agreed with the respondents, noting that the conversion policy did not include disinvested hotels and that the petitioner's lease did not confer ownership rights, making it ineligible for conversion.

2. Quashing of the Demand Notice for Ground Rent:
The petitioner also sought to quash the demand notice dated 29.03.2007, which demanded Rs. 76,05,275 as ground rent for the year 2006-07. The court found that the lease agreement required the petitioner to pay substantial ground rent, which was subject to increase, and that this rent was not nominal. The court held that the petitioner was bound by the lease agreement terms and must pay the demanded ground rent.

3. Writ of Prohibition Against Appropriating the Demanded Amount from the Security Deposit:
The petitioner requested a writ of prohibition to restrain the respondents from appropriating the demanded amount from the security deposit. The court noted that the lease agreement included a substantial security deposit, which was refundable upon lease expiry. The court found no basis to prohibit the respondents from appropriating the demanded amount from the security deposit, as the lease agreement allowed for such measures in case of unpaid rent or breaches.

4. Restraining Coercive Action for Alleged Lease Deed Violations:
The petitioner sought to restrain the respondents from taking coercive action for alleged violations of the lease deed, specifically clause 5. The court observed that the petitioner had resorted to unauthorized construction, violating the lease terms. The court held that the respondents were within their rights to take action under the lease agreement, which allowed for lease termination or re-entry in case of breaches.

Conclusion:
The court dismissed the petition, upholding the respondents' decision to reject the conversion application, demand ground rent, appropriate the demanded amount from the security deposit, and take coercive action for lease violations. The court found no arbitrariness or discrimination in the respondents' actions and emphasized that the petitioner, as a tenant, could not compel the respondents to convert the leasehold rights into freehold.