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TMI Blog2015 (5) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... eme. 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. - W.P. (C) 2726/2007 - - - Dated:- 25-5-2015 - HON'BLE MR. JUSTICE VED PRAKASH VAISH For the Petitioner : Mr. Mohit Chaudhary, Adv. For the Respondent : Mr.Anil Soni with Mr.Naginder Benipal, Advs. JUDGMENT 1. This is a petition under Article 226 of the Constitution of India for quashing of order dated 19.10.2006 rejecting the application of the petitioner for conversion from leasehold to freehold of its premise in terms of conversion policy dated 06.08.2003 of the respondents. The petitioner further seeks quashing of the demand notice dated 29.03.2007 issued by the respondent No.2 demanding an amount of ₹ 76,05,275/- (Rupees Seventy six lakh five thousand two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erties allotted by the Department of Rehabilitation, Land Development Office ( L DO for short) or the Directorate of Estates, for which ownership rights have been conferred and lease deed executed and registered were eligible for conversion from leasehold to freehold. 3. Thereafter, on 13.04.2004, the petitioner paid to respondent No.2 ground rent amounting to ₹ 76,05,275/- (Rupees Seventy six lakhs five thousand two hundred seventy five) vide cheque No. 299204 dated 12.04.2004 in respect of Hotel Queen Road for the period from 01.04.2004 to 31.03.2005 and further an amount of ₹ 76,05,275/- (Rupees Seventy six lakhs five thousand two hundred seventy five only) vide cheque no. 850825 dated 13.04.2005 as ground rent for the period from 01.04.2005 to 31.03.2006. On 27.05.2004, NDMC communicated to the petitioner that revised plans of the petitioner had been approved subject to the condition, amongst others that the petitioner submits a No Objection Certificate ( NOC for short) from the respondent No.2. On 29.05.2004, the petitioner requested respondent No.2 to provide him with a NOC so that he may be able to carry out the necessary alterations. On 31.08.2004, respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. It was lastly contended by the learned counsel for the petitioner that on one hand the government is contending that the property can never be converted from leasehold to freehold which is violative of conversion policy. On the other hand, it is desired by the government that the petitioner should continue to pay ground rent and lease money in perpetuity though the petitioner is entitled to conversion from leasehold to freehold. 7. For establishing his contentions, learned counsel for the petitioner has placed reliance on the order dated 29.08.2005 of this court in 'Hotel Excelsior Ltd. Anr. v. Union of India Anr.', W.P.(C) 15058-59/2004 and 'Hotel Excelsior Ltd. Anr. v. Union of India Anr.', RP 317/2005 and CM 15170/2005 in WP(C) No.15058-59/2004 decided on 25.08.2006. 8. Per Contra learned counsel for the respondents contended that the petitioner has resorted to large scale unauthorized construction in violation of specific terms and conditions contained in the lease agreement dated 08.10.2002 and approached this court with unclean hands. The petitioner belongs to a separate category or class namely disinvested Hotels, which as a whole, is not el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner and the President of India and both the contracting parties are required to act as provided in the contract. Conversion to freehold is not automatic. A premise does not become eligible for conversion into freehold simply on the ground that it is shown as commercial under the Master Plan. It should fulfill other conditions also. The petitioner violated the terms of lease agreement dated 08.10.2002 and therefore, the lease is liable to be re-entered in exercise of powers conferred under Article 12 of the lease agreement. Permitting conversion of the leased premises of disinvested hotel would result in heavy financial losses to the government. 11. I have heard the learned counsel for the parties and have also perused the material on record. 12. The short point for consideration before this court is 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. 13. A lease in ordinary legal sense contemplates demise or a transfer of a right to enjoy land for a term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip 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. Even the division bench of the Bombay High Court in The Collector of Bombay v. Khatizabai Dharsi Somji Dossa‟, 1962(64)BOMLR311 has observed:- ......The term of a lease may be 5 years, 50 years. 99 years or even 999 years. Nevertheless, the transaction is only a lease and there is always a reversion which continues to vest in the owner for the entire term of the lease. 15. At this stage it would be pertinent to reproduce the history of genesis and development of the Conversion Policy/Scheme under which the petitioner has based his present case. The said Policy/Scheme was introduced in the year 1992 and at its inception, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut; the public will be incensed to such an extent that political parties are likely to steer clear from any such attempt. The present scheme has the direct effect of earning revenue for the Government through conversion charges, and at the same time, reducing administrative obligations and costs..... 17. Thus, what can be seen from above is that the aforementioned policy/scheme intended to earn revenue for the government through conversion charges while reducing the administrative charges and costs at the same time. It was primarily aimed towards those properties where the rent of the property was so nominal on the lease that even the administrative costs were not recoverable. However in the case where the property leased out fetched out rent as high as ₹ 76,05,275/- (Rupees Seventy six lakh five thousand two hundred and seventy five) per annum as in the instant case, this court in not convinced with the argument that the rent recoverable is nominal and that the property stands on the same footing as others on which the conversion is allowed as per the said policy. 18. There are differences in the properties on which the conversion is allowed as per the Policy/Scheme o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view: Under s. 105 of the Transfer of Property Act, a lease of immovable property is a transfer of a right to enjoy the property made for a certain time, express or implied or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share service or other thing to be so rendered is called the rent. The section, therefore, brings out the distinction between a price paid for a transfer of a right to enjoy the property and the rent to be paid periodically to the lessor. When the interest of the lessor is parted with for a price, the price paid is premium or salami. But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature of rent. The former is a capital income and the latter a revenue receipt. As per Clause 2.2 of Article 2 and Article 3 of the Lease Agreement dated 08.10.2002 only consideration amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even the Legislature warily treads. All these operational restraints on judicial power must weigh more emphatically where the subject is taxation. 22. Seen from above, 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 learned counsel for the petitioner has heavily relied upon the judgment of this Court in 'Hotel Excelsior Ltd. Anr. v. Union of India Anr.', (supra). However in an appeal preferred against the said judgment, the judgment of the Single Judge of this court was set aside in 'Union of India Anr. v. Hotel Excelsior Ltd. Anr. , ILR (2013) I Delhi 157 LPA which is binding on this court. 23. In 'Union of India Anr. v. Hotel Excelsior Ltd. Anr.' (supra) this court looked at the matter from another perspective and stated that: 27. ....What the respondents, by claiming freehold conversion are seeking is, to become absolute owners of the prime commercial properties belonging to the people at large held by the appellant L DO in trust and which absolute ownership rights were not intended to be given ..... X X X X Extracts X X X X X X X X Extracts X X X X
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