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TMI Blog2012 (9) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... titions, are listed together since the judgments of the learned Single Judge under challenge in LPA Nos.147/2007, 297/2007 and 161/2009 merely follow the judgment of the learned Single Judge under challenge in LPA No. 2298-99/2006. Further, all appeals are stated to entail the same question of law i.e. the right, of the lessees of land underneath disinvested hotels, to have the same converted into freehold. Though the land subject matter of LPA No. 297/2007 is not underneath a disinvested hotel but underneath a cinema hall but the learned Single Judge has qua the same also, followed the dicta under challenge in LPA No. 2298-99/2006 and the counsels in LPA No. 297/2007 also have not argued the same any differently. Rather, arguments have been addressed with respect to LPA No. 2298-99/2006 only, with the counsels in other matters merely adopting the arguments. LPA No. 2298-99/2006 arises from order dated 29.08.2005 allowing W.P.(C) No. 15058-59/2004 preferred by the respondents therein and also impugns the order dated 25.08.2006 in review petition preferred there against. The same concerns land underneath erstwhile Kanishka Hotel and Kanishka Shopping Plaza. LPA No. 147/2007 arises f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uot; could be converted into freehold; F. as per the Master Plan for Delhi, the aforesaid property i.e. Kanishka Hotel and Kanishka Shopping Plaza falls under the category "Commercial"; G. that HEPL being desirous of taking advantage of the said policy of conversion of leasehold rights into freehold, applied thereunder with respect to the land underneath Kanishka Hotel & Kanishka Shopping Plaza and sought adjustment of the security deposit of Rs. 4,68,35,949/- in the conversion charges; H. however neither any response was received nor were the leasehold rights converted into freehold. Accordingly the writ petition aforesaid was filed seeking mandamus for conversion of the land underneath Hotel Kanishka & Kanishka Shopping Plaza into freehold on adjustment of conversion charges of Rs. 4,44,78,504/- out of the security deposit of Rs. 4,68,35,949/-. 4. Notice of the said writ petition was issued. A counter affidavit was filed by the L&DO contesting the petition. It was inter alia stated in the said counter affidavit:- a. that the land aforesaid had been leased out to HEPL under the Disinvestment Policy of the Government of India; b. that the scheme for conversion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition be decided on merits. The Learned Single Judge thereafter proceeded to decide the writ petition afresh and noticed the pleas of the L&DO in the review application to the effect that, a) the land had been leased out to HEPL only for operating and managing the commercial business of hotel by way of Disinvestment Policy of the Government; b) the reserve price for the auction (pursuant to disinvestment) was not fixed having regard to the value of the land; c) even in the lease deed dated 8th October, 2002 executed in favour of HEPL, no premium was charged and the said lease deed was as such different from leases conversion of which into freehold was being permitted. 8. Clause 1.5 of the Scheme of Conversion / Conversion Policy, relied upon by the learned Single Judge is as under:- WHAT ARE THE PROPERTIES UNDER THE CONTROL OF LAND & DEVELOPMENT OFFICE ELIGIBLE FOR CONVERSION FROM LEASEHOLD TO FREEHOLD 1.5 All commercial and mixed land use properties allotted by the department of Rehabilitation, L&DO or the Dte. of Estate, for which ownership rights have been conferred and lease deed executed and registered. The Learned Single Judge, in the judgment dated 25th August, 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the L&DO was irrelevant; XI. entitlement for conversion is to be found in the Conversion Policy and not in the lease. Accordingly the review application was dismissed. 9. The Learned ASG appearing for the appellant L&DO has argued that, i) the land aforesaid was earlier allotted in favour of ITDC and no lease was ever executed in favour of ITDC; ii) that the stamp duty on the lease deed dated 8th October, 2002 was also computed on the basis of the ground rent payable thereunder; iii) comparison is sought to be drawn with the lease deed contemporaneously granted in favour of HUDCO with respect to the land where Ansal Plaza is situated; iv) that what was sold under the share purchase agreement was only the shares; and v) that the Learned Single Judge has wrongly confused the unearned increase with the premium. 10. Mr. Harish Malhotra, Sr. Advocate for the respondents in LPA No. 2298-99/2006 has, i) invited attention to the Public Notices issued at the time of disinvestment and has contended therefrom that it was in fact the property of Kanishka Hotel which would include the land, which was offered for sale, and further contended ii) that permission was given for mortgage and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial/mixed land use properties were/are, under the Scheme/Policy, eligible for conversion, "where ownership rights have been conferred". 13. We have not come across any challenge having been made, since the year 1992 when the Scheme/Policy of freehold conversion was first introduced, on the ground of discrimination, for allowing such conversion qua one category of leases and not others. The question of discrimination in our view in such a situation does not arise since as aforesaid, no lessee has a right of such conversion and merely because the lessor has granted such privilege to some lessees, does not entitle others, who form a distinct class/category, to also claim such privilege / benefit. 14. The appellant L&DO claims leases of lands under disinvested hotels to be forming a separate class/category since no ownership rights were conferred under the said leases. To support the said plea, non-payment of premium under the said lease is cited. As aforesaid, under the Scheme/Policy itself, appellant L&DO had made only such commercial and mixed land use properties eligible for conversion, "for which ownership rights had been conferred". The learned Singl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urshottam AIR 1971 SC 1878 held to be not an indice of permanency. Thus, in law no ownership rights can be said to be conferred on the respondents for the reason of the leases in their favour being for the long term of 99 years. Even a perpetual lessee of Nazul land, in Kiran Tandon v. Allahabad Development Authority (2004)10 SCC 745 was held to be not entitled to get full compensation for acquisition thereof, observing that only a full owner gets the entire amount of compensation. 16. We are similarly of the opinion that the learned Single Judge was unduly swayed by conferment under the lease dated 8th October, 2002 for 99 years of right to mortgage, construct and otherwise deal with the property, to hold ownership rights having been conferred therein. Conferment of such rights is not inconsistent with a lease and in fact under Section 108 of the Transfer of Property Act, 1882, in the absence of a contract to the contrary, a lessee is entitled to make accession to the property [Section 108 (B)(d)], make repairs to the property [Section 108 (B) (f)], transfer absolutely or by way of mortgage or sub-lease, the whole or any part of his interest in the property [Section 108 (B) (j)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make additions/alterations thereto or to reconstruct the same. Moreover, subsequently in Chapsibhai Dhanjibhai Danad v. Purshottam AIR 1971 SC 1878 a provision in the lease, though for building purposes but permitting the lessee to on the expiry of the term thereof remove the structures was held to be not indicative of the lease being a permanent one. 20. We are further of the opinion that once the Policy/Scheme for freehold conversion had made only such commercial and mixed land use properties eligible for freehold conversion, where ownership rights had been conferred, a meaning was/is required to be given to the said words and the same cannot be rendered otiose and redundant, as would be the case if the opinion of the learned Single Judge was to prevail. To look into the mind of the framers of the said Policy, our research led us to the very constitution of the L&DO. It is an attached office of the Ministry of Urban Development and is responsible for the properties of the Government of India in Delhi. These properties fall into two broad categories i.e. Nazul Lands which were acquired in 1911 for formation of the Capital of India at Delhi and rehabilitation lands which were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at a rent of Rs. 1,56,11,983/- per annum to be increased by 30% every 10 years. The position in the other leases is the same. 23. We find the following other differences between the leases of which freehold conversion is being allowed and the subject leases :- i.) The leases of which conversion is being allowed are in the format prescribed in the L&DO Manual. We find the leases of the disinvested hotels to be not in that format and in an entirely different format; ii.) While the leases of which conversion is being allowed are in consideration of premium and the rent to be paid, the leases in favour of the respondents are in consideration only of payment of rent and without payment of any premium whatsoever; the unearned increase for allowing transfer of rights in land, from in favour of ITDC to HEPL, paid out of the share price, cannot be equated to premium - the same in any case was only 50% of the increase in the value of the land between the date when first leased/licensed and the date when assigned to HEPL and can by no stretch be called the price for the grant of lease. A Division Bench of the Bombay High Court recently in Smt. Jaikumari Amarbahadursingh v. State of Mah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as a revenue/recurring receipt and refundable security deposit which is not even treated as income for taxation purposes. In Abdul Rahim v. State of Madras AIR 1962 Madras 272, Veeraswami, J. after referring to the well known judgment in King v. Earl Cadogan L.R. (1915) 3 KB 485 pointed out that the term premium as ordinarily understood is a lump sum payment made outright as a price for lease. It was further held that what is contemplated by premium is something other than the agreed rent and premium in the context of a lease is in the nature of price for the lease and money which is refundable cannot be called premium. Similarly in Ranganayaki Ammal v. M. Chockalingam (1996) II MLJ 139 also it was held that premium as defined in Section 105 of the Transfer of Property Act is the price paid for the lease and consideration for the lease and/or for the purposes of getting a lease. The Supreme Court in Commissioner of Income Tax, Assam v. The Panbari Tea Company Ltd. AIR 1965 SC 1871 was faced with the question whether the amount described as premium in the lease deed is really a rent and therefore a revenue receipt. It was held that Section 105 (supra) brings out a distincti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined, but under the leases in favour of the respondents, the accretions are to vest in the appellant L&DO, without any obligations to pay the value thereof; vi.) While the leases, of which conversion is being allowed, are by way of a government grant and as a developmental act, the leases in favour of the respondents were in pursuance to the share purchase agreements. 24. We are of the opinion that the aforesaid differences are sufficient to belie any case of discrimination and it is not for this Court to go into the insufficiency even if argued of the differences to mete out a different treatment to the respondents. These are policy matters and freehold conversion, as aforesaid is in the sole discretion of the lessor and if the lessor in its wisdom does not want to allow such conversion to certain categories of lease, no case for judicial review thereof is made out in the face of differences aforesaid. The Supreme Court recently in Union of India v. Nitdip Textile Processors Pvt. Ltd. 2012) 1 SCC 226 held that a large latitude is allowed to the State for classification upon a reasonable basis and what is reasonable is a question of practical details and a variety of factors whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disinvested hotels is not borne out from the policy, the same is at best a modification/amendment of the Policy and it is not the case of the respondents that the officials/authority who took such subsequent decision were any inferior to those who had framed the original Policy or that they were not entitled to take the subsequent decision. The appellant in the matter of implementation/working of such a policy is always entitled to exclude certain persons who may be forming a class by themselves and we are unable to find any bar to such modification/amendment of the policy. The Supreme Court in Chairman, Ramappa Gundappa Sahakari Samyakta Besava Sangha Ltd. v. State of Mysore (1974) 2 SCC 221 held that if every policy statement or direction of Government especially regarding disposal of State Property were construed as irreversibly creating right to property in prospective beneficiaries, strange consequences would follow and the government cannot be held prisoner to its administrative decisions which are required to be altered from time to time. Reference with benefit can also be made to A.K. Kraipak Vs. UOI(1969) 2 SCC 262 and U.P. Financial Corp. Vs. Gem Cap (I) P. Ltd. (1993) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lapsed and the eviction was upheld till the Supreme Court vide judgement reported as Aggarwal and Modi Enterprises Pvt. Ltd. v. NDMC (2007) 8 SCC 75. The very fact that the entitlement to freehold was confined only to those leases where ownership rights had been conferred signifies that such conversion was not intended where according to the appellant, ownership rights had not been conferred. In the light of the differences pointed out above, the appellant can well be believed to have entertained an opinion that conversion is to be granted only of those leases for which premium had been paid and not to other leases. We therefore do not find any right in the respondents to compel the appellant L&DO to convert the leasehold rights in the land underneath disinvested hotels and cinema aforesaid into freehold. We also do not find any arbitrariness or discrimination in the refusal of the appellant L&DO to grant freehold conversion sought by the respondents. Axiomatically, we are unable to uphold the judgments of the learned Single Judge under appeal and set aside the same, allowing these appeals. Resultantly, the writ petitions filed by the respondents are dismissed. However, in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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