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Judgment
S. Ravindra Bhat, J.—In this petition under Article 226 of the Constitution of India two letters of the Respondent (hereafter referred to as
L&DO"") dated 16.3.1992 and 9.3.1994 have been challenged. A quashing order has been claimed.
The facts briefly are that one Shri K.N. Ahuja was the original allottee of property being I-G/26, Lajpat Nagar, New Delhi (hereafter called
Suit property""). He transferred/sold his rights to one Smt. Sita Devi by a deed dated 13.9.1972. The original term of allotment contained a
stipulation that permission had to be sought for transfers, Smt. Sita Devi applied for permission, through her Attorney Ms. Ranu Thukral by letter
dated 22.6.1990 for transfer to the Petitioners. The L&DO by its letter dated 6.8.1991 granted permission on condition that unearned increase of
Rs.42,669/- was to be paid. Para 6 of the letter also required the intending purchaser (i.e the Petitioner) to furnish an undertaking that the
difference of 50% unearned increase on revised terms would be paid as and when demanded. This was followed by letter dated 11.10.1991 to
Ms. Sita Devi permitting her to transfer and sell the suit property to the intending purchaser, i.e the Petitioners.
On 30.12.1991 the Vendor, Smt. Sita Devi executed the Sale Deed in favor of the Petitioner which was duly registered. By the first impugned
letter dated 16.3.1992 the L&DO raised a fresh demand for Rs.2,42,476/- towards unearned increase on revised rates. The Petitioners protested
the demand, stating that the Sale Deed had already been executed in December, 1991, further to the letter dated 11.10.1991. On 9.3.1994 the
L&DO issued the following letter:
Government of India
Ministry of Urban Development
Land & Development Office
Nirman Bhawan, New Delhi.
No. L&DO/PSII/133 dated the 9.3.1974
To
Shri Bhawnesh Thukral,
GI/26, Lajpat Nagar,
NEW DELHI.
Sub: Mutation of Property No. G-I/26, Lajpat Nagar, New Delhi.
Sir,
I am to invite reference to this office letter No. L&DO/PSII/888 dated 6.7.1992 on the subject cited above wherein you were requested to make
the payment as demanded vide this office letter No. PSII/243 dated 16.3.1992 to enable this office to process the case further for mutation of the
said property but you have failed to make the payment so far.
In the meanwhile, in April, 1992 the Central Government had announced its Policy for conversion of lease-hold property (under the control of
L&DO) into free-hold. The Petitioners applied for such benefit and sought for conveyance of the property by an application on 22.9.1994. They
deposited Rs.10,320/- as conversion charges.
It is alleged that the respondents did not act upon the application despite its presentation. The inaction of the Respondents in processing the
application for conversion on the one hand and in purporting to deny mutation of the property in favor of the Petitioners, after having approved the
sale on the other, are challenged as arbitrary and unreasonable.
The L&DO in its counter affidavit has relied upon Para 6 in the letter dated 6.8.1991 and contended that the Petitioners as vendees were duty
bound to pay the differential amount of unearned increase on the basis of revised terms. Reliance has also been placed upon the fact that it was on
this understanding that the sale permission was granted on 11.10.1991.
The L&DO denies obligation to accede to any request for conversion of property. It alleges that the letter dated 9.3.1994 was justified in the
circumstances. As regards the question of conversion, it is alleged that the Petitioners cannot take advantage of the Scheme as the case for
mutation was pending when the Scheme was announced and further that they had furnished undertakings to pay the amounts as and when
demanded.
Learned Counsel for the Petitioner relied on the terms of Conversion Scheme and submitted that whatever be the nature of pre-existing disputes
about mutation, there could be no quarrel with the Petitioner''s right to claim that benefit. Para 3.2 of the Scheme was relied upon to say that even
Power of Attorney''s of the lessees could seek conversion. Counsel relied upon on Clause 10.1 to say that in case lease deed was executed but
was not registered by the lessee, conversion could be allowed; Clause 11 permitted conversion where there was misuse of property. Specific
reliance was placed on Clause 15 to say that applications could be made by persons in whose favor the substitution/mutation had to be carried out.
Learned Counsel also submitted that the L&DO cannot justify its demand for any differential amounts once the transferee opted for conversion.
Reliance was placed upon a decision of this Court reported as Mr. J.K. Bhartiya and Others Vs. Union of India (UOI) and Another, . Similarly
reliance was placed on another judgment in Prabhat Kumar Mukherjee v. DDA (WP No. 1301/1987) decided on 17.11.2006.
Learned Counsel for the Respondent relied on the counter affidavit and urged that the approval for sale was premised upon agreement to pay
differential amounts. The Petitioners accepted the conditions and were, Therefore, duty bound to satisfy the demands, when made. They further
chose to ignore the demand, made on revision of rates, for unearned increase. In the circumstances, the Petitioners could not legitimately seek
mutation as this was a dispute pending between the parties. The L&DO acted within its powers in denying the request for mutation and also
refusing to act upon the application for conversion. It was contended that the Petitioners could not insist that the property should be converted into
free-hold from lease-hold without complying with the demands for payment of differential amounts.
At this stage it would be relevant to extract Clause 6 of the letter dated 6.8.1991; the same reads as follows:
Furnishing an undertaking by the Intending purchaser on a non-judicial stamp paper of Rs.2/- duly witnesses by two persons that he/she get the
breaches regularised beyond 14.02.91 or remove the same by 14.7.91 and also that the purchasers with pay the difference of 50% unearned
increase on rental bring in and when demanded by the Govt. The purchaser also pay the damages on revised rates w.e.f. From 1.4.89.
Some of the relevant conditions contained in the Conversion policy in the Brochure, issued in April, 1992 are reproduced below:
3.2 If there was already a transaction regarding the property and the original lessee had given General Power of Attorney to another person for
execution of sale deed, the GPA holder himself can apply for conversion. However in such cases, it should also be specified in the application as to
in whose name the conversion is to be granted. If there are a series of GPAs, attested copies of all such GPAs must be furnished to establish the
link with the lessee on record and the applicant.
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Whether conversion will be granted even if the lease deed is not signed or not registered ?
10.1 In cases where lease deed is not signed or not executed on account of administrative reasons, the conversion will be allowed. Even in case
lease deed was executed but was not got registered by the lessee for whatever reasons, the conversion will be allowed.
Whether conversion will be granted even if there is a misuse of the property ?
Yes. Conversion will be granted even where a portion of residential property is being put to non-residential use, provided additional conversion fee
is paid along with the application. The formula for calculating additional conversion fee is given in Annexure - ''C'' and Annexure - ''D''.
Whether conversion will be granted even if there is unauthorised construction ?
An affidavit in the format given in annexure ''H'' must be enclosed with every application. Conversion will be granted to the lease hold properties
even if there was unauthorised construction. However the applicant will be liable for action under Municipal Bye-laws. The conversion does not
act as a waiver of any action which is liable to be taken under the building bye-laws by the local bodies.
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Whether conversion will be granted if there is a dispute between the Lesser and the lessee about payment of certain dues ?
No. Conversion will not be granted unless any pending dispute in respect of lease hold premises between the Lesser and the lessee is resolved.
Whether application for conversion can be given during the pendency of substitution/mutation ?
Applications can be given by the person/persons on whose name/ names the Substitution/Mutation will have to be carried out. However these
applications will be considered only on disposal of pending Substitution/Mutation case. On disposal of the Substitution/ Mutation case if it is found
that the Substitution/Mutation is carried out on the name of the same person/persons who applied for conversion, the same application will be
taken into account. Otherwise the conversion application will be rejected.
The above narrative shows the limited nature of dispute in the present case. It is whether the refusal of the respondent to accede to the
Petitioner''s request for conversion is justified.
There is no dispute between the parties that in terms of the original lease, the lessee (original allottee) could not transfer title without obtaining
permission of the Lesser. In this case the first transfer took place in 1972. The present dispute centers around the second transfer by the first
purchaser i.e. Sita Devi. The Lesser was satisfied about genuineness of the transaction; it required the purchaser to deposit Rs.42,669/-. No
doubt, while granting permission the Lesser stipulated that differential amounts, if demanded should be paid. In that sense undoubtedly the sale was
based on such condition. However, the matter would have been seen in that light, if no further development had taken place. Yet with the
formulation and enforcement of the conversion policy, there was a radical change in the ground realities as it were.
The object of the conversion policy may be best described from the following extract contained in the brochure.
Considering the long pending demand from the public for converting the lease hold system of land tenure into freehold, the Govt. have decided to
sanction the conversion to freehold in respect of purely residential leases of all flats/tenements and built up plots up to 500 sq. meters of area and
the orders conveying the sanction of the President of India for such conversion were issued on 14.2.1992 by the Ministry of Urban Development.
To enable maximum number of lessees to take advantage of this offer of conversion to free hold, the Govt. have also decided to charge conversion
fee o n the basis of notified land rates effective from 1.4.1987, though the present notified land rates are much higher. However, these concessional
rates will be available up to 31.3.1993. All applications received along with the necessary payments up to 31.3.1993 will be eligible for these
concessional rates. The applications received from 1.4.1993 will be considered with reference to the new land rates to be notified for the relevant
period. Further the Govt. have also decided to offer the convenience of the payment of these amounts in a maximum of five equal annual
Installments to ease the burden on the public. Therefore, it is hoped that maximum number of lessees will take advantage of this offer at the earliest
opportunity.
This Brochure gives information that a lessee would like to know before applying for the conversion to free hold. We hope that the public will find
the Brochure useful and helpful in getting their properties into free hold.
What can be discerned is that the Lesser and the L&DO were of the opinion that maximum number of lessees should take advantage of the
offer of conversion to free-hold. Initially the notified land rates effective from 1.4.1987 were the basis for conversion fees. The Government,
however, decided that concessional rates would be available till 1993. In other words, the un-changed and un-revised rates were the basis for
charging conversion till 31.3.1993. If one keeps in mind this factor, and then examines certain salient terms of the lease, i.e Clause 10.1 (which
stipulates that even where leases are not executed for any reason, the person concerned would be entitled to apply for conversion) the anomaly
arising on account of the respondent''s stand is highlighted in sharp relief. Undisputedly, the petitioner applied in the regular course for transfer. The
prevailing notified rates for granting no objection to the transfer were the basis for demand in 1991, for un-earned increase; that amount was paid.
Immediately thereafter the sale deed was executed. The Petitioner applied for conversion on 22.9.1994.
This Court in J.K. Bhartiya''s case as also the judgment in Prabhat Kumar Mukherjee considered in detail similar circulars, extending the
benefit of conversion into free hold, issued by the Delhi Development Authority. It was held that in cases like the present the lessee/subsequent
purchaser had the option of either pursuing its case for mutation or for withdrawing the application for permission and seeking conversion on the
basis of the documents available with them. Clause 13 of the DDA''s conversion policy was considered in Bhartiya''s case as well as Prabhat
Kumar Mukherjee (supra). The relevant clause of L&D in the present case i.e 10(c) read as follows:
c. Where these are successive power of attorneys, conversion will be allowed after verifying the factum of possession provided that the linkage of
the original lessee/sub-lessee/allotted with the last power of attorney is established and attested copies of power of attorneys are submitted.
In such cases, a surcharge of 33-1/3% on the conversion fee would be payable over and above the normal conversion charges. (No unearned
increase will be recoverable)
Here Clause 3.2 of the conversion policy clearly stipulates that if there was already a transaction regarding property and the original lessee had
given Power of Attorney to another person for execution of sale deed the GPA holder can himself apply for conversion. The same stipulation
further states that if there are series of GPAs, attested copies of those documents must be furnished to establish link with the lessee on record and
the applicant. It is, Therefore, clear that the conditions in the two conversion policies i.e. of the respondents and the DDA are almost identical. The
object of the Scheme was to enable occupants and transferees (the expression used in a broad sense) to have transactions officially recognised.
If the above objective is kept in mind, the patent arbitrariness of the respondents'' position immediately emerges. On the one hand, the
respondent is willing to regularise and recognize transactions which plainly fell outside its official policy. Clause 3.2 was designed to recognize
transactions w here the lease hold rights were alienated through Power of Attorney, without any approval of the Lesser. If such contingencies are
approved, ex facie the petitioner''s case could not have been rejected. The simple logic here is that the petitioners were approved purchasers; they
sought approval which was granted, for the sale. Even the amount claimed as unearned increase on the basis of prevailing rates was deposited. A
sale deed too was executed. In these circumstances, the fact that there was a subsequent dispute about the amount of unearned increase
demanded later on the strength of a revision of the rates made effective from an anterior date, could not have been the basis for rejecting the claim
for conversion. The petitioner''s right to the property was (if one may so use the expression) more legitimate than that of Power of Attorney
holders'' entitlement to the property, which is tenuous because it is not premised upon any permission by the Lesser. The Petitioner, Therefore,
cannot be placed on a worse footing than a General Power of Attorney holder, enjoying the lease-hold rights without applying for permission in
terms of the lease deed.
In view of the above findings, the petition has to succeed. The impugned demand dated 16.3.1992 and the letter dated 9.3.1994 are hereby
quashed. The Respondents are hereby directed to process the petitioner''s application for conversion of the property from lease hold into free
hold. While doing so the respondents shall not recover anything in excess of the amounts payable as conversion charges, on the prevailing notified
rates as of 22.9.1994, after adjusting the amounts deposited by the Petitioner towards conversion fee. The entire process shall be completed
within six weeks from today.
The writ petition is allowed in the above terms. No costs.