Lease: Conversion of land from leasehold to freehold in view of policy formulated by the State – Entitlement to – On facts, allotment of commercial plots to the petitioner company by the State Industrial Development Corporation-UPSIDC, land allotted on 90 years lease basis – Building plan for construction over allotted land sanctioned – Construction completed and issuance of partial completion certificate – Thereafter, policy formulated by the respondent no. 1 for growth of tourism by setting up theme/amusements parks – Policy laid down conditions and incentives, available to theme parks – Thereafter, proposal by the petitioner for recognition of its project as a theme based mall – Petitioner then sought conversion of the subject land from leasehold to freehold – Non-acceptance of the proposal of the petitioner to convert subject land from leasehold to freehold as per the policy formulated and thereafter amended – Challenge to – Held: When the land had already been leased to the petitioner and the petitioner is also holding the same as lessee under the lease deeds executed for the purpose, no reason, justification, logic or rationale that such leasehold rights be converted into freehold rights – Amended policy relied upon by the petitioner came into existence only after second completion certificate had been issued to the petitioner and, the mall had been put into operation – No stipulation found in the original policy or its amendment that it could be applied with retrospective effect and to override the existing legal rights as also the existing legal obligations - Policy in question with its amendment is of no application whatsoever in relation to the subject land and the project – Thus, the claim of the petitioner for freehold rights in relation to the subject land cannot be accepted – Furthermore, the petitioner seems to have developed a mall on the subject land through private investment and there is no participation of the State Government or any public sector undertaking or any instrumentality of the State therein – Thus, the claim of the petitioner to seek benefits flowing from the Office Memo is struck down.
Disposing of the matters, the Court
HELD: 1.1 The entire case of the petitioner-company, asserting its right to get the subject land converted from leasehold to freehold, is premised on the policy formulated by the respondent No. 1 on 06.11.2013 and amended on 03.05.2016. The petitioner would assume that the said policy with its amendment is applicable to its project and to the subject land. This assumption is without any legal basis and the claim of the petitioner turns out to be hollow and baseless because neither the original policy formulated on 06.11.2013 nor its amendment on 03.05.2016 have any application to the subject land or to the project of the petitioner. [Para 15][1088-F-G]
1.2. The subject land was allotted to the petitioner on 05.08.2006 after acceptance of its offer of allotment of the said industrial plot by UPSIDC. Clause 14(a) of the allotment letter dated 05.08.2006 had been clear and unequivocal that land was allotted on 90 years lease basis. Further, it was provided in clause 10(b) of the allotment letter that tripartite lease deed of the builtup premises would be executed where the allottee of the developer shall be the lessee; UPSIDC shall be the lessor; and the developer (the petitioner) shall be a confirming party. The lease deed dated 23.08.2006 in relation to 37208 sq. mtrs. of the allotted land carried the covenants, inter alia, that the lessee (the petitioner) will not, without the consent of lessor (UPSIDC), transfer, sublet, relinquish, mortgage or assign its interest in the demised premises or in the buildings standing thereon with the other requirements [vide clause 3 (j)]. It was also stipulated that the allottee shall have to abide by the general terms and conditions of allotment of UPSIDC [vide clause 13]. It appears that in this lease deed dated 23.08.2006, the stipulation regarding tripartite lease deed did not as such occur but the said clause 13 made all the general conditions of allotment binding on the petitioner. Moreover, in the other lease deed dated 30.03.2009 in relation to the adjacent plot of land, this stipulation was also inserted in clause 3(j). The Court is not entering into the questions relating to tripartite lease deed in this matter but, this much is apparent on a comprehensive look at the terms of allotment and the covenants of lease deeds that the land was allotted to the petitioner on 90 years lease basis and further treatment of land and built-up portion thereupon were to abide by those terms and covenants. It is also clear that possession of the entire parcel of land comprising the aforesaid two lease deeds, i.e., 40505 sq. mtrs., was handed over to petitioner on 31.03.2009 and on 08.10.2009, the building plan for construction over the aforesaid allotted land was sanctioned by respondent No. 2 whereafter construction over an area of 179017.82 sq. mtrs. was completed by the petitioner for which, a partial completion certificate was issued by respondent No. 2 on 07.05.2011. Until all this time, there was nothing existing as regards the policy sought to be relied upon by the petitioner. [Para 15.1][1088-H; 1089-A-F]
1.3. The policy in question came up for the first time only on 06.11.2013 and it was formulated essentially for growth of tourism sector in the State of Uttar Pradesh by setting up theme parks/amusement parks. The said policy dated 06.11.2013 laid down conditions and incentives, including exemption from stamp duty, exemption from tax on construction goods/materials imported into the State etc., which were available to the theme parks/amusement parks with minimum area of 300 acres and minimum capital investment of Rs. 500 crores. Clause 3 of the said policy, of course, provided that a theme park/amusement park could be established and operated by private sector, publicprivate partnership or any authority by creating special purpose vehicle and in that situation all the decisions regarding assessment of the desired land, selection of the private investor and implementation of the project were to be taken by the concerned authority/government body/public undertaking under its own rules but the Court is unable to find any correlation whatsoever of this stipulation of the policy with the subject land that had been given on lease to the petitioner as also with the project of the petitioner which could never be termed as any theme park or amusement park. Viewed in this light, the letter dated 31.01.2015 as sent by the Managing Director of UPSIDC, recommending the case of the petitioner to declare its multiplex, hotel and commercial construction as tourist destination, turns out to be rather baseless and its accompanying document, stating the demand of the petitioner to convert the land in question to freehold, also appears to be wanting in logic. The project of the petitioner cannot be correlated with this policy dated 06.11.2013, meant for theme park/amusement park and that too with involvement of a Government body or an instrumentality of the Government in selection of the private investor as also with participation by way of investment upto 20% of the cost of the land. [Para 15.2][1083-G-H; 1090-A-E]
1.4. On 16.04.2015, respondent No. 2 issued second completion certificate in respect of the project of the petitioner. Even until this point of time, there was no amendment to the policy in question. As regards the amendment of the policy in question by way of Office Memo dated 03.05.2016, of course, the policy to promote tourism was modified so as to grant certain other concessions and was also expanded to include theme-based mall but then, such broadening of the policy came with typical and peculiar stipulations. A Committee was put in place for giving recommendations for permissions in the matters related with theme-based mall. Significantly, clause 4 of the original policy was modified in the manner that for theme-based mall, the limit of partnership of public enterprise/company of the State Government was changed from 20% of the maximum cost of land to minimum 20% of cost of land; and it was provided that the working agency will provide freehold to the SPV after acquiring the land as per the rules, for which freehold charge will be payable. These stipulations occurring in the said Office Memo dated 03.05.2016 make it more than clear that as regards theme-based mall a minimum of 20% of the partnership of the State Government or its instrumentality was stipulated; and such instrumentality of the State Government was also referred to as the working agency, which was to provide freehold land to the SPV to be created for the purpose. The petitioner seems to have developed a mall on the subject land and, as per the suggestions made in the referred communications, seems to have provided certain facilities to make it attractive but fact of the matter remains that the project has been implemented by the petitioner through private investment and there is no participation of the State Government or any public sector undertaking or any instrumentality of the State therein. That being the position, claim of the petitioner to seek benefits flowing from the Office Memo dated 03.05.2016 falls flat and is knocked to the ground. [Para 15.3 & 15.4][1090-E-H; 1091-AC]
1.5. No SPV has been created in relation to the project of the petitioner with involvement of the State Government or any of its agencies/instrumentalities. Which particular agency is, then, to be termed as “working agency” for the purpose of the Office Memo dated 03.05.2016 remains a question inexplicable. If the stretch of arguments of the petitioner seeking freehold land is taken into consideration, only UPSIDC could be termed as “working agency” for the present purpose but then, there is no partnership of UPSIDC in this project. [Para 15.4.1][1091-D-E]
1.6. The subject land was specifically leased to the petitioner for a period of 90 years in terms of the allotment letter dated 05.08.2006 and then lease deeds were executed on 23.08.2006 and 30.03.2009. The construction was undertaken by the petitioner over part of the land in question where partial completion certificate was issued on 07.05.2011 and second completion certificate was issued on 16.04.2015. Several significant consequences follow from this status of record. In the first place, when the land had already been leased to the petitioner and the petitioner is also holding the same as lessee under the lease deeds executed for the purpose, there does not appear any reason, justification, logic or rationale that such leasehold rights be converted into freehold rights. Secondly, the amended policy which is sought to be relied upon by the petitioner came into existence only after second completion certificate had been issued to the petitioner and, as per the petitioner’s own assertions, the mall had been put into operation. No stipulation is found in the original policy or its amendment that it could be applied with retrospective effect and to override the existing legal rights as also the existing legal obligations. [Para 15.5][1091-F-H; 1092A]
1.7 Viewed from any angle, even on direct construction of the relevant clauses vis-à-vis the subject-matter of the present petition, it remains beyond a shadow of doubt that the policy in question with its amendment is of no application whatsoever in relation to the project in question. Therefore, the claim of the petitioner has rightly been rejected. [Para 15.6][1092-B-C]
1.8. In relation to the relied upon letter dated 31.01.2015 sent by the Managing Director of UPSIDC, recommending the case of the petitioner to declare its multiplex, hotel and commercial construction as tourist destination, the same had been wholly baseless and rather unwarranted. Its accompanying document carrying the demands of the petitioner for various grants and exemptions as also for converting the subject land to freehold was also without any legal basis. At the relevant point of time, the policy in question only related to theme parks/amusement parks and it is difficult to see even a logic that the said Managing Director chose to forward the proposition of the petitioner for consideration of the State Cabinet. In any case, the said letter dated 31.01.2015 was only recommendatory in nature; and even the recommendation had only been to declare the places as tourist destination and to give exemption. The Managing Director of UPSIDC could neither have recommended for converting the land to freehold nor did he do so. The said letter is of no relevance whatsoever. [Para 16][1092-C-F]
1.9. The letter/communication dated 16.09.2016, which had been a communication received by the petitioner from the Director General Tourism. The petitioner has described this letter as one of “approval” and has framed the relief in the writ petition on that basis. During the course of submissions too, substantial reliance has been placed on this letter/communication dated 16.09.2016 and the same has been termed as a letter of “approval/qualification.” As would appear from the record, the petitioner addressed various communications on 12.12.2016, 30.05.2017 and 19.02.2018 to UPSIDC while asserting that the mall in question had already been declared as theme-based mall and the petitioner-company is entitled to get the subject land converted from leasehold to freehold. [Para 17][1092-F-H]
1.10. Whatsoever had been the composition of the Committee, it could have only made recommendation for final decision by the competent authority. Merely for presence of the Principal Secretaries of the Departments concerned in the Committee, it cannot be held that its recommendation itself would become a binding decision. Moreover, a close look at the said communication dated 16.09.2016 makes it evident that even the recommendation had only been to approve the proposal ‘as a theme-based mall.’ It is too far-stretched to read this communication as if the Committee had recommended for grant of freehold rights. Providing freehold land for the purpose of setting up a theme-based mall had entirely different requirements and had been of entirely different connotations under the amendment Memo dated 03.05.2016. In composition of the said Committee, there was no representative of the agency/instrumentality directly concerned with the subject land i.e., UPSIDC. Any suggestion or recommendation in relation to the subject land as also the lease deeds already executed between the petitioner-company and UPSIDC could not have been made without taking into account the stand of UPSIDC. After passing of orders dated 20.10.2021 and 13.12.2021 by this Court in W.P. (Crl.) 242 of 2019, the matter was indeed examined by the Industrial Development Section-4 of the Government of Uttar Pradesh where the director of the petitioner-company was afforded the opportunity of personal hearing on 19.01.2022 through video conferencing and his further representation sent through email on 21.01.2022 was also taken into consideration while passing the impugned order dated 24.01.2022. [Para 17.1 & 17.2][1093-C-G]
1.11. Viewed from any angle, even on direct construction of the relevant clauses vis-à-vis the subject-matter of the present petition, it remains beyond a shadow of doubt that the policy in question with its amendment is of no application whatsoever in relation to the project in question. Therefore, the claim of the petitioner has rightly been rejected. The policy in question cannot be applied in relation to the subject land. Therefore, there is no necessity to delve further into the other issues raised on behalf of the respondent No. 2 that it has no policy to grant freehold rights in its allotments. Suffice it would be to say for the present purpose that the claim of the petitioner for freehold rights in relation to the subject land cannot be accepted. [Para 15.6 and 18][1092-B-C; 1093-H; 1094-A-B]
1.12 The writ petition filed by the petitioner-company in the High Court is dismissed; and the first prayer in Crl. M.P. as regards directions for converting the subject land from leasehold to freehold, is also rejected. [Para 20][1094-D]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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