TaxTMI 
TaxTMI 
2015 (5) TMI 1234
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.... clause 5 of the lease deed dated 08.10.2002. 2. Brief facts of the case as borne out from the petition are that by virtue of a Scheme of Demerger sanctioned by the Central Government on 05.08.2002, Hotel Indraprastha (the premises in question) was hived off from ITDC and merged into Hotel Queen Road Pvt. Ltd. The petitioner paid a total price of Rs. 45,03,33,333/- (Rupees Forty five crores three lacs thirty three thousand three hundred thirty three) for the acquisition of M/s Hotel Queen Road Pvt. Ltd. By way of two share purchase agreements, the ownership and management of Hotel Indraprastha stood transferred to the petitioner. Thereafter, a lease deed dated 08.10.2002 was entered into by & between the President of India acting through the respondent No.2 and the petitioner. The petitioner also executed an undertaking and an indemnity bond. In terms of Clause 3.1 of the lease agreement, the petitioner paid a sum of Rs. 2,28,15,826/- (Rupees Two crores twenty eight lakhs fifteen thousand eight hundred and twenty six) as security deposit by way of demand draft issued in favour of respondent No.2. The aforesaid amount was deposited vide demand draft no. 042175 dated 07.10.2002 dr....
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....ted an application duly filled along with the indemnity bond and undertaking and complete in all respects for conversion of its property Hotel Indraprastha, 19, Ashok Road, New Delhi, admeasuring 7121 Sq. mtrs. from leasehold to freehold. Vide impugned order dated 19.10.2006, the respondent No.2 rejected the application for conversion from leasehold to freehold of Hotel Indraprastha on the ground that the property in respect of the disinvested Hotel is not covered under the existing scheme for conversion. 4. Learned counsel for the petitioner contended that in view of clause 1.5 of the conversion policy, disinvested Hotels cannot form a distinct or a separate category and it cannot be stated that disinvested Hotels do not come within the purview of the conversion policy. As per the said clause, all commercial and mixed land use properties allotted by respondent No.2 or Directorate of Estate for which ownership rights have been conferred and lease executed and registered are eligible for conversion from lease hold to freehold. The Master Plan for Delhi includes Hotels within the category of commercial use/properties. Since the petitioner's property falls under category of commerc....
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....d hotels form a separate and distinct category which was not included in the conversion policy of the Government. Only commercial and mixed land use properties allotted by the Department of Rehabilitation, L&DO or the Directorate of Estates for which ownership rights have been conferred and lease deed executed and registered are eligible for conversion. Even the Government of India clarified on 12.06.2006 that the disinvested hotels are not covered under the conversion policy and the same have also been duly mentioned in the conversion brochure. The premises occupied by the petitioner and other disinvested Hotels in Delhi do not fall under any of the categories as specified under para 1.5 of the brochure of conversion and therefore not eligible for conversion as per the policy of the government. 9. Learned counsel for the respondents further contended that in the cases of disinvested Hotels, the properties have been leased out only for running/operating Hotels. The petitioner is aware of the fact that since no cost of land or premium was recovered from them, the ownership of the land vested with L&DO. He is bound by the terms of the lease agreement which is a concluded contract ....
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....r the property and not merely a right to enjoyment. The lessee of a property is a tenant. He may be entitled to transfer his interest in the land, but right to transfer ownership vests with the owner of the said land. Tenancy cannot be considered to be a permanent ownership, even when the tenant has made permanent structures at his own cost on the land. Though heritability and transfer may be incidents common to both ownership and lease, however, that by in itself are not sufficient to cloth a person with absolute ownership. The Hon‟ble Supreme Court, speaking to the same effect, in 'Mohd. Noor v. Mohd. Ibrahim', (1994) 5 SCC 562 observed as under:- "5. ...The theoretical concept of 'ownership', therefore, appears to be that a person can be considered to be owner if he has absolute dominion over it in all respects and is capable of transferring such ownership. Heritability and transferability are not doubt some of the many and may be most important ingredients of ownership. But they by themselves cannot be considered as sufficient for clothing a person with absolute ownership. Their absence may establish lack of ownership but their presence by itself ....
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....n now the Scheme does not state that all leasehold under L&DO are eligible for conversion to freehold. In fact, in Clauses 1.1 to 1.5 of the Scheme/Policy of Conversion, the leases eligible for freehold conversion are specified. A perusal of the said clauses shows a marked difference in case of residential plots shown eligible for conversion in Clause 1.1 wherein it is not mentioned that the conversion for such premises would be allowed, "for which ownership rights have been conferred", as has been mentioned in Clause 1.5 while including commercial and mixed land use properties in the list of properties eligible for freehold conversion. Thus what can be inferred from this is that while leases of all residential properties were eligible for conversion, irrespective of whether the ownership rights thereunder were conferred or not, it was not so qua the commercial/mixed land use properties. Only those commercial/mixed land use properties were/are, under the Scheme/Policy, eligible for conversion, "where ownership rights have been conferred". Clearly with the use of such words, the commercial/mixed land use properties were subject to conversion only on the fulfillment of the rider that....
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....payment of security deposit by the lessee to the lessor, the petitioner under the lease deed, as per Article 3 of the Lease agreement dated 08.10.2002, has paid a security deposit to the tune of Rs. 2,28,15,826/- (Rupees Two crores twenty eight lakhs fifteen thousand eight hundred and twenty six) to respondent No.2 which is free of interest and refundable on expiry of the lease against delivery of vacant peaceful physical possession. b. Also as discussed above, the rent payable under the leases of which conversion is being allowed, is nominal, whereas in the lease agreement of the petitioner hotel the rent payable is not only substantial but is also subject to increase (Clause 2.2 of Article 2 of the Lease Agreement). c. The lease of which conversion is allowed is also by way of a government grant as a development act, however, the lease in favour of the petitioner hotel were in pursuance of a share purchase agreement. d. Perusal of the conversion scheme/policy suggests that the leases of which conversion is being allowed, on the expiry of the term of the lease, accretions on the leased land are to vest with the lessor but on a payment of the value thereo....
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....reement. 20. A perusal of all these differences show that there exists a marked distinction in the cases in which the conversion is allowed as per the Policy/Scheme and the properties like disinvested hotels wherein such conversion is not allowed. Each and every conversion is a discretionary matter based solely upon the wisdom and understanding of lessor/respondent No.2. If lessor/respondent No.2 does not want to allow such conversion on certain legitimate grounds to specific categories of lease, this court cannot go against these legitimate reasons found to be validly applicable to the said category of lease. The Supreme Court in 'Vasundara v. State of Mysore', (1971) 2 SCC 22 was of the view that the courts are not expected to interfere with the manner and method of classification once the classification has been made on reasonable basis. 21. The Hon'ble Supreme Court in 'M/s. Murthy Match Works and Others v. The Assistant Collector of Central Excise and Another', (1974) 4 SCC 428 held as under:- "15. ...Even so, 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 ....
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.... public properties partakes the character of a trust and is entitled to the best price of such properties and ownership cannot be smuggled in through the backdoor of lease." 24. It is another contention of the petitioner that subsequent executive instruction and clarification namely, clarification dated 12.06.2006, cannot override the specific representations and warranties of the government as provided under the Scheme/Policy of Conversion. This contention does not find favour with this court. The decision to exclude certain persons or class from the purview of the policy is solely based upon the discretion of respondent No.2, who is entitled to exclude any class of persons and in turn cause modification/amendment of the policy. This Court cannot sit as an appellate authority over the decisions and orders of quasi judicial or administrative authorities. Administrative authorities have the right to take their own decisions on the basis of their discretion and as discussed above this court cannot interfere with the same. In 'Chairman, Ramappa Gundappa Sahakari Samyakta Besava Sangha Ltd. v. State Of Mysore And Ors.', (1974) 2 SCC 221, the Apex Court was of the view that: ....