No Reason To Convert Freehold Rights To Leasehold Rights When Land Has Already Been Leased- SC Affirms

A Supreme Court Bench of Justice Dinesh Maheshwari and Justice JK Maheshwari has observed that when the land has already been leased, there is no reason to convert the leasehold rights into freehold rights.

Senior Counsel Shyam Divan appeared for the petitioner. ASG KM Nataraj appeared for Respondent No. 1, and Senior Counsel ANS Nadkarni appeared for Respondent No. 2.

In this case, various persons were allotted commercial spaces in a mall and commercial tower by the petitioner-company and its directors but, in due course of time, several FIRs were registered against them, alleging fraud, failure to give assured returns, non-completion of the project on time, and siphoning of money and using it for advertising and procuring other projects. 

The principal question arising for determination was whether the petitioner was entitled to seek the conversion of the subject land from leasehold to freehold in view of a policy formulated by the State.

The Supreme Court found that the policy did not have any application to the subject land or to the project of the petitioner. In that context, it was said that "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."

Further, the Court also held that "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."

By extension of the same, the Court was unable to find any stipulation 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. 

In light of the same, the Court observed that "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."

Cause Title: Bhasin Infotech and Infrastructure Private Limited v. State of Uttar Pradesh & Anr.

Click here to read/download the Judgment