In a major setback for Bandra Landlords, Bombay HC on Wednesday supports the validity of three Government Resolutions (GR).
These resolutions called for the enhanced lease rent of government lands from 400 to 1,900 times. These lands were mainly given to housing societies of Bandra.
But, the division bench of justice BP Colabawalla and justice Somasekhar Sundaresan, removed a clause in one of GRs, which was issued in the year 2012.
The 2012 clause sought the revision of lease rent every five years. After the removal, the revision will take place every 30 years. That too, at the time of lease renewal.
What Was the Case All About?
Recently, the division bench of Bombay HC admitted various petitions of many Bandra west based co-operative housing societies.
These societies had approached the court against May 2006, December 2012 and May 2018 government resolutions.
But for those unversed, the May 2006 resolutions launched a policy of connecting land’s reckoner value with annual lease rent. Subsequently in 2012 resolution, the method of lease rent calculation was launched.
Under 2012 GR, it was mandatory for housing societies and charitable bodies to pay lease rent of 2% of 25 percent ready reckoner value of government land.
In addition, the industries were supposed to pay 4%. The lease rent for commerical and mixed entities stood at 5 percent.
This is where issues arose, as the housing societies questioned the hike, emphasizing that the state government was restricted by earlier verdict with regard to linking lease rent accompanied with land’s ready reckoner value.
Moreover, they also questioned these GRs on the grounds of arbitrariness, asserting that these terms are goes against Article 14 of the Indian constitution.
They also contended, that the increase by 400 to 1,900 times cannot be rationalized as being fair & reasonable in the eyes of law.
In all means, the state must act in a fair & reasonable manner.
What The Court Said?
But these contentions did not hold water in front of the bench.
It declared that high court’s earlier verdict on these issues did not stop state government from connecting linking lease rent with Lands’s ready reckoner value. But it was needed from government to act fairly in their deals with lessees.
Coming to arbitrariness point, the ready reckoner reveals huge details regarding the fixing of rates and at what times, varied rates are given for different areas, depending on their peculiarity.
Giving its observation, the court said, ‘Once this is the case, we find that there is nothing wrong in the government looking to the ready reckoner rate as a reasonable benchmark of value for the purposes of calculating the revised lease rent.’
The court also declared that housing societies will not likely pay more than ₹6,000 per month.
In the end, it indeed agreed that government should be fair and reasonable in its dealings, however it doesn’t believe, that government should in indulge in charity work.
