HC: Maharashtra move to hike land lease rent in high-end real estate area not arbitrary

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Mumbai, Jul 11 (PTI) The Bombay High Court has upheld the Maharashtra government’s decision to increase the lease rent in Mumbai’s Bandra based on Ready Reckoner (RR) rate, holding that it was not “arbitrary” as the suburb is a high-end real estate area.

A division bench of Justices B P Colabawalla and Somasekhar Sunderesan, however, said the rent cannot be revised every five years as per the government’s resolutions and has to remain the same for the entire tenure of the lease agreement.

The court on July 10 (Wednesday) disposed of a bunch of petitions filed by several housing societies in Bandra challenging the government resolutions of 2006, 2012 and 2018 revising the rent on long-term leases granted to them.

The court said that the societies have been enjoying huge portions of land in the prime location of Bandra virtually free of cost.

“If one were to really break down what these individuals are paying now for government land leased to them, it can hardly be regarded as exorbitant,” HC said.

Through these resolutions, the government took a policy decision to adopt the RR to determine the lease rent payable.

The societies claimed the resolutions were illegal as they sought to increase the lease rent by “400 to 1900 times”, which they called exorbitant.

The bench, however, noted that as per a chart submitted by the government, each society’s liability towards the revised lease rent is a maximum of Rs 6,000 per month and in some cases even less than Rs 2,000 per month.

“When one takes these figures into consideration and especially the fact that the properties of the petitioner societies are located at Bandra Bandstand (a very sought after, a high-end real estate area in Mumbai), one can hardly call this increase exorbitant, extortionate and/or manifestly arbitrary,” the high court said.

The HC also noted that since 1951, when their leases were renewed, the societies have been paying rent fixed then.

“Considering the value of money and inflation (and the fact that no revision has been effected), it becomes obvious that these lessees have enjoyed and used all these properties virtually for free for 30 years even after their leases expired in 1981,” the court said.

Considering these factors, the bench said, it can hardly be said that the increase in the revised rent is so exorbitant and or manifestly arbitrary that it would need interference.

“If individuals want to hold large parcels of land in a prime locality and want to enjoy this luxury, it is only fair that they would have to pay for it a reasonable sum that is now the revised amount,” the court said in its order.

The court said that while the law mandates that the government must be fair and reasonable in dealing with its citizens, it does not mean that the government must do charity.

“Though it is indeed true that the government should not act as a private landlord where profit would be the prime motive, it is still entitled to a reasonable return on its land,” HC said.

The court noted that land is in short supply in an island city like Mumbai and when few societies occupy such a finite resource, the lease rentals charged to them have to be commensurate with what they enjoy.

The bench, however, noted that the provision of rent revision in the resolutions would be contrary to the lease agreement and quashed that clause from the government resolutions.

“Just as the lessees cannot, under the guise of calling upon the State to act fairly, unilaterally seek a modification in the contract, so also the State cannot unilaterally modify the contract entered into with the lessees,” it said. PTI SP NR