Leasehold vs Free Hold

By Advocate S. R. Agarwal

“The system of the leasehold is the relic of the British Raj, presumably, based on the assumption that the property of a sovereign cannot be sold to its subjects. Though the country got the independence more than 60 years ago and is now a democratic republic, the leasehold system is still continuing almost throughout the country inasmuch as the land or the plots are given by the government and the government bodies and the development authorities on leasehold basis for a specified term such as 90 years or 60 years, with the restrictive condition against the sale, assignment, transfer of the rights, title and interest therein, without the prior permission of the leaser, which inter-alia, provides that such permission could be made available on payment of half of the difference i.e. 50% of the original premium paid and the declared premium at the time of transfer.

It is not a question of one-time payment, but this payment, usually known as transfer charges, are payable at the time of each transfer, to acquire a valid legal title in the property in accordance with the terms of the lease deed. In spite of various measures taken from time to time, including the incentive of paying such charges at a subsidized rate as against 50% of the difference of the premium paid and the declared premium, transactions are taking place day in and day out without obtaining such permission on payment of the transfer charges.

In other words, the compliance of the terms and conditions is more in the breach than abiding by the same. It is a well known fact that the plots are allotted in Navi Mumbai by CIDCO on lease-hold basis for a period of 60 years and by MHADA and MIDC for a term of 90 years, including the Collector (SBD), with such restrictive conditions and the CIDCO and the office of the Collector have come out with a Transfer Charges Scheme at a concessional rate, still properties are changing hands without obtaining prior permission and payment of transfer charges and, surprisingly, the financial institutions are advancing loans in respect of such properties without bothering for the NOC from the lessers. These aspects have already been discussed in the previous articles herein.

“This scheme was brought to the notice of the Government of Maharashtra by the writer in January 2003 at his individual level and through Navi Mumbai Action Committee, so that the State Government of Maharashtra may also examine the feasibility of converting the lease-hold properties into freehold. Initially, the response of the State Government seemed quite positive, because after examining the whole issue, particularly the DDA Conversion Scheme, the State Government appointed Chesterton Meghraj, an international property consultants, for framing the policy and the guidelines for the conversion method, from lease-hold rights to free-hold in respect of the government lands in the State of Maharashtra”,….. to read full article click on link given below.