Point of Law: Lease Agreement - Demand of misuse charges illegal arbitrary - As per this policy the maximum period for levying misuse charges is restricted to five years from the date of detection of the misuse.

JUDGMENT :

JAYANT NATH, J.

1. This Writ Petition is filed by the petitioner seeking to quash the impugned demand dated 08.11.2016 raised by the respondent for conversion of the property from leasehold to freehold. A direction is also sought to the respondent to execute the Conveyance Deed of the plot in question, namely, Plot No. 53, Wazirpur Group Industrial Area, ad-measuring 400 sq. yards in favour of the petitioner company.

2. The petitioner is said to be a Private Limited Company incorporated in 1977. On 02.09.1976, a Perpetual Lease Agreement was entered into between M/s. Jayna Plastic Works through its proprietor Mr. Vir Anil Jain and the Hon’ble President of India acting through the respondent for leasing of the industrial Plot No. A-53, Wazirpur Group Industrial Area, Delhi-110052 (hereinafter referred to as “the property”). On 30.09.1977, the said M/s. Jayna Plastic Works through its proprietor applied for conversion of the property from M/s. Jayna Plastic Works to the petitioner company i.e. Vipul Plastic and Allied Industries Pvt. Ltd. In 1978 the subscription of the equity shares of the petitioner was increased from 8 to 300 shares and the majority shares vested with the family of Shri Krishan Gopal Aggarwal including himself, wife, son and daughters and (HUF) who together held more than 80% shares in the petitioner company. In 1985 the number of shares of the petitioner company rose from 300 to 350 shares wherein some shares of the petitioner company were subscribed by the family members and some were subscribed by non-family members. However, the family of Shri Krishan Gopal Aggarwal continued to hold 80% shares in the petitioner company thus being in majority and in control of the petitioner company.

3. In September 2010, the respondent advertised a scheme for conversion of leasehold property to freehold property. On 30.09.2013 alongwith other required documents the petitioner made an application for conversion of the property from leasehold to freehold and paid the prescribed fee of Rs. 5,28,846/-. Subsequently on 20.01.2014 an additional demand of Rs. 2,00,111/- was made under various heads which were duly paid.

4. The respondent inspected the property on 28.04.2014 as per the procedure adopted for conversion of plot from leasehold to freehold. On inspection they found the property to be in order and free from all kinds of misuse/sub-letting.

5. Despite all steps having been taken and payment having been made, the respondents took no steps whatsoever to process and finalise the application of the petitioner. The petitioner thereafter filed a Writ Petition before this Court being W.P. (C) 9283/2015 titled as M/s Vipul Plastic and Allied Industries Private Limited vs. Delhi Development Authority. The said Writ Petition came up for hearing on 28.09.2015. This court issued a direction to the respondents to process the application dated 26.09.2013 within six weeks. Despite the said direction, no steps are said to have been taken by the respondent. Finally, the petitioner had no option but to file a Contempt Case being Cont. Cas. (C) No. 823/2016. In the Contempt Petition, on 02.09.2016 this court directed the respondent to dispose of the petitioner's application for conversion before the next date of hearing. Thereafter, the respondent handed over a Demand Letter dated 08.11.2016 whereby they made a demand for payment of Rs. 41,72,177/- towards alleged misuse charges and unearned increase before this court on 09.11.2016. The petitioner as per the directions of this Court filed objections to the said demand. These were dismissed by the respondent without giving any reason whatsoever. This court disposed of the Contempt Petition with liberty to the petitioner to challenge the demand of unearned increase as well as misuse charges dated 08.11.2016. Hence, this writ petition has been filed.

6. The basis of the unearned increase is the Perpetual Lease Deed. The perpetual lease deed dated 02.09.1976 provides that the Lessee sha