Noida’s Grand Venice Mall not a tourist destination; not entitled to freehold rights and tax exemption: Supreme Court

Grand Venice Mall

Supreme Court: In a Transferred Civil Case registered after withdrawal of writ petition filed in Allahabad High Court to this Court challenging order dated 24-1-2022 by Uttar Pradesh State Industrial Development Corporation (‘UPSIDC’) for not accepting proposal to convert the subject land (‘Grand Venice Mall’) from leasehold to freehold as per policy dated 6-11-2013 amended on 3-5-2016, the Division Bench of Dinesh Maheshwari* and J.K. Maheshwari, JJ. found the petitioner company’s claim baseless since the impugned government policy came into effect much later and held that the order dated 24-1-2022 does not suffer from any infirmity, and that freehold rights cannot be granted against the terms of allotment and sale deeds.

Facts reveal that the petitioner’s offer for allotment of commercial plot of approximately 37500 square meters was accepted by UPSIDC on 5-8-2006 stating the allotment on 90 years lease basis. Another land was also allotted in the petitioner’s favour as per lease executed on 30-3-2009. The possession of entire parcel of land measuring 40505 sq. mtrs. was handed over to the petitioner. The building plan for construction over the allotted land was sanctioned on 8-10-2009 and thus, construction of 2 basements, ground, first and second floors was completed, a partial completion certificate was issued on 7-5-2011 and the second completion certificate on 16-4-2015.

In 2013, a policy for tourism growth was formulated in Uttar Pradesh for setting up theme parks/amusement parks and the policy dated 6-11-2013 laid the conditions and incentives available to those with minimum 300 acres area and minimum capital investment of Rs 500 crores for exemption from stamp duty, exemption from tax on construction goods/materials imported into the State etc. In furtherance of the same, the petitioner requested for recognition of project land as tourist destination for which, the Managing Director of UPSIDC wrote a letter to Principal Secretary (Tourism), Government of Uttar Pradesh on 31-1-2015 recommending the declaration of petitioner’s project as tourist destination being provided with necessary exemption stating that final decision shall be taken by UP Cabinet.

Office memo dated 3-5-2016 was issued for making alterations in the policy dated 6-11-2013 for inclusion of theme-based mall in extensive scheme and appointment of UPSIDC as nodal agency for implementation of the said policy. Based on the amendments introduced to the original policy, the petitioner came up with the proposal for recognition of its project as a theme-based mall seeking benefits of the said policy. The proposal was considered by the Committee concerned and recommendations were made for approval as communicated through letter dated 16-9-2016 based on which, the petitioner communicated with UPSIDC for conversion of subject land from leasehold to freehold.

The Court pointed that various persons were allotted commercial spaces in the mall by the petitioner company and its directors, and several FIRs have been registered against them alleging fraud, failure to give assured returns, no timely completion of project, siphoning money and using the same for advertisements and procuring other projects. After a series of matters before the Court including a criminal writ petition, directions were issued and the matter related to conversion of subject land as freehold was considered, being declined through order dated 24-1-2022 which reasoned that the policy came into existence in 2013 and theme-based malls were included in 2016, while allotment of subject land was made in 2006, and so on.

Aggrieved by the said order, the present writ petition was filed before the High Court and thereby withdrawn to this Court through order dated 28-7-2022 to hear the issues in criminal and civil writ petitions together.

The Court found it appropriate to leave prayers for impleadment and directions for execution of sub-lease deed under the criminal writ petition. The Court primarily considered the question of ‘whether the petitioner is entitled to seek conversion of the subject land from leasehold to freehold’ and viewed that the answer could only be negative. The Court explained that the petitioner’s claim against the policy dated 6-11-2013 amended on 3-5-2016 turns out to be hollow due to its non-applicability on the subject land or the petitioner’s project.

The Court pointed out that the policy in question came into effect in 2013 which was formulated for growth of tourism sector in UP by setting up theme/amusement parks which is not correlated with the subject land given on lease or the project which could never be termed as theme or amusement park. The Court also found the UPSIDC letter dated 31-1-2015 containing recommendations for declaration of subject land and project as tourist destination baseless particularly due to absence of government stake in the said project. The Court said that there is no reason or justification for conversion of leasehold rights to freehold rights. The Court also affirmed that neither the original nor the amended policy was applicable in a retrospective manner to benefit the project in question, justifying the rejection of petitioner’s claim.

The Court further said that the Committee could only make recommendation subject to the final decision of the competent authority and that its recommendation could not become a binding decision but subject to approval as a theme-based mall. The Court held that order dated 24-1-2022 does not suffer from any infirmity and that freehold rights cannot be granted against the terms of allotment and sale deeds.

[Bhasin Infotech & Infrastructure (P) Ltd. v. State of U.P., 2023 SCC OnLine SC 290, judgment dated 17-3-2023]

Judgment authored by: Justice Dinesh Maheshwari

Know Thy Judge | Justice Dinesh Maheshwari

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