LAHORE   -  The Lahore High Court (LHC) on Friday declared that the Lahore Development Authority (LDA) could not recover conversion fees from MM Alam Road, Jail Road, Main Boulevard Road, Zafar Ali Road and certain other areas which it had already declared commercial.

Justice Ayesha A Malik passed the orders while allowing 73 petitions, filed between 2014 and 2020, challenging the imposition of conversion fee on properties located at the aforesaid commercial roads and other areas.

The court announced the verdict in open court, which it had reserved on petitions after hearing detailed arguments in December last.

Learning Alliance (PVT) Limited and 72 others had filed the petitions challenging the provisions of the Lahore Development Authority Act, 1975 and provisions of the Lahore Development Authority Land Use Rules, 2014 and notices for payment of conversion fee.

In its detailed order issued here, the court held that the demand for a one time conversion fee was not justified as per Section 28 of the LDA Act and its mandate. “Consequently, the demand notices raised and the public advertisement issued in newspapers, cannot form the basis to collect conversion fees from an area which is already declared commercial,” it added.

However, the court clarified that LDA would first issue notice to the petitioners and grant a right of hearing to justify the demand for conversion fee based on land use classification, if the properties did not fall in the said commercial areas.

The court observed that as per Section 28 of LDA Act, if the authority wanted to raise funds to meet the cost of planning, expansion, development and conversion of any property in any present or future scheme, it must declare the incurred cost to maintain good governance and transparency.

The court noted that the Supreme Court had already upheld sections 4, 6, 13, 14, 14A, 18, 19, 28 and 37 of the LDA Act in the Imrana Tiwana Case, hence, pleas to this extent could not be granted.

Earlier, in final arguments, the petitioners’ counsel questioned notices of the LDA for payment of conversion fee at the rate of 20 percent of the commercial value of the property and argued that the step was arbitrary and did not fall within the mandate of Section 28 of the LDA Act.

They submitted that there was no justification for charging one time conversion fee from their clients for carrying out business activities on their properties as they were doing business at their properties for a long time and had been paying commercialization fee.

They further argued that the petitioners should not be asked to pay conversion fees as their properties were located at roads which had already been declared commercial, adding that it was also not financially viable to pay the conversion fee.

They also contended that Sections 4, 6, 13, 14, 14A, 18, 19, 28 and 37 of the LDA Act violated Article 140 A of the constitution, which envisages a three tier system of government, and pleaded to declare the same as ultra vires.

“That the impugned sections usurps the power of the Local Government in favour of the LDA which is not only against the mandate of the Constitution but also deprives the Local Government of its ability to raise revenue to carry out its functions under the Punjab Local Government Act, 2013”, they added.

However, the counsel for LDA submitted that the Supreme Court had already upheld sections 4, 6, 13, 14, 14A, 18, 19, 28 and 37 of the LDA Act in the Imrana Tiwana case.

He argued that the Authority could charge conversion fees on the basis of Section 28 of the LDA Act read with Rule 28 of the 2014 Rules as it carried out most of the development works in the Lahore Division with the help of WASA and TEPA. He further submitted that Lahore Development Authority Land Use Rules, 2014 had been repealed by the Lahore Development Authority Land Use Rules, 2020 and many of the pending Petitions had become infructuous due to it. “The 2020 Rules have once again introduced the concept of temporary commercialization, hence for those Petitioners who are aggrieved by permanent conversion, the option of availing temporary commercialization is once again available”, he added. However, LDA’s counsel requested that the matter be decided on its merit to settle the long standing issue.