LHC rules on businesses’ pleas: LDA lacks power to levy conversion fee on roads declared commercial

Published July 31, 2021
The Lahore High Court (LHC) judge observed that the vires of sections of the LDA Act challenged in the petitions have already been upheld by the Supreme Court in Imrana Tiwana case. — AFP/File
The Lahore High Court (LHC) judge observed that the vires of sections of the LDA Act challenged in the petitions have already been upheld by the Supreme Court in Imrana Tiwana case. — AFP/File

LAHORE: The Lahore High Court has ruled that the Lahore Development Authority (LDA) had no power to levy or recover conversion fee under its 2014 rules from roads or segments of roads declared commercial or otherwise converted for commercial use.

“The demand for a one-time conversion fee is not justified in terms of section 28 of the LDA Act and is against the mandate of the LDA Act. Consequently, the demand notices raised and the public advertisement issued in newspapers, both English and Urdu, cannot form the basis to collect conversion fee from an area which is already declared commercial,” says Justice Ayesha A Malik in her ruling on a set of petitions mostly filed in 2014.

Court finds 2014 Act deficient

The petitioners are either owners or tenants of the properties who have been asked to pay conversion fee by the LDA under the 2014 rules for carrying out commercial activity at their property. They either challenged the demand notices issued by the LDA for payment of conversion fee or assailed public notices issued in the leading newspapers on the basis of which a list was provided of commercial areas and the public was informed that they have seven days to have their properties converted permanently, for commercial use, after payment of conversion fee.

In some cases the petitioners also challenged the vires of certain provisions of the LDA Act on the ground that the authority did not have the power to levy conversion fee as this power vests with the local government, and in some cases the challenge was with respect to the authority of the LDA to demand a one-time conversion fee.

The petitioners have been doing business at their properties for a long time and paying commercialisation fee, having all requisite permissions in place. Therefore, they said, there was no legal justification for charging a one-time conversion fee under the LDA Act and the 2014 rules for the purposes of carrying out commercial activity on their properties.

The LDA’s counsel argued that the authority provides a large number of services for the development and facilitation of its schemes, hence it could charge a one-time permanent conversion fee.

The counsel also informed the court that the Lahore Development Authority Land Use Rules, 2014, have been repealed by the 2020 rules on the basis of which many of the petitions became infructuous as the new rules again introduced the concept of temporary commercialisation.

However, he requested the court that the matter be decided on its merit to settle the long-standing issue.

Announcing a reserved judgment, Justice Malik declared that the LDA could not levy or recover conversion fee from roads or segment of roads declared commercial as per List A or otherwise converted for commercial use.

However, the judge clarified that for the purposes of the petitioners before the court whose properties as per LDA’s understanding did not fall in List A or in an area declared commercial or has not been declared commercial, LDA first issue notice to the petitioners and grant a right of hearing to justify the demand for conversion fee based on land use classification.

The judge observes that the vires of sections of the LDA Act challenged in the petitions have already been upheld by the Supreme Court in Imrana Tiwana case, hence to this extent prayer of the petitioners cannot be granted.

Published in Dawn, July 31st, 2021

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