IN THE LAHORE HIGH COURT LAHORE

Stereo. H C J D A 38.

Judgment Sheet

IN THE LAHORE HIGH COURT LAHORE JUDICIAL DEPARTMENT

W.P.No.24459/2011

JUDGMENT

Omar Iqbal and 2 others

VERSUS

Lahore Development Authority & 2 others

Date of hearing: 19.09.2012

Petitioners by: Mr. Imran Muhammad Sarwar, Advocate.

Respondents by: Mr. Waqar A. Shaikh, Advocate.

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Muhammad Khalid Mehmood Khan, J. Through

this constitutional petition, the petitioners have prayed as under;

“(a) that the demand made by the respondents for the payment

of commercialization fee, is illegal and mala fide and the notices in

this regard are liable to be withdrawn.

(b) that the property of the petitioners, commonly known as 14-

A, Main Gulberg Road, Lahore is permanently exempted from the

payment of commercialization fee/charges and the petitioners are

free to utilize their property as they deem fit and proper, including

renting it out.

(c) that the respondents are bound to approve the site plan for

further/new construction of their commercial building, whenever

such plan is submitted to them for approval, without demanding

any fee or charges. The only condition applicable to this site plan

may be the observance of the building rules.

(d) that during the pendency of this petition, the respondents

are restrained from raising any demand for the payment of

commercialization fee/ charges from the petitioners who are free

to rent their property out if they so decide and the operation on the

demand notices is suspended.”

2. Briefly stated the facts of the case are, the petitioners are

the owners in possession of property bearing No.14-A Gulberg

Road (Now Jail Road Lahore) measuring 3-Kanal 7-Marla and

W.P No.24459/2011 Omar Iqbal etc. v. LDA, etc.

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105-Sq.ft. detailed in para 6 of the petition, (hereinafter

referred to as the suit property), the Petitioners are in the

Medical profession and have established their own clinics in the

premises. The respondents on 21.12.2010 issued notice to

petitioners directing to pay a sum of Rs.880,744/- being the

temporary commercialization fee.

3. The petitioners assert that their property falls within the

commercial Zone as per the Master Plan of Greater Lahore and

they have not converted the residential property in to

commercial, the respondents are illegally` claiming the

commercializing fee under the garb of conversion fee.

4. Notices were issued to respondents they filed reply and

controverted the fact of commercial character of the suit

property and contends that under the Lahore Development

Authority Land Use (Classification, Reclassification and

Redevelopment) Rules, 2009 (hereinafter referred to as the

Rules 2009) the respondents have raised the demand for

payment of temporary commercialization of the suit property.

5. Learned Counsel for petitioners submits that petitioner

property is situated in the commercial Zone as per the Master

Plan for greater Lahore promulgated on 26.7.1973 and as such

the respondents cannot claim any commercialization charges/

fee from the petitioners. Learned Counsel submits that

respondents can claim commercialization fee only if the

property falls in Residential Zone and the owner or occupant is


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using or utilizing the same for commercial activities. The

petitioner constructed the clinic long ago and since then the

same is being used as Clinic. Learned Counsel has relied on

Capt. S.M.Aslam and others v. Karachi Building Control

Authority through Chief Executive Nazim-e-Aala and others

(2005 CLC 759), Zainab Garments (Pvt.) Ltd. through Chief

Executive and others v. Federation of Pakistan through

Secretary Ministry of Housing and Works, Islamabad and

another (PLD 2010 Karachi 374).

6. Learned Counsel for respondents submits that suit

property is situated on main Gulberg, Lahore where all other

properties have been commercialized either on permanent or

temporary/annual basis, the suit property has been

commercialized in 2002, the Lahore Development Authority

being regulatory authority is competent to raise impugned

demand. Learned counsel submits till the payment of

commercialization fee the status of the suit property will remain

residential. Under Section 51 of the LDA Building Regulations,

only 25% property could be used for commercial purposes

whereas the petitioners are utilizing their entire property being

the clinic.

7. Heard, record perused.

8. The ownership and location of the property is not in

dispute between the parties, the question for resolution is If

once the immovable property is made the part of


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commercial Zone by the competent authority even then the

regulatory authority can claim commercialization fee/

charges treating it residential.

9. The Government of Punjab prepared Master Plan for

Greater Lahore on 26.7.1973, after that it was revised and

tabled on 6.10.2004 before the House of District Council

Lahore; the House on 6.10.2004 approved the Plan as under;

10. The Master Plan for Greater Lahore created following

Zones;

(i) Residential

(ii) Commercial

(iii) Industrial

(iv) Agricultural


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11. The above Zones are further bifurcated in small Zones,

the petitioners property falls in Sub. Zone C-I, the use of Zone

C-I provides as under;

“(i) Use Zone C-1—

Uses Permitted—Retail Shops; Business and professional

offices, service uses like barbers, tailors, launderers and dry

cleaners’ shops etc. Restaurants and entertainment places;

Residences, Social and welfare institutions, provided, they are

located at the first or higher floors; Clinics; Meat, Fish and Fruit

retail markets; Public and Semi-public recreational uses; Public

utilities and buildings; Service industries without nuisance or

hazard and not employing more than 5 persons with or without

power, provided the goods manufactured are sold on the premises

in retail; Approved parking provisions.

Uses permissible on special appeal is allowed by the

Planning Authority—Social Welfare institutions; Petrol filling

stations; coal, wood or timber yards; Service garages; Service

industries without nuisance and hazard and employing not more

than 10 persons with or without power provided the goods

manufactured are sold on the premises in retails; Taxi and scooter

stands; Bus sub-terminals; Approved parking provisions.”

12. The Punjab Local Government Department framed the

Punjab Local Government (Commercialization) Rules, 2004

(hereinafter referred to as the Rules 2004) under Section

191(1) of the Punjab Local Government Ordinance 2001 (XIII

of 2001), rules were published in Punjab Gazette on 2.10.2004.

13. Under rule 2(c) of Rules 2004 the Commercialization is

defined as under;

“Commercialization” means change in the use of land of building,

from residential to commercial, against the use provided in the

approved plan.”


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14. The approved plan is defined in rule 2(a) of the Rules

2004 which is read as under;

“(a) “approved plan” means a long-term spatial plan, master

plan or outline development plan or any zoning or land use plan

made thereunder, for the time being in force, that inter alia

provides for the development, expansion and improvement of the

area and also includes restrictions, regulations and prohibitions

with regard to the development of sites, erection and re-erection of

buildings within the Local Government area, duly approved by the

competent authority i.e. Tehsil Council, Town Council or Zila

Council in a City District, as the case may be;”

15. It is an admitted fact that Jail Road Lahore as per the

Master Plan falls in the Commercial Zone, the suit property is

located on Jail Road Lahore and is fully constructed old

building and is under the use of petitioners as commercial

property/clinic. The Master plan is admittedly effective and

valid up to 2021.

16. The Lahore Development Authority was established

under the Act of 1975 being the regulatory authority, the

Government of Punjab under Section 44 of the Lahore

Development Authority Act 1975 frames rules in 2009 and

Gazetted on 10.2.2009 under the name and style of Lahore

Development Authority Land Use (Classification,

Reclassification & Redevelopment) Rules 2009.

17. The argument of Learned Counsel for the respondents is

that under rule 70 of the Rules, 2009 ibid the Lahore

Development Authority has the powers to levy the conversion


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fee, under rule 2 (c) of the Rules 2004 the word used are

“charge in the use of land of building from residential to

commercial against the use provided in the approved plan”, it

is an admitted fact that approved plan is the Master Plan of

Greater Lahore, and the Lahore Development Authority has not

prepared and got approved any Master Plan of Lahore from the

competent authority so far, the bare reading of the Rule, 2009

ibid show that respondents can charge for the use of land of

building if the owner is utilizing the land in violation of the

basic status of the land as provided in Master Plan. In the

petitioners case the land of building already having the status of

commercial hence the petitioners case did not fall in the

mischief of rule 2(c) ibid, thus the argument of learned Counsel

for respondents is bound to fail.

18. The second argument of learned Counsel for respondents

is that respondents being the regulatory authority are enjoying

powers under rule 70 of the Lahore Development Authority

land Use (Classification, Reclassification and Redevelopment)

Rules 2009. Under the rules 2009 ibid the commercial area is

defined as under;

Under Rule 2 (vii) of the Rules 2009 Commercial

area means an area which is designed for commercial use

as per approved scheme or master plan or is being used

as such in the established built up area.

Under Rule 2 (xxviii) of the Rules 2009 “master

plan” means a land use plan of an area and includes a


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structure plan, an outline development plan, a spatial

plan, peri-urban structure plan and a metropolitan plan.

Under Rule 2 (xxvii) of the Rules 2009 “Land use

plan” means a plan approved by a competent authority

for reclassification, development or redevelopment of an

area.

19. Section 55 of the Rules 2009 reads as under:

“55. Fee for conversion of land use.—(1) The Authority shall

levy following fee for conversion of land use:

(a) the conversion fee for the conversion of residential,

industrial, peri-urban or intercity service area to

commercial use shall be twenty percent of the value of the

commercial land as per valuation table, or twenty percent

of the average sale price of preceding twelve months of

commercial land in the vicinity, if valuation table is not

available;

(b) the conversion fee for the conversion of industrial area to

residential use shall be five percent of the value of the

commercial land as per valuation table or five percent of

the average sale price of preceding twelve months of

commercial land in the vicinity, if valuation table is not

available;

(c) the conversion fee for the conversion of peri-urban area or

intercity service area to residential use shall be one percent

of the value of the commercial land as per valuation table

or one percent of the average sale price of preceding

twelve months of commercial land in the vicinity, if

valuation table is not available;

(d) the conversion fee for the conversion of peri-urban area or

intercity service area to industrial use shall be five percent

of the value of the commercial land as per valuation table

or five percent of the average sale price of preceding

twelve months of commercial land in the vicinity, if

valuation table is not available;

(e) the conversion fee for the conversion of land use to

educational or healthcare institutional use shall be ten

percent of the value of the commercial land as per


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valuation table or ten percent of the average sale price of

preceding twelve months of commercial land in the vicinity,

if valuation table is not available;

(2) The Authority shall not levy conversion fee for the

conversion of land use to an educational or a healthcare

institutional use if the proposed educational institution or

healthcare institution is:

(a) owned by a philanthropic, charitable or non-profit

organization;

(b) an institution exempt from the payment of income

tax;

(c) an institution located in a low income area as may

be determined by the Authority.”

20. The bare perusal the above said rules show that these

have been framed for classification, reclassification and

redevelopment of the land, these rules come in to action only in

the case of conversion of land use, whereas the issue in the

present case is whether the conversion fee is payable or not on

the property already declared commercial or falls in the

commercial zone. The respondents under rules 2009 ibid are

only authorize to claim the conversion fee when the change of

status of land is in dispute.

21. The Master plan for greater Lahore is approved by the

District Council, the said Master Plan was prepared by a

committee constituted by the Punjab Government, the

committee discussed the issue for recovery of

commercialization fee from those land owners who are utilizing

their land as commercial under the earlier Master Plan and the

Committee proposed the following recommendations;


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“The commercialization fee will also not be applicable to

those central areas which were declared commercial as per

previous Master Plan for Lahore.”

22. The above said proposals were approved by the House of

District Council Lahore and the Master Plan of Greater Lahore

was approved by the competent authority under the law. It is

not the case of the respondents that Master Plan approved by

the District Council Lahore is not an approved plan and is not

binding on LDA, their case is that being regulatory authority

the LDA has the powers to frame commercialization policy of

the land being the part of Master Plan, the petitioners have

themselves admitted in their reply as under;

“As per Section 51 of Lahore Development Authority Land Use

(Classification, Reclassification and Redevelopment) Rules 2009,

District Planning and Design Committee evaluated already

declared 58 roads and finalized 29 Roads/Segments of Roads of

CBD are also included in notified roads were change of land use is

allowed.”

23. This shows that as per Section 51 of the LDA Land Use

Rules 2009 district planning & design committee is taking the

steps for the preparation of plans to change the existing Master

Plan.

24. The said admission of the respondents establishes the fact

that Master Plan is the only documents which decide the status

of land, the petitioners land as per Master Plan of Greater

Lahore falls in the commercial Zone and the Master plan


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exempt the charging of commercialization fee being the

conversion fee.

25. The respondents after the promulgation of Rules 2009

ibid referred the matter to the committee constituted under the

Rules 2009 for charging the conversion fee from the owners of

land whose land was made the part of the commercial zone as

per the Master Plan, the Committee decided as under;

“MINUTES OF MEETING REGARDING RECOVERY OF

COMMERCIALIZATION CHARGES FROM NEWLY DECLARED

COMMERCIAL AREAS IN INTEGRATED MASTER PLAN FOR

LAHORE HELD ON 29.6.2006 AT 11:30 A.M. UNDER THE

CHAIRMANSHIP OF DISTRICT COORDINATION OFFICER

LAHORE.

The subject cited meeting was held in the office of District

Coordination Officer Lahore and the following attended the

meeting.

1. District Coordination Officer

City District Govt. Lahore.

2. Executive District Officer,

(Works & Services)


3. Director Town Planning

Lahore Development Authority

4. Director (Commercialization)


5. Senior Urban Planner

NESPAK

6. District Officer (SP&C)

City District Govt. Lahore

7. Dy.District Officer (C-I)


Opening the discussion the District Officer (SP&C)

apprised the participants about the newly declared commercial

areas in the Integrated Master Plan for Lahore where in the


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commercial activity has been allowed subject to payment of

commercialization charges and only the areas earmarked as

commercial in the previous Master Plan were exempted from

payment of these charges. It was further informed that there were

queries from different quarters about recovery of

commercialization charges from the above-mentioned areas, as

they have already been declared commercial in the Master Plan.

Senior Urban Planner NESPAK explained that the issue

was discussed at length in various meetings at the time of

preparation of Integrated Master Plan for Lahore and levy of

commercialization charges was imposed because newly declared

commercial areas comprised of different land uses, as prescribed

in the previous Master Plan, and with the permission of

commercial activities in these areas, load on the infrastructure of

services would be increased for which concerned development

agencies require additional funds. The chair observed that the

relevant provision of Master Plan was quite clear and

commercialization fee would be recoverable from all the newly

declared commercial areas which were either residential,

institutional or industrial etc.

The procedure of recovery of commercialization charges in

above mentioned areas was also discussed. Director

Commercialization, L.D.A. was of the view that all such cases

should be placed before the commercialization committee by

adopting the prescribed procedure after recovery of processing

fee. EDO (Works & Services) pointed out that commercialization

committee decides the cases of change of land use from residential

to commercial but in the instant case the land use has already been

changed and only the commercialization charges are to be

recovered. The placement of these cases before commercialization

committee in his view was therefore, not justified.

After deliberate discussion on the issue it was decided that

the cases, where only recovery of commercialization charges was

required, would not be placed before the commercialization

committee and the same would be submitted to District


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Coordination Officer Lahore for permission to deposit the

commercialization charges into CDGL accounts.

The meeting ended with a vote of thanks by the chair.

s/d

District officer (SP&C)


s/d

Dy. District Officer (C-I)


s/d

Director (Commercialization)


s/d

Director Metropolitan Planning


s/d

Executive District Officer

(Works & Services)


s/d

Senior Urban Planner

NESPAK

s/d

District Coordination Officer

City District Govt. Lahore”

26. It is settled proposition of law once the area or land is

declared commercial by the competent authority, the owner of

the land could not be treated the owner of the residential

property.

28. The Learned Division Bench of the Sind High Court in

such like proposition held as under;

“11. In our opinion, ratio laid in the case of Muhammad Hanif

v. Sameena Sibtain 2007 YLR 3113, (para 14 at page 3119) and

S.M. Aslam v. KBCA (2005 CLC 759) on the strength of

Notification dated 20.7.1998, is that once the area is declared

commercial by law, there is no requirement to apply and observe

any requirement, which otherwise are required to be observed and

followed to obtain conversion of individual residential into

commercial property, and there is no need to pay conversion fee,

as property stand converted by operation of some rules and or

notification issued under authority of law.”


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29. It is and admitted fact between the parties that Master

Plan of Greater Lahore is a valid legislation and the petitioners

have acquired the vested right enforceable in law.

30. From the above said discussion it is clear that conversion

fee/commercialization fee is payable only on those properties

which are notified as residential, industrial or agricultural land

in the Master Plan and not on those Lands of buildings which

are the part of commercial zone of Master Plan approved by the

District Council Lahore on 6.10.2004.

31. In view of the above the petition is allowed and the

impugned demand notice is declared without lawful authority.

(Muhammad Khalid Mehmood Khan)

Judge *KMSubhani*

Announced in open Court today (19.10.2012).

(Muhammad Khalid Mehmood Khan)

Judge *KMSubhani*

Approved for reporting.

IN THE LAHORE HIGH COURT LAHORE

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