Long term lease policy for 160 South Mumbai plots cleared

MUMBAI: Maharashtra cabinet on Tuesday cleared a much-awaited policy on leases for 160 plots, mostly in South Mumbai, housing some of the city’s best-known institutions. These are large properties that were given to various individuals and groups on a long-term lease arrangement at the turn of the last century. It was done in order to pave the way for the building of institutions connected to the city’s social, educational and financial growth.

Under the new policy prepared by the Urban Development Department (UDD) and cleared by the state cabinet on Tuesday, leases of these plots will be renewed, but not for more than 30 years. The policy also mentions that in case of any violation of the lease agreement such as if the user has sub-leased the plot, added more built-up space or brought about a change in the use of the plot from what it was originally intended for, penalties will be levied based on violations. In such cases where violations are found, the state will review the applications before the BMC can renew the lease.

Of the 160 plots in question, the leases on 101 had expired but could not be renewed for want of clear guidelines. The plots include the ones on which the National Insurance building, the Thomas Cook building, Life Insurance Corporation of India Building, Mahalaxmi Race Course and Taj Mahal Palace Hotel are situated. These plots were drawn into a controversy after it was reported that the lease for the race course which is managed by the Royal Western India Turf Club had expired and the state was considering renewing it. The Shiv Sena had then demanded that the plot should be taken back and put to “public use“ such as for recreation facilities. The government was in a bind because it had not yet framed a clear plan. On the other hand, it was losing on lease revenue as well because the plots were all located in premium areas and were highly valued.

Given the legacy of the institutions, these properties are vested with the state and enjoyed a special status under the schedule `W’ of the Mumbai Municipal Corporation Act.

The lease rent of the plots have now been linked to the ready reckoner rates and the amount will depend on the nature of use of the plot. And the government will also revise the lease rent every 10 years based on the changes in the RR rates. According to a Bombay high court order, for a long-term lease, the right of the lessor (in this case the government) is only on 25% of the total area. Hence the lease rent has been fixed for different categories on the basis of this observation. “The policy was required for a long time now. The state was losing out of revenue. The revenue generated as lease rent will be shared by BMC and state government on a 30-70 ratio,“ said a senior UDD official.

Credits ET Realty

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