Delhi LG clears decades-old DDA-DSIIDC dispute

The bench of justices PS Narasimha and Alok Aradhe disposed of a batch of appeals after the two agencies agreed on a mechanism to process the pending applications.

The intervention of the Lieutenant Governor has helped resolve a five-decade-old dispute between the Delhi Development Authority (DDA) and the Delhi State Industrial and Infrastructure Development Corporation (DSIIDC), paving the way for leasehold industrial sheds in multi-storeyed buildings to be converted into freehold properties.

Crucially, any remaining legal or financial issues between the two agencies will have to be settled internally and will not be allowed to hold up the conversion process for individual allottees.

The Supreme Court on October 5 accepted a resolution reached at a meeting chaired by LG Taranjit Singh Sandhu in August, under which DDA will process and execute the conversion of the properties, while DSIIDC will first recover its outstanding dues from the allottees and issue a no-objection certificate (NOC) to the land-owning agency.

With the resolution placed before it, the bench of justices PS Narasimha and Alok Aradhe disposed of a batch of appeals after the two agencies agreed on a mechanism to process the pending applications.

“DSIIDC shall first ascertain and recover all outstanding dues payable to it by the respective property allottees. Issuance of a No Objection Certificate (NOC) by DSIIDC in favour of DDA, certifying clearance of such dues, shall be a mandatory condition precedent to DDA’s processing of the conversion in each case,” the resolution stated.

A leasehold property is given on lease by a landowning agency to an entity for a fixed period of time. A freehold property is when the property title or ownership is transferred by the landowning agency to the owner.

Thus, the resolution not only offers owners a route for people to secure full ownership of industrial properties, freeing them from the restrictions of leasehold tenure, but also clarifies the respective responsibilities of DDA and DSIIDC, allowing conversion to proceed.

It is expected to bring relief particularly to owners of units in multi-storeyed industrial complexes, including the Kirti Nagar Packaging Complex, whose conversion applications had been rejected amid a dispute between the two agencies.

The disagreement dates back to the 1970s and 1980s, when DDA allotted land parcels to DSIIDC to construct industrial sheds under the “Half a Million Job Programme” and the “Self-Financing Scheme”. DSIIDC subsequently constructed and allotted 840 sheds under the first programme and 456 under the second, while continuing to administer leases, transfers and other property-related matters.

The Delhi government introduced a conversion scheme in 2005, allowing eligible built-up industrial plots and sheds to be converted from leasehold to freehold. But applications from owners of multi-storeyed industrial units at the Kirti Nagar Packaging Complex ran into trouble.

The Delhi government notified the conversion scheme in 2005, allowing eligible built-up industrial plots and sheds to be converted from leasehold to freehold. However, applications from allottees of multi-storeyed industrial units at the Kirti Nagar Packaging Complex ran into trouble after DSIIDC maintained that the scheme did not cover flatted factories and that the transfer of lease administration from DDA had not been completed.

The allottees approached the Delhi High Court in 2018 after their applications were rejected. A single judge upheld DSIIDC’s position in May 2019, but a division bench reversed that decision in March 2023, holding that the scheme did not expressly exclude industrial sheds housed in multi-storeyed buildings.

The high court said that the distinction drawn by DSIIDC between double-storeyed and multi-storeyed industrial complexes had no basis in the scheme. It also held that disputes between the two agencies could not be allowed to stand in the way of the allottees’ rights, particularly when the industrial sheds had been constructed under the self-financing scheme and the allottees had paid the requisite amounts.

“Fifty years have gone by,” the high court observed, calling it unjust to deny conversion because of unresolved issues between DDA and DSIIDC. It directed the corporation to consider the applications within three months.

DSIIDC challenged the ruling in the Supreme Court, while DDA filed a separate petition after its review plea was dismissed. The appeals were eventually resolved through the administrative arrangement placed before the top court.

Under the settlement, DDA, as the lessor and title-holder, will process and execute the conversions and recover the applicable conversion charges from the allottees. DSIIDC must first determine and recover its outstanding dues from each allottee before issuing the mandatory NOC.

Crucially, any remaining legal or financial issues between the two agencies will have to be settled internally and will not be allowed to hold up the conversion process for individual allottees. The parties agreed to abide by the arrangement, and the Supreme Court disposed of the appeals in its terms.