Lease renewal of plots: Mumbai civic body pays the price as Shiv Sena delays nod

In what is causing huge losses to the Brihanmumbai Municipal Corporation (BMC), renewal of the lease of over 80 leasehold plots out of 160 that come under the Schedule W category, is now stuck in limbo, as the policy that will enable their lease renewal was postponed by the Shiv Sena in the general body last month. As the clearance of the policy is expected to jeopardise Shiv Sena’s plan of constructing a theme park at Mahalaxmi Racecourse, a Schedule W property, the proposal has reportedly been postponed, putting the decision on hold.

While lease on 104 Schedule W plots (co-owned by BMC and the state) expired between 2009 and 2017, BMC completed inspecting them in March, to check for breaches in their contract before renewing their lease, and found breaches in over 80 of the leasehold plots.

Only 24 out of 104 with expired leases have no breaches at all. Their leases can be renewed with no trouble. Out of the 80 others, BMC has sent show cause notices to 34 of them, and breaches notices to those remaining. The civic body wants to renew their lease, but it can be done only after the breaches are regularised or removed.

A senior civic official of the civic body’s estate department said, “We are facing a loophole, we cannot renew lease agreements without regularisation of the breaches, but the breaches cannot be regularised without lease renewal. That’s where the breaches policy would help, but it has been postponed again, by the general body.” As the renewal of their lease agreement is pending, BMC stands to lose crores of rupees in the form of rent, with every passing month of the delay.

These plots are prime properties in South Mumbai, which were leased out for 30 to 99 years at nominal rates, (as per the prevalent rates of the time), anywhere between Rs1,500 to Rs50,000 per annum.

According to this policy, the leases of the plots whose agreements have expired but cannot be renewed due to breaches or violation of lease conditions will get renewed for a tentative period of three years. Within this time, the tenants can regularise all breaches by paying a fine amounting to 7.5% of the ready reckoner rate. After three years, if all breaches are regularised, the BMC will take a call on renewing the lease for a longer duration.

However, the breaches policy will also enable the state government to take a call on renewing the lease of several leasehold plots including the Royal Western India Turf Club (RWITC)-run Mahalaxmi Racecourse.

In 2016, the state government approved the renewal of lease of ‘Schedule W’ properties, which would be carried out by the civic body, while excluding some plots from its purview, like the Mahalaxmi Racecourse. A senior civic official said, “The state government will take a decision about the racecourse’s lease, only after the breaches policy is passed.”

Presently the ball in is Sena’s court regarding the fate of Mahalaxmi Racecourse as the breaches policy is pending in BMC. The ruling Sena has stalled the policy for over a year, since it was first proposed in the civic improvements committee in December 2016. Its passage in the general body will enable the state government to decide whether to continue the lease of Mahalaxmi Racecourse.

This is likely to jeopardise Sena chief Uddhav Thackeray’s plans to construct a theme park on a portion of the 225-acre racecourse land located in the heart of the city.

Yashwant Jadhav, leader of the house in BMC said, “We only want to discuss and understand the policy further. That is why we postponed it.”