2026 PLP 693 (CLC)

ASIM HAFEEZ, J.

Instant constitutional petition is placed before us in terms of order dated 15.10.2025. And later constitutional petitions bearing W.Ps. Nos. 12198 and 12467 of 2025 are also placed along, which are heard and decided collectively through this single judgment, in wake of commonality of question(s) involved.

2. Question requiring adjudication is crystalized in terms of order of 20.10.2025, which is, Whether commercialization fee can be charged on the property abutted to notified list-A .

3. Petitioners are using and/or intend to use subject matter properties, detailed in the petitions, for commercial activities / purposes, who are contesting demand of payment of conversion fee. Fundamentally, claim of the petitioners is that their respective properties are facing / located on and / or abutting notified roads, listed in list-A in terms of Notification No.DO(SP&C)/MN/539 dated 30.06.2011 ( notification ), whereby future commercial activity was made permissible. Petitioners claimed that since conversion of land use, from one category to another, was done by virtue of notification, issued in exercise of regulatory powers, therefore, the petitioners are not liable to pay conversion fee. Notification was issued in exercise of powers / authority under rule 65(2) of Punjab Land Use (Classification, Reclassification and Redevelopment) Rules 2009 [Rules of 2009], which rules stood substituted by the Punjab Land Use (Classification, Reclassification and Redevelopment) Rules 2020 [Rules of 2020] latter repealed former rules without affecting the position existed / created under Rules of 2009. In this background submissions are made.

4. Learned counsel for petitioners submits that conversion of land use, from one category to another, was in consonance with the revised Master plan and pursuant to planning policy, which instruments create no obligation for payment of conversion fee, when conversion of land use was made effective by operation of law. Explains that conversion fee can be claimed only if permission to convert land use purpose from residential to commercial was granted at specific request of the applicant and with reference to specific property, and not in cases where blanket entitlement was extended through notification, issued under the then existing regulatory framework. To support submissions, reliance is placed on the judgments reported as 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), Omar Iqbal and 2 others v. Lahore Development Authority and 2 others (W.P. No.24459/2011 decided on 19.09.2012), Learning Alliance (Private) Limited through Chief Executive and 3 others v. Province of Punjab through Secretary Housing, Urban Development and PHED and 2 others (2022 CLC 793), Mrs. Hamida Suleman and another v. Sindh Building Control Authority through Director General 6 others (2017 MLD 1391) and Associated Engineering Concern (Pvt.) Ltd. through Chief Executive Officer/Authorized Signatory v. Lahore Development Authority through Director General and others (PLD 2019 Lahore 478).

5. Conversely, learned counsel for the respondent department plead that mere declaration to list roads in list-A category is not enough to claim immunity / exemption from payment of conversion fee, which obligation formed part of terms of notification and affirmed in terms of statutory framework, whereunder categorization of roads in list-A and list-B category was effected. It is pleaded that case of Learning Alliance (Private) Limited through Chief Executive and 3 others (supra) is distinguishable on facts and law, wherein issue of commercialization was adjudicated in the context of section 28 of the Lahore Development Authority Act 1975 (Act 1975) and Lahore Development Authority Land Use Rules 2014 (Rules 2014).

6. Heard. Record / written submissions perused.

7. Scope / extent of present adjudication spreads to examination of the notification, particularly scope and extent thereof; interpretation of relevant clauses of Rules of 2009 and successor thereof, i.e., Rules of 2020 [Rules of 2009 are relevant for the reason that notification was issued in exercise of powers extended rule 65 (2), thereunder] and claim of vested rights for use of properties as commercial without the obligation of payment of conversion fee.

8. Notification identified certain roads, listed in list-A category, permitting commercial use thereof with caveat [with or without condition]. This caveat was manifestation of the conditionalities imposed under regulatory framework. Hence, claim of absolute privilege to make use of the properties for commercial purposes without payment of conversion fee is not spelled out from the notification and relevant regulatory framework terms of the notification have had to be read and interpreted in accordance with the mandate of Rules of 2009, and successor regulatory framework thereof Rules of 2020. Unnecessary confusion prevails regarding the scope and obligation therein qua payment of conversion fee as condition precedent before claiming any benefit thereof. Rule 60 Rules of 2009 provides privilege to levy conversion fee and rule 67 thereof directed for payment of fee. There is no cavil that sub-rule (1) of rule 67 of the Rules of 2009 envisages deeming effect to a building, plot or land facing the road mentioned in the notified list A, as converted to commercial use but conspicuously such enabling / deeming effect was subjected to the condition of payment of conversion fee in terms of sub-rule (2) of Rule 67 of Rules of 2009. For ease of understanding, rules 60 and 67 of the Rules of 2009 are reproduced hereunder, Rule.60. FEE FOR CONVERSION OF LAND USE- (1) A City District Government or a Tehsil Municipal Administration shall levy following fee for conversion of land use: (a) the conversion fee for the conversion of residential, industrial, peri-urban area or Intercity service area to commercial use shall be as under:- Value of land as per Valuation Table Conversion fee Less than one million rupees 5% From one million rupees to ten million rupees 10% More than ten million rupees 20% Provided that in case of non-availability of Valuation Table, the value of the land shall be as per average sale price of the preceding twelve months of the land in the vicinity; (b) the conversion fee for the conversion of industrial area to residential use shall be five percent of the value of the land as per valuation table or five percent of the average sale price of preceding twelve months of 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 and as per valuation table or one percent of the average sale price of preceding twelve months of 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 land as per valuation table or five percent of the average sale price of preceding twelve months of land in the vicinity, if valuation table is not available; and (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 land as per valuation table or ten percent of the average sale price of preceding twelve months of land in the vicinity, if valuation table is not available; (f) the conversion fee for the conversion of any land to a recreational park shall be two percent of the value of the land as per valuation table of the existing use of land or two percent of the average sale price of preceding twelve months of the land in the vicinity, if valuation table is not available. (2) A City District Government or a Tehsil Municipal Administration 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 exempted from the payment of income tax; (c) an institution located in a low income area as may be determined by a City District Government or a Tehsil Municipal Administration. (3) A City District Government or a Tehsil Municipal Administration may allow payment of conversion fee in the 4 equal quarterly installments to be paid over a period of one year. (4) The City District Government or the Tehsil Municipal Administration may forward a case to the District Price Assessment Committee for valuation of land where the valuation table is not available. Rule.67. CONVERSION STATUS.- (1) A City District Government or a Tehsil Municipal Administration shall deem a building, plot or land facing the road mentioned in the notified list A as converted to the commercial use. (2) Subject to any legal restrictions imposed under any law for the time being in force, an occupant of a building, plot or land facing the road mentioned in a notified list A, may use the building, plot or land for a commercial purpose on payment of conversion fee. (3) A City District Government or a Tehsil Municipal Administration shall not entertain any application for conversion of land use of a building, plot or land facing the road mentioned in the list B. (4) A City District Government or a Tehsil Municipal Administration shall recover conversion fee, within two years of the notification of the list A from the owner of a property illegally converted to commercial or any other use along the roads included in List A ; and (5) Nothing in these rules shall affect the status of a building, plot or land which has been converted on payment of the conversion fee under any law for the time being in force . [Emphasis supplied]

9. No legal restriction contrary to the mandate of sub-rule (2) of rule 67 of the Rules of 2009 is identified. Conversion was subjected to payment of conversion fee. Connotation is conspicuously clear and admits no ambiguity. Properties, abutting / facing list-A category roads, were declared eligible for potential commercial use not per se by virtue of declaration but subject to payment of conversion fee. Appreciation of arguments of the petitioners that no obligation to pay conversion fee arose in wake of statutory declaration would render rule 67 of the Rules of 2009 ineffective and redundant. Notification was issued pursuant to a regulatory-cum-planning considerations, in line with the planning / zoning policies. Declaration, notifying roads listed in list-A category, within the jurisdiction of City District Government Multan, encumbered permission for future commercial use subject to a caveat upon adding expression with or without condition , which manifests a clear intent. In terms of zoning regulatory framework, list-A categories road had in fact identified and affirmed suitability of those road(s) for commercial activities. Declaration constitutes general classification and is not meant to be construed as a property specific order. Pertinent question is Whether mere declaration, through notification, changes the legal character of the properties in question. No; mere declaration of notified roads does not alter the legal character of each property specifically but it simply defines the eligibility benchmark, vis- -vis properties qualified for carrying commercial activity subject to the payment of conversion fee. Post-payment of conversion fee, would alter / convert legal character of specific property. Petitioners confuse simple policy permission with misconceived claim of vested right this premise is unwarranted. Enforcement of planning permission involves three steps; firstly, announcement / declaration of zonning / planning policy; secondly, satisfaction of eligibility criterion and thirdly, the stage of fulfilment of conditions upon fulfilment of conditions vested rights qua policy decisions could be claimed and not otherwise. Eligibility is subservient to the terms of policy and enforceability of policy is dependent upon fulfillment of conditionalities attached. Declaration, by no stretch extend enforceable right with respect to any specific property, unless conditions prescribed are met. Viewed from another perspective, in essence, declaration of roads in list-A for future commercial use removed planning prohibition(s) and restrictions, that previously existed in the context of commercial use of properties and subjected it to payment of conversion fee. Land use conversion from one category to another is in the nature of an invitation by the administration to those persons, ready and willing to apply for seeking permission to convert legal status / character of their properties, subject to payment of conversion fee. And once payment is made and other conditions, if so in the policy declaration, are met, legal character of the property would change to commercially compliant property status and effect thereof would be recorded in the land record / land use register, as the case may be. Irrationality of the argument of the petitioners that benefit accrues upon issuance of policy declaration needs to be understood in the context of hypothetical illustration. A owns a property, residential in character and situated in the residential area, as per zoning regulations. After planning review and permission, road, abutting the property of A, is declared suitable for commercial activity by the authorities and residents are invited to seek commercialization of their properties, against payment of conversion / commercialization fee. B, another resident of the area, having property, also abutting notified road, accepts offer and pay dues / fee for effecting conversion of legal character of the property. A, conversely, does not accept the offer. Whether A could claim any benefit out of mere declaration without payment of conversion fee. Examine this position in the context of a situation where A offers the property for sale. Whether A s property would be bargained in the market as commercial or residential property. Does the notification / declaration implied that compliant person be treated differently and disadvantageously as compared to non-compliant person. Actualization of change of legal character would be effective upon fulfilment of conditions and not otherwise, certainly not upon issuance of mere declaration. Hence, A s property would be treated as having residential character, though potentially eligible for change of legal character upon fulfilment of the conditions. A cannot claim appreciation in the value of property without payment of conversion fee and before obtaining a property specific order. Appreciation in the value of the property is a specie of quid pro quo doctrine, but accrual of benefit would be subject to fulfilment of condition of payment of conversion fee. Hence, no change in the legal character of the property could be claimed by A in guise of declaration of suitability of certain area / road for future commercial activities.

10. Petitioners misjudged the scope and effect of the notification, which is merely an enabling step and not a self-executing commercialization order qua any specific property. Declaration, in terms of policy decision, only operates as a framework and must be actualized through a property specific order, upon fulfilment of regulatory conditions. Above-quoted rules of Rules of 2009 prescribed conditions and mechanism for payment of fee for conversion of land use regulatory framework envisaged requirement of a property specific conversion order. Property specific conversion order differs from generally applicable regulatory-cum-planning permission. We are afraid that no vested right is available to the petitioners to seek excuse from payment of conversion fee. In fact, a privilege has been extended through the notification and conditioned with an obligation of payment of conversion fee under rule 67 of the Rules of 2009, textual reading whereof begs no further elucidation rules 49 and 50 of the Rules of 2020 had reiterated the significance of payment of conversion fee. Obligation of payment of conversion price is in consonance with the mandate of property rights guaranteed in terms of Article 24 of the Constitution of Islamic Republic of Pakistan, 1973.

11. In view of the above, we conclude that notification of declaring list-A roads for future commercial use manifest exercise of administrative authority and announcement of policy statement, which has qualified the potentiality of certain property(ies), which can be put to use for commercial activities / purposes but once conditionalities attached are met. Mere zoning or re-zoning of roads would not per se entitle petitioners to benefit from the declaration without meeting the conditions. Learned counsel heavily relied on the case of Learning Alliance (Private) Limited through Chief Executive and 3 others (supra) without appreciating distinguished features thereof. To explain distinction, it is appropriate to reproduce operative part of the judgment which is outcome of the reasoning extended and operative part identifies legislative framework subject to challenge and adjudication. Operative part of the decision reads as,

38. In view of the aforesaid, the instant Petition along with connected Petitions as detailed in Schedule A, are allowed in the following terms:- (i) LDA cannot levy or recover conversion fee under Section 28 of the LDA Act read with Rule 28 of the 2014 Rules from roads or segment of roads declared commercial as per List A 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; (ii) It is clarified that for the purposes of the Petitioners before this Court whose properties as per LDA's understanding do not fall in List A or in an area declared commercial or has not been declared commercial, LDA first issue notice to the Petitioner and grant a right of hearing to justify the demand for conversion fee based on land use classification; (iii) For the purposes of Section 28 of the LDA Act where LDA seeks to raise adequate funds to meet the cost of planning, expansion, execution, development, re-development, maintenance, zoning, classification, re-classification, augmentation, supervision, regulation and conversion of any property in any present or future scheme, it must declare the cost so incurred, which it seeks to recover in the form of a fee with full disclosure of all amounts spent on development and expansion projects and schemes to maintain good governance and transparency and to establish the need to meet the costs for the fee that it has imposed; (iv) The vires of sections challenged before this Court being 4, 6, 13, 14, 14A, 18, 19, 28 and 37 of the LDA Act have already been upheld by the august Supreme Court of Pakistan in the Imrana Tiwana Case, hence to this extent prayer of the Petitioners cannot be granted .

12. Reasoning of the judgment has to be read in the context of section 28 of Act 1975 and Rules 2014 in fact at paragraph 18 of the judgment existence and applicability of Rules of 2020 was acknowledged and it was observed that same shall be enforced by the Local Government to the extent of notified controlled area, which substantiates applicability of Rules of 2009 / 2020. No adverse findings were recorded in the judgment qua Rules of 2009 and Rules of 2020. Hence, discussion / reasoning of the case of Learning Alliance (Private) Limited through Chief Executive and 3 others (supra) has to confined to the extent of regulatory framework subject matter thereof and dictum laid cannot be invoked to prejudice or undermine the Rules of 2009 or Rules of 2020, as and where applicable. Hence, case of Learning Alliance (Private) Limited through Chief Executive and 3 others (supra) has no application to the cases at hand. Judgements, other than the case of Learning Alliance (Private) Limited through Chief Executive and 3 others (supra) extends no assistance to the case of petitioners. In the end we would like to address the argument that since area under reference has been declared conducive for commercial activities in the Master plan, thereof no conversion fee is payable. Argument is fallacious, which does not appreciate the distinction between enabling effect of the zoning classification, which is policy decision regarding conversion of classification of land use, but simultaneously providing for the necessity of fulfilling requisite conditions, before a property specific order is made. At the expense of repetition, change in the legal character of the property would be effected upon fulfillment of conditionalities and mere issuance of declaration to notify roads, suitable for future commercial use, is not enough to claim vested right or reap benefits of policy without payment of conversion fee.

13. In view of the above, challenge thrown to the order and demand for payment of conversion fee is rejected and petitions are, hereby, dismissed. No order as to the costs. UN/A-5/L Petitions dismissed.