2022 PLP 793 (CLC)

AYESHA A. MALIK, J.

This common judgment decides upon the issues raised in the instant Petition along with connected Petitions, as detailed in Schedule "A" appended with the judgment, as all Petitions raise common questions of law and facts. The instant Petition along with connected petitions essentially challenge the vires of provisions of the Lahore Development Authority Act, 1975 ("LDA Act") as well as provisions of the Lahore Development Authority Land Use Rules, 2014 ("2014 Rules") and consequently demand that notifications seeking payment of commercialization/conversion fee be set aside. The case of the Petitioners

2. The Petitioners before the Court are either owners or tenants of properties who have been asked to pay conversion fee by the LDA under the 2014 Rules for carrying out commercial activity at their property. The Petitioners have either impugned demand notices issued by Lahore Development Authority ("LDA") for payment of conversion fee or have challenged public notices dated 28.12.2012 and 5.1.2013 issued in leading newspapers both english and urdu on the basis of which, a list was provided of commercial areas and the public was informed that they have seven days to have their properties converted permanently, for commercial use after payment of conversion fee. In some cases the Petitioners have challenged the vires of certain provisions of the LDA Act on the ground that they do not have the power to levy conversion fee as this power vests with the Local Government and in some cases the challenge is with respect to the authority of the LDA to demand a one time conversion fee.

3. The instant Petitioner is a school located within the Gulberg Scheme whose contention is that they have been paying temporary commercialization fee for the property for a long time and that there is no basis to charge permanent commercialization fee from the Petitioners. There are several other petitions filed by schools on the same ground being W.Ps. Nos.12224/16, 12222/16, 12225/15, 12216/16 and 12220/16. In other cases, the Petitioners state that they are engaged in commercial activity on commercial roads, that their property is located in a commercial area, hence there is no reason to convert the land usage as its usage has been declared commercial. In this context, the relevant areas where the business of the Petitioners are located within the Gulberg Scheme are MM Alam Road, Jail Road, Main Boulevard Road and Zafar Ali Road amongst others. The other locations in dispute are Iqbal Town Scheme, Multan Road, College Road and Lawrence Road which are all declared commercial by the LDA. In this context, the basic arguments of the Petitioners are as follows: (i) The Petitioners have been doing commercial business at their properties for a long time and have been paying commercialization fee having all requisite permissions in place. Therefore there is no legal justification for charging a one time conversion fee under the LDA Act and the 2014 Rules for the purposes of carrying out commercial activity on their properties; (ii) The Petitioners are located on a road or segment of road which has been declared commercial, hence there is no legal justification for charging conversion fee as the land usage is declared commercial. Hence the Petitioners should not be required to pay conversion fee; (iii) The Petitioners have challenged the demand for one time conversion fee on the ground that they should be allowed to pay annual commercialization fee and that a one time lumpsum amount not only is financially not viable but that no quid pro quo is offered on the basis of such a huge amount charged by LDA; (iv) That Sections 4, 6, 13, 14, 14A, 18, 19, 28 and 37 of the LDA Act ("the Challenged Provisions") violate Article 140A of the Constitution of Islamic Republic of Pakistan, 1973 ("Constitution") which envisages a three tier system of government being Federal, Provincial and Local, hence are ultra vires the Constitution and should be declared so; (v) That the impugned sections usurps the power of the Local Government in favour of the LDA which is not only against the mandate of the Constitution but also deprives the Local Government of its ability to raise revenue to carry out its functions under the Punjab Local Government Act, 2013; (vi) That the quantum of the conversion fee prescribed is arbitrary, excessive and discriminatory; (vii) That the 2014 Rules do not prescribe the manner in which the fee shall be charged rather a flat rate of 20% of the commercial value of the property is the required rate charged by the Respondents.

4. The argument essentially made by the learned counsel for the Petitioners is that LDA does not have the power to levy or collect a conversion fee under Section 28 of the LDA Act for land usage which is declared commercial that is where the land usage has been declared commercial, there is no legal basis to recover conversion fee. Further that if at all any fee can be levied it is only to recover cost incurred for conversion within a specified scheme. This requires proper disclosure by LDA of the cost incurred and the amounts statedly to be recovered. Hence it is argued that the conversion fee at the rate of 20% of the commercial value of the property is arbitrary, without basis, exorbitant and does not fall within the mandate of Section 28 of the LDA Act. It is also argued that there is no quid pro quo offered by the LDA for the fee they are charging. In this regard, the argument is that in order to levy a fee quid pro quo is mandatory. Reliance is placed on Collector of Customs and others v. Sheikh Spinning Mills (1999 SCMR 1402), Pakcom Limited and others v. Federation of Pakistan and others (PLD 2011 SC 44), Federation of Pakistan through Secretary Ministry of Petroleum and Natural Resources and another v. Durrani Ceramics and others (2014 SCMR 1630).

5. Learned counsel for the Petitioners also argued that LDA cannot charge a one time fee for permanent conversion as that not only goes against the quid pro quo requirement but also against the mandate of Section 28 read with Section 31 of the LDA Act. Learned counsel for the Petitioners also argued that the LDA Act read with the 2014 Rules seeks to vest the powers of the Local Government in a non-elected authority which is fundamentally opposed to Article 140A read with Article 32 of the Constitution and offends the fundamental rights of the Petitioners. Reliance has been placed on Lahore Development Authority through D.G. and others v. Ms. Imrana Tiwana and others (2015 SCMR 1739) ("Imrana Tiwana Case") to urge the point that these aspects of the matter have not been considered by the august Supreme Court of Pakistan in the said judgment. Learned counsel further argued that Local Government is an elected body which is responsible under the Local Government Act, 2013 (as the relevant law at the time) to essentially develop land use plans, classification and re-classification along with development of markets and zoning rules while considering public transport, roads and other infrastructure. In this regard, the function of the Local Government has been handed over to the LDA which not only is unconstitutional but deprives the Local Government from its ability to do its functions through its elected representative as well as to raise revenue to carry out its functions as contemplated under the Local Government Act. Hence they argued that there is no means of harmonizing the functions of an elected local government viz-a-viz the impugned Sections of the LDA Act. The case of the Respondents

6. On behalf of LDA it is argued that the vires of the sections challenged has already been settled in the Imrana Tiwana Case wherein it was held that these provisions being the Challenged Provisions of the LDA Act are to be construed harmoniously with the functions of the Local Government under the Local Government Act, such that they are compliant with each other in furtherance of their functions and responsibilities. It is also argued that LDA carries out most of the development works in the Lahore Division with the help of WASA and TEPA and that the re-classification of various different schemes falls within the mandate of the LDA Act as well as the 2014 Rules; that the Gulberg Scheme was re-classified so as to facilitate the inhabitants of the areas and to ensure that commercial activity was restricted to particular zones to protect overflow issues and that the District Planning and Design Committee, Lahore has reviewed all recommendations made by the LDA with respect to the commercial and frozen roads which led ultimately to the Notification of 29.6.2011 issued by the Director General, LDA; that the LDA can charge conversion fee on the basis of Section 28 of the LDA Act read with Rule 28 of the 2014 Rules and as such no illegality has been committed by the LDA.

7. So far as the quid pro quo argument is concerned, it is argued that LDA provides a large number of services for the development and facilitation of its schemes, hence it can charge a one time permanent conversion fee. In this regard, learned counsel argued that the LDA maintains the LDA Fund and the Urban Development Fund from which it is required to provide various different services. In this regard, learned counsel argued that if there was no quid pro quo the properties being used commercially or industrially would be of no use to the Petitioners as the commercial or industrial value of the land is on account of the services provided by LDA for that area. During the course of arguments, learned counsel also informed the Court that the Lahore Development Authority Land Use Rules, 2014 have been repealed by the Lahore Development Authority Land Use Rules, 2020 ("2020 Rules") on the basis of which many of the pending Petitions have become infructuous as the 2020 Rules have once again introduced the concept of temporary commercialization, hence for those Petitioners who are aggrieved by permanent conversion, the option of availing temporary commercialization is once again available. However, LDA's counsel requested that the matter be decided on its merit to settle the long standing issue. Issues before the Court

8. On the basis of the arguments made, the issue before the Court is primarily whether the LDA can levy a conversion fee in areas which are declared to be commercial; whether such a fee can be a one time fee and whether the fee charged is as per the requirements of Section 28 of the LDA Act. Also in issue are the vires of Sections 4, 6, 13, 14, 14A, 18, 19, 28 and 37 of the LDA Act with specific reference as to whether these powers should be exercised by the Local Government and whether the Imrana Tiwana Case considered the issue of financial autonomy of the Local Government, particularly with reference to the impact on revenue generation for the Local Government viz-a-viz conversion fees. The Background

9. The dispute between the parties is essentially under the 2014 Rules, on account of the changes in policy with respect to commercial use of land and levy of fee for conversion in land use. In order to appreciate the dispute of the Petitioners, it is necessary to understand the changes in policies adopted by the LDA over the years with respect to commercialization that is commercial use of land and the levy of conversion fee along with the concept of change in land use.

10. On 26.12.1990 the Government of Punjab through the Housing, Physical and Environmental Planning Department issued the first commercialization policy for residential plots on the basis of which residential property could be converted into commercial property. On 27.3.1993 the policy was revised whereby commercialization was allowed subject to the permission granted by a committee, after due deliberation of the roads and streets which could be converted for commercial usage, thereby allowing residential plots to be used for commercial purposes. As per this policy commercialization fee was charged in lumpsum at the rate of 25% of the market value, in advance and it required an NOC to be obtained from adjoining properties prior to converting the land use of the property.

11. The Commercialization Rules, 2001 ("Commercialization Rules") were notified for the first time on 2.7.2001 by the Government of Punjab, Housing, Urban Development and Public Health Engineering Department, Lahore under Section 44 of the LDA Act and Section 43 of the Punjab Development of Cities Act, 1976. As per these Rules, a commercialization committee could notify the roads and streets on which commercial activity was permitted and commercialization fee was charged at the rate of 20% of the value of the property, based on the valuation table prepared under the Stamp Act, 1899 or 20% of the average sale price for the preceding 12 months in case of rural areas. The Commercialization Rules provided for annual commercialization as well as temporary commercialization and also constituted a commercial committee to implement the rules.

12. On 17.3.2008 in exercise of powers under Section 44 (rule making power) of the LDA Act, Lahore Development Authority Land Use Conversion Rules, 2008 ("2008 Rules") were notified and the Commercialization Rules were repealed. As per these Rules, the LDA had to prepare List A, B, C and D which provided for the roads or segment of roads and buildings declared commercial as well as plots and buildings where temporary commercialization was permitted. In terms of Rule 9 of the 2008 Rules, LDA could deem a building, plot or land facing a commercial road as converted to commercial use after payment of conversion fee and an occupant of a building, plot or land facing the roads on List A could use the land for commercial use without payment of conversion fee. It also provided for temporary commercialization in terms of List C and D and required phasing out of temporary commercialization of buildings in List C. Rule 18 of the 2008 Rules provided for the fee for conversion of land use when residential or open areas were converted to commercial use. The rate prescribed was 10% of the value of the land as per the valuation table or the average sale price over the preceding 12 months where valuation table was not available. Important to note that until 2008 roads declared commercial could be used for commercial purposes, without any conversion fee.

13. The 2008 Rules were repealed vide Notification dated 10.02.2009 and the LDA Land Use (Classification, Re-classification and Re-development), 2009 ("2009 Rules") were notified which Rules introduced the concept of land use classification and essentially provided for the various different land uses which were permissible or prohibited. As per these Rules, land use was classified as residential, commercial, industrial, peri-urban, agricultural and notified area. A procedure was set out in Chapter III of the 2009 Rules for the classification of land use and in terms of Chapter IV, land use could be reclassified by the LDA and notified accordingly. An entire process was set out for reclassification of land use, based on the development and growth in the area, which required for the re-classified scheme to be notified. Fee for land use conversion was prescribed in Rule 55 and also provided under Rule 62 that a building, plot or land facing the roads mentioned in List A as converted for commercial use, however the land owners had to pay a conversion fee.

14. Consequent to the 2009 Rules, Notification dated 5.11.2009 was issued by the LDA, which covered 58 roads and segments of roads, which were declared as commercial, named in List A. This List A published on 13.11.2009 provided for the names of the roads and the segments, its starting point, its ending point with all dimensions and also provided for the type of commercial activity allowed on roads. Important to note that these roads were declared as permanent for commercial use. Hence their land usage was declared to be commercial. The LDA also provided for the list of roads, segments of roads, which were not allowed any future or further commercial use as List B. Some of the areas under dispute before this Court are named roads or segments of roads provided in List A such as Jail Road, Main Boulevard Gulberg, M.M Alam Road, Hali Road, Stadium Road, Shahrah-e-Quaid-e-Azam Road, Mall Road and Link Road which have been declared as commercial roads. In the same way, Model Town Link Road, Al-Madinah Road Township, Maulana Shoukat Ali Road, College Road and Zafar Ali Road are also listed as roads in commercial use. This Notification was amended on 29.6.2011 published on 25.7.2011 such that List A and List B were further amended to add roads which can and cannot be commercial in future.

15. On 1.2.2012 a Notification was issued under Rule 42 of the 2009 Rules providing for the land use reclassification plan of the Gulberg Scheme as approved by the Authority as per its reclassification plan. Rules 1 to 3 of the Notification provides as under:- (1) The general restrictions/terms of this re-classification scheme shall apply on the respective roads/commercial corridors and in Institutional Zones permitted for future commercial/institutional use, in addition to any restrictions specifically imposed on these roads (commercial corridors) and institutional zones. (2) Nothing in this notification 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. (3) Subject to any legal restrictions imposed under any law for the time being in force, an occupant of a building, plot or land may use the building, plot or land for a purpose permitted under the Re-classification Plan on payment of the conversion fee. Essentially this Notification re-classified land use in the Gulberg Scheme, as per the Reclassification Plan but importantly did not affect the status of a building, plot or land which had been converted on payment of conversion fee under any law. This meant that for land use, which had been converted and conversion fee had been paid, that property retained its converted land use. The Notification is silent so far as the named roads in List A are concerned, which suggests that they maintain their status of being declared commercial despite the reclassification exercise. It also required a conversion fee be paid for commercial use as per the re-classified plan. Hence the dispute starts at this point when conversion fee was sought for conversion of land use as per the re-classification of a scheme.

16. The 2009 Rules were repealed by the 2014 Rules, which essentially maintained the same concept of classification and reclassification of land use. Fee for conversion of land use was prescribed in Rule 28 and Rule 31 deals with temporary commercialization. In April 2014, LDA also notified the Master Plan Rules, 2014 which provided for the master plans, its amendments and provided that these rules shall prevail in the event of inconsistency with the 2009 Rules. Some of the Petitioners before this Court have relied on the LDA Integrated Master Plan for Lahore 2021 dated 6.10.2004 to show that the land use is commercial since 2004 under the Master Plan. Most of the Petitioners before the Court are involved in commercial activity in areas where commercial use is permissible and they have been carrying on commercial activity by way of permanent or annual commercialization fee under the different rules and Notifications. Also important to note is that the LDA was given the power to carry out land use classification and re-classification by way of an amendment to the LDA Act by the Lahore Development Authority (Amendment) Act XXVI of 2013 ("2013 Amendment") . So prior to 2013, LDA could modify a scheme but change of land use, through re-classification was specifically introduced vide the 2013 Amendment wherein Section 14 of the LDA Act provides that LDA can notify a scheme by change of land use through classification or reclassification or redevelopment. In the same way through the 2013 Amendment in Section 28 of the LDA Act, an amendment was made allowing LDA to raise funds by imposing fees to meet the cost of reclassification and conversion of any property, amongst others. Prior to the amendment, LDA could only levy fees with the consent of the Government and a scheme could be modified as per the prescribed rules, in the same way as prescribed for the preparation of a scheme. Consequently the 2013 Amendment allowed LDA to raise funds without any approval from the Government and for reasons such as planning, expansion, classification, re-classification which by itself is general and means and suggests any and all functions of the LDA.

17. The Government of Punjab has now issued the 2020 Rules under Section 44 of the LDA Act and repealed the 2014 Rules. The 2020 Rules defines commercial area and commercial use of property and has maintained the chapter on conversion, commercialization and permissibility fee as well as temporary commercialization.

18. From the aforesaid, it can be said that the Government of Punjab and the LDA through various different policies and rules have regulated land use, its conversion and commercial use of the land. Over time, due to rapid development and population growth, there has been an increase in the commercial use of property and on account of this rapid growth reliance on the master plan eroded and instead LDA's land use rules governed conversion of land use. The Government of Punjab also issued the Punjab Land Use (Classification, Reclassification and Development) Rules, 2009 under Section 191 of the Punjab Local Government Ordinance, 2001 for the benefit of the Local Government which are similar to the 2014 Rules. These Rules still exist and are to be enforced by the Local Government to the extent of the notified controlled area which defines their jurisdiction. Consequently what has resulted is a haphazard manner of land use conversion and approval for commercial use of land which then necessitated the concept of re-classification by the LDA. This essentially meant surveying the areas and notifying new usages as per the existing use of land in the area. Important to note is that historically LDA has relied upon different commercialization policies which allowed for the commercialization of properties on temporary or annual basis subject to certain conditions. At the time there was no land use plan guiding conversion and commercialization policies. Reliance was made on the Master Plan of Lahore. Commercial use of land was granted on need basis and was fairly random. LDA then introduced Lists A to D which set out roads which were commercial and roads which were frozen, so no further commercial activity could take place on these roads and roads on which temporary commercialization was allowed. The idea was to regulate land use conversion and streamline classified land use as declared by LDA. Ultimately through re-classification it increased the areas where commercial activity is permissible and required a conversion fee to be paid simply on account of the re-classification of the Gulberg Scheme. Hence the conversion fee under challenge in these cases, primarily arises on account of the re-classification exercise. During this time, LDA has also tried to phase out temporary commercialization, however it has not been successful in doing so. LDA has again provided for phasing out temporary commercialization through the 2020 Rules.

19. The shift in policies has not advanced the cause of LDA, that is to make the process of land use conversion for commercial purposes effective and more efficient. Under the 2008 Rules, there was no definition given to conversion of land use and instead Rule 9 provided for a deemed conversion status of buildings, plots or land facing a commercial road as mentioned in List A, being the list of land converted for commercial use. As per the 2008 Rules, an occupant of any building, plot or land facing a commercial road as notified in List A did not have to pay any conversion fee. Conversion fee was defined under Rule 18 of the 2008 Rules where LDA could levy the said fee for change of residential or open area to commercial use at the rate of 10% of the value of the commercial land. The 2009 Rules defined commercial area under Rule 2 as well as commercial use being land which is predominantly used for commercial purposes. Land use was classified as per its usage introducing several categories of land use which meant that LDA was allowing other than residential land to be converted for commercial use or other usage. The 2014 Rules defined land use plan as the plan that sets out land uses and defined master plan as the traditional method for presenting land use. A detailed process of reclassification of land use was carried out which was an effort to keep pace with the rapid urban growth. The dispute before the Court pertains to the fee levied on conversion of land use for properties covered under List A. Therefore in order to appreciate the case of the Petitioners, it is necessary to understand the concept of land use and its conversion as the entire dispute is based on this. Conversion of Land Use: The Concept

20. The LDA Act defines conversion under Section 3 of the LDA Act to mean change in use of land from the one provided in an approved scheme or master plan. Scheme is also defined under Section 3(w) of the LDA Act to mean a project approved for urban development, re-development or renewal and includes larger area plan, areas specified and notified for specific use, traffic control plans, classification and re-classification plans, housing scheme or zoning scheme. Section 13 of the LDA Act requires the LDA to prepare schemes and provides for its requirements. Section 14 of the LDA Act provides that LDA can change the land use within a scheme through classification or re-classification or redevelopment as per the prescribed manner. Section 38 of the LDA Act provides that where a property's usage is converted to a different usage, then the one provided under a scheme or master plan or classification it must be with the approval of the Authority. The 2014 Rules defines conversion of land in Rule 2(c) to mean the change in use of land or property from the one originally provided in an approved scheme or the master plan. Master Plan has been defined to mean the traditional method for presenting a set of land usage, allocation and control measures in the form of a map in graphical form and is supported by written statement of goals and objectives, strategy, financial implications and policies for planning and development for an area and includes a structure plan, an outline development plan a spatial plan, peri-urban structure plan. The relevant master plans referred to are the Master Plan of Greater Lahore 1966, and the Lahore Integrated Master Plan 2021. These Master Plans initially served as the fundamental document responsible for urban planning and future growth of Lahore. However, with time LDA relied upon its land use rules and land classification and re-classification schemes as they were based on more recent surveys and represented a more accurate picture of land use. Land Use is classified as residential, commercial, industrial and institutional amongst others in Chapter II of the 2014 Rules. As per the 2014 Rules, 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. Commercial Use means land use which is predominantly connected with sale and distribution of goods and services. List A means roads or segments of roads, on which commercial use has been permitted under the Lahore Development Authority Land Use (Classification, Reclassification and Redevelopment) Rules, 2009 or Punjab Land Use (Classification, Reclassification and Redevelopment) Rules, 2009. List B means roads or segments of roads, on which commercial use has been prohibited under the Lahore Development Authority Land Use (Classification, Reclassification and Redevelopment) Rules, 2009 or Punjab Land Use (Classification, Reclassification and Redevelopment) Rules, 2009. The 2014 Rules prescribe the permitted land use of commercial areas amongst other land usage. It also requires LDA to prepare a land use classification map and prepare a land use reclassification scheme of a project area. The intent being to allow LDA to change land use permissibility as per the trending usage in the project area. As per the 2014 Rules temporary commercialization was not allowed by the LDA in areas permitted for commercialization in the master plan, re-classified areas or areas permitted for commercial use and roads mentioned in List A. This means that for these given areas LDA required land usage to be permanently converted by the owners against a one time conversion fee.

21. So in the scheme of planning and development the master plan sets out a general plan of the areas and their land usages. The land use plan set out the overall vision of the manner in which land can or cannot be used as it separates uses which are incompatible with each other, so that areas are earmarked with a purpose which is conducive to the environment and provides the required amenities for the given land use. This was necessary as schemes like Gulberg had changed from largely residential to permanently commercial. The land use rules, provided for the classification of land use and allowed conversion as per the rules. List A provided for the declared roads and segment of roads which were commercial as it reflected the permanent usage of the road or segment of roads. Essentially roads mentioned in List A were declared as commercial by the LDA since 2008 on the basis of the prevailing land use.

22. The challenge faced by the LDA through the process of devising policies for commercialization and then conversion of land use has been to maintain the conversion process as close to the master plan and the land use plan devised by them. However this has not been possible or practical as the increased pace of development put pressure on land use for commercial purposes whereas the aspects of planning, development and execution did not necessarily keep the same pace. LDA then entered into a phase of reclassification of certain areas where on the basis of the existing usage of land, they modified the land usage and developed a new land use plan. As per the 2014 Rules, in areas where the land use is declared as commercial, those who were carrying on business in these areas and have paid permanent commercialization fee or conversion fee under a previous policy or rules were made liable to pay a one time conversion fee, based on the reclassification of the scheme. Essentially there was no conversion of land use, but the exercise of re-classification became the basis of the demand for the one time fee. In the cases before the Court, this is primarily relevant to the Gulberg Scheme. Interestingly LDA is charging a one time conversion fee even though the status of land use has not changed by way of the reclassification scheme. That is to say the land use has not been converted as the Petitioners before the Court are covered under List A. Hence LDA is charging conversion fee on roads that have been declared commercial that is where the land use is declared as commercial. LDA claims that even though the roads have been declared commercial, the individual properties on that road are not commercial. This logic totally defies the concept of land use plan and land use classification as the only objective of land use classification and land use plan is to declare areas within which classified usage can take place. Hence there appears to be no logic in requiring the owner to pay for conversion of land use, as the land use has not been converted. However, in individual cases which relate to housing schemes or areas not covered under List A, LDA has to first ascertain whether the area is commercial or residential and whether in fact there is any land use conversion.

23. Land use essentially is a planning device which ensures that individuals use their land in the interest of the environment and for the surrounding area. The purpose of classifying land use, is to provide the permissible limits of land usage. Conversion of land use means that the owner of the land, takes permission to convert the land use from that which is prescribed in the land use plan or scheme. So land use conversion means that where the area is classified as residential or institutional permission is sought to use the land for a different purpose other than that prescribed. Where the land usage is as per its classification, then there is no element of conversion involved. This is why conversion must be as per the rules with the permission of the Authority. In the present cases, LDA seeks to recover conversion fee, where there is no element of conversion involved.

24. The argument given by the LDA that each individual property is required to be converted even though it is located on a road or segment of roads declared commercial (List A) is totally misconceived, as the reason the said roads were declared commercial in the first case is because the usage on that road was primarily commercial, hence the road was declared permanently commercial. This means that the land use for the area is commercial. Since the land usage was declared on the basis of existing usage of the land, the requirement of individual property owners to convert the land usage of property has no basis as their property stands converted with the declaration made by the LDA. In this regard, it is important to note that the declaration of a road as commercial is based on the usage of the property around that road and not per se the actual road itself. Hence there is no justification to demand a conversion fee on properties facing roads or segment of roads as named in List A. The entire concept of land use conversion is based on changing the use of land from the one provided in the scheme or master plan or land use plan. Hence where there is no conversion in land use, a conversion fee cannot be levied. The Petitioners have also challenged the quantum of the fee being contrary to the requirements of Section 28 of the LDA Act. Hence the scope and purpose to charge conversion fee is also relevant, to decide on the basic issue. On the issue of levy of fee for conversion of land use

25. One of the justifications that the LDA has given for charging conversion fee is that it is responsible for preserving, protecting and developing areas which are declared commercial for which it requires revenue as it has to provide a large number of facilities such as roads, parking, water, sanitation including facilities such as fire fighting arrangements, water hydrants which are the requirements of any major urban city today. Hence the power to levy and collect fee is co-related to the basic function of the LDA which involves planning and development, to improve the environment which includes aspects of traffic, transport, water supply, sewerage, drainage, waste disposal and matters connected therewith. In this context, they allege that both services and quid pro quo are present to justify the fee. They state that Section 28 of the LDA Act allows LDA to raise adequate funds to meet its costs, hence conversion fee is a valid fee under the LDA Act.

26. The power to levy and collect fee is pursuant to Section 28 of the LDA Act which reads as follow:-

28. Rates and fees.- (1) The Authority may raise adequate funds to meet the cost of planning, expansion, execution, development, redevelopment, maintenance, zoning, classification, reclassification, augmentation, supervision, regulation and conversion of any property or any present and future scheme or any part of the scheme, by imposing rates, fees, surcharge, other charges and fines in the prescribed manner. (1a) The Authority may, in the prescribed manner, impose fee on change of land use owing to classification and reclassification. (2) The rates, fees and other charges for water supply, sewerage and drainage schemes] shall be such as to provide sufficient revenues (i) to cover the operating expenses including taxes, if any, and interest to provide adequate maintenance and depreciation; (ii) to meet repayments on long term indebtedness to the extent that such repayments exceed the provision of depreciation; (iii) to finance the normal year to year extension of any of such schemes and to provide a reasonable portion of the cost of future major expansion of such schemes.

27. As per Section 28(1a) of the LDA Act, the LDA can levy a fee on the change of land use owing to classification or re-classification, to raise adequate funds to meet the cost of planning, expansion, development and re-development amongst other reasons as listed in Section 28 of the LDA Act. Section 3(k) of the LDA Act defines the word 'fee' to mean an amount levied by the Authority on the land, area, scheme or property on account of any privilege, benefit, services, transfer of rights and interests, issuance of a licence or permission or any cost and includes charges for provision of water supply, construction, maintenance and network of roads, drainage, sewerage and other services. So the conversion fee is for a benefit or service or for recovering costs which includes charges for water supply, maintenance of roads, drainage, sewerage and other services all relevant to conversion of land use. Section 28(1) vests power in LDA to raise adequate funds to meet the cost of conversion of any property. Hence what is fundamental to the levy of conversion fee is that it requires adequate funds to meet the cost of conversion. Although LDA can raise adequate funds to meet the cost of planning, expansion, development, maintenance, for the purposes of a conversion fee, all amounts raised have to be adequate to meet the cost of conversion. As per Section 3(i) conversion means change in land use from the approved scheme or master plan. So a conversion fee can be charged for change of land use and change of land use is on account of the change from the classification or re-classification of a scheme. Section 44 of the LDA Act provides for the powers to make rules for carrying into the effect the purpose of the LDA Act. Pursuant to these powers, the Commercialization Rules were issued vide Notification dated 02.07.2001, the 2008 Rules, the 2009 Rules, the 2014 Rules and now the 2020 Rules. Rule 28 of the 2014 Rules prescribes as follows:

28. Fee for conversion of land use. (1) Conversion of land use, by preparation, amendment in the master plan, by declaration of peri-urban area under the Lahore Development Authority Master Plan Rules 2014, and by reclassification under Lahore Development Authority Land Use (Classification, Reclassification and Redevelopment) Rules, 2009, Punjab Land Use (Classification, reclassification and Redevelopment) Rules, 2009 or under these rules, shall not entitle any person to use the land for such notified, converted, reclassified use unless the conversion fee is paid in a manner given hereinafter: Land Use Rates I. On the approved roads as mentioned in list A of the Gazette Notification dated 29.06.2011 20% of the commercial value of the total area of ownership, as provided in the valuation table. II. Upon Re-Classification under the Lahore Development Authority Land Use Rules, 2009, Punjab Land Use (Classification, Reclassification and Redevelopment) Rules, 2009 or under these rules: a. From Peri Urban, Residential, Agricultural Areas to Commercial. b. From Residential, Agricultural, Peri Urban to Industrial, Institutional, Intercity Service Area. c. From Institutional or Industrial and Intercity Service Area to Commercial. a. 20% of the commercial value of the total area of ownership, as provided in the valuation table. b. 10% of the commercial value of the total area of ownership, as provided in the valuation table. c. 10% of the commercial value of the total area of ownership, as provided in the valuation table. III. Upon Declaration of Peri- Urban Area: a. from agriculture area to residential area b. from agriculture area to commercial area c. from agriculture area to Industrial, Institutional, intercity services. a. 5% of the residential value of the total area of ownership, as provided in the valuation table. b. 20% of the commercial value of the total area of ownership, as provided in the valuation table c. 10% of the commercial value of the total area of ownership, as provided in the valuation table IV. On permissible uses under Rules 4(b), 7(b), and 8(b) 20% of the commercial value of the total area of ownership, as provided In the valuation table (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) is exempt from the payment of income tax; and (c) its audited accounts for last three years reflect that it provides services to the needy or the poor, free of cost or on no profit basis. (3) The Authority may allow payment of fee in four equal quarterly installments over a period of one year. In case of default, the fee already paid shall, subject to an opportunity of hearing, be forfeited and the offer of commercialization shall stand withdrawn.

28. As per the 2014 Rules, conversion fee applicable to properties located on approved roads or segments of roads was 20% of the commercial value of the total land. Annual commercialization fee is applicable only to properties located on non-approved roads or in frozen zones operating prior to the 1.2.2012 Notification issued by the Chief Metropolitan Officer, LDA, Lahore. This means that for areas declared commercial, a permanent conversion fee has to be paid, one time and for roads not declared commercial an annual fee is to be paid on a temporary basis as the area is not declared commercial. The question that arises is that once an area is declared commercial, how does a one time fee raise adequate funds to meet the costs of conversion and whether LDA is obligated to declare the costs incurred or likely to incur in order to justify the quantum of the fee charged. LDA has justified its fee structure for commercial use of land on permanent basis as being a regulatory fee, a service fee and a quid pro quo fee required for providing services both as regulator and facilitator for the given area. They argue that fee for conversion of land use is necessary as it is in the nature of a license granted by the LDA to use the land for a specific purpose. Also that LDA has to ensure that the area meets the requirements of the given land use, in terms of facilities such as road, network, parking, traffic flow and impact, utility services, water, sanitation, sewerage etc. Furthermore as it is a regulatory fee, it does not require any quid pro quo and the only test is to ascertain if there is a nexus between the fee charged and the administrative services provided. Reliance is placed on Collector of Customs and others v. Sheikh Spinning Mills (1999 SCMR 1402), Seven Up Bottling Company (Pvt.) Ltd. v. Lahore Development Authority (L.D.A.), Lahore through Managing Director, WASA and its Deputy Director Revenue (South), WASA, Lahore Development Authority and another (2003 CLC 513), Pakcom Limited and others v. Federation of Pakistan and others (PLD 2011 SC 44), Federation of Pakistan through Secretary Ministry of Petroleum and Natural Resources and another v. Durrani Ceramics and others (2014 SCMR 1630) and Trade Serve International (Private) Limited and others v. Pakistan Electronic Media Regulatory Authority and others (PLD 2017 Lahore 563). From the arguments raised it appears that the fee charged under Section 28 of the LDA Act is an all encompassing fee to serve the purpose of revenue collection.

29. In the cases before the Court, land use conversion is from residential to commercial, hence LDA seeks to levy a conversion fee for commercial use of the land. However, where roads, buildings, areas have been declared commercial, can it be said that a conversion fee should be charged for the purposes of development and maintenance of the area. Historically LDA charged a commercialization fee for carrying out commercial activity in a permitted area. The Commercialization Rules provided for permanent as well as temporary commercialization fee as per the users' requirements. In cases where permanent commercialization fee was paid under the Commercialization Rules, the land use stands permanently converted consequent to the said Rules. In the same way, the 2008 and 2009 Rules declared certain roads or segments of roads as approved for commercial use, permitting commercial activity on those roads. With the re-classification exercise, LDA required that a one time fee be paid for conversion of land use to commercial for all properties including those declared commercial permanently. They state that re-classification meant that the classifications were decided afresh, hence the fee has to be paid. They also state that while the road has been declared commercial the individual plots have not been converted, hence given that it is a declared commercial area, a land owner can convert its residential plot to commercial on payment of conversion fee. They also argue that once this fee is paid, no further fee will be required with respect to land use conversion. However, this does not address the issue raised by some of the Petitioners who have paid permanent commercialization fee under the Commercialization Rules. Why are they required to pay any further amounts as they have converted their land permanently prior to the re-classification scheme. Then there are other Petitioners, who have been paying annual commercialization fee in areas declared as commercial because the rules at the time allowed it. These Petitioners are required to pay a one time fee, in a declared area, where in fact there is no land use conversion. Some of the Petitioners before the Court have been doing business on these roads, by paying temporary commercialization fee and their main grievance is that they should not have to pay a conversion fee or in the alternate should be allowed to pay a temporary fee at a reasonable rate. Their argument is that as the land use has been converted by the LDA, hence there is no reason to charge a conversion fee. This argument is supported by the 2020 Rules which allows occupants of already approved property to apply for temporary or annual commercialization at the rate of 1.25% of the commercial value of the land as per the prevailing valuation table. Hence the entire case of LDA of charging a one time fee has itself undergone a change with the 2020 Rules as the 2020 Rules again gives land owners the option to pay annual fee in declared commercial areas. It also totally negates the argument that the one time fee is necessary to meet the adequate costs incurred by the LDA in developing the area to meet the cost of conversion.

30. Important to note is that once again through the 2020 Rules LDA has stated that temporary commercialization shall be phased out by 30.6.2024 which means that on approved roads (List A) conversion fee will have to be paid after 30.6.2024. Hence the basic dispute remains that is should the Petitioners pay a conversion fee, for land declared as commercial. In the first case, as already has been stated once the land use has been declared by LDA, no further conversion is required. As the only justification for the levy of the fee is revenue collection then it is necessary to understand the purpose and manner of revenue collection. Section 28 of the LDA Act requires LDA to charge a fee for conversion of land use to meet the cost of classification or re-classification and conversion. This means that LDA can charge a fee to recover the cost it has incurred to develop an area as per its land use. This stands to reason as the LDA is the Authority responsible for planning and development in the area of the Lahore Division by devising policies and programs for improvement in housing, traffic, transport, education, water supply, sewerage, drainage, sold waste disposal and connected matters. Hence it can raise funds to meet the cost of planning. In this context, LDA is required to execute its planning through itself and government agencies, hence it uses the assistance of WASA and TEPA amongst others to execute its plans. However, nothing has been argued or filed in support of the cost incurred with reclassification or the anticipated cost for which the one time conversion fee is being charged. Nothing has been placed on record to show what if any, reclassification costs were incurred, especially since many parts of Gulberg were already classified as commercial areas under the master plan or as per List A and List B, which means that these areas were already providing facilities needed for a commercial area, and reclassification, at best, necessitated enhancement of the facilities. LDA has stated that it provides maintenance of infrastructure for the benefit of property owners in the area which includes repair works, expanding sewerage systems, roads, under and over passes and additional infrastructure. They have relied on a self created document which claims to reflect the cost incurred from 2009 to 2015 specifically on tube wells, sewerage, water supply drains and filtration plants. They have also relied on their own list of infrastructure development in the Gulberg area. These documents do not detail the cost incurred or even planned. It also does not explain the rational to pay a permanent fee for conversion of land use which land was already converted and the re-classification exercise has not changed the land use. Consequently they have failed to establish the extent of the cost incurred in the re-classification of the Gulberg Scheme or any other scheme or road and have failed to show what further development is required on the declared commercial roads or segments of roads for which the conversion fee is required. They have also failed to justify a one time levy and its nexus with the conversion fee.

31. It is noted that under the repealed land use rules 2008 and 2009, LDA was required to keep a separate account for revenue collected from conversion of land use so that the revenue is spent on infrastructure development. LDA has not been able to show that it ever maintained such accounts and whether revenue from conversion fees have all been used for planning and development of the given areas from where fees were recovered. A valid concern that arises is that if LDA uses the conversion fee to develop a flyover or underpass or express way in some part of Lahore, which is not relevant to the area from where the conversion fee was recovered can that be referred to as adequate funds to meet the cost of expansion and development in any scheme or expansion of the scheme. As per the judgments of the august Supreme Court of Pakistan, a fee is extracted from a specific purpose and for providing privilege to particular individuals or a community or a specified area. The distinction between a fee and tax is that a tax is part of the common burden, but a fee is for a specific purpose. So the fee will be for a specified purpose which must co-relate to the expenses incurred. Reliance is placed on 1999 SCMR 1402 (supra), PLD 2011 SC 44 (supra) and 2014 SCMR 1630 (supra).

32. In terms of Section 28 of the LDA Act, LDA must declare its costs for the conversion, classification or reclassification and can then seek to recover its costs through a conversion fee, where the land use is converted. Whether the fee is regulatory or a license fee, it can only be recovered for conversion purposes to meet the declared cost of conversion. As conversion of land use is a benefit sought by the owner, hence a conversion fee can be levied to recover costs. Accordingly the requirement is that LDA declares its planning, development and expansion plans with the expected costs on an annual or bi-annual basis not only to meet the requirements of good governance and transparency but also to justify the adequacy of the costs incurred and its nexus with the fee sought to be recovered. The fees paid under Section 28 of the LDA Act are amounts paid by the public for purposes relevant to the public. Hence they have a right to know where the money is being spent and what to expect from the LDA for the fees they have paid. However, in the cases before the Court, there has been no conversion of land use, as the roads have already been declared commercial and there is no declaration of the costs incurred the LDA for the fees sought to be recovered nor have they explained where conversion amounts have been spent. As the cases before the Court challenge specific demands for conversion fee under the 2014 Rules, the judgment is confined to the levy under the 2014 Rules and the LDA Act.

33. The issue becomes relevant when seen in the context of the LDA Act and the 2013 Amendment. Originally under the LDA Act, LDA Fund was to be established and the amounts deposited in the Fund were utilized by the Authority in connection with its functions under the LDA Act including payment of salaries and other emoluments. There were two heads within the Fund, Urban Development and Environment Sanitation in which amounts including collection from fees, rates and charges would be credited separately. With the 2013 Amendment, Section 27 was amended and 27(3) was inserted which provided that the LDA Fund shall be credited with all stated amounts including fees, rates and charges received by the Authority and that all these amounts with respect to services related to water supply, sewerage and drainage shall be credited in water supply and sanitation head and all other amounts under the Urban Development head. The amounts used under the water supply and sanitation head are to be used exclusively for the purposes of water supply and sanitation, sewerage and drainage and urban development to be used towards development of infrastructure. Similarly Section 28 was amended which allowed the Authority to raise funds to meet the cost of planning, expansion, execution development, re-development, maintenance, zoning, classification, re-classification, augmentation, supervision, regulation and conversion of property presently or need in future scheme and further LDA was allowed to impose a fee on change of land use owing to classification or re-classification. Under the original LDA Act, all rates and fees were to be charged with the consent of the Government and these rates, fees and charges were imposed to cover operating expenses, repayment and finance of any scheme or to provide for future expansion of a scheme. The 2013 Amendment allows LDA to generate revenue through conversion fee without any government control. It also enables LDA to charge conversion fee after completing the re-classification process, even though the land use did not change. This means that in areas declared commercial land owners are made liable to pay conversion fee, simply on account of the reclassification process. The net result of which is that the areas declared commercial remain commercial. This means that essentially conversion fee has become a major source of revenue for the LDA to pay for the various different infrastructure projects it undertakes. So the 2013 Amendment expanded the power of the LDA to recover rates and fees without any intervention of the Government, for a wide variety of reasons without actually providing for any accountability in the manner as to where the funds are used. The basis of the rates prescribed under Rule 28 of the 2014 Rules is also not explained in terms of costs incurred by the LDA or even in terms of adequacy. This amount statedly is deposited in the LDA Fund and can be used for urban development which means that its open ended and not specified on what urban development is and how it is related to conversion of land usage. Further that fees for water supply and sanitation works are collected separately and also are a part of the cost for conversion of land use without specifically stipulating whether the conversion fee raised from a scheme is actually used within that particular scheme. Hence LDA's argument that the conversion fee is used for maintenance, development and expansion within a scheme is not evident from the manner in which it maintains its fund or from the manner in which it has undertaken the task of re-classification.

34. Another aspect of the matter is that even though a lot has been said with respect to the utilization of the conversion fees for development, expansion and maintenance, the fact that the fee is collected one time, on a permanent basis in itself suggests that the collected amount does not necessarily represent the cost incurred for the purposes of development, planning or expansion or even maintenance of any scheme. In this context, LDA was specifically asked to explain how they have budgeted future expansion and plans within the scheme in the context of the fee that is being charged at the rate of 20% of the value of the property. Learned counsel for the LDA has argued that the Gulberg Scheme is a re-classification project where the land use was re-surveyed and re-planned to accommodate the growing commercial activity within Gulberg which originally was a residential area. However, given that LDA has been charging commercialization fee since 1990 under various different rules and polices, it does not explain the one time fee for areas already declared commercial. LDA has not disclosed as to what the cost of conversion has been since 2008 and how the charging of a one time fee fulfills that mandate for all times to come. It has also been brought to the attention of the Court that LDA charges other fees such as betterment fee, development fee and water and sanitation fee, meaning thereby that it is charging under different heads for specific purposes, which is part of maintenance and development. The Lahore Development Authority (Miscellaneous) Rules, 2014 ("Misc. Rules 2014") also sets out rates, fees and charges that the Authority can levy. These are as follows as per Rule 2 of the Misc. Rules, 2014: Imposition of rates and fees: (1) The Authority may, by notification in the official Gazette, levy the rates, fees, charges, surcharge, penalties or fines in the area. (2) In addition to rates, fees, charges, surcharge, penalties or fines specified in the Act or any other rules, the Authority may, in like manner, levy the following rates, fees, charges, surcharge or fines; (a) transfer fee; (b) placement of documents fee; (c) permission to mortgage fee; (d) power of attorney fee; (e) copying fee; (f) processing fee; (g) no objection certificate fee; (h) development charges; (i) augmentation charges; (j) water conservancy charges; (k) emission charges; (l) congestion charges; (m) toll; and (n) parking fee. (3) The authority may, by notification in the official Gazette, increase or decrease the rates, fees, charges, surcharge, penalties or fines. (4) For purposes of assessing the increase in the value of property for charging betterment fee in accordance with sections 23 and 24 for the Act, the approved assessor of the Authority shall assess such increase in the value of the property. (5) The Authority may undertake development of infrastructure and may levy toll on such infrastructure and, for the purpose, the Authority may, in accordance with law, enter into a joint venture or concession agreement with private parties in accordance with law. (6) The Authority may outsource or sublet the collection of rates, fees, charges, surcharge, penalties or fines. (7) Where the owner of property or person liable to pay, defaults in payment of any rate, fee other charges, surcharge, penalty or fine, the Authority, Director General or the person so authorized in this regard may, subject to notice, take one or more of the following actions; (a) withhold the transaction of the property of such person such as transfer or sanction of building plan till such time as the default continues; (b) seal the property of such person; (c) impose surcharge on the defaulted amount at a rate to be determined by the Authority; and (d) declare the defaulted amount to be recoverable as arrears of land revenue. Hence LDA collects various different fees and charges like development charges, augmentation charges which are also related to the same purpose as planning, development and expansion of a present or future scheme. Again I have found no explanation or justification for the levy of conversion fee to pay for services covered under the Misc. Rules, 2014.

35. In this context LDA supports the quantum of its fee on the ground that it is reasonably related to the estimated cost of expenditures incurred by the LDA and is likely to be incurred by the LDA for providing administrative and utility services in the area. Learned counsel argued that in terms of the case law, it is not possible for the LDA to work out arithmetical equivalence of the amount of fee that should be reasonably charged and the only criteria or basis is that the fee charged should be related to the expenditure incurred. It is also argued that LDA provides many facilities with respect to infrastructure works, utility services, waste management and so on, on the basis of which redevelopment schemes will require constant upgradation over time. Hence the fee charged is neither unreasonable nor illegal as the Petitioners have been paying temporary commercialization fee for the same reasons. Reliance is placed on Secunderabad Hyderabad Hotel Owners Association and others v. Hyderabad Municipal Corporation, Hyderabad and another (AIR 1999 SC 635), Shell Pakistan Limited, Karachi through Attorney v. Capital Development Authority through Chairman and 2 others (PLD 2015 Isl. 36) and Trade Serve International (Private) Limited and others v. Pakistan Electronic Media Regulatory Authority and others (PLD 2017 Lah. 563). It is also argued that quantum of fee is a policy decision which is not subject to judicial review. Reliance is placed on Pakcom Limited and others v. Federation of Pakistan and others (PLD 2011 SC 44) and Syeda Abida Hussain Imam and others v. The Province of Punjab through Secretary and others (2015 YLR 1522). However as already reasoned above, there is no basis to justify the rates and there is no accountability for the money collected as fee and where it is spent. This is totally against good governance, which requires a public body to be transparent and declare its costs and use of the fees collected. Therefore for the fee to be levied to cover costs under Section 28 of the LDA Act, LDA has to declare the costs, the development and maintenance works required or undertaken to recover the costs. In this context, Section 28 of the LDA Act cannot be used as a ways and means of generating revenue, to undertake projects which are made under the garb of general development and improvement. LDA has a specific mandate to plan and coordinate with government agencies for preparing a master plan to develop, operate, maintain water supply, sewerage, drainage with WASA and to plan annually for development programs and maintain planning controls and building regulations. Hence the purpose of levying a conversion fee has to be such that LDA fulfills its mandate and makes the necessary disclosures and declarations. Consequently the levy of conversion fee at the rate of 20% of the commercial value of the property is without any justification and against the requirements of Section 28 of the LDA Act. On the issue of vires of the Challenged Provisions

36. LDA was established to provide a system of planning and development to improve the quality of life in the metropolitan area of Lahore which then became the Lahore Division. It was established to assist the Provincial Government and prepare schemes appropriate for urban development. The word "scheme" is defined in Section 2(w) of the LDA Act being a project approved for urban development, redevelopment or renewal and includes larger area plan, areas specified and notified for specific use, traffic control plans, classification and reclassification plans, housing scheme or zoning scheme, therefore the Authority plans and develop schemes and then implements them with the help of the government agencies. However, all this is done in aid of the Provincial Government and not to usurp the functions of the Local Government. This aspect was discussed by a learned Full Bench of this Court in Ms. Imrana Tiwana and others v. Province of Punjab and others (PLD 2015 Lahore 522) which concluded as follows:

95. LDA can prepare "schemes" under the LDA Act (section 13). "Scheme" means a project approved for urban development, redevelopment or renewal and includes larger area plan, areas specified and notified for specific use, traffic control plans, classification and reclassification plans, housing scheme or zoning scheme [section 3(w)]. The schemes are prepared and then executed by the LDA in the "Area," which means the Lahore Division [section 3(c )] subject to the approval of the Government. Section 13(5) specifically provides that a "Government Agency" (which includes a local government [section 3(m)(ii)]) shall not prepare a planning or development scheme within the Area except with the concurrence of LDA. Similarly, LDA has the power to prepare housing, building infrastructure services, commercial and semi-commercial projects (section 13A) or do land use classification (section14), make master plan (section 14A ), or give direction to the local government to execute a scheme in consultation with the Authority, or take over and maintain any of the works and services in that area, to provide amenity in relation to the land which in the opinion of the authority ought to be provided and to enforce regulations on behalf of the Authority (section 15). General power to execute Schemes (section 16). LDA can declare any locality within an area to be controlled area and issue such directions for the prevention of haphazard growth or encroachments and unauthorized construction in such area (section 18). Power to remove sources of pollution (section 20). Imposition of betterment fee (sections 23 and 24). LDA enjoys the power to impose rates, fees, surcharges or other charges and fines (section 28). Extension of time and cancellation of approved schemes (Sections 34A and 34B). Punishment for offences (section 35). Conversion of property to different use (section 38). LDA Act is to override other laws (section 46). All these powers usurp the responsibilities and authorities devolved to the local government under PLGA and offend the constitutional mandate of Article 140A.

96. For the above reasons, the powers and functions of LDA under sections 6, 13, 13A, 14, 15, 16, 18, 20, 23, 24, 28, 34A, 34B, 35, 38 and 46 of LDA Act, 1975 to the extent that they usurp, trump, encroach, dilute and abridge the powers, responsibility and authority devolved on to the elected representatives of the Local Government System under Article 140A through PLGA are therefore, declared ultra vires Articles 9, 14, 17 and 25 of the Constitution and further declared to be offensive to Articles 32, 37(i) and 140A of the Constitution.

97. LDA, however, does continue to be a development authority of the Provincial Government for the assistance of the Provincial Government but it cannot assume jurisdiction or interfere in the political, administrative and financial powers devolved on to the local government through PLGA under Article 140A. It matters less if LDA Act has undergone amendment after the promulgation of PLGA. The constitutional mandate to devolve and establish a local government system, once devolved, cannot be usurped through subsequent collateral legislation. The Provincial Legislature has the power to alter or withdraw the devolved powers subject to the principles of subsidiarity and federalism discussed above but till then the said powers are protected under the vertical separation of powers introduced by Article 140A of the Constitution and no provincial or federal legislation can impair or impede the political, administrative and financial responsibility and authority of the elected representatives of the Local Government. The august Supreme Court of Pakistan while hearing the appeal in the Imrana Tiwana Case decided as follows:-

54. The Province is under an obligation under Article 140A of the Constitution to establish, by law, a Local Government System and to devolve political, administrative and financial responsibility on the Local Government. Yet, in doing so it is not stripped bare of its executive and legislative authority under Articles 137 and 142 of the Constitution. The Provincial and the Local Governments are to act in a manner, which complements one another. The Constitution, therefore, envisages a process of participatory democracy, where the two governments act in harmony with one another to develop the Province. The authority of neither destroys the other. Article 140A cannot be used to make the provisions of Articles 137 and 142 either subordinate to it or otiose. One constitutional provision cannot, unless it is so specifically provided, override another and must be harmoniously construed together, as repeatedly held by this Court ..

55. The creation of a Local Government System, and the conferment upon the Local Government of certain political, administrative and financial responsibilities does not deprive the Province of authority over its citizens and deny it all role in the progress, prosperity and development of the Province. The creation of a Local Government System does not spell the end of the Provincial Government in the Province. To the contrary it strengthens the Provincial Government by entrenching democracy at grass root level.

56. That even after the insertion of Article 140A the Provincial Government would continue to have the authority to enact and amend statutes, make general or special laws with regard to Local Government and local authorities, enlarge or diminish the authority of Local Government and extend or curtail municipal boundaries. This power of amendment has, however, to be informed by the fact that if the Provincial Government oversteps its legislative or executive authority to make the Local Government powerless such exercise would fall foul of Article 140A of the Constitution. An excessive or abusive exercise of such authority would not be countenanced by this Court. It would be struck down.

74. The solution, therefore, lies in reading the provisions of the two statutes in harmony. The LDA Act, 1975 is to be regarded as an enabling statute. It allows LDA to act in support of and to complement the Local Government in the exercise of its functions and responsibilities. Where the Local Government is unable to act because of a lack of resources or capacity, or where the project is of such a nature that it spills over from the territory of one Local Government to another or where the size of the Project is beyond the financial capacity of the Local Government to execute; the LDA can step in and work with the Local Government. Economies of scale, spillovers and effectiveness are merely illustrative of the situations in which the LDA can act in the exercise of its functions to carry out developmental and other work and perform its statutory functions. These are not exhaustive. Life and time may throw up other situations and create circumstances which may warrant LDA action to be taken in consultation with the Local Government within the purview of PLGA, 2013. Closing the categories today will freeze growth and retard progress. (emphasis added)

37. As per the Imrana Tiwana Case, the sections challenged before this Court being 4, 6, 13, 14, 14A, 18, 19, 28 and 37 of the LDA Act were upheld for not being ultra vires to the LDA Act or Constitution and the Court required that a harmonious interpretation be given such that functions of the LDA compliment and facilitate the Local Government. During the course of arguments, a lot was said with respect to the fact that the conversion fee collected by the LDA for Lahore in fact disables the Local Government from collecting revenue by way of conversion fee which revenue is relevant for the purposes of development and maintenance of the city. It was also argued that it impinges upon the financial autonomy of the Local Government as the LDA is to work in aid of the Provincial Government as well as the Local Government and cannot in fact use amounts collected under the garb of conversion fee for undertaking large infrastructure development projects which is the present case, as per the contention of the Petitioners. However, during the course of arguments there has been no representation from the Local Government on account of the repeal of the Punjab Local Government Act, 2013 and the promulgation of the Punjab Local Government Act, 2019. Therefore this aspect of the matter has not been looked into in these cases with the help of the Local Government, therefore this question may be raised again in some other appropriate case by the Local Government. For the purposes of these cases, this issue stands decided by the august Supreme Court of Pakistan in the Imrana Tiwana Case which declared that the Challenged Provisions are not against the mandate of the LDA Act and the Constitution.

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. Schedule-A Details of Writ Petitions mentioned in judgment Dated 15.12.2020 passed in W.P. No.18066 of 2014 Sr.No. W.P. No. Parties Name 1 18066/14 Learning Alliance Private Limited and others v. Province of Punjab and others 2 11928/2016 Salman Ali Shaikh v. Province of Punjab and others 3 11929/2016 Khurshid Seema Iftikhar v. Province of Punjab and others 4 11930/2016 Mian Iqbal Salah ud Din and others v. Province of Punjab and others 5 11931/2016 Mian Yousuf Sala ud Din v. Province of Punjab and others 6 11932/2016 Mian Iqbal Sala ud Din and others v. Province of Punjab and others 7 11933/2016 Mian Asad Salah ud Din Province of Punjab and others 8 16823/2016 Sahiba Saeed v. Province of Punjab and others 9 16748/2014 Walid Iqbal v. Province of Punjab and others 10 11988/2016 Raheel Rashid and others v. Province of Punjab and others 11 12103/2016 Ahmad Tofique v. Province of Punjab and others 12 12115/2016 Ahmad Tofique v. Province of Punjab and others 13 12228/2016 Irfan Hussain and others v. Province of Punjab and others 14 9472/2017 Bhimra (Pvt.) Ltd. v. Province of Punjab and others 15 14927/2016 Farid Pervez Masud v. Province of Punjab and others 16 13330/2016 Obaid Sattar v. Province of Punjab and others 17 29340/2016 Pakistan Steel Mills Corporation v. Province of Punjab and others 18 12393/2016 Quaid Campus v. Government of Punjab and others 19 12225/2016 Salamat School System (Pvt.) Ltd. v. Government of Punjab and others 20 12222/2016 Salamat School System (Pvt.) Ltd. v. Government of Punjab and others 21 12224/2016 Salamat School System (Pvt.) Ltd. v. Government of Punjab and others 22 12220/2016 Salamat School System (Pvt.) Ltd. v. Government of Punjab and others 23 14846/2016 Bilal Husnain Chandan v. Province of Punjab and others 24 27559/2017 Savera Butt v. Province of Punjab and others 25 12077/2016 Muhammad Saleem and others v. Province of Punjab and others 26 25124/2016 Nasreen Irfan and others v. Province of Punjab and others 27 12108/2016 Pakistan Sugar Mills Association v. Lahore Development Authority and others 28 24928/2017 Model Housing (Pvt.) Ltd. v. Province of Punjab and others 29 8414/2016 Sughra Aziz Noon v. Lahore Development Authority and others 30 12089/2016 Ghulam Ali Zahid v. Province of Punjab and others 31 4019/2016 Nazia Iftikhar v. Lahore Development Authority and others 32 6486/2015 Muhammad Amjad v. Lahore Development Authority and others 33 12754/2016 Humera Haleema v. Province of Punjab and others 34 12326/2016 Mian Sana Khaliq Kareemi v. Province of Punjab and others 35 12453/2016 Mohsin Ilyas v. Government of Punjab and others 36 12106/2016 Faisal Ejaz v. Lahore Development Authority and others 37 12107/2016 Syed Asim Ali v. Lahore Development and others 38 12233/2016 Muhammad Ahsan Raza v. Lahore Development Authority and others 39 12088/2016 Chaudhry Talat Mahmood v. Province of Punjab and others 40 12087/2016 Khawaja Mohammad Shafique v. Province of Punjab and others 41 12085/2016 Rahat Bano v. Province of Punjab and others 42 12023/2016 Mian Sana Khaliq Kareemi v. Province of Punjab and others 43 11957/2016 Sikandar Sarfraz Khan Malik and others v. Lahore Development Authority and others 44 11935/2016 Mian Iqbal Salah ud Din v. Province of Punjab and others 45 99373/2017 Muhammad Tayyab Khan and others v. Province of Punjab and others 46 11986/2016 Muhammad Amir v. Lahore Development Authority and others 47 12449/2016 Maqsood Ahmed Mian and others v. Province of Punjab and others 48 4230/2015 Mahmud Ahmed Shah v. Province of Punjab and others 49 48504/2020 Parveen Akhter Hussain v. Lahore Development Authority and others 50 13934/2016 Kohinoor Textile Mills Ltd. v. Lahore Development Authority and others 51 12455/2016 Shafqat Mahmood and others v. Government of Punjab and others 52 16033/2016 Syed Zia Mohiuddin v. Lahore Development Authority and others 53 15375/2016 Amjad Khan and others v. Government of Punjab and others 54 12066/2016 Nawab Ali Asim and others v. Province of Punjab and others 55 56872/2017 Malik Bashir Ahmed v. Government of Punjab and others 56 34258/2014 Shah Munir v. Province of Punjab and others 57 12759/2016 Saira Jabeen v. Province of Punjab and others 58 12757/2016 Mohammad Ismail and others v. Province of Punjab and others 59 13543/2016 Hamid Ali Jawa v. Province of Punjab and others 60 14533/2016 Muhammad Saleem and others v. Province of Punjab and others 61 38473/2016 Asaf Mohyuddin and others v. Province of Punjab and others 62 17439/2016 Alle'nora Saloon and Studio v. Province of Punjab and others 63 121917/2017 Tasneem Ismail v. Province of Punjab and others 64 12752/2016 Mian Khalid Gul Maluk and others v. Lahore Development Authority and others 65 12216/2016 Salamat School System (Pvt.) Ltd. and others v. Province of Punjab and others 66 30483/2015 Kaizen Construction (Pvt.) Ltd. v. Province of Punjab and others 67 11971/2016 Mian Mazhar Ahmad Qureshi v. Lahore Development Authority and others 68 233965/2018 Ali Masood v. Government of Punjab and others 69 5691/2017 Farooq Rasool Chaudhry v. Province of Punjab and others 70 12024/2016 Syed Iqtadar ul Hassan Bukhari v. Government of Punjab and others 71 11982/16 Mian Kamran Afzal v. Province of Punjab and others 72 30268/14 Bank of Punjab v. Lahore Development Authority and others 73 13169/16 Bank of Punjab v. Lahore Development Authority and others MH/L-4/L Petition allowed.