Union Of India & Anr. vs The Khetri Trust
- Court
- Delhi High Court
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on : 13.02.2026
% Judgment delivered on: 02.06.2026
+ LPA 732/2025 & CM APPL. 75989/2025
UNION OF INDIA & ANR. .....Appellants
Through: Mr. Chetan Sharma, ASG with Mr.
Rajesh Gogna, SPC, Mr. Shivam
Tiwari, Mr. Amit Gupta, Mr.
Shubham Sharma, Mr. Yash Wardhan
Sharma, Mr. Naman, Mr. Tejendra
Pratap Singh and Ms. Priya, Ms.
Rebina, Ms. Punita, Advs.
versus
THE KHETRI TRUST .....Respondent
Through: Mr. Ajay Verma, Sr. Adv. with Mr.
Ishaan Verma, Ms. Diviani K. Verma,
Mr. Armaan Verma, Advs.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE TUSHAR RAO GEDELA
J U D G M E N T
DEVENDRA KUMAR UPADHYAYA, C.J.
1. This intra-Court appeal seeks to challenge the judgment dated
18.12.2024 passed by the learned Single Judge in W.P.(C) No. 17407/2024,
whereby the demand letter dated 12.06.2024 issued by the Land and
Development Office, Ministry of Housing and Urban Affairs, Union of India
(hereinafter referred to as L&DO) demanding an amount of Rs.4,34,92,812/-
Signature Not Verified
LPA 732/2025 Page 1 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
towards Unearned Increase from the respondent– The Khetri Trust, has been
quashed. By the impugned order it has further been provided that
substitution in favour of The Khetri Trust in respect of the subject property
shall remain subject to outcome of the decision of the Hon’ble Supreme
Court in SLP (C) Diary No.45720/2023.
FACTS
2. A perpetual lease was executed in respect of the property no.5, Sardar
Patel Marg, New Delhi by the Government of India on 24.04.1962 in favour
of Raja Bahadur Sardar Singh of Khetri, the original lessee.
3. The original lessee executed a Will dated 30.10.1985 and Codicil
dated 07.11.1985, whereby the subject property was bequeathed in favour of
respondent–The Khetri Trust. The original lessee died on 28.01.1987
without leaving any heir. In accordance with the Will dated 30.10.1985, the
respondent Trust was created by executing a Trust Deed dated 04.04.1987.
On the basis of the said Will dated 30.10.1985 a Testamentary Case
No.26/1987 was filed before this Court for grant of probate, however the
said Testamentary Case was dismissed by the learned Single Judge of this
Court, who refused to grant the probate, by means of the judgment dated
03.07.2012. This judgment of learned Single Judge was assailed in
FAO(OS) 348/2012 before a Division Bench of this Court which was
allowed by the Division Bench vide judgment dated 11.07.2023 and the
Division Bench was pleased to grant probate of the Will dated 30.10.1985.
4. The judgment of the Division bench dated 11.07.2023 granting
probate was assailed by the State of Rajasthan and Surender Singh & Ors.,
Signature Not Verified
LPA 732/2025 Page 2 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
who claimed to be the agnates of Raja Bahadur Sardar Singh of Khetri by
instituting special leave petitions, which too have been dismissed by
Hon’ble Supreme Court vide two separate orders passed on 01.09.2025, the
one is reported in 2025 SCC Online SC 1992 and the other is reported in
2025 SCC Online SC 1993 .
5. After grant of probate by the Division Bench of this Court vide
judgment dated 11.07.2023 the respondent applied to the L&DO–appellant
no.2 for substitution of its name in place of original lessee in respect of
subject property. The said application was processed by the appellant no.2
and vide email communication dated 09.04.2024 it was informed that,
substitution application has been cleared for property ID 21950. However,
the appellant no.2 issued a demand letter to the respondent Trust on
12.06.2024 requiring the Trust to pay an amount of Rs. 4,34,92,812/-
towards Unearned Increase as a condition precedent to substitution. It is the
case of the L&DO that substitution based on testamentary bequest to a non-
family entity (in the present case a charitable Trust created by the Testator)
falls within the realm of transfer attracting Unearned Increase as per the
terms of the lease as also in terms of the Office Memorandum (O.M.) dated
20.10.2000. The relevant clause entitling the appellants to claim and
recover the portion of the Unearned Increase, which is the difference
between premium paid and current market value in the value of land at the
time of transfer, can be found in Clause 13 of the lease dated 24.04.1962,
which is extracted hereunder:-
“(13) The Lessee shall before any assignment or transfer of the said
premises hereby demised or any part thereof obtain from the Lessor
or such officer or body as the Lessor may authorise in this behalf
Signature Not Verified
LPA 732/2025 Page 3 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
approval in writing of the said assignment or transfer and all such
assignees and transferees and the heirs of the Lessee shall he bound
by all the covenants and conditions herein contained and be
answerable in all respects therefor,
Provided also that the Lessor shall be entitled to claim and recover a
portion of the unearned increase (i.e., the difference between the
premium already paid and current market value) in the value of land
the decision of the Lessor in this behalf shall be final at the time of
transfer (whether such transfer is an entire site or only a part thereof),
the amount to be recovered being 50 per cent of the unearned
increase.
The Lessor shall the pre-emptive right to purchase the property after
deducting 50 per cent of the unearned increase as aforesaid.”
6. As per Clause 13 of the lease as quoted above, the amount to be
recovered shall be 50% of the Unearned Increase. The appellant no.2 issued
an O.M. providing therein inter alia that where the deceased lessee leaves a
Will in favour of family members such as husband, wife, mother, father,
son, daughter, grand-son, grand-daughter, daughter in law, brother and
sisters and the testator does not have any child of his own, the property shall
be substituted without charging any Unearned Increase. However, the said
O.M. further provides that where the deceased lessee leaves a Will in favour
of a person other than the family members, Unearned Increase will be
chargeable as per the provisions of the lease deed before carrying out
mutation in favour of such person.
7. When the respondent sought mutation of its name in respect of the
subject property though by email communication dated 09.04.2024 it was
informed that substitution application has been cleared, however vide the
demand letter dated 12.06.2024, the respondent was directed to pay
Unearned Increase as a pre-condition for substitution. It is this demand
Signature Not Verified
LPA 732/2025 Page 4 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
letter dated 12.06.2024, which was under challenge before the learned
Single Judge in the writ petition instituted by the respondent, which has been
allowed by the impugned order.
SUBMISSIONS
8. On behalf of the appellants, learned Additional Solicitor General of
India and Senior Counsel, Mr.Chetan Sharma has vehemently argued that
the learned Single Judge has completely ignored the judgment of Hon’ble
Supreme Court in Delhi Development Authority v. Vijaya C Gurshaney
[(2003) 7 SCC 301] . He has further argued that the impugned judgment
rendered by the learned Single Judge effectively neutralise the operation of
Clause 13 of the lease in its operation in cases of probated Wills favouring
non-family Trust. It has also been argued that the probate cannot operate as
a waiver of the dues emanating from the lease. Mr.Sharma has further
submitted that the impugned judgment, whereby the demand of Unearned
Increase has been quashed, has imminent financial implication resulting in
loss of quantified Unearned Increase to the public exchequer and that the
judgment has wider ramifications across similarly placed Government lease
hold properties where testamentary disposition to non-family entities are
invoked to seek substitution/mutation without satisfying the demand of
Unearned Increase amount, which emanates from relevant clauses of the
leases.
9. It has also been argued that the learned Single Judge has erred while
ignoring the terms of lease especially Clause 13, which expressly provided
for recovery of 50% of Unearned Increase where the property is transferred
whether by assignment or bequest or otherwise to any person outside the
Signature Not Verified
LPA 732/2025 Page 5 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
immediate family of the lessee. Further submission is that grant of probate
cannot nullify lease obligations and though probate establishes the
genuineness of Will but it does not dispense with the compliance of
contractual covenants and conditions under the lease. Mr.Sharma has also
submitted that the learned Single Judge has erroneously treated the probate
as extinguishing the liability to pay Unearned Increase as the rights of the
lessor under the terms of lease would survive notwithstanding the
testamentary disposition. In this regard, it has been stated that the
respondent Trust is neither an heir nor a family member and, thus, was
bound to pay Unearned Increase amount before claiming mutation or
substitution of its name.
10. Reliance has also been placed on behalf of the appellants on the O.M.
dated 20.10.2000, which, according to them, provides that where any leased
property devolves on operation of Will in favour of non-family members,
levy of Unearned Increase amount is mandatory before mutation can be
effected. It is also stated on behalf of the appellants that the O.M. dated
20.10.2000 is a policy measure evolve to preserve misuse of testamentary
instruments as a device to circumvent restrictions on transfer.
11. In the aforesaid background, it is the submission on behalf of the
appellants that the learned Single Judge has rendered the policy decision
embodied in the O.M. dated 20.10.2000 otiose by quashing the demand of
Unearned Increase amount and has created an exception, which is neither
supported by any statute nor the terms of the lease.
12. Mr.Ravi Verma, learned Senior Advocate representing the respondent
Signature Not Verified
LPA 732/2025 Page 6 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
has refuted the submissions made on behalf of the appellants. While
defending the impugned judgment rendered by the learned Single Judge, it
has been argued by Mr.Verma that reliance placed by the appellants on
Vijaya C Gurshaney (supra) is misplaced as already explained by this Court
in Lala Diwan Chand Trust v. New Delhi Municipal Council [2015 SCC
OnLine Del 6676] . He has further argued that this Court in Aroti Das &
Ors. v. Union of India & Ors. [MANU/DE/4032/2007] has considered a
case which is similar on facts and has opined that demand of Unearned
Increase, on blind application of the policy, which dictates that only
specified heirs would be recognized and others have to pay Unearned
Increase as a pre-condition for transfer of lease hold rights appear to be
utterly unreasonable.
13. Reliance has also been placed by Mr.Verma representing the
respondent on yet another judgment of a Division Bench of this Court in
Delhi Development Authority v. Shanti Swaroop Goyal [2012 SCC OnLine
Del 3912] where guidelines framed by the Delhi Development Authority
(DDA) on similar lines as the O.M. dated 20.10.2000 was considered and it
has been held that in a case where legatee of a Will is not found to have
practiced fraud or misrepresentation the reasoning of Vijaya C Gurshaney
(supra) would not apply. He has further stated that the said judgment
further holds that transfer prohibited under the terms of the lease would be
transfer inter vivos and in absence of any prohibition in law or in express
terms of the lease, property rights to bequeath any property to anyone cannot
indirectly be extinguished.
14. Drawing our attention to certain observations made by Hon’ble
Signature Not Verified
LPA 732/2025 Page 7 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
Supreme Court in Vijaya C Gurshaney (supra), it has been argued that the
said case dealt with a situation of a camouflage sale transaction and it is in
this background fact that it was held that rationale behind the formulation of
such a policy is to curb illegal transactions in favour of persons not of blood
relation of the lessee, which is practiced rampantly and the property is
transferred by an underhand sale in the garb of Will or Power of Attorney.
Mr.Verma has, thus, argued that such is not a fact situation in the instant
case for the reason that the Will executed by the original lessee has been
probated by a judgment of Division Bench of this Court, which has been
upheld by Hon’ble Supreme Court.
15. He has also argued that transfer in the wake of the lease deed means
transfer by a living person to another and since a Will remains only a wish
and it operates and passes upon the death of the testator. He has further
stated that there is no indication in the lease deed that testamentary transfers
cannot be made.
16. On behalf of the respondent further submission is that in the instant
case the original lessee/testator did not have any Class I heir, who bequeath
the property to a charitable Trust to be set up as per his instructions in the
Will itself after his death and, therefore, there was no and could not be any
sale or transfer of the property inter vivos for the reason that the property or
the possession thereof did not pass to the Trust/legatee during the life time
of the original lessee and, therefore, in such circumstances Unearned
Increase is not leviable.
Signature Not Verified
LPA 732/2025 Page 8 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
DISCUSSIONS AND CONCLUSION
17. We have given our careful consideration to the submissions made by
the learned counsel for the parties and have also perused the records
available before us on this Letters Patent Appeal.
18. A Division Bench of this Court vide its judgment and order dated
30.10.2023 has granted probate based on the Will executed by the original
lessee, dated 30.10.1985. The said judgment of the Division Bench of this
Court dated 30.10.2023 has been upheld by Hon’ble Supreme Court in two
separate SLPs the one filed by State of Rajasthan and the other by Surender
Singh & Ors. claiming themselves to be the agnates of the deceased lessee.
19. The law relating to levy of Unearned Increase as a sine qua non for
mutation/substitution has been settled by Hon’ble Supreme Court in Vijaya
C Gurshaney (supra) . The said matter related to a perpetual lease granted
by the Government of India, Clause 4 whereof prohibited the transfer or
assignment of the leased property except with the written consent of the
DDA subject to such terms and conditions as the DDA might impose
including recovery of 50% of the Unearned Increase in the value of plot.
The DDA on 26.07.1988 formulated a policy and issued guidelines in
respect of payment of 50% of Unearned Increase in the value of land if
mutation or substitution is claimed on the basis of Will left by the deceased
allottee which required a person, who was not a blood relation of the testator
and sought mutation on the basis of Will to submit certain documents. In
Vijaya C Gurshaney (supra) the legatee applied for grant of Letters of
Administration (hereinafter referred to as LoA) to the District Judge on the
strength of a Will executed by the original allottee which was granted and
Signature Not Verified
LPA 732/2025 Page 9 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
thereafter an application was made to the DDA for substitution of the name
of the legatee in place of the original allottee, whereupon the applicant
seeking mutation was issued a letter of demand requiring him to pay 50% of
the Unearned Increase as per the terms and conditions stipulated in the lease
deed as the transfer through the Will was not favour of the blood relation of
the original allottee. The letter of demand was challenged before this Court
by means of a writ petition where the DDA contended that the Will was
actuated by monitory considerations and was in fact a sale and further that
the Will was actually a transfer of land to a non-blood relation and,
therefore, it was in violation of the terms and conditions of the lease deed
hence the applicant seeking mutation was liable to pay 50% of Unearned
Increase in the value of the property. This Court allowed the writ petition
holding therein that grant of LoA was a judgment in rem and was a
conclusive proof of existence and genuineness of the Will and, therefore, it
effects could not be nullified except by proceedings for revocation of LoA.
20. Hon’ble Supreme Court in Vijaya C Gurshaney (supra) however
reversed the judgment of this Court holding that a testamentary Court is only
concerned with finding out whether or not the testator executed the
testamentary instrument on his free will. It was also held by Hon’ble
Supreme Court that LoA issued on the basis of a Will merely enables
administration of the estate of the deceased. Further observations made by
Hon’ble Supreme Court in Vijaya C Gurshaney (supra) is that rationale
behind formulation of its policy and guidelines issued by the DDA is to curb
illegal transactions in favour of persons, who are not blood relations of the
allottee, which is practised rampantly and the property gets transferred by an
Signature Not Verified
LPA 732/2025 Page 10 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
under hand sale in the garb of Will or Power of Attorney etc., and since
DDA is a statutory body, any policy decision or guidelines formulated by
such authority will have binding effect in the parties in absence of any rule
to the contrary.
21. We may, however, note that in Lala Diwan Chand Trust (supra) this
Court while considering Vijaya C Gurshaney (supra) has held that Hon’ble
Supreme Court has upheld the policy of the DDA to demand Unearned
Increase in the value of land in cases where lease hold property was sought
to be transferred under the garb of a Will, however, in cases where Will
represented a genuine desire of a testator to bequeath its property to a
particular legatee a demand for Unearned Increase would not be sustainable.
It has further been held in Lala Diwan Chand Trust (supra) that in case of a
bona fide transmission of property by a Will no distinction could be drawn
on the basis of the relationship between the testator and the legatee. Lala
Diwan Chand Trust (supra) also places reliance on Aroti Das (supra)
where challenge relating to demand of Unearned Increase by L&DO in
respect of immovable property bequeath by a lessee to one of his relative,
who did not fall within the definition of family member had succeeded.
Paragraphs 10, 11 and 13 of Lala Diwan Chand Trust (supra) are extracted
herein below:-
“10. The rationale for demanding unearned increase in cases where
the property is transmitted by way of a Will is to ensure that the
parties are unable to escape payment of unearned increase by
disguising a transaction of sale and purchase of the leasehold
property as a bequest. It has been a well established practice in Delhi
for persons to enter into transactions for sale and purchase of
immovable property by execution of various documents such as
General Power of Attorney, Affidavits, Will etc. Undisputedly, in these
Signature Not Verified
LPA 732/2025 Page 11 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
circumstances, the demand for unearned increase would be
warranted. The guidelines exempt payment of unearned increase
where a lessor bequeaths the leasehold property in favour of his
natural heirs. This only indicates that the respondent did not intend to
recover unearned increase in cases of genuine transmission of
property by a testator. In DDA v. Vijaya C. Gurshaney : (2003) 7 SCC
301 the rationale of the policy to charge unearned increase in respect
of properties sought to be transferred by way of a Will was explained
as under : -
“10. The rationale behind the formulation of its policies and
guidelines issued by DDA is to curb illegal transactions in
favour of persons not of blood relation of the allottee, being
practised rampantly and the property being transferred by an
underhand sale in the garb of will and power of attorney etc.
DDA has formulated a policy that in such cases the Department
would ask for 50% of unearned increase in the value of property.
It is always open to the appellants to inquire whether an alleged
will is in actuality a sale in the garb of will in total disregard of
the policy decision of the authority. Merely because
probate/letters of administration are granted, would not
preclude DDA from so inquiring. It must be grasped that DDA
has been given no notice of the testamentary proceedings.
Therefore, it would have no right to appear or oppose such
proceedings. As already said, DDA is a creature of the statute
and any policy decision or guidelines formulated by such
Authority will have a binding effect on the parties, in absence of
rules to the contrary.”
11. The Supreme Court upheld the policy of DDA to demand unearned
increase in the value of land in cases where the leasehold property
was sought to be transacted under the garb of a Will. However, in
cases where Will represented a genuine desire of a testator to
bequeath its property to a particular legatee, a demand for unearned
increase would not be sustainable.
13. A Coordinate Bench of this Court in the case of Aroti
Das v. Union of India : W.P. (C) 8081-82/2005 had considered the
challenge relating to the demand of unearned increase by L&DO in
respect of the immovable property bequeathed by a lessor to one of his
relatives who did not fall within the definition of a family member
under the guidelines. It is noteworthy that the language of the
guidelines applicable in that case was similar to the language of
Signature Not Verified
LPA 732/2025 Page 12 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
clause (5) of the guidelines as referred to by the learned counsel for
the respondent. This Court set aside the demand of unearned increase
and held as under : -
“ 10. In the face of these facts, the demand for unearned
increase, in my opinion, on a blind application of a policy which
dictates that only specified heirs would be recognized and others
have to pay unearned increase as a pre-condition for transfer of
leasehold rights appears to be utterly unreasonable.”
22. In Aroti Das (supra) this Court considered the fact situation where the
deceased lessee was not survived by any Class 1 heir and had died
unmarried and the beneficiaries under the Will executed by him were wife
and son of the pre-deceased brother of the original lessee. The Will
executed by the original lessee was said to be proved in a probate
proceedings vide judgment of the District Judge and thus it was held that the
Will executed by the original lessee was put to scrutiny and proved. It was
also held that there was no doubt as to the genuineness of the claim of the
legatees of the Will, who were claiming substitution/mutation of their
names. It is in these facts that Aroti Das (supra) holds that demand for
Unearned Increase, on a blind application of a policy which dictates that
only specified hears would be recognized and others have to pay Unearned
Increase as a pre-condition for transfer of lease holds rights, appears to be
utterly unreasonable.
23. In Shanti Swaroop Goyal (supra) while discussing the similar policy
of the DDA of levying the Unearned Increase amount, this Court has held
that in absence of any prohibition in law or express terms of the lease,
property rights to bequeath any property to anyone cannot indirectly be
extinguished. The Court has further held that insistence of the DDA in the
Signature Not Verified
LPA 732/2025 Page 13 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
said case upon payment of Unearned Increase would attract violation of
Article 300A of the Constitution of India. The facts which were considered
in Shanti Swaroop Goyal (supra) were the DDA had finalised the mutation
in favour of the legatee of the Will in 1985 whereas the guidelines providing
for levy of the Unearned Increase was promulgated in the year 1988 i.e. after
DDA had accepted the Will and probate in favour of the legatee. It is in
these facts and circumstances that the Court found that the DDA failed to
show that the policy promulgated in the year 1988 could apply and cover a
case where the property was already mutated in the year 1985 on the basis of
the Will. It was also found by the Court that there was no material
suggesting that the legatee had practised fraud and misrepresentation of
facts. The Court in paragraph 10 of the judgment in Shanti Swaroop Goyal
(supra) has summarised that the DDA had failed to show how policy
guidelines of the year 1988 could validly apply and cover a case where the
property had already been mutated in the year 1985 and that there was no
material which suggested that the legatee had practised fraud or
misrepresentation of the facts. Accordingly, it was found by the Court in
Shanti Swaroop Goyal (supra) that reasoning of Vijaya C Gurshaney
(supra) would not apply to the said case. Paragraph 14 of the judgment in
Shanti Swaroop Goyal (supra) is extracted herein below:-
“14. To summarize, it is held that in this case, the DDA has been
unable to show how the later policy, embodied in its guidelines of
1988 could validly apply and cover the petitioner's case; the property
had been mutated in 1985, and there was no new material disclosed in
the records, suggesting that the legatee (Ms. Saroj Kumari) had
practised fraud or misrepresentation of facts. Thus, the reasoning in
Gurshaney would not apply to this case. Furthermore, the transfer
prohibited under terms of the lease, would be transfer inter vivos; in
the absence of any prohibition in law, or express terms of the lease,
Signature Not Verified
LPA 732/2025 Page 14 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
the property rights - which are indefeasible and vest as an incident of
ownership, - to bequeath any property to anyone, cannot be indirectly,
through sleight of interpretation, of a mere lease deed, extinguished,
as was sought to be done by DDA, by refusing to recognize the will,
which was proved in accordance with procedure established by law.
The DDA's refusal to recognize it, and insist upon payment of
unearned increase, in such cases, at least, would attract the odium of
violation of Article 300-A of the Constitution of India. Lastly, the DDA
cannot refuse to convert the property into lease hold in this case,
because in terms of its policies, framed from time to time from 1994
onwards, completely irregular transactions like power of attorney
sales, and even in cases where the lease had been cancelled were
eligible for conversion into lease hold, in the hands of the applicant
transferee.”
24. In the light of the discussions made above what we conclude is that
though Vijaya C Gurshaney (supra) was a judgment in relation to
guidelines regarding levying Unearned Increase by DDA, which are of
similar nature as those contained in the O.M. dated 20.10.2000 issued by the
appellant no.2, however the said judgments still holds the field.
25. Vijaya C Gurshaney (supra) considered the relevant clause of the
lease which clearly provided that the lessee shall not sell, transfer, assign or
otherwise part with the possession of the whole or any part of the subject
property in the lease without the previous consent in writing of the lessor.
Similar provision exists in Clause 13 of the lease deed dated 24.04.1962,
which also provides that the lessee before any assignment or transfer of the
demised premises or any part thereof shall obtain from the lessor approval in
writing of such assignment or transfer and all such assignees, transferees and
heirs of the lessee shall be bound by all the conditions of the lease. It is to
be noticed that in the lease, the expression “transfer” has not been defined.
However, as held in Shanti Swaroop Goyal (supra) by a Division Bench of
Signature Not Verified
LPA 732/2025 Page 15 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
this Court transfer has to be understood in the context to mean conveyance
of an interest, or divesting of one’s title in respect of immovable property.
Having regard to provision Section 5 of Transfer of Property Act, Shanti
Swaroop Goyal (supra) further holds that the concept of transfer is transfer
inter vivos or by a living person to another. The Court further held that in
case of any testamentary document, such as a Will, the bequest remains only
a wish of the testator which operates only upon testator’s death and only
then the title passes to the legatee. In the instant case, the lease deed dated
24.04.1962 does not contain any prohibition that testamentary transfers
cannot be made. As held in Shanti Swaroop Goyal (supra) in absence of
any indication in the lease deed if it is held that testamentary transfer cannot
be made, the same would lead to legal consequences which would be
startling for the reason that it would lead to altering the property rights of the
lessee. Accordingly, in the instant case as well there cannot be any dispute
that in absence of any prohibition in the lease deed dated 24.04.1962, the
deceased lessee during his lifetime could have executed the Will dated
30.10.1985.
26. On the basis of the said Will, probate has also been granted by a
judgment of the Division Bench of this Court, dated 11.07.2023, which has
been upheld by Hon’ble Supreme Court vide its order dated 01.09.2025.
Reverting to the law laid down by Hon’ble Supreme Court in Vijaya C
Gurshaney (supra) what we find is that rationale behind formulating a
policy by the L&DO levying Unearned Increase amount is to curb illegal
transaction in favour of persons, who are not blood relation family members
of the lessee. The Supreme Court has laid down in the said case that since
Signature Not Verified
LPA 732/2025 Page 16 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
such a practice of illegal transaction in favour of persons not of blood
relations was rampant and the properties are being transferred by an
underhand sale in the garb of Will and Power of Attorney etc., DDA had
formulated the policy that in such cases it would levy 50% of the Unearned
Increase in the value of property as a condition precedent for
mutation/substitution. The Supreme Court in Vijaya C Gurshaney (supra)
has also held that it is always open to the lessor to inquire whether an
alleged Will is actually a sale in the garb of Will and further that merely
because probate/LoA is granted, it would not preclude the lessor from
making such inquiry.
27. In the instant case, as already observed above, probate has been
granted on the basis of the Will dated 30.10.1985. In Vijaya C Gurshaney
(supra) as well, LoA was granted and it is in the background of the said fact
that it was held that merely because LoA was granted, it would be wrong to
hold that the lessor cannot inquire into the true nature of the transaction.
The Supreme Court in the said case further observed that a testamentary
Court while granting probate or LoA does not even consider, particularly in
uncontested matters, the motive behind the execution of a testamentary
instrument and further that a testamentary Court is only concerned with
finding out whether or not the testator had executed the testamentary
instrument of his free will. It has also been held that grant of probate or
LoA does not confer title to property; they merely enable administration of
estate of the deceased and, therefore, it is always open to dispute the title
even though probate or LoA have been granted.
28. Paragraphs 8 and 10 of the Vijaya C Gurshaney (supra) are relevant
Signature Not Verified
LPA 732/2025 Page 17 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
to be extracted here, which read as under:-
“8. In this case the alleged will was executed on 26-10-1977. Ram
Dhan died on 18-9-1978. Letters of administration were granted on 7-
5-1980. Admittedly, the respondent is not related to the deceased Ram
Dhan. The High Court clearly erred in holding that merely because
letters of administration are granted the appellants cannot inquire
into the true nature of the transaction. It is settled law that a
testamentary court, whilst granting probate or letters of
administration does not even consider particularly in uncontested
matters, the motive behind execution of a testamentary instrument.
A testamentary court is only concerned with finding out whether or
not the testator executed the testamentary instrument of his free will.
It is settled law that the grant of a probate or letters of
administration does not confer title to property. They merely enable
administration of the estate of the deceased. Thus, it is always open
to a person to dispute title even though probate or letters of
administration have been granted .”
“10. The rationale behind the formulation of its policies and
guidelines issued by DDA is to curb illegal transactions in favour of
persons not of blood relation of the allottee, being practised
rampantly and the property being transferred by an underhand sale in
the garb of will and power of attorney etc. DDA has formulated a
policy that in such cases the Department would ask for 50% of
unearned increase in the value of property. It is always open to the
appellants to inquire whether an alleged will is in actuality a sale in
the garb of will in total disregard of the policy decision of the
authority. Merely because probate/letters of administration are
granted, would not preclude DDA from so inquiring. It must be
grasped that DDA has been given no notice of the testamentary
proceedings. Therefore, it would have no right to appear or oppose
such proceedings. As already said, DDA is a creature of the statute
and any policy decision or guidelines formulated by such Authority
will have a binding effect on the parties, in absence of rules to the
contrary .”
(emphasis supplied)
29. Thus, having regard to the facts of the instant case and the law laid
down by Hon’ble Supreme Court in Vijaya C Gurshaney (supra) our
Signature Not Verified
LPA 732/2025 Page 18 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
conclusions are as follows:-
(i) There being no prohibition in the lease deed dated 24.04.1962, the
deceased lessee was competent to execute the Will dated 30.10.1985.
(ii) Transition of rights in the subject property to the legatee on the basis
of Will dated 30.10.1985 cannot be said to be transfer or assignment for
which approval of the lessor is required in terms of Clause 13 of the lease
dated 24.04.1962.
(iii) The testamentary Court while granting probate/LoA does not consider
the motive behind execution of a testamentary instrument such as Will; the
Court is only concerned with finding out whether or not the testator
executed the Will of his free will.
(iv) The rationale behind and purpose of formulation of the
policy/guidelines embodied in the O.M. dated 20.10.2000 issued by the
appellant no.2 is to check illegal transactions in favour of persons, who are
not blood relations or family members of the lessee. In case, by way of Will
some transaction in relation to immovable property takes place which, in
fact, turns out to be an underhand sale in the garb of Will, it is absolutely
lawful for the appellant no.2 to levy the Unearned Increase.
(v) Merely because probate or LoA is granted, it would not preclude the
appellant no.2 from inquiring as to whether such transaction is, in fact, an
underhand/illegal sale in the garb of Will and in case it is found that such
transaction is an underhand sale in the garb of Will, in our opinion, the
appellant no.2 would be legally entitled to levy the Unearned Increase,
Signature Not Verified
LPA 732/2025 Page 19 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
which will be in tune with Clause 13 of the lease deed read with the policy
decision embodied in O.M. dated 20.10.2000.
(vi) The appellants have specifically pleaded that on grant of probate
when the respondent Trust approached the appellant no.2 on 23.10.2023
seeking substitution/mutation in its favour, such request necessitated
examination of lease and the applicable policy framework including the
O.M. dated 20.10.2000 and after preliminary correspondence the matter was
scrutinized, whereupon vide demand letter dated 12.06.2024, the appellant
no.2 required the respondent Trust to pay the amount indicated therein
towards Unearned Increase.
(vii) However, what we also simultaneously find is that the demand letter
dated 12.06.2024, which was under challenge before the learned Single
Judge and which has been quashed by the impugned judgment, does not give
any indication whatsoever that on any inquiry the transaction which
occurred under the Will dated 30.10.1985 was an underhand/illegal sale or
transfer in the garb of Will dated 30.10.1985. Nothing has been brought on
record even before us which may, at this juncture, suggest existence of any
material whereby it could be concluded that it was a case where the original
lessee had entered into any illegal or underhand sale or transaction of the
rights in the subject property in favour of the respondent Trust.
(viii) In our opinion, for demanding Unearned Increase amount under the
O.M. dated 20.10.2000 in the light of what has been held in Vijaya C
Gurshaney (supra), there should exist some material to show that the
deceased lessee has left a Will in favour of persons, who are not his blood
Signature Not Verified
LPA 732/2025 Page 20 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
relations or family members, and the Will was a camouflage and in fact by
executing the Will, an underhand sale or transfer had taken place.
(ix) There is nothing on record, except the averment made by the
appellants that the matter was scrutinized in the light of the policy and the
terms of lease, which could show or establish that the appellants are
possessed of any material leading to the conclusion that Will was sham and
in fact by executing the Will some illegal/underhand sale or transaction had
taken place between the original lessee and the respondent Trust.
(x) On the other hand, it is to be noticed that respondent Trust has been
created/constituted as per the wish of the original lessee in the Will itself
executed by him. In absence of any such material pointing out the Will
being sham or a camouflage it is difficult for us, at this juncture, to conclude
and hold that the Will in fact was an underhand sale or transaction.
30. For the aforesaid reasons, applying the principles of law laid down in
Vijaya C Gurshaney (supra) , we are unable to take a view different from
the view taken by the learned Single Judge in the impugned judgment.
31. The appeal is, thus, dismissed along with pending application(s).
However, as laid down in Vijaya C Gurshaney (supra), even on grant of
probate on the basis of a Will executed by the original lessee in favour of an
entity or a person who is not a blood relation of the lessee or is not his
family member, enquiry is permissible to be conducted by the lessor to
ascertain whether the transmission of rights through Will is a camouflage
and the Will actually is an underhand sale/ transfer in the garb of Will, it is
provided that it will be open for the Appellant No.2 to conduct such an
Signature Not Verified
LPA 732/2025 Page 21 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25
enquiry in accordance with law and take further action which may be
permissible and warranted under the law.
32. There will be no orders as to costs.
(DEVENDRA KUMAR UPADHYAYA)
CHIEF JUSTICE
(TUSHAR RAO GEDELA)
JUDGE
JUNE 02, 2026
S.Rawat
Signature Not Verified
LPA 732/2025 Page 22 of 22
Digiltally Signed
By:SREERAM L
Signing Date:02.06.2026
13:26:25