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Commercial Plot

                                                                                     Commercial Plots

Policy guidelines for commercial licensing of railway land for commercial plots etc

( Master Circular )

Policy guidelines for commercial licensing of Railway land last issued vide Board’s letter No 83 / W2 / LM / 18 / 87 dated 29.08.1995 in super session of the earlier policy directives , have been amended from time to time . With a view to bring all such policy instructions under one umbrella , it has been decided to issue a master circular combining all the instructions issued so far on the subject . Henceforth, Railways should quote only the present letter for any further reference.

2.0         General:

2.1   Leasing of land is not permitted except in cases where it is specifically approved by the Railway Board.  Lands for the purpose of commercial use should be given on licensing basis only. In this connection Board’s letter No 82 / W2 / LM / 18 / 116 dt 22.11.1982 may please be referred .  

2.2   Temporary licensing of railway land to private individuals for the purpose of setting up shops, commercial offices, vending stalls, clinics etc. not connected with the Railway working was stopped in terms of Boards letter No.80/W2/18/O/A dt.7.6.1984.  This ban will continue.  In exceptional cases, where such licensing may have to be done with the prior approval of the Board, license fee must be fixed by resorting to public auction/open tenders for getting the maximum revenue. 

2.3   Licensing of ordinary Commercial plots connected with Railway working as indicated in para/3 below will be done with the personal approval of General Manager in consultation with FA& CAO  . The periodical review may however be approvedby DRM  on the recommendation of committee of Divisional Heads of EngineeringCommercialandFinanceDepartments    -3  

2.4   Licenses of existing licensees, not connected with the Railway working as mentioned in Para 3 (f) below may, however, be renewed from time to time so long as the land is not required by Railway for its own purpose but on new terms and conditions indicated in thisletter.  

2.5   In each case of licensing, proper agreement must be executed between the Railway Administration and the licensees before the licences is given possession of the land / plotThis must be strictly followed and for any violation of these instructions, the official handing over land before the execution of agreement shall be held personally responsible by the Railway Administration. 

3.      Rates of License Fee:

3.1    License fee of plots will continue to be fixed as a percentage of the land value, determined as per the procedure detailed in para-5 below.  The percentage applicable w.e.f. 01.04.04 to various types of plots will be as under:-

  Item No.

Types of Plots

Annual License fee as a Percentage of Land Value


Railway related activities such as City Booking office, Out Agencies etc.



Ordinary Commercial Plots without structures



Ordinary Commercial Plots with temporary structures for stacking/storing



(i)Covered area

(i)7½ %


(ii)Open Area

(ii) 6%


Steel Yards / Coal Dumps Bulk Oil Installations etc.

7½ %


Land used to lay private sidings



Shops / Retail Depots etc.


4.0  Formation of a Standing Committee

4.1    A Standing Committee of three HODs will be set up at the Headquarters of each Zonal Railway and other Railway Units.  The Standing Committee consisting of CE, CCM and FA&CAO shall examine fresh cases connected with railway working, as indicated in Para 3 (a) to (e) and submit its recommendations to GM for approval. 

4.2    The periodical review will, however, be done by DRM on the recommendations of Divisional Heads of Engineering, Commercial and Finance Departments.  The Committee will review annually whether the traffic commitments by the licensees of the commercial plots have actually materialised or not and in case of any deviation, initiate suitable corrective action including de-licensing and vacation as necessary. 

5.0    Fixing of Land value:

5.1    The market value would however be required to be taken to serve as a base value for working out rental fee payable.  This shall be fixed on the basis of the land value of the surrounding area as on 1.1.1985, as determined from the Revenue Authorities and/or from the following: -

(a)     Evaluations of Town Planning Department ;

(b)     Actuals as per PWD and CPWD transactions ;

( c )   Actual Transactions, as per documents filed in the Office of the Sub-Registrar ;

(d)     Value of land as assessed by professional evaluators of the State and Central Governments; 

5.2    The land value as worked out shall be increased every year on the 1st of April, starting from 1.4.1986, at the rate of 10% over the previous years land value to arrive at the land value for the following year based on which the annual license, fees shall be fixed.  From 1.4.2004 onwards, the land value shall be increased at the rate of 7% every year over the previous year’s value. 

5.3    However, for fresh cases of licensing of plots, for any purpose (s) defined in Para 3.1 (a) to (e) above, the license fee shall be fixed after obtaining the current value of land.  In very rare cases where it is not possible to obtain the current cost (reasons for which should be brought on record), the updated cost based on 1.1.1985 land price should be adopted. However, for the Metropolitan towns of Mumbai, Kolkata, Delhi, and Chennai if the HODs Committee feels that the land rates are widely varying within the city, two or more rates can be utilised for that city.Using this method arrears of collection of license fee on this account should not be allowed to accumulate.

6.0   Minimum License Fee:

6.1    The minimum license fee in respect of plots covered under this letter should be Rs.1000/- per annum.  For the purpose of determining the minimum license fee, the maximum size of a plot shall be taken as 100 sq. metres.  For instance, in case licensing of plot measuring 250 sq. metres is involved, the minimum license fee chargeable shall be relevant to three plots of 100 sq.metres each and will work out to Rs.3000/- per annum.

7.0   Revision of License Fee:

7.1   As the notional land value will increase by 7% over the previous years land value as mentioned in Para 5.2 above, the license fee will automatically go up by 7% over the previous year’s fee from the first of April every year.  Suitable provisions, with the Schedule of payment due, may be incorporated in the Agreement. 

7.2    The termination/renewal date of the Agreement should always be the end of the financial year so that there is no confusion and a better watch is kept on renewals. 

8.0   Power of Licensing and Renewal:

8.1   Fresh cases of licensing of plots connected with Railway working and mentioned at (a) to (e) of Para 3 above will be approved by GM, on the recommendation of the HODs Committee. As regards plots mentioned at (f ) of Para 3 vizshops , retail oil depots etc as already stated , the existing ban on fresh licensing for purposes unconnected with Railway working will continue . Renewal of licences of railway land not connected with Railway working given under para 3 (f) can be done at GM’s level with Finance concurrence.

9.0 Security Deposit and Liquidated Damages :

9.1Instructions contained in para 1025, 1026 and 1027 of the Indian Railways Code for the Engineering Department (1999 Edition) should continue to be strictly followed and any violation of these instructions should be viewed seriously.

10.00 Settlement of pending cases:

10.1The revised instruction would become effective with effect from 1.4.2004. It has also been decided to withdraw the retrospective effect of orders dated 29.08.1995. Thus the orders of August 1995 would be made applicable for the period 1995-96 onwards and not for the earlier period from 1.4.1986 to 31.3.1995 . Any recovery already effected for the period between 1.4.1986 to 31.3.1995 need not be refunded in cash but should be adjusted against future payments due from the concerned party. Arrears of land license fee may be recovered in easy installments.

10.2 In cases pending in Court of Law, the Law Officer of the Railway should be consulted before arriving at a settlement.

11.0Having included their provisions in the master circular , the earlier circulars on the subject nos .

I. 83 / W2 / LM / 18 / 87 dt 24.3.04

ii. 83 / W2 / LM / 18 / 87 dt 29.8.95

iii. 83 / W2 / LM / 18 / 87( vol II ) dt 14.03.01

iv. 83 / LML / 18 / 87 ( vol II ) dt 05.11.01

v. 83 / W2 / LM / 18 / 87 ( Vol II ) dt 28.04.04

vi. 01 / LML / 18 / 58 dt 23.09.02 stand withdrawn

This issue with the concurrence of the Ministry of Railways

(Bd’s Authority: - No. 2005 / LML / 18 / 8 dt 10.02.2005)

Source : South Eastern Railway CMS Team Last Reviewed : 16-01-2015  

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