Nambi Buildwell Limited & Anr vs Municipal Corporation Of Delhi & Anr on 6 May, 2025

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Delhi High Court - Orders

Nambi Buildwell Limited & Anr vs Municipal Corporation Of Delhi & Anr on 6 May, 2025

                          $~84
                          *    IN THE HIGH COURT OF DELHI AT NEW DELHI
                          +         W.P.(C) 5969/2025 & CM APPL. No. 27372/2025, CM APPL. No.
                                    27371/2025

                                    NAMBI BUILDWELL LIMITED & ANR.                                                  .....Petitioners

                                                                  Through:            Mr.Rajiv Nayar and Mr.B.B.Gupta,
                                                                                      Senior Advocates with Ms. Meghna
                                                                                      Mishra, Mr.Ankit Rajgarhia and
                                                                                      Mr.Rohit Kumar, Advocates
                                                                  versus

                                    MUNICIPAL CORPORATION OF DELHI & ANR. .....Respondents

                                                                  Through:            Mr.Tushar Sannu, SC with Mr.Parvin
                                                                                      Bansal and Mr.Shivam, Advocates

                                    CORAM:
                                    HON'BLE MS. JUSTICE MINI PUSHKARNA
                                                                  ORDER

% 06.05.2025 CM APPL. No. 27372/2025 (Exemption)

1. Allowed, subject to all just exceptions.

2. The application is disposed of.

W.P.(C) 5969/2025 and CM APPL. No. 27371/2025 (Stay)

3. The present writ petition has been filed by the petitioners seeking quashing of the Demand Notices dated 30th May, 2024, 7th June, 2024, 23rd August, 2024 and 5th March, 2025 issued by the respondent, wherein, advertisement fees and penalties aggregating to Rs. 6,60,04,000/-, had been imposed upon the petitioners.

4. Learned Senior Counsels appearing for the petitioners submit that the W.P.(C) 5969/2025 Page 1 of 11 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/06/2025 at 19:57:23 said amounts have been imposed upon the petitioners under the purported exercise of powers under Section 430 (2) of Delhi Municipal Corporation Act, 1957 ("DMC Act").

5. It is submitted that petitioners challenge the action of the respondents on the ground that there is no statutory basis for classifying "In mall"

displays by authorized tenants/licensees as third party advertisements, and that the enhanced rate of Rs. 1600 per square feet per month, as well as the penalty imposed, is without jurisdiction, ultra vires and in violation of Articles 14 & 19(1)(g) of the Constitution of India.

6. It is submitted that under the Advertisement Bye-laws 1996 framed under Section 481 of the DMC Act, no such classification exists and Bye- Law 13(4) clearly prescribes a fee of only Rs.25/- for seeking advertisement permission, while Bye-Law 16 prescribes the daily penalty of Rs.20/-, in case of any contravention. Thus, it is submitted that the penalty imposed by the respondents to the tune of Rs. 5,15,20,000/-, grossly violates the statutory limits and lacks any adjudicative process.

7. Learned Senior Counsels appearing for the petitioners submit that the petitioners have already paid an amount of Rs. 1,44,84,000/- under protest vide Demand Draft No. 514724 dated 18th October, 2024. It is further submitted that the petitioners have already removed the disputed LED displays. It is submitted that despite the same, the respondents had issued a fresh Notice dated 5th March, 2025, seeking recovery of Rs.5,15,20,000/- as penalty, without granting any opportunity of hearing or following any due process.

8. Learned Senior Counsels appearing for the petitioners have drawn the attention of this Court to the judgment dated 18th November, 2014, passed in W.P.(C) 5969/2025 Page 2 of 11 This is a digitally signed order.

― xxx xxx xxx Analysis and Conclusion

6. Before proceeding further to address the controversy, it would be necessary to ascertain the nature and the basis of the impugned charges.

Whilst the petitioner contends that the impugned charges are in the nature of a "tax", the learned senior counsel for the MCD has sought to justify the same as a "regulatory fee". The first clue as to the nature of the impugned charges is the term used to describe them - "damage charges". The second clue is found in the impugned orders dated 16.04.2010 and 29.04.2010 which reason the demand by explaining that "financial loss caused to the MCD must be realized". The third clue is a reference, in the impugned orders, to a circular dated 09.03.2010 (hereafter 'the circular'). The said circular indicates the basis and the scheme for imposing the impugned demand and it is necessary to examine the same. The circular is reproduced below:_ ― CIRCULAR Sub: Imposition of damages on display of unauthorized advertisements.

―In order to implement the directions of the Hon'ble Supreme Court issued vide order dated 12.10.2007 in Writ petition (Civil) No.13029/1985 titled ―Shri M.C. Mehta Vs. Union of India & others‖ in letter and spirit, the Corporation has decided (i) to create suitable conditions for a regime where unauthorized advertisement is discouraged and legal advertisement is encouraged by making the unauthorized advertisement financially costlier. This will ensure that the Outdoor Advertisement Policy, 2007 is strictly adhered to and enforced, as directed by the Hon'ble Supreme Court, and (ii) the concept of damage needs to be seen in the context of financial loss to the Corporation because of display of unauthorized advertisement.

Accordingly, a decision has been taken by the Corporation to impose damages on the advertisements erected, exhibited, fixed or retained upon or over any land, building, wall, hoarding, frame, post or structure or upon or in any vehicle or displayed in any manner whatsoever in any place within Delhi without the written permission of the Commissioner granted in accordance with bye-laws made under the relevant provisions of DMC Act, 1957 and the Outdoor Advertisement Policy as approved by the Hon'ble Supreme Court on the following terms & conditions:-

W.P.(C) 5969/2025 Page 3 of 11

This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/06/2025 at 19:57:23

1. To take damages for putting up unauthorized advertisement which shall be double the rate charged by MCD for that mode in a particular zone. This means that if the MCD's rate is ‗X' per month for a particular mode of display in a particular zone, then damages shall be ‗2X' for illegal displays through that mode in that zone.

2. In case of non-availability of rate for charging such damages, MCD rate applicable shall be that of wall wrap in the zone.

3. Since the unauthorized advertisement is for the benefit of some person or a company or other body corporate or an association of persons (whether incorporated or not), then such person and every President, Chairman, Director, Partner, Manager, Secretary, Agent or any other officer or person concerned with the management thereof, as the case may be, unless he proves that the unauthorized advertisement was displayed without his knowledge or consent, shall be accountable for payment of damages.

4. In case of such unauthorized advertisement where the advertising agency and the owner/occupier of the property is known, then identical demand shall be raised against each of them, in addition to the beneficiaries at point 3 above and shall be realized in similar fashion.

5. Even for illegal display of one day, damages for the whole month shall be taken. Similarly, for the month and one day, damage charges will be for two months, and so on.

6. Charging of damages will in no way regularize the unauthorized outdoor advertisement. In fact, other legal and administrative steps, including penal action, will be taken simultaneously against such unauthorized advertisements.

7. Once a demand for damages is raised, the payment will have to be made within 15 days of receipt of such demand notice. Any delay in payment shall attract 2% compounded interest, per month.

8. Any such due to the Corporation may be recoverable from any person from whom such sum is due as an arrear of tax under DMC Act, 1957.

This issues with the prior approval of the Competent Authority dated 08.03.2010 on file No. OSD(Advtt)/2010/D-927 and comes into force with immediate effect.

(B.N. Singh) Officer on Special Duty (Advtt)‖

7. It is apparent that the impugned charges have been fixed by MCD on the basis of the notional perceived loss caused to the MCD on account of W.P.(C) 5969/2025 Page 4 of 11 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/06/2025 at 19:57:23 display of unauthorized advertisement. The MCD decided to levy a charge, which is twice the amount that the MCD would have received for permitting display at its sites. The said circular also provides for payment of interest at the rate of 2% per month as well as a mechanism for recovery of the impugned charges. Plainly, the MCD's endeavor has been to frame the circular to contain a complete code for the imposition, computation and recovery of the impugned charges.

......

10. The distinction between a tax and a fee has been reiterated in several decisions. In the present case, it is plainly clear that the impugned charges are not related to any services being rendered by the MCD and thus, in the traditional sense, the levy cannot be considered as a fee.

11. The learned counsel for the MCD had contended that the impugned charges should be considered as a regulatory fee and had relied upon the decisions of the Supreme Court in Secunderabad Hyderabad Hotel Owners' Association (supra), Delhi Race Club Limited (supra) and Sona Chandi Oal Committee (supra).

.......

15. In my view, this decision also does not support the contention that a regulatory fee could be charged without any nexus with the costs or the efforts required in the process of regulating the activity for which such regulatory fees are charged. On the contrary, the Court clearly indicated that the regulatory fee could not be excessive. It cannot be disputed that levy of a regulatory fee is permissible, however, the question is whether such fee could be levied, without any reference or relation to the costs incurred. The question whether a regulatory fee is excessive or not would have to be adjudged in the context of activity sought to be regulated and the reasonable outlay required for such regulation.

`........

18. It is distinctly clear from the above that the impugned charges are not in a nature of a fee, regulatory or otherwise. It is further important to note that the impugned charges are also not in relation to grant of any privilege by the State - as in the case of activities where the doctrine of res extra commercium are applicable - or for allocation of any natural resource.

19. Plainly, a levy which has no element of quid pro quo with any service rendered cannot be considered as a fee. Further, a charge for granting any permission to carry any activity, which has no nexus with the costs, effort or infrastructure required for regulating the said activity cannot be considered as a regulatory fee. Thus, in my view, the impugned charges cannot be considered as a fee.

......

21. It is next necessary to ascertain whether the power for such levy can be found under provisions of the DMC Act. Section 142 of the DMC Act provides for levy of tax on display of advertisement and specifies that tax at rates specified in the fifth schedule to the DMC Act are payable in respect of W.P.(C) 5969/2025 Page 5 of 11 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/06/2025 at 19:57:23 display of advertisements. Section 143(1) of the DMC Act prohibits any advertisement without the written permission of the Commissioner. And, Section 146 of the DMC Act provides for the consequences for contravening Section 143 of the DMC Act. Section 142, 143 and 146 of the DMC Act are relevant and are quoted below:-

―142. Tax on advertisements.- (1) Every person, who erects, exhibits, fixes or retains upon or over any land, building, wall, hoarding, frame, post or structure or upon or in any vehicle any advertisement or, who displays any advertisement to public view in any manner whatsoever, visible from a public street or public place (including any advertisement exhibited by means of cinematographs), shall pay for every advertisement which is so erected, exhibited, fixed or retained or so displayed to public view, a tax calculated at such rates not exceeding those specified in the Fifth Schedule as a Corporation may determine:

Provided that no tax shall be levied under this section on any advertisement which--

(a) relates to a public meeting, or to an election to Parliament or a Corporation or to candidature in respect of such election; or

(b) is exhibited within the window of any building if the advertisement relates to the trade, profession or business carried on in that building; or

(c) relates to the trade, profession or business carried on within the land or building upon or over which such advertisement is exhibited or to any sale or letting of such land or building or any effects therein or to any sale, entertainment or meeting to be held on or upon or in the same; or

(d) relates to the name of the land or building upon or over which the advertisement is exhibited, or to the name of the owner or occupier of such land or building; or

(e) relates to the business of a railway administration and is exhibited within any railway station or upon any wall or other property of a railway administration; or

(f) relates to any activity of the Central Government or the Corporation.

(2) The tax on any advertisement leviable under this section shall be payable in advance in such number of instalments and in such manner as may be determined by bye-laws made in this behalf.

Explanation 1.--The word "structure" in this section includes W.P.(C) 5969/2025 Page 6 of 11 This is a digitally signed order.

Explanation 2.--The word "advertisement" in relation to a tax on advertisement under this Act means any word, letter, model, sign, placard, notice, device or representation, whether illuminated or not, in the nature of and employed wholly or in part for the purposes of advertisement, announcement or direction.

143. Prohibition of advertisements without written permission of the Commissioner.-(1) No advertisement shall be erected, exhibited, fixed or retained upon or over any land, building, wall, hoarding, frame, post or structure or upon or in any vehicle or shall be displayed in any manner whatsoever in any place within Delhi without the written permission of the Commissioner granted in accordance with bye-laws made under this Act.

(2) The Commissioner shall not grant such permission if--

(a) the advertisement contravenes any bye-law made under this Act; or

(b) the tax, if any, due in respect of the advertisement has not been paid.

(3) Subject to the provisions of sub-section (2), in the case of an advertisement liable to the advertisement tax, the Commissioner shall grant permission for the period to which the payment of the tax relates and no fee shall be charged in respect of such permission.‖ ―146. Power of Commissioner in case of contravention. - If any advertisement is erected, exhibited, fixed or retained in contravention of the provisions of section 143, the Commissioner may require the owner or occupier of the land, building, wall, hoarding, frame, post or structure or vehicle upon, or over or in which the same is erected, exhibited, fixed or retained, to take down or remove such advertisement or may enter any land, building, property or vehicle and have the advertisement dismantled, taken down or removed or spoiled, defaced or screened.‖ .......

23. It is apparent from the above that the circular and the impugned charges cannot be traced to any of the provisions under the DMC Act. Clearly, the damage charges as contemplated under the circular are not a tax on advertisement as contemplated under Section 142 of the DMC Act. Whilst Section 143 of the Act prohibits advertisement without permission W.P.(C) 5969/2025 Page 7 of 11 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/06/2025 at 19:57:23 of the Commissioner, it does not provide for any levy, impost or penalty in respect of an unauthorized advertisement. Section 146 of the DMC Act empowers the Commissioner to dismantle, take down, remove, spoil, deface, or screen an advertisement, which is in contravention to the provisions of Section 143 of the DMC Act. The bye laws made under the DMC Act also do not support or authorize the levy of any damage charges. Thus, undeniably, the impugned charges are not imposed pursuant to or in exercise of any statutory power under the DMC Act.

....

25. The learned senior counsel for the petitioner contended that recourse to Article 142 of the Constitution of India cannot be taken to supplant any existing law, impose a tax or ignore the substantive rights of parties. And therefore, the orders passed by the Supreme Court for implementation of the outdoor policy cannot be read to include imposition of the impugned charges. This was disputed by the learned counsel for the MCD and it was contended that the Supreme Court had adopted a specific policy which included imposition of ―a fine as decided by MCD Commissioner‖. It was further submitted that since the outdoor policy specifically included charging regulatory fee for advertisement, such fee could be charged by virtue of the order dated 12.10.2007 passed by the Supreme Court in M.C. Mehta II (supra). The learned counsel relied on the decision of the Supreme Court in Vishaka v. State of Rajasthan: (1997) 6 SCC 241 in support of its contention that the decision of the Supreme Court could be read as declared law for imposing the impugned charges.

xxx xxx xxx‖ (Emphasis Supplied)

9. Learned Senior Counsels appearing for the petitioners submit that reading of the aforesaid judgment shows that it has categorically been held that the MCD does not have any statutory powers to impose any penalty. He further draws the attention of this Court to the order dated 18th February, 2015 passed by the Division Bench in LPA 78/2015, wherein, the aforesaid judgment of the learned Single Judge, was upheld.

10. This Court is informed that no appeal was filed in the Supreme Court against the aforesaid orders and that the aforesaid orders have, thus, attained finality.

11. It is further submitted that the entire foundation for the demand by the W.P.(C) 5969/2025 Page 8 of 11 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/06/2025 at 19:57:23 MCD is Resolution No. 35 dated 26th April, 2018, which is already under challenge in this Court in W.P.(C) No. 9586/2020, titled as "DLF Emporio & Ors. Versus South Delhi Municipal Corporation & Ors.", wherein, this Court has already granted interim protection against the coercive action. It is further submitted that the Demand Notices are not only procedurally fraud and factually erroneous, but also seek to impose liability without any notice or hearing, in violation of the Principles of Natural Justice.

12. Learned Senior Counsels for the petitioners submit that there has been no adjudication by any competent Magistrate or authority, as mandatory under the Act for imposition of any penalty or fine.

13. Learned Senior Counsels appearing for the petitioners submit that the petitioners have acted in good faith and have already paid the principal amount towards the commercial charges as raised by the MCD. However, it is submitted that the petitioners apprehend that the respondents may proceed with coercive measures against the petitioners, which will cause irreparable harm and injury to the petitioners and disrupt the functioning of the commercial establishment.

14. Issue notice. Notice is accepted by the learned counsel for the respondents.

15. Learned counsel appearing for the respondents vehemently opposes the submissions made on behalf of the petitioners and submits that the judgment in the case of Sports & Leisure Apparel Ltd. (Supra), as relied upon by the petitioners, was with respect to self signage, whereas, the present petition pertains to third party advertisement inside a mall, for which commercial rates are payable. He further submits that the authority of the MCD is derived from various provisions of the DMC Act, as well as the W.P.(C) 5969/2025 Page 9 of 11 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/06/2025 at 19:57:23 Advertisement Bye-Laws and Resolution of MCD and the Outdoor Advertisement Policy, 2017. He further submits that the aforesaid judgment, as relied upon by the petitioners, pertained to the 2007 policy of the advertisement. However, the aforesaid Policy has since been replaced by the Delhi Outdoor Advertisement Policy, 2017. He, thus, submits that the import of the aforesaid judgment, as relied upon by the petitioners, cannot be made applicable to the facts and circumstances of the present case.

16. He further submits that the petitioners have already accepted the statutory basis upon which the commercial levy has been imposed by the MCD, as the same stands deposited with the MCD. He further draws the attention of this Court to the order dated 20th May, 2019, passed in W.P.(C) 5301/2019, titled as ―M/S Skycom And Anr. Versus South Delhi Municipal Corporation & Ors.‖, to submit that the petitioners ought to deposit at least bank guarantee for the purposes of any interim stay, which is being pressed by the petitioners.

17. Responding to the same, learned Senior Counsels appearing petitioners submit that the order dated 20th May, 2019 in aforesaid case, as relied upon by the respondents, pertains to the payment of the licence fee. However, he submits that in the present matter, the principal amount stands paid by the petitioners and the only issue before this Court for the time being, is with regard to recovery of the penalty charges by the respondents. Thus, it is submitted that the aforesaid order, is clearly distinguishable.

18. Having heard learned counsels for the parties, the matter requires consideration.

19. Let reply be filed within six weeks. Rejoinder thereto, if any, be filed within two weeks, thereafter.

W.P.(C) 5969/2025 Page 10 of 11

This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/06/2025 at 19:57:23

20. Considering the submissions made by learned Senior Counsels appearing for the petitioners that the principal amount of Rs.1,44,84,000/- already stands paid by the petitioners, and that the petitioners have already removed the advertisements in question from the mall, and in view of the facts and circumstances peculiar to the present case, it is directed that till the next date of hearing, no coercive steps shall be taken against the petitioners pursuant to the impugned notices, which are subject matter of the present writ petition.

21. However, it is clarified that, in case, any advertisement is displayed by the petitioners in future inside the mall, they shall continue to pay the commercial charges to the MCD, as raised by the MCD. It is further clarified that in case in future any signage is put by the petitioners inside the mall, they shall take due permission from the MCD, in accordance with law.

22. Re-notify on 19th September, 2025.

MINI PUSHKARNA, J MAY 6, 2025/SV W.P.(C) 5969/2025 Page 11 of 11 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 29/06/2025 at 19:57:23

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Delhi High Court - Orders

Nambi Buildwell Limited & Anr vs Municipal Corporation Of Delhi & Anr on 6 May, 2025