Delhi District Court
Having Its Regd. Office At 4609 vs Municipal Corporation Of Delhi on 2 February, 2019
IN THE COURT OF SH. HARISH KUMAR : ADDL. DISTRICT
JUDGE -13 : CENTRAL DISTRICT ; TIS HAZARI COURTS : DELHI
RCA No. 61193/2016
In re :-
M/s Ramjas Foundation,
A Society Registered under
the Societies Registration Act 21 of 1860,
Having its Regd. Office at 4609, Ansari Road,
Darya Ganj, New Delhi-110002,
Through Sh. Ram Kanwar Gupta,
Hony. Secretary, Managing Committee
...... Appellant
VERSUS
Municipal Corporation of Delhi,
Town Hall Chandni Chowk,
Delhi-110006
(Service on the respondent be kindly
affected through Commissioner or Principal
officer in accordance with law) ........Respondent
Date of institution of appeal : 19.01.2012
Date of receiving in this court : 01.03.2018
Date of hearing arguments : 03.01.2019
Date of Judgment : 02.02.2019
APPEAL UNDER SECTION 96 OF THE CODE OF CIVIL
PROCEDURE AGAINST THE JUDGEMENT/DECREE DT. 22.11.2011
PASSED BY SH. N. K. MALHOTRA, ASCJ (NORTH) TIS HAZARI
COURTS, DELHI IN SUIT No. 117/09/89
JUDGMENT
This judgment shall dispose of the appeal filed under Section 96 of CPC against the judgment and decree dt. 22.11.2011 whereby the suit filed by the appellant for perpetual injunction and declaration was dismissed. For the sake of convenience parties have been referred to in this judgment as per their status before the trial court.
1. Briefly stated case of the appellant/plaintiff is that it is a RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 1 of 13 charitable society founded for and engaged in the work of providing education and was initially set up under the name & style of Ramjas College Society. The plaintiff acquired land measuring 1653 Sq. yards at No. 2107, Deshbandhu Gupta Mag, New Delhi for the purpose of setting up a Senior Secondary School building. The site was cleared by demolishing the structure standing thereon in the year 1977 and the building was completed in the year 1979 and a school is being run under the name and style of Rai Kedar Nath L. M. Girls Senior Secondary School.
2. The school run in the building receives Government grant to the extent of 95% from the Delhi Administration and 5% of its expenses were being met out of the funds collected by public domain. The said school is exempted from payment of general taxes leviable on the property by the defendant as the Municipal authority for the area as per Sec. 115(4) of the DMC Act as the same is exclusively occupied and used by the plaintiff as a society for charitable purpose of providing education to the children. The plaintiff is also managing other schools which are exempted from payment of general taxes.
3. The defendant has imposed general taxes for which the suit property has qualified as per Section 115 (4) of the DMC Act and the general tax of Rs. 41,786/- was wrongly imposed upon the plaintiff which includes arrears up to 31.03.1990 by allegedly fixing the rateable value at Rs. 14,360/- and the mentioning the same to be operative w.e.f. 01.04.1979. The plaintiff protested the said imposition of general taxes as being violative of the provisions of Sec. 115(4) of the DMC Act.
4. The plaintiff society is a charitable society and engaged in the work of imparting education to the children without any distinction as to caste, creed and race and this fact is duly recognized in suit No. 580 of 1978 and No. 9 of 1984 decided by the court of Sh. O. P. Divedi, Ld. ADJ, Delhi, as RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 2 of 13 his lordship then was.
5. The defendant has issued bill No. COMP/61079 dated 26.07.1989 claiming amongst other general tax amounting to Rs. 4,17,866/- but the plaintiff is not liable to pay this amount. The demand is arbitrary, illegal, without jurisdiction and ultra vires to the provisions of DMC Act. The defendant has been duly furnished with the proof of the character of the plaintiff society being a charitable institution and the defendant has not till date delivered any decisions relating to any claim for exemption of the school building. As per judgment and decree in suit No. 9/84 and 580/78 delivered by the court of Sh. O. P. Divedi, ADJ as his lordship then was, the character of the institution is duly declared. In the aforesaid facts plaintiff filed suit praying therein that a decree of declaration be passed declaring the school building bearing No. 2107, Deshbandhu Gupta Marg, New Delhi in which Rai Kedar Nath I. M. Girls Senior Secondary School is being run is exempted from payment of general taxes as per Sec. 115(4) of the DMC Act. The plaintiff also prayed for a decree of permanent injunction restraining the defendant from demanding, claiming and enforcing recovery of Rs. 4,17,866/- as general tax vide Bill No. COMP/6109 dated 26.07.1989 up to the assessment year 1989-90.
6. Defendant filed written statement and took the preliminary objection that the suit is not maintainable in view of Section 169 of the DMC Act, 1957 r/w Sec. 41(h) of the Specific Relief Act, 1963. The suit is also not maintainable under Section 478 of the DMC Act. The suit is barred by period of limitation as per Sec. 478 (2) of the DMC Act. The suit is not properly valued in accordance with the suit valuation Act, 1886.
7. On merits, it is averred that assessment of grant of exemption under Section 115(4) of the DMC Act has been kept in abeyance for hearing by the Assessing Authority. The plaintiff has not furnished the full details, RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 3 of 13 hence, the matter was deferred and will be decided only after providing due opportunity of being heard. The assessment order dated 19.11.1986 is self explanatory. The plaintiff is liable for property tax on the basis of rateable value of Rs. 1,34,360/- p.a. w.e.f. 01.04.1979 which has been legally fixed vide assessment order dated 19.11.1986.
8. It is further stated that the plaintiff has already represented that the property in suit is meant for charitable purpose and the same be exempted from the property taxes. However, the requirements of Sec. 115(4) of the DMC Act regarding voluntary contribution as a whole or part of expenses has not been clearly specified and the assessing authority vide order dated 19.11.1986 has kept the file pending on this point. The assessing authority vide order dated 19.11.1986 has made it clear that the property in suit will not be eligible for exemption for the portion which has been let out @ Rs. 22/- and there is no significant change in the rateable value by separating the assessment of the portion of the shop and the Assessing Authority has taken that the assessment framed will include the shop also. The plaintiff has to file appeal under Sec. 169 of the DMC Act. Dismissal of the suit was prayed for by the defendant.
9. The plaintiff filed the replication and controverted the allegations made in the written statement and further reaffirmed the averments made in the plaint.
10. From the pleadings of the parties, following issues were framed by the trial Court vide order dt 26.03.2004:-
1. Whether the suit of the plaintiff is barred for the reasons pleaded in the paras 1 and 4 of the preliminary objections? OPD
2. Whether the plaintiff is charitable body, and the property in suit is being used for the charitable purpose of providing education to children ? If so, is he entitled to be declared exempt from payment of general tax as per Sec. 115 (4) of the DMC Act?
OPD RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 4 of 13
3. Whether the demand of the defendant corporation is illegal and without jurisdiction? OPD
4. Whether the plaintiff is entitled for a decree for perpetual injunction as asked for? OPP
5. Relief
11. Plaintiff examined Sh. Raj Kumar Gupta as PW-2. PW1. Sh Mohar Singh was not examined after setting aside of the ex-parte order against the defendant. Defendant on the other hand examined Sh. Bhagwan Singh, Dy. Assessor and Collector, South Zone, R. K. Puram, New Delhi as DW-1.
12. Ld. Trial Court after hearing arguments and appreciating evidence, pleading and material on record was pleased to dismiss the suit vide impugned judgment and decree 22.11.2011.
13. Aggrieved from the impugned judgment and decree, the appellant has preferred the present appeal.
14. Counsel for the appellant/plaintiff and Counsel for defendant/respondent heard.
15. Grounds of appeal, pleadings of the parties, evidence and material on trial court record and impugned judgement perused. It is worthwhile to note that defendant/respondent has not filed any cross appeal.
16. Trial Court dismissed the suit primarily on two counts. Firstly that the suit is not maintainable before Civil Court as appeal lies to ATMCD under Section 169 of Delhi Municipal Corporation Act and secondly plaintiff failed to prove that it is charitable institution.
17. Second reason for dismissal of the suit is taken up first. Ld. RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 5 of 13 Counsel for appellant has argued that Trial Court has misdirected itself in looking for further evidence from plaintiff in this regard. He contends that plaintiff is a charitable institution has not been disputed at all even in the pleadings whereas Ld. Counsel for respondent has argued that plaintiff has failed to prove that plaintiff is a charitable institution.
18. This Court has gone through the plaint and written statement. In para 3 of the plaint plaintiff has categorically mentioned that school run in the building receives government grant to the extent of 95% from Delhi Administration, while 5% of its expenses are met out of the funds collected by public donation and other. In corresponding paragraph of the written statement defendant has not disputed the said averment. Plaintiff's witness PW-1 in his examination-in-chief reiterated the said averment. He also deposed that plaintiff is using the subject building for the educational purpose and did not pay any dividend and bonus to its members as all the members of the plaintiff committee are honorary members. In the entire cross examination not a single contrary suggestion was given to the plaintiff's witness. It was also not suggested to the plaintiff's witness that plaintiff is charging fees from the students. In fact the PW-2 in cross examination categorically deposed that no fees is charged from the school students as it is government aided. He also deposed that salaries of the teachers and employees were paid to an extent of 95% by the government and 5% is contributed on behalf of the plaintiff. He also deposed that there is only one shop in the property for the purposes of canteen and no stationary or dresses are sold in the school premises. He denied the suggestion that any commercial activity in the premises is going on.
19. In the evidence led by the defendant there is no specific testimony that plaintiff is charging any tuition fee from its students or that premises is being used for commercial activity or that plaintiff society is earning income from the commercial use of the suit property. Defendant did RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 6 of 13 allege that a portion of the property has been let out at Rs 22/- p.m but defendant placed nothing on record that any portion has been let out. Even with respect to canteen being run no suggestion was given that said canteen is the tenanted shop.
20. Witness of the defendant in cross examination admitted that plaintiff is an aided school wherein 95% of the aid is contributed by the Government of Delhi and remaining 5% is contributed by Ramjas Foundation. He also admitted that subject property is used for running of school. He also admitted that appeal No. 402/2000 was instituted against demand bill dated 15.09.1998 amounting to Rs.15,47,717/- in respect of similar demand whereby the appeal was accepted and the impugned bill was set aside and the matter was remanded back for determination. Witness of the defendant deposed so much in favour of plaintiff that Counsel for defendant/respondent had to seek permission of the court to re-examine him. Even in re-examination the witness of the defendant again admitted that school is running by the grant of aid to the extent of 95% by the Delhi Government. He also admitted that the defendant is allowing 80% rebate on the total demand in case of institution which are getting government grants.
21. The Trial Court has observed that plaintiff has not proved by leading some cogent evidence by proving accounts and balance sheet of the school to show that school has not gained any profit. Ld. Trial Court ignored the fact that plaintiff and its witnesses categorically stated that it is a government aided school and no fees is being charged but no contrary suggestion was given to plaintiff's witness. A party cannot be expected to lead negative evidence. Defendant did not bring even an iota of evidence that plaintiff has gained any benefit nor did it give suggestion to the plaintiff's witness that its account books shows such benefit/profit in which event it would have become imperative for the plaintiff to bring its accounts book for the perusal of the court. When defendant itself is not giving any suggestion to RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 7 of 13 this effect nor coming out with any source of earning by the plaintiff, in this circumstance it was not required of the Ld Trial Court to look for any further evidence in this regard. Further plaintiff's witness categorically deposed that the subject building is used for the educational purpose and plaintiff does not pay any dividend and bonus to its members as all the members of the Managing Committee are honorary workers. The said testimony has not been controverted by the defendant even by giving contrary suggestion. Plaintiff's witness also deposed that no school fees is being charged from the students. This fact has also not been disputed by the defendant even by contrary suggestion. In these circumstances, when plaintiff is not earning any money from its activities and rendering services free of cost to the students in the field of education then its activities cannot said to be non-charitable or commercial.
22. What is Charity? Charity is a service to the needy free of cost. When there is no evidence from the side of the defendant that plaintiff for rendering services of education to its students is charging any money and when there is no evidence that any other commercial activity was going on in the subject premise and further when there is no dispute that institution is meeting its expenses by government grants to the extent of 95% and 5% by its members, then in this circumstance, there was no need for the trial court to look for further evidence from the side of the plaintiff and held against plaintiff.
23. Section 115(4) of the DMC Act provides for exemption of general tax which read as under:
"(4) Save as otherwise provided in this Act, the general tax shall be levied in respect of all lands and buildings in Delhi except -
(a) lands and buildings or portions of lands and buildings exclusively occupied and used for public worship or by a society or body for charitable purpose:
Provided that such society or body is supported wholly or in RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 8 of 13 part by voluntary contribution, applies its profits, if any, or other income in promoting its objects, and does not pay any dividend or bonus to its members.
Explanation:- "Charitable purpose" includes relief to the poor, education and medical reliefs but does not include a purpose which relates exclusively to religious teaching."
24. Thus in order to be entitled for exemption from levying of general tax by the defendant, plaintiff was required to prove that the building in question is used by the society for charitable purposes, that such society is supported wholly or in part by voluntarily contribution and thirdly the society applies it profits, if any, or other income in promoting its objects and does not pay any dividends or bonus to its members.
25. Plaintiff claims that the building is being used for running the school. Defendant although has not disputed that the school is being run from the said building but has pleaded that the portion of the building/property is let out at the rate of Rs.22/- per month. Except for oral testimony of DW-1 that too based on records nothing has been placed on record and proved by the defendant that the portion of the suit property has been let out to any one at any rate. In fact witness of the defendant deposed so much against the interest of the defendant itself that defendant was required to re-examine his own witness with the permission of the court.
26. When the defendant is claiming that plaintiff is not entitled for exemption in that circumstances defendant was required to deny each and every averment of the plaintiff so as to put the plaintiff on alert to prove each and every averment. But in the present case defendant is not disputing most of the claims of the plaintiff or testimony of plaintiff witness, therefore in this circumstance, it is for the defendant to prove that the plaintiff is non- charitable institution and the institution is earning from other sources which is being applied for other purpose or that it is providing education with commercial interest. In fact on this aspect there is admission on the part of the RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 9 of 13 defendant that entire expenses of the plaintiff is being maintained by way of grant from the government to the extent of 95% and remaining 5% from the contributions. Apart from this it was the specific case of the plaintiff that it does not pay any dividend and bonus to its members as all the members of the committee are honorary workers. Nothing has been brought on record that plaintiff is engaged in earning profits from the use of the building in any manner. In these circumstances, plaintiff is complying with all the three ingredients required under Section 115(4) of the DMC Act and therefore, plaintiff qualifies for exemption from imposition of general tax. Hence, in view of the above reasoning the finding of the Ld Trial Court that plaintiff has failed to prove issue No. 2 is not sustainable and is accordingly hereby set aside and decided in favour of the plaintiff/appellant.
27. Before parting on this it will not be out of place to observe that it is surprising that authorities of the defendant keeping decision pending on the plaintiff's claim for exemption from general taxes, are raising the demand of property tax. In fact before fastening the plaintiff with any financial liability, an appropriate decision regarding plaintiff's entitlement for exemption should have been taken first and then the demand could have been raised if plaintiff was to declared ineligible.
28. The next ground of dismissing the suit was that present suit is not maintainable before the Civil Court as the jurisdiction lies with ATMCD. Ld. Trial Court was of the view that since plaintiff has already availed remedy under Section 169 of DMC Act before ATMCD, therefore, the suit was not maintainable and was barred under Section 169 of the DMC Act r/w Section 41(h) of the Specific Relief Act. The judgment which has been cited before this Court i.e. Ganga Ram Hospital Trust v. MCD 92(2001) DLT 775 DB was also cited before the Trial Court but the rulings therein did not find favour with the Trial Court although Trial Court did not discuss as to how the said ruling is not applicable to the present case.
RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 10 of 13
29. In Ganga Ram Hospital Trust v. MCD, 92(2001) DLT 775(DB) Hon'ble Delhi High Court held that as follows:
"15. Section 169 provides for a remedy of appeal against levy or assessment of any tax under the Act while Section 170 lays down conditions subject to which the right of appeal conferred by Section 169 can be exercised. Neither of these two sections contain any provision barring a civil suit to challenge levy and assessment of tax under the Act. At best it may be argued that in view of the remedy of appeal provided under Section 169 of the Act a party should have recourse to the said remedy. But a party filing a civil suit to challenge the levy and assessment of tax under the Act may like to urge that the levy and assessment of tax is not in accordance with the Act or is violative of the provisions of the Act. In other words it may be the case of a plaintiff that the authorities under the Act have not acted in accordance with the provisions of the Act while levying and assessing tax and, therefore, it is entitled to exercise its inherent right to challenge such a levy and assessment by way of a civil suit. Availability of an alternative remedy may be treated as a bar by the court while exercising its writ jurisdiction because writ jurisdiction under Article 226 of the Constitution of India is a matter of exercise of discretionary jurisdiction of the court but it is not the same case while entertaining a civil suit. Exercise of jurisdiction to entertain civil suit is not a discretionary matter before the civil court. A civil court may reject the plaint as per law or dismiss a civil suit on merits. It cannot refuse to entertain the suit unless barred by law. The DMC Act does not contain any such bar to a civil suit in matters of levy and assessment of tax.
16. While on the question, of express or implied bar to a civil suit it has to be noticed that elsewhere in the DMC Act where the legislature intended to create a specific bar to exercise of right to file a civil suit it has specifically provided for it. In this connection reference may be made to Section 347A, Section 347B and Section 347E. In mattes relating to unauthorised construction in properties and demolition of such construction the statute has established an Appellate Tribunal before which the parties are entitled to agitate their grievances. In all such cases appeals are provided to the Appellate Tribunal and further appeal is provided from the order of the Appellate Tribunal to the Administrator under Section 347B. Section 347E provides for a complete bar to the power of civil court to entertain any suit/application or other proceedings in respect of any order or notice appealable under Section 343 or Section 347B. The section further goes on to provide that no such order or notice shall be called in question otherwise than by preferring an appeal under Sections 343 or 347B. Thus an express bar has been provided to the exercise of jurisdiction by the civil court in entertaining a civil suit or application in cases covered under the relevant provision. Sections 169 and 170 of the Act do not contain any such bar to civil suits or applications to challenge levy and assessment of tax under the Act RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 11 of 13 nor is there any other provision in the Act barring a civil suit or application in cases pertaining to levy and assessment of taxes. Rather Section 478 of the Act which contains general provision regarding advance notice being served on the Corporation before institution of suits against it, shows that the Act envisages civil suits being normally filed against the Corporation. From this discussion we conclude that there is no bar to civil suits to challenge levy and assessment of tax under the Act.
XXXXX
35. The result of the above discussion is that the impugned judgment of the trial court holding that a civil suit is not maintainable cannot be sustained. The finding of the trial court on the preliminary issue is hereby set aside. It is held that a civil suit to challenge levy and assessment of tax is not barred in view of Section 169 of the Act. A civil suit in such cases is maintainable. It is , however, a different matter whether on merits a plaintiff is able to make out a case in its favor in the suit. on question of merits of the controversy in the suit we say nothing. The trial court dismissed the suit on the threshold holding it as not maintainable and, therefore, we have only considered the question of maintain ability of civil suit in this appeal. The appeal is allowed and the impugned judgment of the trial court is set aside. The suit is remanded back to the trial court for decision in accordance with law. In the facts and circumstances of the case, there will be no order as to costs.
30. Thus, the above judgement categorically laid down that jurisdiction of civil court in respect of matter contemplated by Section 169 of Delhi Municipal Corporation Act, is maintainable. Simply because for subsequent similar bills raised by defendant plaintiff has approached another forum/ AtMCD that does not mean that jurisdiction of the Civil Court will be barred. In the said judgment inefficacy of the remedy provided under Section 169 of the DMC Act was categorically highlighted and it was ruled that Civil Court will also have jurisdiction. Hence, findings of the Ld Trial Court qua issue No.1 is also not sustainable and is accordingly hereby set aside and decided in favour of the plaintiff/appellant.
31. In view of the reasoning and discussion, appeal of the plaintiff/appellant is accepted, impugned judgement and decree dt 22.11.2011 is hereby set aside and a decree of declaration is hereby passed in favour of the plaintiff/appellant and against the defendant/respondent thereby declaring RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 12 of 13 that school building bearing No. 2107, Deshbandhu Gupta Marg, New Delhi in which Rai Kedar Nath L. M. Girls Senior Secondary School is being run is exempted from payment of general taxes as per Section 115(4) of the DMC Act.
32. Decree of permanent injunction is hereby passed in favour of the plaintiff/appellant and against the defendant/respondent thereby restraining the defendant/respondent from demanding, claiming, enforcing recovery of the amount of Rs 4,17,866/- claimed as general tax vide bill No. COMP/6109 dt. 27.07.1989.
33. It is made clear that this judgement and decree shall not debar the respondent/defendant to challenge the status of plaintiff as "charitable institution" if it comes to notice change in plaintiff's activities disqualifying it from exemption.
34. Appellate Decree sheet be prepared accordingly.
35. Parties to bear their own respective cost of litigation.
36. Trial Court record be sent back after placing the copy of this judgment on the same.
Appeal file be consigned to Record Room after necessary compliance. Digitally signed by HARISH HARISH KUMAR KUMAR Date:
2019.02.04 15:17:09 +0530 (Harish Kumar) Announced in the open Court. ADJ-13(Central)/THC (Judgment contains 13 pages) Delhi/02.02.2019 RCA No. 61193/2016 Ramjas Foundation Vs Municipal Corporation of Delhi Page No. 13 of 13