Delhi District Court
(Sh) Polo Singh And Co vs Mcd on 7 January, 2025
Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025
IN THE COURT OF PRINCIPAL DISTRICT & SESSION JUDGE
WEST DISTRICT, TIS HAZARI COURTS, DELHI
RCA DJ/12/2023
CNR No.: DLWT01-001683-2023
Polo Singh & Co.
Through its Partner, Sh. Trilochan Singh
87, furniture Block, Kirti Nagar,
New Delhi-110015. .....Appellant
Vs.
Municipal Corporation of Delhi
(A statutory body establish under the DMC Act)
through its Commissioner
Dr. S. P. M. Civic Centre, Minto Road,
New Delhi-110002. .....Respondent
Date of institution : 22.02.2023
Date of conclusion of arguments : 07.12.2024
Date of judgement : 07.01.2025
JUDGEMENT
1. This is an appeal under Section 347(B) of the Delhi Municipal Corporation 1957 (in short DMC Act) challenging a judgement dated 7.2.2023 passed by Appellate Tribunal MCD Delhi (in short ATMCD) in Appeal No. 192/ATMCD/2022, upholding a sealing order dated 15.3.2022 bearing no. S/B/KBZ/Misuse/2022/25 in respect of Plot no.
RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 1 of 40Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 88, Furniture Block, Kirti Nagar, New Delhi issued by Deputy Commissioner, Karol Bagh Zone under Section 345A read with Section 347 of the DMC Act, 1957 in respect of premises/plot no.87, Furniture Block, Kirti Nagar, New Delhi.
2. Notice of appeal was issued to respondent. Trial Court record of ATMCD and MCD were summoned. Reply was filed and arguments were heard.
Conditions of Allotment
3. As per the Perpetual Lease Deed dated 17th June 1972, President of India had allotted Plot No. 87, Furniture Block in the lay out plan of Kirti Nagar, Ware Housing Scheme to M/s Polo Singh & Co. for running industry of wooden furniture and lethe works. As per Clause 13 of the said lease deed, the Lessee, without the written consent of Lessor, cannot use or permit to use the aforesaid Plot or in any building thereon for residence or for carrying on any trade or business, whatsoever, or use the same or permit the same to be used for any purpose other than industry of Wooden Furniture. I would like to reproduce Clause 13 of the perpetual deed as under :
"(13) The Lessee shall not without the written consent of the Lessor use, or permit to be used, the industrial plot or in any building thereon for residence or for carried on any trade or business whatsoever or use the same, or permit the same to be used for any purpose other than that of carrying on the manufacturing RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 2 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 process or running the industry of wood sawing and lathe work such other manufacturing process or industry as may approved from time to time by the Lt.
Governor or do or suffer to be done therein any act or thing whatsoever which in the Lessor may be a nuisance, annoyance or disturbance to the Lessor of and person living in the neighbourhood.
PROVIDED that, if the Lessee is desirous of using the said Industrial plot or the building therein for a purpose other than that of the manufacturing process or industry as may be approved from time to time, the Lessor may allow such charge of user on such terms and conditions, including payment of additional premium and additional rent, as the Lessor may in his absolute discretion determine."
Show Cause Notice Dated 22.12.2021
4. Respondent i.e. the then North Delhi Municipal Corporation (NrDMC) through Deputy Commissioner issued show cause notices dated 22.01.2022 to the appellant U/s 345A and 347 of the DMC Act, 1957 on account of misuse/occupancy of the premises against the sanctioned use/without paying the requisite charges as notified by the Government etc. since non-compliance of the mandatory provisions amount to violation of the provision of the Master Plan-2021.
Respondent vide the aforementioned notice directed the appellant to stop the misuse and bring the premises within the permitted use as per Master Plan-2021 within 48 hours and show caused as to why the aforesaid premises be not sealed for misuse.
RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 3 of 40Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 The above said show cause notice issued by the respondent was replied by the appellant.
Sealing of the Premises
5. After considering the reply of appellant, the respondent through its Deputy Commissioner sealed the premises of the appellant on 20.01.2022 vide order dated 20.01.2022 stopping the appellant from carrying out furniture business.
W.P. (C) No. 1515/20226. Furniture Block Market Association filed writ petition titled as "Furniture Block Market Association (Regd.) Vs North Delhi Municipal Corporation (NrDMC) & Ors. bearing W.P. (C) No. 1515/2022 seeking quashing of the show-cause notices and sealing orders in respect of various properties in Kirti Nagar (including the present premises). This Writ Petition was disposed vide Judgement dated 25.01.2022, in which the Hon'ble High Court of Delhi directed the Respondent/MCD to de-seal the premises and give fresh hearing. Fresh Hearing
7. In compliance of the aforesaid order a fresh hearing was given by Deputy Commissioner, North Delhi Municipal Corporation, Karol Bagh Zone. Vide Order No. S/B/KBZ/Misuse/2022/25 dated 15.3.2022 the Deputy Commissioner passed this impugned order, RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 4 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 operative portion of the same is reproduced as under :
"And whereby, I have gone through the record and documents placed before me. As per available record, the owners/occupiers have been using the property for commercial purposes for trading of furniture including imported furniture, furnishing items which are in contravention of their lease deed. As per its clause 4(a), lease was granted for the purpose of manufacturing process or running of any industry whatsoever.
And where, industrial units/plots can be put to commercial use within the existing development control norms subject to payment of conversion charges and all other requisite charges (as applicable) computed as per MPC-2021 & as per Govt. notifications.
Now therefore I, Shashanka Ala, Deputy Commissioner/Karol Bagh Zone of North Delhi Municipal Corporation in exercise of the powers vested in me under Section 345 A read with Section 347 of the DMC Act and rules made there under hereby intimate the owner/occupiers of property bearing no. 88, Furniture Block, Kirti Nagar, Delhi that their premises is already under misuse as Commercial & directed to pay the conversion charges = plot are (Sqmt) x Rs.21240.00 and parking charges = Built up area (Sqmt) x Rs.1995.00 and all other applicable charges as per MPD-2021 if applicable to North DMC within 3 days of the receipt of this order. They should take notice that any non-compliance of this order will amount to violation of the terms of lease as well as provisions of MPD-2021 & thus will automatically lead to Sealing action against the continuing misuse of the premises and no separate order/intimation will be sent in this regard.
Issued under my hand seal on this __ day of March, 2002.
(SHASHANKA ALA) Deputy Commissioner Karol Bagh Zone"RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 5 of 40
Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025
8. Appellant received this order dated 15.3.2022 on 17.3.2022 whereby he was directed to pay conversion and parking charges within three days of the receipt of the said order failing which the premises would be sealed again.
Appeal before Appellant Tribunal of Municipal Corporation of Delhi (in short ATMCD)
9. Aggrieved by the said dated 15.3.2022, the appellant filed an Appeal No. 192/ATMCD/2022 titled as Anjali Bhasin Vs. North Delhi MCD. After hearing arguments ATMCD dismissed the said appeal vide impugned judgement dated 7.2.2022.
Jurisdiction of Principal District Judge to entertain appeal against a judgement of ATMCD
10. Section 347D of the DMC Act provides for a remedy of an appeal against the order of ATMCD to Administrator i.e. Lt. Governor of NCT of Delhi. This provision was declared unconstitutional by the Hon'ble Supreme Court of India in Civil Appeal No. 5075 of 2005 vide judgment dated 21.04.2011 mandating appeal, if any, under Section 347D to be preferred to the District Judge till proper judicial authority is setup under the DMC Act.
11. As no judicial authority to hear appeals against the judgements of ATMCD has been set up till today, this court being the court of RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 6 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 Principal District Judge continues to be vested with the powers to hear appeal against the orders/judgements of ATMCD. Whether the MCD has power to seal the premises on the ground of its misuse?
12. The appellant has challenged the impugned order submitting that MCD has no power to seal any premises under Section 345 A of DMC Act because this provision permits MCD to seal an unauthorized construction and does not permit sealing of premises for misuser.
13. Ld. Counsel for appellant has taken me through the language of Section 345A of DMC Act and has submitted that this provision of law gives limited power to MCD to seal a premises only in case of unauthorized construction. It is further submitted that the scope of Section 345A was expanded by the Supreme Court of India in the case of M. C. Mehta Vs. UOI : W. P. (C) No. 4677 of 1985 vide judgment dated 16.02.2006 followed by judgment dated 29.09.2006. However, Supreme Court of India had passed the said judgment only in cases where residential premises were being used for commercial purposes. Ld. Counsel for appellant has further drawn my attention to a judgement dated 14.8.2020 passed in M. C. Mehta Vs. Union of India and Ors., Writ Petition (Civil) No.4677 of 1985, where it is observed as under :
RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 7 of 40Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 "88. It is quite apparent that particularly when the Monitoring Committee is not empowered to take action, the incumbents could not have been deprived of the due process of protection in accordance with law. As against the action of the Monitoring Committee, no appeal lies elsewhere. Even High Court is not authorized to entertain any matter and scrutinize its action, such is the drastic step taken by this Court by way of an exceptional measure in public interest, and it is confined to the misuse of residential property for commercial purpose and encroachments and unauthorized construction on the public land, roads."
14. It is submitted that the aforesaid widening of scope of Section 345A would not extend to the misuse of industrial plot for commercial purposes. Therefore, the aforesaid judgement of Supreme Court of India is not applicable to the present case where the plot was allotted for industrial purposes but being used for commercial activities.
15. On the other hand, Ld. Counsel for respondent/MCD has argued that Supreme Court in the aforesaid judgement was concerned about the "misuser" and not about the type of misuse.
16. First I would like to reproduce the relevant portion of Section 345A of The DMC Act as under :
"345A. Power of seal unauthorized constructions.
- (1) It shall be lawful for the Commissioner, at any time, before or after making an order of demolition under Section 343 or of the stoppage of the erection of any building or execution of any work under Section 343 or under Section 344, to make an order RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 8 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 directing the sealing of such erection or work or of the premises in which such erection or work is being carried on or has been completed in the manner prescribed by rules, for the purpose of carrying out the provisions of this Act, or for preventing any dispute as to the nature and extent of such erection or work. (2) .........
(3) ........."
17. Now I would like to refer to the relevant portion of M. C. Mehta Vs. Union of India and Ors., Writ Petition (Civil) No.4677 of 1985 as under :
"A bare perusal of building bye-laws shows how relevant is the user, commercial or residential, and the large impact of occupation load on various facilities including water, sanitation and drainage.
Keeping future needs in view, experts prepare Master Plans. Perusal of the Delhi Master Plan, 1962 and 2001 shows what were plan projections. At the time of planning, the experts in the field of town planning, take into account various aspects, such as, healthy living, environment, lung space need, land use intensity, areas where the residential houses to be built and where the commercial buildings to be located, need of household industries etc. Provision for household industries in residential areas does not mean converting residential houses in the commercial shops. It only means permitting activities of household industry in a part of a residential property. It does not mean that residential properties can be used for commercial and trading activities and sale and purchase of goods. Master Plan contemplates shops in District Centres, Community Centres, Local Shopping Centres etc. and not in residential areas. Be that as it RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 9 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 may, for the present, we are not considering the cases of small shops opened in residential houses for catering to day-to-day basic needs, but are considering large-scale conversion, in flagrant violation of laws, of residential premises for commercial use.
In respect of planning, reference can usefully be made to Section 313 of the DMC Act as well. The said section provides for the requirement of layout plan of the land. It, inter alia, provides that before utilizing, selling or otherwise dealing with any land under Section 312, the owner thereof shall send to the Commissioner a written application with a layout plan of the land showing various particulars including the purpose for which the building will be used. For breach of Section 313, action can be taken under Section 314. It has rightly not been disputed by any counsel that neither layout plan, nor the building plan, can be sanctioned by MCD except in the manner and for the purpose provided in the Master Plan. If in the master plan, the land use is residential, MCD cannot sanction the plan for any purpose other than residential. In the impugned judgment, while dealing with the provisions of the layout plan, it was observed that the provisions for user 'are only regulatory in nature'. While dealing with the user, the High Court observed that 'the power, whereby and whereunder the basic human rights or the fundamental rights conferred upon a person is taken away, must be specifically conferred by a statute'. The provision of user may be regulatory but all the same, they are mandatory and binding. In fact, almost all the planning provisions are regulatory. The violations of the regulatory provisions on massive scale can result in plans becoming merely scraps of papers. That is the ground reality in the capital of the country. None has any right, human or fundamental, to violate the law with immunity and claim any right to use a building for a purpose other than authorised. Further, RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 10 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 the words 'unless the context otherwise requires' in Section 331 of the DMC Act are of no consequence for determining the point in issue as the context herein does not provide otherwise for the present purposes. It does not provide that the power of sealing under Section 345A cannot be exercised in case of misuser. In view of the clear language of Section 345A, we are also unable to sustain the view of the High Court that action under Section 345A can be taken only when there exists order of demolition under Section 343 or an order under sub-section (1) of Section 344. The conclusion of the High Court that action under Section 345A can be taken only when there exists an order of demolition under Section 343, or on passing of an order under sub-section (1) of Section 344, and in no other contingency cannot be accepted in view of the clear provision of Section 345A that action can be taken even before or after an order is made under those provisions. It is clear from a conjoint reading of the definition of the expression 'to erect a building' in Section 331 and Section 345A that conversion of user would come within the purview of the expression 'to erect a building'. In this respect useful reference can also be made to Building Bye-Laws for the Union Territory of Delhi, 1983, in particular Bye-Law Nos. 2.17 and 2.85, defining the expressions 'Conversion' and 'To Erect' respectively, which read as under:
"2.17 Conversion\026 The change of an occupancy to another occupancy or change in building structure or part thereof resulting into change of space or use requiring additional occupancy certificates. 2.85 To Erect\026 To erect a building means:
(a) To erect a new building on any site whether previously built upon or not;
(b) To re-erect any building of which portions above the plinth level have been pulled down, burnt or destroyed; and RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 11 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025
(c) Conversion from one occupancy to another."
Having regard to these definitions if a Building/structure not originally constructed for use as a shop, is put to use as a shop, such conversion of use would come within the ambit of the expression 'to re- erect' and, consequently, within the ambit of the definition of the expression 'to erect a building'. In view of the aforesaid, reversing the impugned judgment of the High Court, we hold that under Section 345A of the DMC Act, the Commissioner of MCD is empowered to exercise power of sealing in case of misuser of any premises."
18. I agree that Supreme Court of India was dealing with the matters in which residential properties were being used for commercial purposes. However, I disagree that Supreme Court enlarged the scope of Section 345A only in respect of residential premises being used for commercial purposes. The perusal of the aforesaid judgement quoted above makes it clear that the Apex Court dealt with the whole scheme of DMC Act regarding sealing power and held that DMC Act empowers the Commissioner to seal a property in case of misuser. Therefore, even though the present matter pertains to conversion of industrial premises to commercial use, MCD has got power to seal such premises under Section 345A of DMC Act. Whether "misuse/conversion charges" amount to "tax"
19. It is argued by Ld. Counsel for appellant that no tax can be RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 12 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 imposed by MCD beyond Section 113 and 150 of DMC Act. Hence it is submitted that DMC Act does not empower MCD to levy misuse/conversion charges and therefore, the charges imposed by the Deputy Commissioner MCD are not lawful.
20. Ld. Counsel for respondent has submitted that by the Office Order No.55/Add.Com.Engg./2010 dated 7.6.2010, issued on the decision of Lt. Governor, conversion charges have been imposed and such conversion charges would not amount to "tax". Therefore, Section 113 and 150 of DMC Act are not applicable in the present case.
21. Ld. Counsel for appellant has controverted this submission and has cited TATA Iron & Steel Co. Ltd. & Anr. Vs. State of Bihar & Ors. 2017 Legal Eagle (SC) 1301 and Commissioner of Income Tax, Udaypur, Rajasthan Vs. McDowell & Co. Ltd. 2009 Legal Eagle (SC)
883. Ld. Counsel for appellant argued that the "misuse/conversion charges" are nothing but "tax" in terms of Article 265 of Constitution of India.
22. I have considered the rival submissions and have perused the aforesaid judgements cited by Ld. Counsel for appellant.
23. In TATA Iron & Steel Co. Ltd. (supra), Supreme Court of India relied upon Commissioner of Income Tax, Udaypur, Rajashtan RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 13 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 (supra), which was approved by a nine Judge Constitution Bench of Supreme Court of India in Jindal Stainless Ltd. & Anr. Vs. State of Haryana & Ors., 2016 (II) Scale1.
24. In TATA Iron & Steel Co. Ltd. & Anr. Vs. State of Bihar & Ors. 2017 Legal Eagle (SC) 1301, it is held as under :
17. On behalf of the respondent-State, it is submitted that the impugned demand is a 'fee' but not a 'tax', the expression 'tax' occurring in Article 265 cannot take within its sweep - "fee". Therefore, there is no need for a legislative sanction for the impugned demand.
18. The expressions "taxes" and "duties" are to be found in many provisions of the Constitution. The expression "fee" finds a place in Article 110(2)8 and 199(2), which are in pari materia. Both the Articles recognise the existence of two kinds of fees. Fees for licences and fees for services. Each one of the three lists contained in the Seventh Schedule have entries which employ the expression "fees" (Entry 96 of List I, 66 of List II and 47 of List III). Article 366 contains definitions of various expressions employed in the Constitution. Article 366(28) defines the expression "taxation"- "(28) taxation includes the imposition of any tax or impost, whether general or local or special, and tax shall be construed accordingly;"7.
See Articles 265, 266, 268, 269, 270, 271, Entries 82 to 91 of List I and Entries 46 to 63 of List II of the Seventh Schedule to the Constitution.
19. The expressions "fee" and "duty" are not defined under the Constitution. Article 366(28) employs another expression "impost". What are the legal contours of each one of these expressions i.e. "tax", "impost", "duty" and "fee" fell for the consideration of RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 14 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 this Court from time to time.
20. This Court in Commissioner of Income Tax, Udaipur, Rajasthan v. McDowell And Company Limited, (2009) 10 SCC 755 held:
"21. "Tax", "duty", "cess" or "fee" constituting a class denotes to various kinds of imposts by State in its sovereign power of taxation to raise revenue for the State. Within the expression of each specie each expression denotes different kind of impost depending on the purpose for which they are levied.
This power can be exercised in any of its manifestation only under any law authorizing levy and collection of tax as envisaged under Article 265 which uses only the expression that no "tax" shall be levied and collected except authorised by law. It in its elementary meaning conveys that to support a tax legislative action is essential, it cannot be levied and collected in the absence of any legislative sanction by exercise of executive power of State under Article 73 by the Union or Article 162 by the State.
22. Under Article 366(28) "Taxation" has been defined to include the imposition of any tax or impost whether general or local or special and tax shall be construed accordingly. "Impost" means compulsory levy. The well-known and well-settled characteristic of "tax" in its wider sense includes all imposts. Imposts in the context have following characteristics:
(i) The power to tax is an incident of sovereignty.
(ii) "Law" in the context of Article 265 means an Act of legislature and cannot comprise an executive order or rule without express statutory authority.
(iii) The term "tax" under Article 265 read with Article 366(28) includes imposts of every kind viz. tax, duty, cess or fees.
(iv) As an incident of sovereignty and in the nature of compulsory exaction, a liability founded on principle of contract cannot be a "tax" in its technical sense as an impost, general, local or special."
21. A nine-judge Constitution Bench of this Court in Jindal Stainless Ltd. & Another v. State of Haryana & Others, 2016 (11) Scale 1, quoted the above RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 15 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 mentioned statement of law with approval. Therefore, it is now well settled that the expression "fee" is also comprehended in the expression "tax" for the purpose of Article 265 and even for the collection of a "fee", authority of law (i.e. legislative support) is mandatorily required under the Constitution.
22. In view of the above mentioned authoritative pronouncement, we need not examine the various ancillary submissions made on behalf of the respondent State relying upon various judgments 9 of this Court rendered prior to judgment in Jindal Stainless case (supra) that the expression "tax" occurring in Article 265 does not take within its sweep the expression "fee".
25. The above quoted judgement leaves me in no doubt that the "misuse/conversion charges imposed by the MCD in its impugned order are nothing but "tax".
Whether MCD has power to impose misuse/conversion charges.
26. Ld. Counsel for appellant has argued that specific power to impose and recover tax/levy/fee/charges are governed specifically under chapter VIII (Section 113 to 183) of the DMC Act and that it does not empower MCD to impose misuse or conversion charges. It is argued that conversion charges are covered under the definition of "Tax" and no tax can be imposed by Government or any Authority unless empowered by a statute. It is argued that the "misuse/conversion charges are not mentioned in the list of taxes, RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 16 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 which MCD is empowered to levy under as per Section 113 of DMC Act. It is submitted by Ld. Counsel for appellant that Section 113 of DMC Act does not even remotely relate to misuse/conversion charges claimed by MCD from the appellant. It is argued that as per Article 256 of the Constitution of India no tax/levy/fee or charge of any nature whatsoever can be imposed without the authority of the law.
27. It is further argued by Ld. Counsel for appellant that the conversion charges sought to be imposed and recovered by the Corporation is in violation of Section 109(2) of DMC Act which requires MCD to determine on or before 15 th February of each year the rates at which various municipal taxes, rates and cesses shall be levied in the next following year which cannot be subsequently be altered for the year for which they have been fixed. No such exercise appears to have been carried out by MCD.
28. Ld. Counsel for appellant has drawn my attention to Section 150 of The DMC Act, which empowers MCD to impose any other tax but such tax can only be imposed in accordance with the procedure laid down under Section 150. It is submitted that no resolution under Section 150 has been passed by MCD for levying the conversion charges. Therefore, it is argued that the conversion charges imposed by respondent/MCD are illegal. Ld. Counsel for appellant has relied RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 17 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 upon Jindal Stainless Ltd. & Anr. Vs. State of Haryana & Ors., Civil Appeal No. 3453/2002, date of decision 11.11.2016l in which Hon'ble Supreme Court of India held that no tax can be levied unless power to impose and recover such tax has been accorded by a Legislation. It is submitted that as misuse/conversion charges amount to "tax", MCD has no power to impose and recover the same without following the procedure laid down under Section 150 of DMC Act. It is submitted that simply by framing a policy vide an office order, no tax can be levied or recovered.
29. Ld. Counsel for respondent/MCD has opposed the appellant on this point submitting that the said charges are levied and demanded by the answering respondent on the basis of various notifications which has been issued by Ministry of Urban Development, being notification bearing No. S.O.2034(E) dt. 12.08.2008 and notification bearing no. 1215(E) dated 13.05.2013, wherein, as per Clause (vi) it is provided as under :-
"[vi) Industrial units / plots abutting roads of 24m ROW and above shall be eligible for conversion to commercial use within the existing development control norm, subject to payment of conversion charges computed on current market value of commercial area and cost of parking as decided by the Government from time to time. The activities permissible in Community Centre will be permitted in such plots. In addition, multilevel parking shall be permissible activity.RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 18 of 40
Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 However, this shall not be permitted on non-conforming / regularized industrial cluster. The above provision shall not affect the Supreme Court orders in any way.]"
30. It is further submitted by Ld. Counsel for respondent/MCD that based upon notification dt. 12.08.2008, an office order dt. 07.06.2010 was issued by the then Unified MCD being office order bearing no. 55/ADDL.COM.ENGG./2010, whereby, one time use conversion charges, as well as annual conversion charges and parking charges for different industrial areas were determined and fixed. It is further submitted by Ld. Counsel for respondent/MCD that under the said office order, the use conversion charges were levied upon the built-up area under conversion.
31. It is further submitted by Ld. Counsel for respondent/MCD that the said rates vide notification dt. 03.07.2018, being issued by the Land Disposal Wing of Delhi Development Authority under the heading "Fixation of charges for allowing permitted non-industrial activities, such as residential use (Group Housing) etc. in existing industrial areas, in accordance with provisions of notified under MPD-
2021 and also revision/fixation of charges of use conversion in case of Industrial to Commercial/Hospital" has been revised and are now being levied upon the plot area irrespective of the built up area under RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 19 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 conversion. It is further submitted by Ld. Counsel for respondent/MCD that Sr. No.3 of the said notification, the new rates have been fixed as Rs.21,240/- per sq. mt. of the plot area.
32. It is argued by Ld. Counsel for respondent/MCD that the conversion rates have been charged as per said office order.
33. During the course of arguments, I had raised a query to MCD vide order sheet dated 8.11.2024. The order sheet is reproduced as under :
"One of the issues, which requires decision of this court, is as to whether MCD is empowered to impose conversion charges, which have been promulgated through Office Order No. 55/Addl.Com.Engg./2010 dated 07.06.2010.
As the conversion charges do not find mention in the list of taxes described in Section 113 of DMC Act, the other taxes including conversion charges can be imposed only through by following the procedure of Section 150 of DMC Act.
The reply of MCD is silent on the issue as to whether the Office Order No. 55/Addl.Com.Engg./2010 dated 07.06.2010 had been issued by MCD after following the procedure of Section 150 of DMC Act. MCD is directed to file specific answer to this question along with relevant documents.
Put up the matter for this purpose and further arguments on 16.11.2024."
34. Pursuant to the aforesaid directions, MCD filed a status report, which is reproduced as under :
RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 20 of 40Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 "Status report on behalf of respondent, Municipal Corporation of Delhi.
Respectfully Showeth:
(a) That the present status report is being filed in compliance of the direction passed by the Hon'ble Court vide order dated 08.11.2024 in the subject matter.
(b) That the Section 113 of the DMC Act 1957 is related to levy of taxes and section 150 is related to imposition of other charges. The imposition of Conversion charges are not a type of tax levied by MCD. Hence Section 113 & 150 are not attracted and applicable in this case.
(c) That the imposition of conversion charges are governed by Master Plan of Delhiwhere DEVELOPMENT CODE clause 2(10) states that Conversion charges/ other levies as prescribed by the Government from time to time shall be payable wherever land use conversion from time to time is enabled at premises level by Master Plan/Zonal Plan, Mixed Use Regulation and other Regulations.
(d) That the issue of conversion of Industrial Plot to Commercial usage is governed by the notification no.
544(E) dated 25.02.2009 and amended vide no.
S.O.3233(E) dated 03.07.2018.
(e) That the conversion charges/parking charges/Addl. FAR are levied and demanded by the answering respondent/Corporation on the basis of various notifications which have been issued by MOUD bearing No. S.O.2034(E) dt. 12.08.2008 and notification bearing no. 1215(E) dated 18.05.2013, whereby amendments were made in the MPD-2021, by way of inserting Clause
(vi) under clause Industry use Zone - Guidelines which provides as under :-
"[iv) Industrial units / plots abutting roads of 24m ROW and above shall be eligible for conversion to commercial use within the existing development control norm, subject to payment of conversion charges computed on current market value of RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 21 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 commercial area and cost of parking as decided by the Government from time to time. The activities permissible the Government from time to time. The activities permissible in community Centre will be permitted in such plots. In addition, multilevel parking shall be permissible activity. However, this shall not be permitted on non-conforming/regularized industrial cluster. The above provision shall not affect the Supreme Court orders in any way.]"
(f) That the said rates vide notification bearing no. S.O.3233(E) dt. 03.07.2018 issued by the Land Disposal Wing of the Delhi Development Authority under the heading "Fixation of charges for allowing permitted non- industrial activities, such as residential use (Group Housing) etc. in existing industrial areas, in accordance with provisions of notified under MPD-2021 and also revision/fixation of charges of use conversion in case of Industrial to Commercial/Hospital" has been revised and are now being levied upon the plot area irrespective of the built up area under conversion of the Industrial Units/Plots for commercial purposes.
Report is submitted accordingly.
R.K. Rohilla ASSTT. ENGINEER (BLDG) KAROL BAGH ZONE"
35. I have considered the rival submissions and have perused the aforesaid notifications issued by Ministry of Urban Development and office order issued by MCD. There is no need for reproducing the notifications issued by Ministry of Urban Development. Its power to issue aforesaid notifications amending Master Plan for Delhi 2021 and levying misuse/conversion charges are not under challenge in this appeal as the same cannot be challenged before this court being RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 22 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 second Appellate Authority under DMC Act and is not an Appellate Authority under DDA Act. Therefore, I will come to the office order issued by MCD. Vide this order, the rates of conversion charges have been fixed.
36. Before coming to the said office order, I would like to reproduce relevant portion of Section 113 of DMC Act as under :
113 Taxes to be imposed by 3[a Corporation] under this Act. - (1) 3[A Corporation] shall, for the purposes of this Act, levy the following taxes, namely:-
(a) property Tax;
(b) a tax on vehicles and animals;
(c) a theater-tax;
(d) a tax on advertisements other than
advertisements published in the newspaper;
(e) a duty on the transfer of property; and 4 [(f) a tax on buildings applications payable along with the application for sanction of the building plan.] (2) In additional to the taxes specified in sub-
section (1), 3[a Corporation] may, for the purposes of this Act, levy any of the following taxes, namely:-
(a) an education cess;
(b) a local rate on land revenues;
(c) a tax on professions, trades callings and
employments.
(d) a tax on the consumption, 5[sale or supply] of
electricity;
(e) a betterment tax on the increase in urban land
values caused by the execution of any
development or improvement work;
(f) a tax on boats; and
(g) tolls.
RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 23 of 40
Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025
(3) The taxes specified in sub-section (1) and sub
-section (2) shall be levied, assessed and
collected in accordance with the provisions of this Act and the bye-laws made thereunder."
37. The list of taxes mentioned from (b) to (f) in sub-section (1) and
(a) to (g) in sub-section (2) of Section 113 makes it obvious that same do not include misuse/conversion charges. Now it is to be seen as to whether "property taxes" appearing in Section 113(1)(a) can be stretched to an extent to fit the aforesaid charges in. This inquiry lead me to definition of "property tax" in Building Bye Laws (BBL) 2 (e) of the Delhi Municipal Corporation (Property Taxes) Bye Laws 2004. I reproduce it as under :
"2. Definitions. - (1) in these bye-laws -
(a) .......
(b) .......
(c) .......
(d) .......
(e) "tax' means property tax, that is to say, a
building tax or a vacant land tax or both."
38. The aforesaid definition and the entire BBL do not include misuse/conversion charges in the definition of property tax. Therefore, it is clear that conversion/misuse charges are not included in the list of taxes enumerated in Section 113 of DMC Act. However, statute provides a procedure to impose taxes, which have not been RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 24 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 listed in Section 113. This procedure has been provided under Section 150 of DMC Act.
39. Therefore, it takes me to Section 150 of DMC Act, which is reproduced as under :
150. Imposition of other taxes. - (1) [A Corporation] may, at a meeting, pass a resolution for the levy of any of the taxes specified in sub-section (2) of section 113, defining the maximum rate of the tax to be levied the class or classes of persons or the description or description of articles and properties to be taxed, the system of assessment to be adopted and the exemptions, if any, to be granted.
(2) Any resolution passed under sub-section (1) shall be submitted to the 2[***] Government for its sanction, and if sanctioned by that Government, shall come into force on and from such date as may be specified in the order of sanction.
(3) After a resolution has come into force under sub-section (2), 1[a Corporation] may, subject to the maximum rate, pass a second resolution determining the actual rates at which the tax shall be leviable; and the tax shall come into force on the first day of the quarter of the year next following the date on which such second resolution is passed.
(4) After a tax has been levied in accordance with forgoing provisions of this section, the provisions of sub-section (2) of section 109, shall apply in relation to such tax as they apply in relation to any tax imposed under sub-section (1) of section 113."
40. Section 150 of DMC Act thus provides a legislative procedure through which MCD can impose taxes other than mentioned in RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 25 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 Section 113 of DMC Act.
41. With a view to find the source of power to levy conversion charges, I would like to reproduce initial portion of this office order as under :
"MUNICIPAL CORPORATION OF DELHI OFFICE OF THE ADDITIONAL COMMISSIONER [ENGG.] TOWN HALL : CHANDNI CHOWK : DELHI No. 55/Addl.Com.Engg./2019 Dated : 07.06.2010 OFFICE ORDER CONVERSION CHARGES FROM INDUSTRIAL TO COMMERCIAL/BANQUET HALLS In supersession of office order No.D-16/Addl. Com.(Engg.)/10, dated 15/02/2010, the following policy shall be adopted for realization of conversion charges from industrial to commercial /. banquet hall.
..........
This issues as per decision of Hon'ble Lt. Governor.
Sd.
ADDITIONAL COMMISSIONER (ENGG)"
42. Crux of Section 150 of DMC Act is that corporation may pass a resolution for levy of other taxes and such resolution has to be submitted to the Government for its sanction. If such resolution is sanctioned, the MCD shall pass a second resolution determining the rates of such tax. As already stated I had specifically put a question to MCD as to whether or not the legislative process as envisaged under Section 150 of DMC Act was followed or not. Reply of MCD shows that it was not followed. Rather MCD simply adopted as a RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 26 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 matter of policy the misuse and conversion rates notified by DDA under various notifications.
43. It is clear that aforesaid office order was issued without any authority or legal backing under MCD Act. Hence, it is held that the aforesaid misuse/conversion charges imposed upon the appellant vide impugned order of MCD is not lawful and MCD erred in levying the said charges, which amount to tax as already discussed. Whether the terms "industrial" and "commercial" can be used interchangeably.
44. It is argued by Ld. Counsel for appellant that the industrial activity is nothing but a commercial activity. Therefore, if a plot has been allotted for industrial use, it means that the allottee can use it for commercial purpose also. It is further submitted that the word "industrial" and "commercial" have not defined under any Act or any Rules. Therefore, it is submitted that considering these two terms as separate categories of user is unjustified.
45. I have considered the submissions. When a term is not defined in any law, its meaning in common parlance has to be accepted.
"Industry" involves mainly the manufacturing activity, though it may involve commercial transactions necessary for running such industry. However, "commercial" use does not involve manufacturing activity. It RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 27 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 is not the case of appellant that the furniture was being manufactured at the premises. Further, I disagree with the submission that the word "industrial" and "commercial" have not been defined in law. Section 9
(c) and (e) of The Delhi Municipal Corporation (Property Taxes) Bye-
Laws 2004 have defined various types of use of buildings including "mercantile building" and "industrial building". I would like to reproduce the same as under :
9. Definitions of use-wise categories of buildings.
- For the purpose of clause (f) of sub-section (1) of section 116 A, the use-wise -
(a) .............
(b) .............
(c) "mercantile building" shall mean any building or
part thereof used as shops, stores or markets for display or sale of merchandise, either wholesale or retail, or for office, storage or service facilities incidental to the sale of merchandise and located in the same building, and such buildings shall include establishments wholly or partly engaged in wholesale trade, manufacturer's whole-sale outlets (including related storage facilities), warehouses, and establishments engaged in truck transport (including truck transport booking agencies), and subscriber trunk dialing and international subscriber dialing booths;
(d) .............
(e) "industrial building" shall mean any building or
structure or part thereof in which products or materials of all kinds and properties are fabricated assembled or processed as in assembly plants, and such buildings shall include laboratories, power plants, smoke houses, refineries, gas plants, mills, diaries, factories, RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 28 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 workshops, automobile repair garages, and printing presses, but the portion of the building for purposes other than purposes specified in this clause shall be assessed separately according to its use;
......."
46. Needless to say that premises used for commercial purpose has been defined as "mercantile building" in the aforesaid sections. Aforesaid Bye-laws make it clear that the mercantile building is used for storage, sale or display of merchandise, whereas an industrial building is a building where products are being fabricated, assembled and process. Thus the said bye-laws sufficiently define, describe and differentiate the buildings used for commercial purposes and industrial purposes.
47. There is nothing on record to show that the premises/building in question is being used for industrial purposes and there is no material to doubt the respondent's case that the said premises is being used for commercial purposes. Therefore, I find no infirmity in the impugned judgement that the premises in question is being used exclusively for commercial purposes, despite the fact that premises was allotted for industrial purposes.
RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 29 of 40Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 Whether MPD 2021 depict the premises in question as a commercial zone?
48. Ld. Counsel for appellant has painstakingly taken me through MPD 2021 and modifications in the same and on the basis of same it is submitted by Ld. Counsel for appellant that quasi judicial authority of MCD and ATMCD have failed to take notice of the MPD-2021 and the zonal plan, which show that the area is to be used for commercial purposes. It is submitted that Ld. ATMCD was unable to take note of the relevant facts and did not notice that the area is commercial in nature and therefore, even if the premises was allotted for industrial purposes, the appellant was bound to use it for commercial purpose in view of the modified Master Plan.
49. I am of the considered opinion that the aforesaid arguments are of no benefit to the appellant. Admittedly the plot was allotted for industrial purposes. Therefore, appellant can only run industrial activities in his premises. Even If it is presumed that the Master Plan has declared the area to be used for commercial purposes, still the terms and conditions of allotment would not change. For bringing any change in the use of the premises from industrial to commercial, the appellant must get change of user as per rules. He cannot unilaterally change the terms and conditions of the allotment.
RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 30 of 40Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 Whether the terms of a lease deed are dynamic and the same should be construed as per the demands of changing times.
50. Ld. Counsel for appellant has referred to Panacea Biotec Ltd. Vs. Delhi Development Authority & Anr. 2008 Legal Eagle (DEL) 544 (Date of Decision 23.04.2008) and argued that when a lease is for a very long time its clauses should be interpreted considering the changes and developments that has taken place over a time. Ld. Counsel for appellant has drawn my attention to para 19 of this judgement, which is reproduced as under :
"19. The lease deed in question is a statutory document prescribed under the Nazul Rules. Nevertheless while interpreting its clauses, one has to keep in mind that the lease is for a term of 99 years and therefore the clauses have to be interpreted considering changes and development that take place over a period of time and construction of the words used in the sub-lease Deed has to be alive and one which takes into account relevant changes that take place with new technology and need and requirement of the society. The lease deed has to be read in a dynamic manner and the expressions used have to be understood by updating construction and meaning to be assigned to the expressions used lest they become totally outdated and ill-tuned with the ground reality. The words have to be interpreted in accordance with the current understanding and not in a theoretical manner. If reality requires adjustment and liberal interpretation of expressions used in the Sub-lease Deed, they should be interpreted liberally. [On the question of updating construction of words used in the RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 31 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 statue, see observations of the Supreme Court in Commissioner of Income Tax Vs. Podar Cement, report in (1997) 5 SCC 482.]"
51. I have carefully perused this judgement cited by Ld. Counsel for appellant. In this judgement, High Court of Delhi was considering a case where the property was allotted by DDA under a perpetual lease deed dated 17.4.1978 for carrying out manufacturing process or running of industry. Para 9 of the said judgement reveals that pursuant to a court order, a joint inspection was carried out on the premises as per which basement was found to be used for storage, ground floor was used for software programming and the first and second floors were found to be used for office purposes. The arguments of DDA before Hon'ble High Court of Delhi is culled as under :
"13. During the course of hearing, it was submitted by the learned Counsel for the DDA that software development Information Technology enabled services cannot be categorised as a 'manufacturing process' or 'industry'."
52. In para 17 of the said judgement, High Court of Delhi observed that in Master Plan of Delhi 2021, computer hardware and software industry have been regarded as an "Industrial Activity". In para 17 of the said judgement, High Court of Delhi noted that in Master Plan of RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 32 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 Delhi 2021, a limited type of new industries including the computer hardware and software industries have been permitted being high- tech area. In backdrop of these facts, it was observed in para 18 of the judgement that with changing times the construction of words used in Sub-lease Deed has to be interpreted dynamically. However, in no manner, High Court of Delhi changed the terms of the lease deed converting the user from one head to another. In said case the premises was allotted for industrial purposes and High Court of Delhi held that as per the Master Plan of Delhi 2021, the computer hardware and software industry amounts to an industrial activity.
53. Therefore, it is clear that the judgement cited by Ld. Counsel for appellant is not applicable to the facts of the present case, where the industrial premises is being used for commercial purposes. It is correct that when there is lease for a very long period, the circumstance and nature of industrial or commercial activities change with advancement of time and technology. Therefore, the terms of such lease deed can be interpreted dynamically to allow new industries, which were not foreseen at the time of writing the lease deed, to be run on such premises. High Court of Delhi in the aforesaid judgement simply held that computer hardware and software industry is also industrial activity and that at the time of RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 33 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 writing the lease deed, such industry was not in existence and that modern high-tech industry can be defined as the product, which may be intangible initially, but when it is transferred to floppy, CD Roam, Punch Card, Magnetic tapes etc. it becomes a marketable commodity or goods. It was held that such product is saleable and has value even in intangible form. Therefore, it was held that Sub-Clause 14 of the sub-lease deed has to be interpreted in a reasonable manner and with sufficient flexibility and should not be given a very strict interpretation as to prevent the sub-lessee from using the property in the manner he wants. It was further held that computer software is a marketable product and are "goods" under Article-366(12) of The Constitution of India. It was further held that use of intellectual rights and resources, which are otherwise intangible, to produce a product can be regarded as manufacturer production/activity for the purpose of Sub-Clause 14 of the Sub-lease Deed. The ratio of this judgement is that with advancement of new technologies, new industries may come up and the terms of lease deed can be interpreted to include such new industries within the "manufacturing clause" of the lease deed. As already stated, Hon'ble High Court of Delhi did not change the user of the premises, rather brought the high-tech industries within the meaning of "manufacturing". Ld. Counsel for appellant wants this RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 34 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 court to interpret industrial activity to include commercial activity also. But it is not possible under law to convert the industrial activity to commercial activity. If this is allowed, it will destroy the entire purpose of town planning, which is being effected through Master Plan. I would like to mention here that the Delhi Development (Master Plan and Zonal Development Plan) Rules 1959 provide a complete procedure for preparation of the Master Plan and Zonal Development Plan and procedure for amendment in the same. Perusal of the same would reveal that draft of Maste'r Plan is prepared taking in consideration the survey and analysis of the socioeconomic feature of Delhi with special reference to the trends of growth of population, industries, business, commerce and such matters as may relate to a planned development [Rule 4(3)]. Thereafter, it is published and representation, objections and suggestions of persons, authorities etc. to such draft are invited and are considered (See Rule 5 to 9). Only after hearing such objections etc., a report of recommendation is prepared and final draft of Master Plan is sent to Central Government (See Rule 10 and 11). When such elaborate exercise for preparation and amendment of Master Plan and Zonal Plan is provided, it would not be justified to interpret the industrial activity to include commercial activity or any other activity as such RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 35 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 exercise would finish the whole purpose of Master Plan and Zonal Plan.
54. Here I would like to refer to Section 14 of The Delhi Development Act 1957, which is reproduced as under :
"14. User of land and buildings in contravention of plans. - After the coming into operation of any of the plans in a zone no person shall use or permit to be used any land or building in that zone otherwise than in conformity with such plan:
Provided that it shall be lawful to continue to use upon such terms and conditions as may be prescribed by regulation made in this behalf and land or building for the purpose and to the extent for and to which it is being used upon the date on which such plan comes into force."
55. The aforesaid section certainly bars change of any use of the premises, if it violates Master Plan or Zonal Plan. Therefore, If the contention of Ld. Counsel for appellant is accepted, it may lead to disastrous results.
56. Coming to Clause 13 of the perpetual lease deed already reproduced in earlier part of this judgement, its perusal leaves me in no doubt that it does not permit the lessee to use the plot for any purpose other than industrial. However, it leaves scope for change of its user. It can be done by seeking permission of lessor subject to payment of additional premium and additional rent as the lessor may RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 36 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 determine. Therefore, the appellant cannot be allowed to use the plot in question for commercial purpose without seeking permission of the lessor and such change of user cannot be brought about by liberally interpreting the term "industrial" to include commercial activity. Conclusion
57. The conclusion of the aforesaid discussions is summarized as under :
(i) The premises in question was allotted for industrial purposes by President of India through DDA vide a perpetual lease deed under Government Grants Act 1895.
(ii) This premises is being used for commercial purposes in contravention of the terms and conditions of the perpetual lease deed.
(iii) Therefore MCD is within its power under Section 345A read with Section 347 of DMC Act to seal the premises in question on account of its misuse.
(iv) However, Deputy Commissioner MCD cannot imposed misuse charges/conversion charges (levied in the impugned order) as MCD has no power to levy and recover the same (see discussion in para 28 to 45 of this judgement on Section113 and 150 of DMC Act).
58. Therefore, the impugned order of Deputy Commissioner MCD regarding its power to seal the premises for misuser as upheld by RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 37 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 ATMCD is valid and I find no error in the same.
59. However, Deputy Commissioner MCD had erred in imposing misuse/conversion charges vide the impugned order dated 15.3.2022, it being beyond his powers. Accordingly, the said order directing the appellant to deposit the misuse/conversion charges is hereby set aside. Impugned order of ATMCD upholding imposition of the said charges is also set aside.
60. Here I deem it necessary to mention that the perpetual lease deed in respect of the premises in question was executed under the Government Grants Act 1895 by the President of India through DDA for industrial purposes. It is the President of India/DDA, who is the lessor in the present case. Therefore, the President of India can change the terms and conditions of the lease. DDA had issued various notifications levying various charges including conversion charges, parking charges etc., which permit change of industrial plot to commercial use. Therefore, the said charges, which have been specified through various notifications, can be recovered by DDA. It needs to be mentioned that stand of DDA before ATMCD was that Kirti Nagar has been denotified and now it is no more a development area and therefore responsibility to recover conversion charges is upon MCD. Thus the situation is that DDA is not recovering the RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 38 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 conversion charges and MCD has no power to levy and recover the same. If DDA does not accept the conversion charges and convert the terms and conditions of the perpetual lease, only course for MCD is to proceed in accordance with Section 150 of DMC Act.
61. It will not out of place to mention that as per Section 347 of DMC Act, Commissioner MCD can permit change of user of a building. However, for imposing conversion charges or misuse charges, MCD must comply Section 150 of DMC Act. In absence of a legislative action under Section 150 of DMC Act, MCD can neither levy these charges nor recover the same.
62. During appeal the appellant had deposited the conversion charges with MCD subject to the outcome of this appeal. The appellant would be entitled to refund of the same after one month from this judgement.
63. I deem it necessary in interest of justice to grant 60 days time to the appellant to approach DDA to get the terms and conditions of the perpetual lease changed from industrial to commercial use, failing which the MCD would be entitled to seal the premises in question till the appellant agrees to use the premises in question for industrial purposes only. It is reiterated that DDA can change the terms and conditions of the perpetual lease, even if the area in which the RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 39 of 40 Polo Singh & Co. Vs. Municipal Corporation of Delhi (UOI) Judgement dt. 7.1.2025 premises lies is no more a developmental area. For example, it is DDA only, who can make the leased plot freehold. Similarly, it can change the terms and conditions of the lease deed and can also accept the conversion charges as per its own notifications.
64. The appellant had pointed out some discrepancies in dates of sealing order. However, this court being a second Appellate Court cannot enter into examination of facts. Therefore, I have confined myself to the legal issues arising in the present appeal and do not find any need to express any opinion on the same as it would not affect the outcome of the appeal.
65. Accordingly, appeal is partly allowed.
66. The judicial record of ATMCD and the record of MCD be returned to their respective offices along with the copies of this judgement.
67. Appeal file be consigned to record room.
Announced in the open Digitally signed by VINOD
court on 7.1.2025. VINOD KUMAR KUMAR
Date: 2025.01.07 15:34:14 +0530
(Vinod Kumar)
Principal District & Sessions Judge
West District, Tis Hazari Courts, Delhi
RCA DJ/12/2023 CNR No.: DLWT01-001683-2023 Page 40 of 40