Delhi District Court
Ms Avas Photos P.Ltd vs New Delhi Municipal Council on 27 February, 2024
IN THE COURT OF ADDITIONAL DISTRICT JUDGE- 01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
Presided over by :- MS. VIJETA SINGH RAWAT (DHJS)
HTA No. 196/2016 and HTA No. 198/2016
M/s. Avas Photos Pvt. Ltd.
Having its Registered Office at :
19A, Khan Market,
New Delhi
......... Appellant
Versus
New Delhi Municipal Council
Through its Chairman
Palika Kendra, Parliament Street
New Delhi - 110001
........ Respondent
Petition presented On : 03.01.2014
Arguments Concluded On : 20.02.2024
Judgment Pronounced On : 27.02.2024
JUDGMENT
1. By way of the present judgment, the Court proposes to decide aforementioned two appeals under Section 115 of New Delhi Municipal Council Act, 1994 (hereinafter, referred to as 'The NDMC Act'), by way of which, the appellant has impugned assessment order dated 30.10.2013 (hereinafter, referred to as the 'impugned order'), as per which the rateable value for property HTA no. 196/16 and HTA no. 198/16 Page no. 1 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council (bearing no. 19A, Khan Market, New Delhi) was assessed as under :
Sl no. RV in Rs. W.e.f.
1. RV Rs.4,00,000/- - less 10% 01.04.2000
2. RV Rs.1560,000/- less 10% 01.04.2001 to 31.03.2009 PLEADINGS
2. In a nutshell, it is the case of the appellant that it is a private limited company which purchased the property from one Sh. Ashok Ahuja vide Agreement to Sell dated 19.08.1999 for a consideration of Rs. 40,00,000/- and got mutated the same in the name of the appellant on 18.07.2001. Therefore, notice u/s 72 of The NDMC Act for proposing to increase rateable value to Rs. 4,00,000/- per annum (less 10%) (on cost basis) w.e.f. 01.04.2000 was not served upon the appellant and objections, if any, filed are not within the knowledge of the appellant. However, notice dated 11.02.2002 u/s. 72 of The NDMC Act proposing to enhance the rateable value to Rs.15,60,000/- p.a. (on comparative rent) being fetched by Shop no. 15B, Khan Market, New Delhi was received and objections were filed on 20.02.2000. It is further averred that on 12.07.2013, hearing was afforded with respect to the first notice, only when the official of the respondent was informed that the appellant was never served with the notice and asserted that the value on cost basis of the property could not be more HTA no. 196/16 and HTA no. 198/16 Page no. 2 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council than Rs.27,850/- p.a. as previously determined. Yet, by way of the impugned order, the rateable value was fixed as above mentioned on subsequent notice, as well.
GROUNDS OF APPEAL
3. The impugned award has been challenged on the following broad grounds :
(a) That the Assessing Officer has acted capriciously, vindictively and on conjectures and has also erred in not properly exercising the jurisdiction which vested in him.
(b) That the Assessing Officer failed to appreciate that the notices u/s 72 of the NDMC Act for the year 2000-2001 and 2001-2002 are quoram non judice and incapable of acted upon as they did not disclose any reason or formula for proposed rateable value and were also barred by time at least on 31.03.2004 and 28.02.2005, respectively. Reliance has been placed upon State of Punjab and Ors. v. Bhatinda District Co-op Milk P. Union Ltd1 and Delhi Development Authority Vs. Ram Prakash2.
(c) That the grounds of objection for assessing the rateable value have not been dealt with. Relying upon Mahindra and Mahindra Limited Vs. Union of India and Anr.3, it is stated that the Assessing Officer erred in not appreciating that The Delhi 1 2007 (11) SCC 363 2 AIR 2011 SC 1399 3 (1979) 2 Supreme Court Cases 529 HTA no. 196/16 and HTA no. 198/16 Page no. 3 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council Rent Control Act, 1958 applied to property constructed after 1988 and hence, the rateable value ought to have been determined u/s 6 (1) DRC Act, 1958 and the concept of letting cannot be introduced in self occupied properties. Reliance has also been placed upon Delhi Paints and Chemicals Vs. New Delhi Municipal Committee & Anr4.
4. No reply has been filed.
ARGUMENTS
5. Sh. Saurabh Malhotra, Ld. Counsel for the appellant has argued that after the decision in M/s Pearey Lal and Sons (P) Ltd. Vs. New Delhi Municipal Council and Anr 5, the findings of the Delhi High Court in Mr. Ved Marwah Vs New Delhi Municipal Council (NDMC) and Ors.6 continues to be applicable and therefore, the assessment order not being passed within a reasonable time is liable to be set aside. It has been argued that principles of natural justice have been violated. Also, it has been urged relying upon Dr. Balbir Singh and Ors. Vs. M/s MCD and Others,7 that the assessment should have been on cost basis.
4 50 (1993) Delhi Law Times 207 (DB) 5 AIR 1968 SC 133 6 W.P. (C) 188/2018 CM Appl 7772/18 dated 23.03.2018 7 AIR 1985 Supreme Court 339 HTA no. 196/16 and HTA no. 198/16 Page no. 4 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council
6. Sh. Sanjay Sharma, Ld. Counsel for NDMC has argued that pursuant to the judgments in Rama Goel Vs. NDMC8 and State Trading Corporation Vs. NDMC Civil Appeal no. 2772 of 2009 decided on 03.02.2016, assessment was required to be done on comparable rent basis, only. It has further been stated that notice u/s 72 of the NDMC Act was served upon "Avas Securities" and reply was given by them. Therefore, the appellant cannot now claim that it was not given fair opportunity to contest.
REASONING AND APPRECIATION OF MATERIAL ON RECORD
7. This Court has considered the submissions and material on record.
8. In view of the SLP (C) No. 10155/2019 titled New Delhi Municipal Council Vs. M/s. Pearey Lal and Sons (P) Ltd. & Anr, having been withdrawn vide order dated 01.08.2023, the decision of the Delhi High Court in Mr. Ved Marwah Vs New Delhi Municipal Council (NDMC) and Ors (supra) holds ground where it has been held as under :
13. The notices for revising the assessment list in all these cases were issued over a decade prior to the passing of final orders. In one case, it was 16 years; in others, it was 14 years. In two cases, the same property was subject to multiple notices for later periods, without finalization of 8 WP(C) no 5548/2004 dated 09.05.2006 HTA no. 196/16 and HTA no. 198/16 Page no. 5 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council rateable value, for the previous year. Clearly, the finalization of these cases after inordinate delay of 14 to 16 years was plainly unreasonable. Where such open ended power-like in the present case, in Section 72 was conferred upon a statutory authority, i.e. a Sales tax authority official in Punjab, the Supreme court had outlined the correct approach in State of Punjab and Ors.
v. Bhatinda District Co-op Milk P. Union Ltd 9 with respect to the limitations to exercise of such power. It was held that:
"5. In respect of the assessment for the year ending 31.3.2000, the assessment proceedings were completed relying on the return filed by the appellant on 20.3.2001. Indisputably, in terms of Section 11 of the 1948 Act, a period of three years has been prescribed as a period of limitation as contained under sub-section (3) of Section 11 for completing assessment from the last date for filing of return. Sub-section (6) of Section 11 reads as under :
If upon information which has come into his possession, the Assessing Authority is satisfied that any dealer has been liable to pay tax under this Act in respect of any period but has failed to apply for registration, the Assessing Authority shall, within five years after the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed to assess to the best of his judgment, the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and in case where such dealer has willfully failed to apply for registration, the Assessing Authority may direct that the dealer shall pay by way of penalty, in addition to the amount so assessed, a sum not exceeding one and a half times that amount. Section 21 of the said Act provides for revision. Section 21 of the Act with which we are concerned herein reads as under:
21. Revision-(1) The Commissioner may of his own motion call for the record of any proceedings which are pending before, or have been disposed of by any authority subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such proceedings or order made therein and may pass such order in relation thereto as he may think
9 2007 (11) SCC 363 HTA no. 196/16 and HTA no. 198/16 Page no. 6 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council fit.
(2) The State Government may by notification confer on any Officer the powers of the Commissioner under subsection (1) to be exercised subject to such conditions and in respect of such areas as may be specified in the notification. (3) A Tribunal, on application made to it against an order of the Commissioner under sub-section (1) within ninety days from the date of communication of the order, may call for and examine the record of any such case and pass such orders thereon as it thinks just and proper. (4) No order shall be passed under this section which adversely affects any person unless such person has been given a reasonable opportunity of being heard. ********************** ***************
15. Sub-section (1) of Section 11 empowers the Commissioner to extend the period of three years for passing the order of assessment wherefor reasons are required to be recorded in writing subject, however, to the maximum period of five years. Ordinarily, therefore, a period of three years has been prescribed for completion of the assessment in terms of the provisions of the Act. We may also notice that in cases where an assessment order is to be reviewed, the same should be done within a period of one year.
16. A bare reading of Section 21 of the Act would reveal that although no period of limitation has been prescribed therefor, the same would not mean that the suo moto power can be exercised at any time.
17. It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors.
18. Revisional jurisdiction, in our opinion, should ordinarily be exercised within a period of three years having regard to the purport in terms of the said Act. In any event, the same should not exceed the period of five years. The view of the High Court, thus, cannot be said to be unreasonable. Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. As indicated hereinbefore, maximum period of limitation provided for in sub-section (6) of HTA no. 196/16 and HTA no. 198/16 Page no. 7 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council Section 11 of the Act is five years."
14. Bhatinda (supra) was noticed and followed subsequently in Ram Prakash (supra). In a more recent decision Ram Karan (D) by LRs v. State of Rajasthan 10, it was held that:
"38. State of Punjab & Ors v Bhatinda District Co-op Milk P. Union Ltd (supra) this Court held that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. However, what shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors. In the present case, neither any objection was raised nor was any application filed by vendors for restoration of land in their favour. The suit was filed by the Tehsildar, Viratnagar after more than 31 years. No ground is shown to file such petition after long delay nor it was mentioned as to whether the vendors i.e. original landholders made any application for restoration of land in their favour.
39. In view of the matter, we hold that the suit being filed beyond the reasonable period was fit to be dismissed. The Additional Collector rightly dismissed the suit being barred by limitation."
14. In the present case, the finalization of assessment list or its revision, after over 12 years in all the cases, cannot be countenanced. It is clearly unreasonable and arbitrary and calls for interference."
(emphasis applied)
9. Perusal of record shows that notices u/s 72 of The NDMC Act dated 31.03.2004 and 21.03.2011 have been decided after almost 16 and 9 years, respectively which is absolutely unreasonable. Also, notice dated 28.03.2017 has been decided beyond three years. Therefore, there is substance in the ground of appeal and hence, the issue of limitation requires re-appreciation.
10 2014 (8) SCC 282 HTA no. 196/16 and HTA no. 198/16 Page no. 8 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council
10. Second objection is premised upon the fact that the methodology adopted by the Assessing Officer is incorrect considering that the property was self occupied and therefore, rateable value was required to be determined on cost basis. In this regard, it would be relevant to refer to STC of India Vs. NDMC11 where it has been held as under :-
"3. Though the learned senior counsel appearing for the appellants sought to place reliance on the proviso under section 63(1) of the NDMC Act, we are afraid the contention cannot be appreciated. The concept of standard rent is no more available under the Delhi Rent Control Act, 1958, since the said provision has been struck down in the case of Raghunandan Saran Ashok Saran (HUF) Vs.Union of India & Others12. Additionally, it is also to be noted that the standard rent in the case of the appellants has never been fixed under the Delhi Rent Control Act, 1958.
4. In the cases before us there are two categories of buildings
1)self- occupied and 2) out of the leased premises a portion which is self occupied and the rest let out on sub-lease under due permission from the Government of India. In case the premises is sub-let, there is a condition that the lessee should pay to the Government 25% of the gross rent fetched out of the sub-lease.
5. In the impugned judgments, the High Court has taken the view that since there is already a payment of rent by the sub-
lessee, there need not be any other exercise for assessment of the reasonable rent. The High Court has based its decision under bye-law 12 of the New Delhi Municipal Committee Byelaws Relating to the Assessment and Collection of House Tax. For the purpose of reference, we may extract the provision of bye-law 12:
"12. The annual value of a building or house which is in the owner's own occupation either for residential purposes or for commercial purposes and the
11 AIR 2016 SC 1269 12 95 Delhi Law Times 508 (2002)(DB) HTA no. 196/16 and HTA no. 198/16 Page no. 9 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council standard rent of which has not so far been fixed by a competent authority may be calculated under section 8(1)(b) on the basis of rents of similar accommodation prevalent in the locality and in the event of the Committee being of the opinion that the same is not feasible, the annual value may be calculated under section 3(1)(c)."
6. However, it is pointed out that the Punjab Municipal Act, 1911 has been repealed and as per Section 416(2) of the NDMC Act what is saved is only the provisions under the bye- laws which are not otherwise inconsistent with the provisions of the NDMC Act. Since there is a provision and procedure under Section 63 the NDMC Act for calculating the annual rent, one need not refer at all to the bye-laws as quoted above since they are apparently inconsistent with the provisions of the NDMC Act. In short, it is impermissible to refer to the bye-laws framed under the Punjab Act in view of specific provisions made under the NDMC Act providing for the levy, assessment and collection of property tax.
7. Therefore, the only basis for fixation of rateable value is the annual rent at which the land or building might reasonably be expected to be let from year to year, subject to the deductions provided under the Act.
8. The basis of the impugned judgments which was wholly based on the bye- laws having been thus knocked down, we have to get back to the provisions under the NDMC Act for the purposes of the fixation of the rateable value which is based on the rent which can be reasonably fetched by letting out the premises.
9. Our attention has been invited to a three Judge Bench decision of this Court in Dewan Daulat Rai Kapoor and Others Vs. New Delhi Municipal Committee and Others13 wherein this Court has dealt with in detail as to what is the scope of the expression "reasonably be expected to let from year to year". The whole consideration is available in paragraph 2 of the Judgment which reads as under:
"2. It is obvious from this definition that unlike the English Law where the value of occupation by a tenant is the criterion for fixing annual value of the building for rating purposes, here it is the value of the property to the owner which is taken as the standard for making assessment of annual value. The criterion is the rent 13 reported in (1980) 1 SCC 685 HTA no. 196/16 and HTA no. 198/16 Page no. 10 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council realisable by the landlord and not the value of the holding in the hands the tenant. The rent which the landlord might realise if the building were let is made the basis for fixing the annual value of the building. The word "reasonably" in the definition is very important. What the landlord might reasonably expect to get from a hypothetical tenant, if the building were let from year to year, affords the statutory yardstick for determining the annual value. Now, what is reasonable is a question of fact and it would depend on the facts and circumstances of a given situation. Ordinarily, as pointed out by Subba Rao, J., speaking on behalf of the Court in Corporation of Calcutta v. Padma Devi; "a bargain between a willing lessor and a willing lessee uninfluenced by any extraneous circumstances may afford a guiding test of reasonableness. An inflated or deflated rate of rent based upon fraud, emergency, relationship and such other considerations may take it out of the bounds of reasonableness". The actual rent payable by a tenant to the landlord would in normal circumstances afford reliable evidence of what the landlord might reasonably expect to get from a hypothetical tenant, unless the rent is inflated or depressed by reason of extraneous considerations such as relationship, expectation of some other benefit etc. There would ordinarily be in a free market close approximation between the actual rent received by the landlord and the rent which he might reasonably expect to receive from a hypothetical tenant...."
10. In the second category of cases before us the actual rent payable by a tenant to the landlord is available for verification by the assessing officer. But the question is whether that rent paid by the sub-lessee is in normal circumstances and whether it is either inflated or depressed by reason of any other consideration or relationship. Having regard to the agreement with the Government of India for payment of 25% of the gross rent fetched from the sub-lessee, we are inclined to hold that the 25% that is being paid to the Government of India by the lessee out of the rent collected from the sub-lessee is inflated to include the extra 25% since the rent actually available to the lessee is only 75% of the amount actually paid by the sub-lessee to the lessee. Therefore, going by the principle settled by this Court in the HTA no. 196/16 and HTA no. 198/16 Page no. 11 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council case of Dewan Daulat Rai Kapoor (supra), the rateable value under section 63 of the NDMC Act, in the case of the appellants coming under the second category has to be fixed on the basis of 75% of the amount received from the sub- lessee by the appellants. On that basis, the rateable value of the premises both tenanted and self- occupied will be fixed by the assessing officer. This is however, subject to the production of proof of payment/adjustment/ appropriation of the 25% by the lessee with the Government of India.
11. As for the first category, where the building is self- occupied and where there is no sub-lease, the annual rent will have to be fixed as held by this Court in the case of Dewan Daulat Rai Kapoor (supra) and in the case of India Automobiles Ltd. Vs. Calcutta Municipal Corporation and Another14 on the basis what the landlord might reasonably expect to get from a hypothetical tenant. Such fixation has to be made only as per the NDMC Act. It is for the assessing officer to make the fixation in accordance with law. The assessment for the disputed period shall be completed within three months from today."
11. Be that as it may, the impugned order should also have been speaking and reflecting that the appellant was afforded sufficient opportunity to contest the quantum of comparable rent. However, the order does not speak as to what persuaded the Assessing Officer to arrive at an average rent in 2000-2001 and 2001-2002 at the rate of Rs. 272.53 and 275.63 per sq. ft., per month, respectively.
12. Thus, in the considered view of this Court, it would only be relevant to remand the appeal to the respondent for deciding afresh and dealing with the objections of the appellant within a reasonable period.
14 (2002) 3 SCC 388 HTA no. 196/16 and HTA no. 198/16 Page no. 12 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council
13. Thus, in the considered view of this Court, the impugned order is not sustainable and is hereby, set aside.
14. Accordingly, the appeals are accordingly, is allowed.
15. File be consigned to records.
Pronounced in open Court (Vijeta Singh Rawat) on 27.02.2024 Additional District Judge-01, New Delhi District, Patiala House Courts, New Delhi HTA no. 196/16 and HTA no. 198/16 Page no. 13 of 13 M/s Avas Photos Pvt. Ltd. Vs. New Delhi Municipal Council