Delhi District Court
L I C Of India vs New Delhi Municipal Council on 1 November, 2023
IN THE COURT OF SH. SUDHANSHU KAUSHIK :
ADDITIONAL DISTRICT JUDGE-02 & WAQF TRIBUNAL :
PATIALA HOUSE COURTS : NEW DELHI
HTA NO.28/2018
CNR NO.DLND01-006339-2018
IN THE MATTER OF :-
L.I.C. OF INDIA
ZONAL OFFICE
JEEVAN BHARTI BUILDING,
124, CONNAUGHT CIRCUS,
NEW DELHI - 110001
.....APPELLANT
VERSUS
1. NEW DELHI MUNICIPAL COUNCIL
THROUGH ITS CHAIRMAN
PALIKA KENDRA, SANSAD MARG,
NEW DELHI
2. ASSESSING AUTHORITY
NEW DELHI MUNICIPAL COUNCIL
(PROPERTY TAX DEPARTMENT)
PALIKA KENDRA, PARLIAMENT STREET,
NEW DELHI
.....RESPONDENTS
DATE OF INSTITUTION : 06.07.2018
DATE OF CONCLUSION OF FINAL ARGUMENT : 31.10.2023
DATE OF PRONOUNCEMENT OF ORDER : 01.11.2023
JUDGMENT
1. This is an appeal under Section 115 of the New Delhi Municipal Council Act, 1994 (hereinafter referred to as 'the Act') against the assessment order dated 13.03.2018 passed by New Delhi Municipal HTA No.28/2018 LIC of India Vs. NDMC Page 1 of 13 Corporation (NDMC) whereby the rateable value of property, 'GF United India Building, Back of F-19/20, F-Block, Connaught Place, New Delhi-110001' was revised with effect from 01.04.2005 onwards.
2. The brief facts as disclosed in the appeal are;
A) Appellant Life Insurance Corporation of India (LIC) claims itself to be the owner of 'GF United India Building, Back of F-19/20, F-Block, Connaught Place, New Delhi-110001' (hereinafter referred to as 'the property'). It has been disclosed that there are various tenants in the property. Appellant claims that it had been paying the House Tax as per the annual rateable value calculated on the basis of annual rent received from the tenants.
B) It has been mentioned that respondent/New Delhi Municipal Corporation (NDMC) issued a notice dated 20.02.2006 to the appellant under Section 72 of NDMC Act for enhancing the rateable value of the property from Rs.56,98,300/- to Rs.74,04,900/- with effect from 01.04.2005 on the basis of actual rent. The appellant accepted the proposal and conveyed its acceptance by means of a letter dated 01.03.2006. Thereafter, respondent issued another notice dated 24.03.2006 to the appellant for enhancing the rateable value of the property to Rs.1,92,00,000/- with effect from 01.04.2005 in respect of two shops in the property on comparable rent basis. Subsequently, respondent issued another notice dated 24.03.2007 proposing to enhance HTA No.28/2018 LIC of India Vs. NDMC Page 2 of 13 the rateable value to Rs.2,48,74,051/- with effect from 01.04.2006 on comparable rent basis. Appellant raised objections against the said proposed enhancement.
C) It is the case of the appellant that respondent was informed that various portions of the property were lying vacant and in respect of those portions, vacancy remission should be granted. Appellant also provided the list of the tenants and the details of the realized rent to the respondent. However, respondent ignored all these facts and passed the impugned order dated 13.03.2018.
3. Appellant has challenged the assessment order on following grounds;
(a) That the impugned order is a non-speaking order and the same has been passed mechanically;
(b) That the assessing authority ignored the provisions of Section 63(1) of NDMC Act while passing the impugned order;
(c) That the impugned order does not provide any justification for assessing the properties at comparable rent basis;
(d) That the Assessing Officer had no material to arrive at a finding about comparable rent of the properties;
(e) That there was considerable time gap between the notice and the impugned assessment order;
(f) That respondent failed to appreciate that various portions of the property were lying vacant and the appellant ought to have provided the vacancy HTA No.28/2018 LIC of India Vs. NDMC Page 3 of 13 remission in respect of those vacant portions;
(g) That respondent did not take into account the measurement of the tenanted portions and the realized rent of those portions while passing the impugned order.
4. Notice of the appeal was issued to the respondent. Respondent filed a detailed reply and took preliminary objection of limitation.
5. Arguments were heard.
6. Counsel for the appellant supported the grounds taken in the appeal. He contended that the impugned order is a non-speaking order and the same has been passed in a mechanical manner. He contended that respondent failed to take note of the fact that tenants were occupying various portions of the property and the rent paid by them was below the market price. He argued that although respondent mentioned in the assessment order that the rateable value is being revised on the basis of comparable rent but there was no material basis to provide the comparable rent of similarly situated property. He mentioned that respondent has arbitrarily revised the rateable value of the property and the same is not permissible. He mentioned that the Assessing Officer arbitrarily arrived at a finding that the rent of the properties has been suppressed. He mentioned that the impugned order is liable to be set-aside as the principles of natural justice were not complied with.
7. On the other hand, counsel for respondent questioned the HTA No.28/2018 LIC of India Vs. NDMC Page 4 of 13 maintainability of the appeal. He contended that the appeal is not maintainable as the same was not filed within the limitation period prescribed under Section 116 of the Act. He contended that the impugned order was passed according to the provisions of the Act and all the relevant factors were taken into consideration before passing the order. He submitted that notice under Section 72 of the Act was served on the appellant wherein it was clearly indicated that the rateable value is proposed to be enhanced on comparable rent basis. He mentioned that the objections filed on behalf of appellant were taken into consideration at the time of passing the impugned order. He stated that no period of limitation has been prescribed under the Act for fixing the ratable value of the property pursuant to the notice issued under Section 72 of the Act. He mentioned that provisions of Section 4, 6 & 9 of the Delhi Rent Control Act have been declared ultra virus by the Hon'ble High Court of Delhi in the matter of "Raghunandan Saran, Ashok Saran Vs Union of India" 95 (2002) DLT 508. He has contended that the concept of standard rent is no longer available and therefore, the property was assessed on the basis of annual expected hypothetical reasonable rent.
8. During the course of arguments, counsels of the parties conceded that there is a considerable delay in finalizing the assessment. Though several grounds were raised in the appeal to challenge the impugned order, however, Counsel for the appellant while relying on 'Ved Marwah HTA No.28/2018 LIC of India Vs. NDMC Page 5 of 13 & Ors. Vs. New Delhi Municipal Council & Ors. 248 (2008) DLT 781' confined the grounds of appeal to the aspect of limitation. It was argued by Counsel for the appellant that similar to the facts of the above case, there is inordinate delay in finalizing assessment list viz-a-viz the notice. Counsel argued that the notices under Section 72 of the Act were issued 20.02.2006 & 24.03.2006 whereas the impugned order was passed on 13.03.2018 i.e. after a gap of almost 12 years. He has argued that the in view of law laid down in 'Ved Marwah' (Supra) the impugned order is liable to be set aside.
9. I have perused the record in the light of respective arguments.
10. Before adjudicating on the aspect of delay, I deem it expedient to deal with the preliminary objection of the respondent about the maintainability of the appeal on the ground of limitation. Counsel for respondent has argued that appeal was filed beyond the prescribed period of 30 days and it should be dismissed on this ground. I do not find force in the said submissions. Section 116(a) of the Act mandates that the appeal against the assessment order should be filed within a period of 30 days of the date on which the amendment is finally made under Section 72 of the Act. Admittedly, the present appeal has been filed beyond the prescribed period of 30 days but it was accompanied with an application Section 117 of the Act. Section 117 of the Act provides that notwithstanding anything contained under clause (a) of HTA No.28/2018 LIC of India Vs. NDMC Page 6 of 13 Section 116, an appeal may be admitted after the expiration of prescribed period if the appellant satisfies the court that he had sufficient cause for not preferring the appeal within the prescribed period. The appellant has given a detailed explanation for the delay. It has been mentioned that the records of the property were lying with officials in different departments and substantial time was consumed in collecting the requisite details. It has been stated that the time was also consumed in consultations with various panel lawyers. Detailed explanation for the delay has been given in the application. The application is accompanied with an affidavit filed on behalf of the Legal Manager of the appellant. In view of these circumstances, keeping in view the explanation tendered by the appellant, the delay in filing the appeal stands condoned.
11. Now coming to the arguments of the appellant about the inordinate delay in finalizing the assessment. It is an admitted position that the impugned assessment order dated 13.03.2018 has been passed in respect of notices dated 20.02.2006, 24.03.2006 and 24.03.2007 issued under Section 72 of the Act. Although, the Act does not specify any period of limitation for finalizing the assessment but this does not mean that respondent is at liberty to sleep over the matter for a period of more than 12 years. It is expected that after issuance of notice, respondent should finalize the assessment within a reasonable period. The Division Bench of the High Court of Delhi has observed in the matter of "Ved Marwah HTA No.28/2018 LIC of India Vs. NDMC Page 7 of 13 & Ors. Vs. New Delhi Municipal Corporation & Ors." 248 (2008) DLT 781 that the proceedings initiated pursuant to Section 72 of the NDMC Act should be concluded in a reasonable period of not more than three years. In the said matter, notices for revising the assessment list were issued over a decade prior to passing of the final orders by the NDMC. The High Court of Delhi categorically held in Ved Marwah's case (supra) that there cannot be any unreasonable delay in finalizing the assessment after a notice has been issued under Section 72 of the Act. The High Court relied on various decisions of the Supreme Court of India and observed that the Assessing Officer must finalize the assessment within a reasonable period. It made the following observations;
"Analysis and Conclusions
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 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 & Ors. v. Bhatinda District Co-op Milk P. Union Ltd 2007 (11) SCC 363 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 HTA No.28/2018 LIC of India Vs. NDMC Page 8 of 13 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 fit.
(2) The State Government may by notification confer on any Officer the powers of the Commissioner under sub-section (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.HTA No.28/2018 LIC of India Vs. NDMC Page 9 of 13
(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".
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15. Sub-section (1) of Section 11 empowers the Commissioner to extend the period of three years for passing the order of assessment where for 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 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 HTA No.28/2018 LIC of India Vs. NDMC Page 10 of 13 Rajasthan 2014 (8) SCC 282, 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."
15. 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.
17. In view of the above reasoning, it is held the impugned final orders of assessment and the demands issued are clearly unreasonable and void. They are hereby quashed. Consequently, it is held that the NDMC is at liberty to rework the assessments in respect of the properties that are the subject matter of these proceedings, by issuing fresh notices for the periods commencing from 3 years prior to the date on which the final notices were issued, and finalize the assessments within reasonable time. In the event of grievance on the part of the assessee to such fresh assessment orders, it is open to them to approach the appellate tribunal; provided they deposit the amount towards the tax liability for the base year."
12. As observed in the preceding paras, the High Court of Delhi held in Ved HTA No.28/2018 LIC of India Vs. NDMC Page 11 of 13 Marwah's case (supra) that a delay of over 12 years in finalizing the assessment of property tax is arbitrary and the same cannot be countenanced. In the said matter, the High Court quashed the order of the assessing authority on the ground of unreasonable delay. While quashing the order, it granted liberty to NDMC to rework the assessment by issuing fresh notice for the period commencing from three years prior to the date on which final notices were issued. NDMC was further directed to finalize the assessment within a reasonable time. NDMC challenged the order of the High Court by filing a Special Leave Petition No.25403/2018 titled as "New Delhi Municipal Council Vs. Pyare Lal & Sons Pvt. Ltd." but the same was dismissed by the Supreme Court of India vide order dated 01.08.2023. Resultantly, the findings in Ved Marwah's case (supra) attained finality.
13. Coming back to the present case. In the present matter, there is an inordinate delay in finalizing the assessment. The notices under Section 72 of the NDMC Act were issued on 20.02.2006. 24.03.2006 and 24.03.2007 while the final assessment order was passed on 13.03.2018. There is a time gap of around 12 years between the issuance of notices and the finalization of the assessment. This, in itself, is a sufficient ground for setting aside the impugned order.
14. In view of the discussions in the aforesaid paras, I am of the considered opinion that the impugned order dated 13.03.2018 is bad in law. Relying HTA No.28/2018 LIC of India Vs. NDMC Page 12 of 13 on the observations made in Ved Marwah's case (supra), the delay is certainly inordinate and arbitrary. Accordingly, the appeal is allowed and the impugned order is set aside.
15. Copy of the judgment be sent to the respondent/NDMC.
16. Decree Sheet be prepared.
17. File be consigned to record room.
Announced in the open court on 01.11.2023 (Sudhanshu Kaushik) Addl. District Judge-02 & Waqf Tribunal New Delhi District, Patiala House Courts, New Delhi HTA No.28/2018 LIC of India Vs. NDMC Page 13 of 13