The National Institute Of ... vs Municipal Corporation Of Delhi
1989 Latest Caselaw 266 Del

JUDGMENT

M.K. Chawla, J.

(1) The petitioner, the National Institute of Immunology claims to be a charitable society. It was established with the following amongst other objects :-

"(A)to undertake, aid, promote, guide and co-ordinate research of a high calibre in basic and applied immunology ;

(B)to provide and promote effective linkage on a continuing basis between various scientific and research agencies/laboratories and other organisations working in the country in the field of immunology, "vaccine development" and related areas.

It is the case of the petitioner that with a view to fulfilll its objects, the society has been receiving grants in aid and voluntary contributions from the Government of India ; through Department of Science; the Indian Council of Medical Research ; International Development Research Centre of Canada ; family planning foundation ; United Nations Development Programme ; Rockefeller Foundation, etc. The society has also been provided with about 15 acres of land in Jawahar Lal Nehru University Campus, Shahid Jeet Singh Marg, New Delhi, on a long term lease to enable the petitioner to construct the necessary buildings and infrastructure to carry out its objects. It has constructed/started constructing three buildings with an approximate cost of construction of Rs. 38.38 lakhs, Rs. 32.37 lakhs and Rs. 29.86 lakhs respectively.

(2) On 5th September, 1985, the respondent Corporation called upon the petitioner to furnish complete information in respect of property known as National Institute of Immunology, by filling in the prescribed proforma. In reply, the petitioner informed the respondent-corporation that the petitioner is an autonomous body functioning under the administrative control of Department of Science and Technology, Government of India and is engaged in research of high calibre, in basic and applied immunology. In view of this position, the Institute does not come under the purview of the property tax as per the Municipal Act. The information asked for in the proforma was, however, not supplied. The parties continued to exchange correspondence when ultimately by letter dated 16th March, 1986, the Add). Tax Recovery Collector informed the petitioner that the respondent Corporation proposed to amend the assessment list on the basis of the reasons stated therein. If the petitioner has any objection, they may file their objections in writing within 35 days of the receipt of the notice under Section 126 of the D.M.C. Act failing which it will be presumed that the petitioner has no objection and the proposal to fix the rateable value at Rs. 21,60,000.00 will be confirmed as per rule No. 9 of the M.C.D. (assessment List) Bye-laws, 1959. The petitioner did not file any objection within the stipulated period. The proposed retable value was confirmed w.e.f. 1-4-1985 the information of which was conveyed to the petitioner vide letter dated 8th September, 1986.

(3) It appears that after receipt of the letter of confirmation of the rateable value, the petitioner contacted the Additional Tax Recovery Collector and impressed upon him that the petitioner Institute if fully funded by the Government of India and its properties should be exempted from property tax. The respondents were also informed that the construction work of the properties was still in progress and none of its buildings were complete or capable of occupation. On the basis of this information, the respondent Corporation required the petitioner to send the relevant documents showing the dates on which the construction work of the building was started and the electricity and water connections were installed. The detailed information asked for was not supplied.

(4) However, by their latter dated 3rd November, 1986, the petitioner Institute requested the respondent to review the assessment order for reasons stated therein. Vide letter dated Kith Novembar, 1986. the Tax Recovery Officer stated:-

"ON checking up the position I find that notice under Section 126 of the D.M.C. Act, 1957 in respect of the said building was delivered to your Institute on 18th March, 1986 against proper acknowledgement. As no objection was filed by Nil within the stipulated period, the proposed Rateable Value was confirmed as un objected at Rs. 21,60,000.00 w.e.f. 1-4-1985. Thus total, dues, towards' property qua the said building for the period ending March, 1986. aggregate to Rs. 15,08,941.10.

Please be informed that there is no enabling provision under the Act to review/reopen a decided case. hut as a special gesture towards a Public Institute, the request can be considered provided that 50ø, of the demand raised liquidated as a precondition to re-opening of the case.

I hope you will like to avail of this special opportunity in the larger interest of the Institute."

(4) The petitioner Institute took the stand that as per the provisions of Section 115(4) of the D.M,C. Act, the petitioner being a society formed for the charitable purposes is exempt from the provisions of the property tax. They also forwarded the copies of the balance sheet and audited accounts for the year 1984 to 1986, along with the list of the donors. They also averred that the Institute has no income of its own and is fully dependent on the grants received from the various institutions. They requested that the petitioner institute be exempted from property tax as it has been created only for the welfare of the mankind. On the basis of this information, the matter was re-examined as is clear from the letter dated 18th February, 1987. The respondent Corporation on the basis of the document came to the conclusion that the petitioner Institute, though is dependent on grants in aid from the Government of India but these are subjects to various checks and balances which cannot be treated in the nature of voluntary contributions so as to justify the claim for exemption from levy to general tax under Section 115(4) of the D.M.C. Act. In view of this, the petitioner institute was directed to clear the tax dues which have become recoverable Along with 20% penalty to avoid freezing of bank accounts.

(5) In face of this ultimatum and to avoid the realisation of the property tax, the petitioner filed the present petition seeking the appropriate order to direction for quashing the demand notice and to restrain the respondents from recovering any amount of property lax by coercive methods.

(6) The main thrust of the petitioners argument in this case is that the properties owned by the petitioner are liable to be exempted from levy of property tax in terms of the provisions to Section 115(4) of the D.M.C. Act. In support of this submission, learned counsel places reliance on the aims and objects for which the petitioner institute was established. These objects are contained in the Memorandum of Association and Rules (Annexure 'A'). Besides others, one of the objects of the petitioner Institute is to organise post graduate courses, workshops, seminars, symposia and training courses of specialised nature in the field of immunology, vaccine development and related areas. Reliance was also placed on the list of donors who are making grant in aid voluntary contributions to fulfilll the charitable objects.

(7) SUB-SECTION (4) of Section 115 of the Delhi Municipal Corporation Act reads as under :-

"(4)Save as otherwise provided in this Act, the general tax shall be levied in respect of all lands and buildings in Delhi except-

(A)lands and buildings or portions of lands and buildings exclusively occupied and used for public worship or by a society or body for a charitable purpose ;

Provided that such society or body is supported wholly or in part by voluntary contributions and that its profits, if any, arc not subject to any dividend or bonus to its members.

EXPLANATION-"Charitable purpose" includes relief of the poor. education and medical relief but does not include a purpose which relates exclusively to religious teaching."

(8) In order to succeed in the present petition, the petitioner is required to conclusively prove to the satisfaction of the authorities concerned that the petitioner is a society engaged in charitable purposes and is supported wholly or in part by voluntary contributions and that its profits, if any, are not subject to any dividend or bonus to its members. As observed earlier, in this Court, the charitable purpose is sought to be proved from the Memorandum of Association and Rules of the Institute (Annexure-A). For voluntary contributions, reliance is placed on the annual reports of the Institute for the year 1985-86 and 1986-87 as well as Appendix I & Ii to the additional affidavit of Shri D.R. Manchanda, Finance and Accounts Officer of the Institute. These annexures enlist the contributions by the Government of India as grants-in-aid through the Department of Science and Technology/Bio-technology and the voluntary contributions from the various research centres enumerated above. But unfortunately this very material information which was required to be supplied to the Assessing authority was with held for the reasons best known to the petitioners. In spite of the repeated reminders and warnings that if the required information in pursuance of Sections 131/175 of the D.M.C. Act is not submitted, the assessing authorities will be left with no option but to go ahead with the assessment. The Institute was also informed that the Memorandum of association and rules on which reliance is placed to claim exemption from levy of general tax, does not appear to qualify for the said exemption. The Institute was again reminded of their duty to appear and answer the notice proposing to amend the assessment list Admittedly, no objections to the proposed assessment were filed. The rateable value of the property was assessed at Rs. 21,60,000.00 w.ef. 1-4-1985. In pursuance of the assessment a demand of Rs. 15,08,936-10 was raised and the Institute was required to pay the same within the stipulated period to avoid unpleasant situation.

(9) It was only thereafter that the Institute asked for the review of the order of assessment. As a special gesture, the respondent agreed to reopen the case provided the petitioner liquidated 50% of the demand raised. This was not done but instead some information asked for was sent to the assessing authority. On the basis of the information supplied as a special case, the matter was reviewed, and the information of which was conveyed to the petitioner vide letter dated 18th February, 1987, (Annexure-M) staling therein that "THE matter has been reviewed. The National Institute of Immunology is dependent on grants-in-aid from the Government of India which are subject to checks and balances, which cannot be treated through voluntary contributions so as to qualify for exemption from levy of general tax under Section 115(4) of the D.M.C. Act. Hence, the request of the Institute for grant of the said exemption is not maintainable."

In spite of this information, the petitioners admittedly have not cared to file an appeal as provided under Section 169 of the D.M.C. Act. But instead have rushed to this court to avoid the payment of demand.

(10) There is substance in the preliminary objection of the respondents that without having exhausted alternative remedy of filing an appeal to the District and Sessions Judge, under Section 169 of D.M.C. Act which is equally efficacious, the writ petition is premature and not maintainable. Even otherwise, the correspondence exchanged between the petitioners and the respondent Corporation on which reliance has been placed does not bring the case of the petitioners squarely under Sub-section (4) of Section 115 of the Act. Admission of the petitioners in their letter dated 28th October, 1986 (Annexure-H) reads as under :-

"The governing body was of the view that since the Institute is fully funded by the Government of India, its property should be exempted from property tax. However, if the decision of the Government of India is contrary, the Institute has no option but to abide by the Government of India, Instructions. During the discussions, the undersigned had with your Mr. P.D. Swamy, sometime back, it was clarified that Government of India letter on the issue exists. It is requested that a copy of the Government of India decision may please be forwarded for information and record of the Institute.

The respondents in their counter have placed reliance on this letter. The office memorandum dated 30th March, 3965 had declared thus :-

"They raised a question whether properties of Institutions, of autonomous status should be treated as Government properties. It was proposed that where such Institutions enjoy complete autonomy, they should be treated as private properties and should be taxed as such and should not enjoy the concession in Government of India order dated 30th April, 1965. In such a category, the Central Institutions of Education and the National Institute of Audio and Video, etc. would fall and the properties of these Institutions should be treated as private properties from the date they were transferred to the autonomous bodies. Where the Institution has a purely educational one, they should also get the concessions which normally were available to other education institutions. Subject to these clarifications, the representatives of the Ministry of Education agreed to ensure very early payment of the bills."

In view of this office Memorandum and as per the petitioners' own showing, they are liable to pay the property tax and are not entitled to any exemption on this account,

(11) Furthermore, the petitioner is not a voluntary organisation as its governing body consists of Ex-officio officers of the Government of India. The petitioner society itself has been floured by the Government of India. I is grant-in-aid are regulated by statutory rules, and are advanced with certain checks and balances. These grams a.re claimed as a matter of right and can not be said to be voluntary contributions.

(12) Even otherwise, the so-called voluntary contributions which are received from various societies, appear to have been advanced for specific projects and are utilised for that purpose. Appendix Ii to the additional affidavit of Shri D.R. Manchanda. Finance & Account Officer of the Institute enlist the various projects which have been undertaken by the petitioner against the grants/voluntary contributions received from different quarters. List of few of the donors and the projects for which contributions were sent were as under :-

1.International Development Research Centre (IDRC), Canada: Project on Ant conceptive Technology.

2.United States Agency for International Development (USAID), Virginia: Project on contraceptive Development Reproductive Immunology.

3.United Nations Development Programme (UNDP), New Delhi : Project on Development of Diagnosis Methods using Modern Immune logical and Biological Approaches.

4.Rockefeller Foundation, New York : Project on Studies in Immune logical Methods of Fertility.

(13) The objectives of the petitioner Institute may be laudable but the funds received from various organisations are spent on particular projects, the result of which are sent to the donor countries/organisation. There is no evidence to suggest that these funds are being used for charitable purposes i.e. its results are applied for the genera! good of the public at large. The amounts claimed to have been received by the petitioner as voluntary contributions are not required at all for the existence and running of the Institute. These are in fact the cost of particular and specific projects. The Institute is accountable to the donor agencies. These amounts cannot be diverted to other works or projects whereas the voluntary contributions can be used and spent in any manner without any obligation to the donor. This is not the case here.

(14) Anyhow these facts were not brought to the notice of the Assessing Authority, before these assessment orders were passed. These are some of the questions of fact which could only be gone into by the assessing authority or finally determined in appeal. This court in writ jurisdiction will not be in a position to determine the question of fact as to whether the voluntary- contributions are meant to be utilised turn specific projects or being used by the petitioner institute for the charitable purpose, which includes relief to the poor. It is not a case where on the mere perusal of the Memorandum of Association and Rules or the list of donors, it can be said that the voluntary contributions are solely meant for charitable purpose. The documents on the file do not lead us anywhere.

(15) There is yet another difficulty in the way of the petitioners. The petitioners have been allotted land on long term lease basis to enable it to construct the buildings and necessary infrastructure to carry out its objects. According to the petitioner, they are in the process of constructing three buildings i.e. Research Scholars Hostel, 'A' Block flats and 'F' Block flats. These very buildings are liable to property tax provided they are complete in some respects and are capable of occupation. The case of the petitioner has throughout been that the buildings are still under construction and no phase has so far been completed and as such are not liable to general/property tax. It is true that in order to conclude that the building is .complete, the issuance of completion certificate or an occupation certificate are one of the guiding factors. Similarly, the installation of water and electric connections will also go a long way to determine its completion. In this case, the petitioners have not supplied the complete information asked for to the assessing authorities, inasmuch as they did not fill in the proforma sent to them by the respondent, to determine the exact stage of the constructions of the buildings and the feasibility of levying the property tax. They admit that a part of the building has been occupied by a few selected staff with a view to speed up the work of construction. Petitioners also admit, vide 'heir letter dated 30-10-1986 that in the month of May & June, 1986, wafer & electric connections were sanctioned by the Corporation. Yet on another occasion, the petitioners' own case is that the Building plans of the three buildings were sanctioned on 4-5-83, the construction started in the month of September, 1983 and the buildings were completed (when permission for sewer connection was given) on 15-9-1986. They, however, do not give the date when the completion certificate was applied and sanctioned. From this material, it is not possible for this Court to hold as to when the buildings were put to use and if so, how much portion was occupied. This is also a disputed question which this Court will not be able to decide. On this score also, the petitioner should have approached the assessing authority and if they were not satisfied with its order, then to seek the relief by way of appeal. Having not taken recourse to an alternative remedy, as provided in the Act, this Court will not like to interfere in the impugned order of fixing the rateable value of the property in question.

(16) The Delhi Municipal Corporation Act is a complete code in itself. It lays down the procedure for issuance of notices for the assessment of property tax, inviting objections, affording the opportunity of hearing objections and then determining the property tax in accordance with the provisions of the Act. It also provides for right to appeal case the assessed is not satisfied with the order of assessment.

(17) The submission of the learned counsel for the petitioner is that the alternative remedy of appeal is no remedy in the eye of law inasmuch as the assessed is required to first deposit the full amount of tax. That may be so, but the provisions of filing the appeal has not been held to be ultra vires the Constitution. Here in this case, the deposit of the amount demanded was not made mandatory as the authorities agreed to review the case provided the petitioner deposited only 50% of the amount demanded. Even this gesture was not taken in right spirit, to spite of that, the case was reopened and decided against the petitioner. Without exhausting the alternative remedy, the petitioner cannot be allowed to by pass the right of appeal and get the disputed,questions of facts decided in a writ jurisdiction.

(18) With these observations, the petition fails and is hereby dismissed.