Housing & Urban Development ... vs Municipal Corporation Of Delhi
1999 Latest Caselaw 756 Del

ORDER

Usha Mehra, J.

1. The point at issue as raised by the Housing and Urban Development Corporation Limited (in short HUDCO) is; whether HUDCO is exempt from levy of property tax on the land allotted to it by Government of India.

2. The controversy revolves around the applicability of the provision of Section 120(1)(c) of the Delhi Municipal Corporation Act (in short the DMC Act). Secondly, whether HUDCO by virtue of allotment of letter/lease in its favour acquired leasehold rights in the property or is it only managing the property on behalf of the Government of India, and finally; whether the land allotted to HUDCO can be called "land capable of being built".

3. No doubt provisions of Sections 120(1)(a), (b), & (c) as well as the provisions of Sections 116(4) and 119 of the DMC Act came up for interpretation in number of cases earlier, but keeping in view the facts of this case we have to see which of the sub-clauses of Sections 120 of the DMC Act are attracted in the facts of this case. And whether the properties in question are exempted under Section 119 of the Act. Before answering the points raised, lets have quick glance to the facts of this case.

4. The facts relevant for the determination of above points are, that the Government of India allotted the land measuring 42.6 acres to the petitioner, at Pinjrapole, Andrews Ganj, New Delhi. The allotment was subject to the terms and conditions as stipulated in Memorandum of agreement and the lease deed dated 1st November, 1990. Out of 42.6 acres of land, an area measuring 17.6 acres was leased out to the petitioner for being utilised for the construction of Community Centre. After the allotment of land vide lease deed dated 1st November, 1990 various letters were exchanged between the Government of India and the HUDCO. Finally a perpetual lease deed was executed between the HUDCO and the Union of India on 4th July, 1997. As per the first allotment letter dated 1st November, 1990 the area of 17.6 acre was given on lease basis to HUDCO on its paying a token premium of rupee one and annual ground rent of Re. 1 per acre for a period of 32 years. 25.0 acre of residential land was leased out for a period of 10 years with a further stipulation that after the expiry of this period the land along with structures to be erected by HUDCO thereon would be reverted to the Ministry of Urban Development. The land allotted for Community Centre was to be developed for Hostels, guest house facilities, conference hall, shopping centre and other community facilities. The net resources to be generated from the 17.6 acres of land was to be utilised for construction of maximum permissible number of houses/ flats on 25.0 acres residential land. Those constructed flats were to be taken over on rent by the Government. On taking over these flats the Government was to pay a token amount of Re. 1 for the entire residential complex. The flats were to be maintainable by the Government. The building and service municipal taxes etc. of those flats were to be paid by the Government. To that effect a separate tenancy agreement was to be executed between the Ministry of Urban Development and the HUDCO. Beside the above 18 acres of land was entrusted to HUDCO without payment of any fee. It was allotted for the care and maintenance as zonal green. The cost of the development and maintenance of the zonal green was to be charged by the HUDCO to the accounts of the Community Centre Project. The Government was to intimate the details of leasing arrangement in respect of the facilities developed on the Community Centre land.

5. It has been the case of the MCD that the petitioner started raising construction on the 17.6 acres of land with which we are concerned in October, 1990 i.e. prior to the official allotment of land vide letter dated 1st November, 1990. The petitioner after raising construction of the Community Centre on 17.6 acres of land, sub-leased the same to the third parties. It is in this backdrop that the Joint Assessor & Collector, Municipal Corporation of Delhi issued notice dated 18th March, 1991 under Section 126 of the DMC Act intimating the proposal to amend the assessment list for the years 1988-89, 1989-90 and 1990-91 and also inviting objections, if any, from the HUDCO.

6. In response to this notice HUDCO vide its reply dated 8th May, 1991 took the plea that the area under notice was not the property of HUDCO. It was owned and belonged to the Government of India and, therefore, exempted from property tax. That the possession of the plot of land measuring 42.6 acres was given to HUDCO on 2nd July, 1990 for care and maintenance on behalf of the Government of India. And the lease was to be governed under the Government Grants Act, 1895. Out of this land 25.0 acre of land was meant for construction of general pool quarters of the Government of India which was to remain the property of the Government of India and not of HUDCO. It was intimated that the land allotted to HUDCO was not the property nor under the ownership of the HUDCO but was granted to it by the Government for the care and maintenance by HUDCO. Approval of the Government of India was a precondition for entering into sub-lease. HUDCO could not take any action without the consent and prior approval of the Government of India.

7. That not being satisfied with the explanation rendered by HUDCO, the Deputy Assessor & Collector, Municipal Corporation of Delhi, vide his order dated 23rd March, 1994 fixed the rateable value of the property in question. It is against this order of fixing of the ratable value which has been challenged by the petitioner before this Court by way of this writ petition.

8. To determine whether the HUDCO is in possession of the land as agent of the Government of India or any leasehold right stood transferred to it, we have to understand some of the relevant terms contained in letters/lease deeds executed and exchanged between Government of India and HUDCO including the perpetual lease deed dated 4th July, 1997 as well as the provisions of the DMC Act.

The terms set out in the letters of allotment dated 1st November, 1990 are reproduced as under :-

No. J-13014/6/90-LD Government of India Ministry of Urban Development (Land Division)

New Delhi, Dated the 1st Nov., 90

To,

The Land & Development Officer, Nirman Bhavan, New Delhi.

Sub : Allotment of land to the Housing & Urban Development Corporation Ltd. at Pinjrapole (Andrews Ganj ).

Sir,

I am directed to convey sanction of the President to the allotment of land measuring about 42.6 acres at Pinjrapole, Andrews Ganj, as per enclosed plan in favour of HUDCO as per terms and conditions detailed below:-

(a) 17.6 acre of land for Community Centre will be leased on payment of a token premium of rupee one and annual ground rent of rupee one per acre for a period of 32 years.

(b) 25.0 acres of residential land will be leased for a period of 10 years on payment of a token premium of rupee one and annual ground rent of rupee one per acre. After the expiry of this period the land alongwith structures to be erected by HUDCO thereon will revert to the Ministry of Urban Development.

2(i) The land for the Community Centre should be utilised for development of hostel and guest house facilities, conference hall, shopping and other community centre facilities as per the urban design for the complex approved by this Ministry.

(ii) The net resources generated from the development and disposal of properties on 17.6 acres of land mentioned at (a) above should be utilised for construction of maximum permissible number of house/flats on 25.0 acres residential land vide (b) above and on other locations, as necessary. These flats will be taken on rent by the Government for the purpose of general pool accommodation. The rent payable by the Government will be a token amount of Rs. 1/- for the entire residential complex and will include maintenance of buildings and services, Municipal taxes etc. A separate agreement in respect of the tenancy between HUDCO and the Ministry of Urban Development will be concluded in due course.

(iii) Separate books of accounts showing the expenditure and receipts in respect of development of the community centre should be maintained by HUDCO and reported to the Ministry of Urban Development on a quarterly basis. In respect of the expenditure incurred on the construction of residential houses/flats on 25.0 acres of land similar separate books of aces will be maintained. The balance of the net proceeds arising from disposal of properties on the community centre should be kept in separate bank a/c and will be utilised by HUDCO for construction of further houses/flats as per the directions of the Ministry of Urban Development. In any case no diversion of net resources obtained from the development of the community centre for HUDCO's normal operations will be permitted. The financial projections for the works to be undertaken both on community centre and residential houses/flats should be submitted to the Ministry of Urban Development for prior approval before commencement of works.

(iv) HUDCO will complete construction of at least 100 houses/ flats to be used temporarily by the Afro Asian Games Authorities before these games are held in 1990-91.

3. 18 acres of land is entrusted to HUDCO without payment of any fee for care and maintenance as Zonal green. HUDCO will develop this area and maintain it till further directions from the Government. The cost development and maintenance of the Zonal green may be charged by HUDCO to the accounts of the community centre project.

4. A review/monitoring Committee comprising of Additional Secretary, Joint Secretary dealing with the subject and Joint Secretary (Finance) from the Ministry of Urban Development and CMD, HUDCO will monitor/review implementation of this project and will function as an Empowered Committee to take investment and disposal decisions as may be considered necessary for efficient completion of the project. Company Secretary, HUDCO will function as Secretary of this Committee.

5. The details of leasing arrangements in respect of facilities developed on the Community Centre land will be intimated in due course.

6. This issues with the concurrence of Finance Division vide their U.O. No. 1724/F, dated 1.11.1990.

Yours faithfully, Sd/ (K.K. Gupta) Under Secretary to the Govt.

of India.

9. Subsequently vide letter dated 28th December, 1992, Government of India, Ministry of Urban Development, revised the terms of allotment as stipulated in letter dated 1st November, 1990 by replacing para 2(ii) & para 4 of the said allotment letter dated 1st November, 1990. Vide letter dated 28th December, 1992 Government of India ordered deletion of some of the clauses mentioned in its letter dated 27th March, 1992, namely clauses 2(viii), (ix), (xv) & (xvi). Such of the clauses namely, 2(viii), (ix), (xv) and (xvi) of letter dated 27th March, 1992 which stood deleted vide letter dated 28th December, 1992 are reproduced as under :

Clause 2 (viii) - HUDCO will complete construction of at least 100 houses/flats to be used temporarily by the Afro Asian Game Authorities before these games are held in 1990/-91.

Clause 2 (ix) - In addition, the HUDCO shall be required to pay the present day replacement cost minus depreciation of the structures standing at site as assessed by the CPWD. These charges will be intimated to HUDCO in due course.

Clause 2 (xv) - The HUDCO shall first offer to Government on "no profit no loss" rental basis the constructed floor spaces in excess of its own requirements. The Government shall have the pre-emptive rights to take it or hire on the said basis.

Clause 2(xvi) - Lease will be governed under the Government Grants Act.

10. That vide letter dated 28th December, 1992 the above clauses were ordered to be deleted. That letter of 28th December, 1992 reads as under :-

   

 Government of India 
 Ministry of Urban Development  
 (Lands Division) 
 Nirman Bhawan, New Delhi - 110011
      No. J-13014/6/90-LD                Dated : 28.12.1992
 

 The Land & Development Officer, 
 Nirman Bhawan, 
 New Delhi.
 

 Sub : Allotment of Land to Housing and Urban Development Corporation Ltd., at Pinjrapole (Andrews Ganj), New Delhi.
 

 Sir, 
 

I am directed to refer to the correspondence resting with this Ministry's letter of even number dated the 1st November, 1990 and to say that the matter has been examined in the light of the points raised by the HUDCO vide their letters No. HUDCO/EM/Andrews/91 dated 5th May, 1992 and D.O. letter No. HUDCO/DEP/H & RC/92 dated 3rd July, 1992 and L & DO UC No. L-11-(1976)/90 dated 11.8.1992. Accordingly the relevant paragraphs of the Allotment Letter may be replaced as under :

(a) Para 2(ii):

The net resources generated from the development and disposal of properties on 17.6 acres of land mentioned at (a) above should be utilised for construction of maximum permissible number of houses/flats on 25.0 acres residential land vide (b) above and on other locations as necessary. These flats will be taken on rent by the Government for the purpose of general pool accommodation. The rent payable by the Government will be taken amount of Rupee one for the entire residential complex and will include maintenance of buildings and services for a period of 2 years from date of its handing over to the Government by the executing agency. The Municipal taxes etc. will be paid by the Government as on actual basis as applicable to the Central Government properties. A separate agreement in respect of tenancy between HUDCO and the Ministry of Urban Development will be concluded in due course.

a) Para 4:

A Memorandum of Understanding will be executed between Government of India & HUDCO detailing the terms & conditions for execution of the project, types of houses to be constructed, time allowed for construction, handing over arrangements for maintenance etc. The monitoring of day to day activities related to the project would be done by under the authority of the Board of Director of the HUDCO after execution of the MOU the HUDCO would be requested to submit monthly progress report relating to the project to enable the Government to watch the progress of the project fulfilllment of the targets, terms & condition spelt out in the MOU.

2. The points raised by the HUDCO with reference to allotment issued by the L&DO on 27.3.1992 are clarified as under :

(i) Date of allotment :

The date of allotment should be the date of issue by the Ministry i.e. 1.11.1990.

(ii) Period of construction :

The construction should be completed within a period of years from the date of handing over of the plot of within extended period as decided by the Government.

(iii) Paras 2(viii) and (xi) of L&DO's letter dated 27.3.1992 should be deemed to have been omitted.

(iv) Para 2(xiii) of L&DO's letter may be read as under :

The land in question falls under the jurisdiction of the Municipal Corporation of Delhi.

(v) Para 2(xv) of letter should be deleted.

(vi) Para 2(xvi) should be deleted.

3. The area allocated for construction of General Pool accommodation as well as development of the Community Centre correctly indicated in the plan after ascertaining the utilisation proposed by the HUDCO.

Yours faithfully,

sd/-

(B.R. DHIMAN) Under Secretary of Govt. of India

Vide a subsequent letter of 15th June, 1993, the lease of 17.6 acre of land was extended for a period of 99 years.

11. Thereafter as already pointed out above number of letters were exchanged but barring extending the period of lease from 32 years to 99 years the salient features of the lease/allotment remained the same. However, in order to complete sequence, we may also note the finally concluded perpetual lease dated 4th July, 1997 which is reproduced as under :-

PERPETUAL LEASE DEED

(For 17.6 ACRES LAND FOR COMMUNITY CENTRE)

THIS INDENTURE made on 4th day of July, 1997 BETWEEN THE PRESIDENT OF INDIA (hereinafter called the Lessor) of the one part and the Housing and Urban Development Corporation Limited, having its registered office at "HUDCO BHAWAN", India Habitat Centre, Lodhi Road, New Delhi - 110003 (hereinafter called "the Lessee") of the second part.

Whereas the lessor owns land measuring 17.6 acres comprising of Khasra No. ____________of Village Pinjrapole, Delhi, now as Andrews Ganj who plot of land measuring 17.6 acres situated in Pinjrapole, Andrews Ganj, for Community Centre complex, is more particularly described in Schedule hereunder written and with boundaries thereof for greater clearness have been delineated on the plan annexed to these presents and thereon coloured red (hereinafter referred to as the "Plot").

And whereas the lessor wishes to develop the said land as community centre as described in MPD-2001 as an integrated urban design complex.

And whereas the lessee being one of the premier Public Sector Organisation engaged in urban development has offered to develop the plot according to the directions of the lessor.

And whereas the lessor has agreed to demise the said plot to the lessee in the manner hereinafter appearing. Now THIS INDENTURE WITNESSETH that, in consideration of the amount of Rs. 1 (Rupee one only) paid towards premium before the execution of these presents (the receipt whereof the lessor hereby acknowledges) and of the rent hereinafter reserved and of the convenants on the part of the Lessee hereinafter contained, the lessor doth hereby demise upto the lessee, ALL THAT plot of land containing by admeasurements an area of 17.6. acres or thereabouts situated at Pinjrapole (Andrews Ganj), New Delhi, TOGETHER WITH all rights, easements and appurtenances whatsoever to the said plot of land to be used for construction of a Community Centre at Pinjrapole (Andrews Ganj), New Delhi, belonging or appertaining TO HOLD the premises hereby demised unto the lessee for 99 years from First day of November one thousand nine hundred and ninety YIELDING AND PAYING therefor yearly rent payable in advance of Rs.1/- per acre (Rupee one per acre only), or such other sum as may hereafter be assessed under the convents conditions hereinafter contained clear of all deductions by yearly payments on or before the 15th day of January in each year at the Reserve Bank of India, New Delhi or at such other place as may be notified by the lessor or such officer as may be authorised by him on his behalf (hereinafter referred to as the said "officer") for this purpose from: time to time; the first of such payment was made on 29th day of March, 1996.

SUBJECT ALWAYS to the exceptions, reservations, convenants and conditions hereinafter contained, that is to say, as follows :

1. The lessor excepts and reserves unto himself all mines, minerals, coal, gold washing, earth oils, stone, gravel and queries in or under the said land to be used for construction and development of the Community Centre at Pinjrapole (Andrews Ganj), New Delhi, and full right and power of all times to enter on the said demised premises and to do all acts things which may be necessary or expedient for the purpose of searching for working, obtaining, removing and enjoying the same, without providing or leaving any vertical support for the surface of the said land or for any building for the time being standing thereon provided always that the lessor shall make reasonable compensation to the lessee for all damages directly occasioned by the exercise of the right hereby reserved or any of them.

II. (a) It is hereby agreed that the land hereby demised shall be used by the lessee for the construction and development of a Community urban design for the complex approved by the lessor.

(b) The lessee shall have the right to sub-lease for 99 (ninety nine) years or for such lesser period coterminous with the date of expiry of the period under this deed the building constructed on the plot of land hereby demised together with site for such construction on the terms and conditions as may be approved by the lessor in consultation with the lessee.

(c) At the completion of the construction and development of the Community Centre but not later than ten years from the date of this perpetual lease deed, the lessor will have the right to review the arrangement with the lessee and enter into fresh arrangement with any other government agency or public sector undertaking for the purpose of lease/maintenance and administration of the properties. The rights and liabilities of the Sub-lease under the sub-lease entered into by the lessee with sub- lease in respect of the properties developed in the Community Centre Complex shall, however, continue in the same manner by the designated agency.

III. The lessee for itself, its successors, administrations, Sub-lessee and assigns covenants with the Lessor in the manner following, that is to say :-

(1) The lessee on the said plot of land hereby demised shall undertake construction of the Community Centre as detailed herein above after obtaining requisite sanction of the building plans from the proper municipal or other authority as its own expenses.

(2) The lessee shall pay unto the lessor the yearly rent thereby reserved on the day and in the manner hereinafter appointed without any deductions until any portion of built spaces are allotted. Thereafter the sub-lessees/space buyers shall pay to the lessee the yearly rent of two and half per cent of the premium paid towards the proportionate share of the land as per the provisions of the sub-lease without any deductions, who in turn shall pay the yearly rent collected to the lessor in two equal instalments payable on 5th January and 5th July every year.

(3) All arrears of rent and other payments due in respect of the premises hereby demised shall be recoverable in the same manner as arrears of land revenue under the provisions of the Punjab Land Revenue Act, XVII of 1987, and any amending Act for the time being in force.

(4) The sub-lessees/space buyers shall from time to time and at all times pay and discharge all rates, taxes, charges and assessments of every descriptions which are now or may at any time hereafter during the continuation of the sub-lease be assessed, charged or imposed upon the premises hereby demised or any part thereof or on any building to be erected thereupon or on the sub- lease in respect thereof.

(5) It is also agreed that a separate maintenance fund will be created for the proper maintenance of the whole complex. The maintenance fund will be funded by the allottees and sub-lessees of the various properties. A separate maintenance society will be established where of all the allot-tees/sub-lessees will be members and this society will be responsible for the proper maintenance of the complex. The Society formed shall charge the cost of maintenance from the sub-lessees on proportionate basis.

(6) The sub-lessees may with the previous consent in writing of the lessor, sell, transfer, mortgage or charge their respective interest in sites/built spaces as may be approved by the lessor in his absolute discretion. PROVIDED that in the event of the consent being given, the lessor may impose such terms and conditions as he thinks fit and the lessor shall be entitled to claim and recover a portion of the unearned increase in the value (i.e. the difference between the premium paid and the market value) of the said plot of land at the time of sale, transfer, assignment, or parting with the possession of such interest at the site/built space, the amount to be recovered being fifty per cent of the unearned increase and the decision of the lessor in respect of the market value shall be final and binding. PROVIDED FURTHER that the lessor shall have the pre-emptive right to purchase the interest in the property or any part thereof that may be subject of sale, transfer, assignment or otherwise parting with the possession, as the case may be, after deducting fifty per cent of the unearned increase as aforesaid.

(7) The lessor's right to the recovery to the fifty per cent of the unearned increase and the pre-emptive right to purchase the property as mentioned hereinbefore shall apply equally to an involuntary sale or transfer whether it be by or executing or insolvency court.

(8) The lessee hereby agrees that the net resources generated, if any, from the development and disposal of the properties erected on the said demised plot of land leased out shall be utilised by it for the construction of maximum permissible number of houses/flats on 25 acres of residential land allotted and placed in possession of the lessee separately. However, in case the land falls short for the money available, the general pool accommodation will be constructed elsewhere and if no land is available for constructing general pool residential accommodation (beyond 25 acres), the surplus may be credited with the Government or used with the permission of Ministry of Urban Affairs & Employment to build general pool residential accommodation elsewhere in country.

(9) Whenever the title of lessee in the said plot and building constructed thereon or any part there of is transferred in any manner whatsoever, the transferees shall be bound by all the convents and conditions contained herein and be answerable in all respects thereof.

(10) The lessee shall in all respect comply with and be bound by the building, drainage and other bye-laws of the proper municipal or other authority concerned for the time being in force.

(11) The lessee will at all times during the continuance of this lease ensure that the buildings erected on the said plot of land are kept in a good and substantial state of repair to the satisfaction of the said lessor or duly authority officer.

(12) The lessee and sub-lessees shall at all reasonable times grant access to the demised premises/built up space to the lessor or any other office duly authorised by him for being satisfied that the covenants and conditions contained herein have been and are being complied with.

(13) The lessee shall on the determination of this lease peaceably yield up the said demised premises and buildings constructed thereon upto the lessor. The lessee shall not be entitled to any compensation for the building constructed by the lessee on 17.6 acres from the surplus created and in existence at the time of delivery of possession of the buildings to the lessor.

(14) In case after the expiry of the period of this lease, the lessee requests the lessor for the extension/renewal of the lease period, then the lessor may at its sole discretion agree to renewal of lease on the fresh terms and conditions which it may deem fit and proper. However, in the event the lease is not renewed the buildings and structures, built and constructed at the cost of the lessor, his sub-lessee shall also be taken over by the lessor and the lessee and/or his sub-lessee will have no right or claim over it whatsoever.

(15) The lessee or any of the sub-lessees shall not without sanction or permission in writing of the proper municipal or other authority concerned erect any buildings or make any altercations or additions to such building constructed on the said plot of land.

(16) The said plot of land and buildings constructed thereon or any part thereof shall not be used for the purpose other than as specified herein. The lessee and all other persons claiming title through him shall not use or cause to be used the said premises or part thereof for the purpose whatsoever other than that as specified herein and not use or cause to be used any portion or the unit in such a manner which may or is likely to cause nuisance or annoyance to the neighbours or occupies of any other units in the buildings or to the owners and occupiers of any other adjoining and neighbouring property. No part of the demised premises or any unit thereof shall be used for any illegal or immoral purposes.

Provided that, if the lessee is desirous of using the said plot of land/apartment or the buildings constructed thereon for a purpose other than permitted, herein, lessor may allow such change of use on such terms and conditions including payment of additional premium and/or rent, as the lessor may in his absolute discretion determine.

IV. The rent hereby reserved shall be enhanced from the first day of January, 2020 and thereafter, at the end of each successive period of 30 years, provided that the revised rent fixed at each enhancement, shall at each such time be two and a half per cent of the then prevailing fair market value of land as determined by the lessor. The decision of the lessor in this regard shall be final and binding on the lessee/sub-lessees.

V. If the sum or sums payable towards the yearly rent hereby reserved or any part thereof shall at any time be in arrears and unpaid for three calender months or more after any of the day whereon the same shall have become due whether the same shall have been demanded or not or if it is discovered that this lease has been obtained by suppression of any fact or misstatement, misrepresentation or fraud or if there shall have been in the opinion of the lessor, whose decision shall be final, any breach by the lessee or by any person claiming through or under him of any of the convenants or conditions contained herein and on his part to be observed or performed, then and in any such case, it shall be lawful for the lessor (notwithstanding the waiver of any previous cause or right or reentry upon, the plot hereby demised and the buildings thereon) to re-enter upon and take possession of the plot and the buildings and fixtures and thereupon this lease and everything herein contained shall cease and determine and the lessee shall not be entitled to any compensation whatsoever nor to the return of any premium paid by it. PROVIDED that, notwithstanding anything contained therein to the contrary, the lessor may without prejudice to his right of re-entry as aforesaid and in his absolute discretion, waive, condone breaches temporarily or otherwise, on receipt of such amount and are on such terms and conditions as may be determined by him and may also accept the payment of the rent which shall be in arrears as aforesaid together with interest at the rate of ten per cent per annum or as decided by the lessor.

VI. No forfeiture or re-entry as aforesaid shall be effected until the lessor has served on the lessee a notice in writing :

(a) specifying the particular breach complained of, and

(b) if the breach is capable of remedy requiring lessee to remedy the breach,

and if lessee fails within such reasonable time as may be mentioned in the notice to remedy the breach if it is capable of remedy, and in the event of forfeiture or re-entry the lessor may in his discretion, relieve against forfeiture on such terms and conditions as he thinks proper.

Nothing in this clause shall apply to entry for breach of covenant against unauthorised sub-division and/or obtaining of the lease by suppression of any fact, misstatement, misrepresentation or fraud.

VII. The expressions "the lesser" and "the lessees" hereinbefore used shall; where the context so admits include in the case of the lessor his successors and in the case of the lessee, its successors in interest, administrators or representatives or permitted assigns or the persons for the time being having control over its assets and affairs.

VIII. The stamp duty and registration fee levied on this deed shall be borne by the lessee.

IX. In the event of any question, dispute or difference, relating to the interpretation and application of all provisions of this perpetual lease deed, such dispute or difference shall be referred by either party to the Arbitration of one of the Arbitrators in the Department of Public Enterprises to be nominated by the Secretary to the Government of India in charge of that Department. The Arbitration and Conciliation Act, 1996 shall not be applicable to the arbitration under this clause. The award of the Arbitrator shall be binding upon the parties to the dispute, provided, however, any party aggrieved by such award may make a further reference for setting aside or revision of the award to the Secretary, Department of Legal Affairs, Ministry of Law and Justice, Government of India. Upon such reference, the dispute shall be decided by the Law Secretary himself or he may refer the same for arbitration to the Special Secretary/Additional Secretary when so authorised by the Law Secretary whose decision in that respect shall be final and binding upon the parties. The parties to the dispute will share equally the cost of arbitration as intimated by the Arbitrator. This arbitrator clause shall be applicable to all the disputes and differences arising between the lessee and the lessor. The disputes and differences, if any, arising between any of the sub-lessees and the lessee shall be decided as per the provisions in the Sub-Lease Agreement.

X. All notices, orders, directions consents or approvals to be given under his lease shall be in writing and shall be signed by such officer or as may be authorised by the lessor and shall be considered duly served upon the lessee if the same shall have been delivered at or sent by post to the registered office of the lessee upon a sub-lessee or any person claiming any right to the said plot of land and/or the buildings constructed thereon if the same shall have been delivered at or sent by post to the last known address.

IN WITNESS WHEREOF THE parties hereto have set their hands the day and year first above written.

12. Tax on lands and buildings is authorised under Entry 49 of the List-II of the Seventh Schedule of the Indian Constitution. Sections 113, 114, 115(4), 116(2), and 119 of the Act envisage as under :

Section 113 of the Act gives power to the Corporation to levy property taxes.

Section 114 of the Act stipulates that the property taxes shall be levied on lands & buildings in Delhi.

Section 115 of the Act envisages the premises in respect of which property taxes are to be levied.

Sub Section (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, applies its profits, if any, or other income in promoting its objects and does not pay any dividend or bonus to its members.

Section 116 of the Act deals with the determination of RV of lands and buildings which are assessable to property tax.

Sub Section (2) provides "the rateable value of any land which is not built upon but is capable of being built upon and of any land on which a building is in process of erection shall be fixed at five percent of estimated capital value of such land."

Section 119 of the Act exempts Union of India's properties.

Incidence of property tax provided in Section 120 of the Act and which is very relevant for our purpose is reproduced as under :-

120. Incidence of property taxes - (1) The property taxes shall be primarily leviable as follows:-

(a) if the land or building is let, upon the lessor ;

(b) if the land or building is sub-let, upon the superior lessor ;

(c) if the land or building is unlet, upon the person in whom the right to let the same vests:

Provided that the property taxes in respect of land or building, being property of the Union, possession of which has been delivered in pursuance of Section 20 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (44 of 1954) shall be primarily leviable upon the transferee.

(2) If any land has been let for a term exceeding one year to a tenant and such tenant has built upon the land, the property taxes assessed in respect of that land and the building erected thereon shall be primarily leviable upon the said tenant, whether the land and building are in the occupation of such tenant or a sub-tenant.

Explanation - The term "tenant" includes any person deriving title to the land or the building erected upon such land from the tenant whether by operation of law or by transfer inter vivos.

(3) The liability of the several owners of any building which is, or purports to be, severally owned in parts of flats or rooms, for payment of property taxes or any instalment thereof payable during the period of such ownership shall be joint and several.

13. 'Land & building' and 'owner' has been defined under the Act as under:-

Section 2(24):

'Land' includes benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth and rights created by law over any street.

Section 2(3):

"Building" means a house out-house, stable, latrine, urinal, shed, hut, wall (other than a boundary wall) or any other structure, whether of masonry, bricks, wood, mud, metal or other material but does not include any portable shelter.

Section 2(37):

"owner" includes a person who for the time being is receiving or is entitled to receive, the rent of any land or being whether on his own account or on account of himself and other or as an agent, trustee, guardian or receiver for any other person or who should so receive the rent or be entitled to receive if the land or building or part thereof were let to a tenant and also includes..."

14. Mr. B.B. Jain in order to establish that the land allotted to the petitioner measuring 17.6 acres on which Community Centre has been constructed and the flats built on 25 acres of land are exempt tax because of the following factors.

1. Land was allotted under the Governments Grants Act,1985.

2. ownership of the properties remained with Government of India. It was only development of the same and management was transferred to the petitioner.

3. No term in the lease that property tax shall be born by the petitioner.

4. Net resources received from Community Centre built on 17.6 acres land be spent on building flats on 25 acres of land.

15. Lets see whether these factors exist and are sufficient to exempt the properties in question. According to Mr. Jain the applicability of the provisions of Government Grants Act, 1895 can be inferred from the terms of lease deed dated 19th March, 1996. In the lease dated 19th March,1996 it is specifically provided that the land in question was granted by the Government under Government Grant Act as the same was granted by the Government for its own benefit. Hence the property granted to the petitioner by the Government of India is exempted from property tax. Deletion of this clause earlier or in the subsequent perpetual lease dated 4th July, 1997 will not make any difference. To strengthen his argument that land was allotted under Government Grants Act, Mr. B.B. Jain relied on the judgment of this court in the case of Skipper Builders & Ors. Vs. Municipal Corporation of Delhi, reported in 1986 Tax. Net page 28. Those provisions apply to the lease granted by virtue of the prerogative rights of the state made solely for the benefit of the Government of India and not of any individual. Since the lease was granted by the Government of India for its own benefit and the proceeds of the same were to be utilised for the general benefit of the Government of India hence the provisions of the Government Grants Act are applicable. When the Government allotted land to the petitioner the estate or interest in it did not pass on to the petitioner.

16. On the other hand, Mr. R.K. Anand, Senior Advocate appearing for the MCD contended that allotment of land was not under the Government Grants Act. It was a lease of the land. By virtue of the lease, Government handed over not only the possessory rights in the land but also the interest and right in the land. Even otherwise property granted under the Government Grants Act does not mean that the property tax will not be attracted on the property in question. It could have been so if the term of the lease expressly provided otherwise.

17. To the question of applicability of the Government Grants Act, the answer is in the negative and the reasons are not far to search. Firstly in the letter of allotment dated 1st November, 1990 as well as in the perpetual lease deed executed on 4th July, 1997 there is no mention that allotment was under Government Grants Act,1895. Subsequently, however, this clause did find mention in the letter dated 27th March, 1992, but immediately thereafter vide letter dated 28th October, 1992 this clause was deleted by the department. Again the applicability of the Act find mention in the letter dated 26th March, 1996. But such a clause stood deleted in the final perpetual lease deed executed on 4th July,1997. What we have to see is the intention of the parties. Supreme Court in the case of Puran Singh Vs. Sundari Bhagwandass Kriplani & Ors., held that while interpreting the deeds, documents and agreements, the intention of the parties to that agreement has to be gathered from the terms of the agreement construed in the context of the surrounding, antecedent and consequent circumstances. The very fact that as and when a clause was inserted in the letter, regarding the applicability of the Government Grants Act, such a clause was immediately deleted by the Government in the subsequent letter or the deed as the case may be. From this act of the Government it can be safely be inferred as to what was the intention of the parties. Had it been the intention of the Government to grant the land in question under the Government Grants Act, nothing prevented it to incorporate the same in the finally concluded perpetual lease deed dated 4th July,1997. By this time the controversy between the petitioner and the MCD was known to the Government and yet it did not make the Government Grants Act applicable to the land allotted to the petitioner. This is a clear pointer to the intention of the parties and thus negative the assertions of the petitioner.

18. Now turning to the question of petitioner's status vis-a-vis the properties in question, Mr. B.B. Jain strenuously urged that the petitioner was only entrusted the development and raising the construction of properties and on behalf of the Government. This was even accepted by the Commissioner of MCD in the meeting held under the chairmanship of Additional Secretary, L&DO on 25th June, 1998. In the said meeting it was agreed by the Commissioner of MCD that petitioner was not liable to pay property tax because it was only managing the properties of the Government of India. That the property tax, of course can be charged from the buyers/sub lessees as per clause 4 of the lease deed. The municipal tax on the land and for that matter on built up space on land measuring 17.6 acres as such cannot be charged from the petitioner because ownership of the same always remained with the Government. Hence, the provisions of Section 119 of the DMC Act are attracted in the facts of this case.

19. That the provisions of Sections 2(24), 2(37), 114, 115, 116(4) and 120(1)(c) of the DMC Act will not apply to the properties in question so long these remain in the hands of the petitioner. Allotment of the land to the petitioner was merely to develop the same for the benefit of Union of India. As per the terms of the lease, the petitioner was to construct the Community Centre. But the entire resources generated therefrom were to be utilised for the construction of the Central pool accommodation to be built on 25 acres of land for the Government employees. Petitioner did not acquire any vested or lease hold rights either in the land or in the built up properties. Other than a construction agency, it has no other role to play. Petitioner entered into agreement with the Government of India in order to carry out development activities as directed by the Union of India. Simply because the petitioner has been addressed as "lessee" in the lease does not mean that leasehold rights vested in the petitioner. The use of the word "lessee" in the letter of allotment and subsequently in the perpetual lease deed is a misnomer. In fact the petitioner could not act independently it has to seek prior approval or consent of the Government for everything. Moreover, it is one of the term of the lease that the municipal taxes would be paid by the Government on actual basis as applicable to the Central Government properties. Since the construction and development was carried out by the petitioner as per the integrated urban design for the complex approved by the lessor and every action taken by the petitioner was with the prior approval and consultation of the Government, hence neither lease-hold rights vested in the petitioner nor stood transferred or sold to the petitioner by the Government. In any case no diversion of net resources obtained from the development of the Community Centre has been permitted by the Government. In the lease executed with the petitioner, no provision has been made fixing liability of the petitioner to pay property tax. Whereas in all other leases executed either by the DDA or L&DO, such, such a clause is specifically provided stipulating therein that the property tax shall be paid by the lessee. In the absence of such a Clause in the lease in had, intention of the parties can be clearly inferred that the property tax was not to be paid by the petitioner as these properties belonged to the Government of India. Status of the petitioner is only that of a manager. On the other hand wherever lessor wanted the property tax to be paid by a party, a clause in that respect is specifically provided, namely, clause 4 of the lease which provides that property tax will be paid by the sub-lessees. As per the terms of the lease it is only sub-lessees who have been made liable to pay the property tax. In the absence of such a clause in the lease in hand, the decision relied by the respondent, namely, Nehru Place Hotels Ltd. Vs. M.C.D., 1987 Tax Net 53, Indian Habitat Centre Vs. M.C.D., 1994(4) AD 247, IFCI Vs. MCD, 1996(1) AD 535, Bharat Petroleum Corporation Vs. MCD, 1996 (64) DLT 237, 1993(49) DLT 666, M/s Vishal Builders (P) Ltd. Vs. DMC & Ors., 1978 Tax L.R. (NOC) 32 (Delhi), M.C.D. Vs. Batia Brothers, 1997 (4) AD 317 etc. are distinguishable. In fact this question is still reintegrate. As per the terms of the lease nobody is in doubt as to who has to pay property taxes, if admissible. Mr. Jain without conceding the above position conceded that at best the provision of Section 120(1)(b) of the Act can be attracted. But by no means the provision sub Section 1(c) of Section 120 would apply. Alternatively he argued that since the land was allotted to the petitioner by the Government of India and until construction raised and completion certificate obtained there could not have arisen any question of petitioner's liability to pay the tax on the vacant land. According to him neither the provision of Section 115 nor of 116 of the Act are attracted till such time the building was complete in all respects and completion certificate obtained. In the present case building was constructed for all intent and purposes in 1994 when the completion certificate was issued. Hence, any demand of tax prior to 1994 is bad in law.

20. Mr. R.K. Anand, Senior Advocate appearing for the MCD on the other hand contended that from the reading of the terms and various clauses of the lease deed it clearly emerges that the leasehold rights in the property stood transferred to the petitioner. This can be seen from the fact that the petitioner has been given the right to sell that leasehold interest both in the land as well as in the built up property. Petitioner is authorised to let the property and receive the proceeds. It was not only the right to effect construction on the land but also powers were given to the petitioner to sell the built up properties to third parties. Liability to pay would be of the petitioner from the date it took possession of the leasehold rights which in this case was July, 1990 even though not spelt out in the lease deed. Liability of the petitioner would continue till it disposed/sold/ transferred the built up space alongwith the site to third parties. As regards 25.0 acres of land the tax liability would also be of the petitioner. The building plan was got sanctioned by the petitioner from MCD representing itself to be the "owner".

21. In the above backdrop we have to examine whether lease hold rights transferred to the petitioner. There is no doubt that mere use of the word "lessee" by itself does not prove that leasehold right something more is required. We have glanced through the term of the lease deed. It stipulates that petitioner has been granted the right to sell, allot and/or sub-lease the site as well as the built up property in the Community Centre built on 17.6 acres of land. From the bare reading of the terms of allotment dated 1st November, 1990 and of the perpetual lease deed dated 4th July, 1997, the picture which emerges is that 17.6 acres of land was leased to the petitioner on payment of consideration though of minimal premium and the annual ground rent is also payable by the petitioner till the subsistence of lease period.

22. That the petitioner is vested with the right to let the properties and receive the lease money and/or the sale proceeds is clear from the reading of Clause 4, 6 and 16 of the lease. The right to build or rebuild the properties also vest with the petitioner. Third party interest can and has in fact been created by the petitioner vis-a-vis the properties constructed by it on the land in question. To our mind, the lease provides that petitioner paid the consideration for the allotment of this land then what was the amount of consideration is immaterial. Fact remains Government at the time of transferring the leasehold rights in question charged consideration from the petitioner.

23. The building plans for the construction of Community Centre was got sanctioned by the petitioner from the MCD at its own expenses and by representing itself to be the owner of the properties. Per the DMC Act, it is only "owner" of the properties who can submit the plan of the building. Petitioner has always represented itself to be the owner because it possesses the lease hold rights in the properties. The sub lessees/space buyers per the terms of the lease has to pay to the lessee/petitioner the yearly rent of 2.5% of the premium paid towards the proportionate share of the land. Not only petitioner can sub lease the space or sell it, but also has the power to allow the sub-lessees to further sell, transfer, mortgage or charge their respective interest in sites/built space subject of course with the consent of the lessor. This makes petitioner owner of the properties.

24. Admittedly neither in the allotment letter nor in the letters exchanged thereafter nor in the perpetual lease deed there is any mention that payment of property tax shall be borne by the petitioner. But that does not alter the position any way. Since the rights in the property were transferred to the lessee i.e. the petitioner hence mere non-mentioning of a specified clause in the lease cannot alter the character and status of the petitioner. Intention of the Government of India to vest the proprietary rights in the property in the petitioner can be inferred from the terms of the lease. Vesting of the leasehold rights with the petitioner makes it owner of the property. By virtue of clause 1 of the lease deed dated 4th July, 1997, the lessor i.e. the Government of India reserved to itself only the rights in the minerals namely mines, minerals, coal, gold washing, earth oils, stone, gravel and quarries. It did not reserve any other right in the land. It is also a term of the lease that the lessor would reasonably compensate the lessee i.e. the petitioner for any damages directly occasioned by the exercise of the above right reserved by the lessor mentioned in Clause I of the lease. Reading of the term leaves no manner of doubt that the lessor except reserving the underground rights in land vested all other rights in the land to the petitioner. Otherwise there could no valid reason for an owner of the land to compensate to its Manager for the exercise of owner's right. If the ownership of the land belonged to the lessor, the lessor was not liable, to compensate the lessee who as per petitioner's version was merely to manage the properties on behalf of the Government. It is only when the right in land passes that the question of compensation would arise. The matter does not rest here. By virtue of sub-clause (b) of Clause (II) of the lease deed, the lessor vested the right to the lessee to further sub-lease, sell or transfer the built up properties together with the site to third parties. It is apparent that when the leasehold rights in the properties are transferred and vests with the lessee, then only such a lessee could exercise the powers of sub-leasing or selling the properties. The mere fact that lease provides that sale terms may be got approved from the lessor will not change the character of the vesting. Various terms of the lease show that the right to sell, transfer and to enter into sub-lease solely vest with the lessee. The approval of the terms of the sub-lease are required to obtained from the lessor because lessor wants to ensure that the lessee does not violate the terms of its lease. Since only leasehold rights have been transferred in favour of the petitioner, hence to protect lessor's rights, such a clause is inserted. But from this it cannot be concluded that lease hold rights were not transferred to the petitioner. For this conclusion, support can be had from the term used in the lease deed executed by the Delhi Development Authority (in short the DDA) with its buyers of plots and the flats. Under DDA lease it is invariably the term of the lease that the buyer before mortgaging the lease property shall seek permission of the lessor/DDA. By imposing this clause it does not mean the leasehold rights are not sold out by the DDA to the purchaser of the flat or the land. In a lease hold property all the rights in the property vests in the lessee yet to ensure that there is no violation or breach of those terms, the lessor keeps to itself the right of the faithful compliance of those terms. Merely keeping of such power to itself does not mean that transfer of interest in the property was restricted or limited nor can be said that the lessee was given only the right to manage the properties on behalf of the lessor.

25. That for alterations or additions of the building constructed on the said land lease does not stipulate prior approval of the lessor. The only approval required is from the Municipal or other Authority concerned. Reading of Clause 16 of the perpetual lease deed show that sub-lessees claim their title to the property through this lessee. If that be so then it can be presumed that petitioner had a good title in the property and, therefore, could further transfer or sell the same. Unless the lessee possess better title in the property it cannot pass any title to the sub-lessee. There is no right of resumption with the lessor except what is provided under Clause 16(V) of the perpetual lease deed. It gives power to the lessor to re-enter the property provided there is breach as stipulated in Sub-clause (VI). And even before thinking of re-entering the lessor has to serve the lessee with one months notice in writing. Reading of Clause 16 as a whole leaves no manner of doubt that leasehold rights and interests in the property passed on to the petitioner and those could not be divested by lessor except following the conditions as stipulated in clause 16 of the lease. Lease deed in question was required to be stamped and registered at the expense of the lessee. If it was merely a licence and not vesting of right and interest in the immovable property the lessor would not have insisted to get the lease of this immovable property registered, which is requirement pertaining to lease of more than one year under Section 17(d) of the Registration Act, 1908.

26. It is also one of term of the lease that the lessee shall pay yearly rent as long as the property is in its exclusive possession. The very fact that the possession of the property exclusively vests with the petitioner, it indicates that the lessee till the subsistence of lease period has got the possessory rights as well as leasehold rights. As per Clause III(3) of the perpetual lease right is reserved by the lessor to recover arrears of rent from the lessee as if it is an arrears of land revenue. This clinches the issue. Such a provision is attracted only when the lessee is a distinct juristic entity and the possessory and leasehold rights of the properties vest in such a lessee. The clauses of the lease deed coupled with the facts referred to above, and in particular that the lessee took the leasehold rights in the property against consideration and has a right to sub-lease not only the built up space but also the site without any restrictions conclusively proves that the leasehold rights vest in the petitioner.

27. The Apex Court in the case of Municipal Commissioner of Dum Dum Municipality & Ors. Vs. Indian Tourism Development Corporation interpreted the expression "vest" and "vesting". The Court observed that though these words may be having different shades of meaning, but what is to be seen is the nature and character of vesting. These Corporations, whether created under the Statute or registered under the Companies Act are distinct entitles owning their own properties, having their own fund, capable of borrowing and leading money and entering into contracts like any other Corporation. Such Corporations have their own properties, own funds, accounts, employees and are capable of entering into contracts. Therefore, while interpreting the words "vest" and "vesting" it was observed that nature and character of vesting had to be ascertained with reference to the relevant provisions of the enactment and/or the lease as in this case. From the facts and the terms of the lease as discussed above, we find no force in the submissions of Mr. B.B. Jain that the land in question was placed at the disposal of the petitioner for the erection and construction of Community Centre as manager or that the land was put at the disposal of the petitioner for the benefit of the Government of India. Nor from the facts of this case it can be said that the vesting was only for the purpose of managing the properties or that the ownership of these properties never vested in the petitioner. It will be contradiction in term if on one hand lessee is declared the manager of the property for an on behalf of the Union of India and at the same time entitled to pass on the title in the property to a third party. A person cannot pass a title unless he possesses the same. If the petitioner was assigned only the management of the property then no right vested in it to sell the built up properties and pass on legal title to the sub-leases.

28. The case of Municipal Commissioner of Dum Dum Municipality (Supra), Mr. Jain tried to distinguish. According to him the Apex Court reached that conclusion because of Section 12 of the Act which stipulated that the properties would vest with the Airport Authority. But no such term exist in the lease in hand. Since the ownership of the land vest in the Airport Authority, hence Apex Court held it responsible to pay tax. In the case in hand the petitioner has not been vested with the properties. Petitioner has to obtain prior consent and approval of the Government before entering any agreement of sub-lease. The ultimate power rests with the Government of India, therefore, neither the interest in the land nor the leasehold right in built up property stood transferred. We are afraid, we cannot subscribe to this contention of Mr. Jain. Clause 6 of the perpetual lease deed is a sharp contrast to the power vested in the lessee under Clause II(b) of the said lease. By virtue of clause II(b) exclusive powers have been conferred on the lessee. No strings have been attached to the powers of the lessee to create sub-lease. Whereas under clause 6 if a sub-lessee has to further transfer, mortgage or charge interest in the property, he has to seek consent and approval of the lessor. The lessor has been given discretion to grant or not to grant such approval. But in contrast no such fetters are attached to the powers of the lessee to transfer, sell or create sub-lease of the properties in question. Only rider attached under Clause II(b) of the lease is that the sub-lease by the lessee should be co-terminus with the date of expiry of the period of lease. It is to ensure the implementation of such a provision as stipulated in Clause 6 that the lessor has kept to itself the right asking the lessee to seek its prior approval and that too with the consultation of the lessee. Reading of these two clauses indicate why prior approval is required of the lessor. It is, however, clear that lessee has been vested with unfettered right in the property with further powers to deal with the same in any manner it likes. This is nothing but vesting of rights in the properties to the lessee.

29. Merely because the petitioner has to take prior permission of the Central Government before selling, letting or sub-leasing the properties would not absolve the petitioner from the liability to pay property tax. Section 120(1)(c) of the Act provides that the tax is to be realised from the person who has the right to let. In this case right to let vests with the petitioner. Tax can also be realised from the person occupying the premises who may or may not be the owner of the land or building. As already pointed out above that by virtue of the terms of the lease the right to let the properties vest with the petitioner. Per term of clause 16 of the lease, the sub-lessees can claim their title on the built up space alongwith the site through this petitioner. The petitioner has thus the vested and leasehold interest in the properties. The leasehold interest which is the land in question as defined under Section 2(24) of the DMC Act, vest with the petitioner in the capacity of a lessee. Therefore, being the lessee or holder of leasehold rights, the liability to pay tax squarely falls on the petitioner.

30. From the reading of the terms of the lease it cannot be said that the vesting was only for the purpose of management of the property. The very fact that powers are given to the lessee to further sub-lease the properties and pass on the title not only of the built up space but also of the site is a clear pointer of the fact that the property in question vested with the petitioner. Vesting in favour of the petitioner was not for the management of the property as Mr. Jain tried us to believe. In the words of the Supreme Court in Municipal Commissioner of Dum Dum Municipality's case (supra):

"The Authority is a statutory Corporation distinct from the Central Government and that the properties vested in it cannot be said to have vested in it only for proper management. After the date of vesting, the properties so vested are no longer the properties of Union of India for the purpose of land within the meaning of Article 285. The vesting of the said properties in the Authority is with the object of ensuring better management and more efficient operation of the airport covered by the Act. Indeed that is the object behind the very creation of the Authority. But that does not mean that it is a case of limited vesting for the purpose of better management".

31. Moreover, if the petitioner had only been acting as agent then there was no necessity for the Government to stipulate a clause in the lease that it would have a preemptory right to repurchase the property. preemptory clause shows petitioner to be the owner. Government cannot be the owner and at the same time reserves to preemptory right.

32. The stipulation in the lease pertaining to land measuring 17.6 acres is in sharp contrast to the term pertaining to land admeasuring 25 acres. In Clause (d) of the lease relating to land measuring 25 acres, it has been stated that petitioner would be liable to pay the Municipal taxes etc. on actual as applicable to Central Government properties with regard to 25 acres of land. This stipulation is unlike the clause dealing with 17.6 acres of land. Vide clause (d) the Government has expressed its intention that construction raised on 25 acres of land Municipal taxes shall be borne by the Government because that property alone will be treated as Government property and hence exempted under Section 119 of the DMC Act. Had it been also the intention of the Government to exempt the land and built up space on 17.6 acres of land nothing prevented it to express in similar term of the condition. This, thus lead to an irresistible conclusion that the land and built space on 17.6 acres of land is the property of the petitioner and not of the Government of India, hence not exempted under Section 119 of the DMC Act.

33. That the petitioner is not acting on behalf of the Government as it acquired the leasehold interest in the same. Having acquired the leasehold interest the petitioner acquired the ownership. The owner alone has the right to sub-lease or let out the property. Being owner, the petitioner applied for the sanction of the building plan. Under the building bye-laws of the respondent it is only the owner or the lessee who can apply for sanction of the building plans. So far as the properties constructed on land measuring 25 acres is concerned, for that the respondent cannot charge any Municipal tax. The intention of the Government is clearly stipulated in clause (d) of the lease where it is specifically provided that the municipal taxes on actual basis would be paid by the Government as applicable to Central Government properties. The property being a Central Government property is exempt from tax under Section 119 of the DMC Act.

34. In the case of India Habitat Centre Vs. MCD reported in 1994 (4) AD 247 this Court observed that:-

"The interest of a lessee of the Government can be the subject matter of property tax and when such interest is being taxed, it cannot be said that the residuary interest of the landlord (Union of India) is being taxed. The units of taxation are distinct in each case."

35. In the words of Dalip Kapur, J. in the case of M/s. Vishal Builders Pvt. Ltd. Vs. MCD & Ors., [1978 Tax LR NOC 32 (Delhi)] "The said holder of subordinate rights cannot claim any exemption and has to pay the tax on the value of the interest transferred to him." In the case in hand the lease being perpetual lease with a right to raise construction and a right to sub-lease the same and make alterations and additions without any permission of the lessor and without any right to resume during the currency of the lease except re-entry for the breach as stipulated in clause 16(v) of the lease, such a lessee cannot claim that he is managing the affairs of the property on behalf of Union of India. In the case of I.F.C.I. Vs. M.C.D. (supra) this Court after analysing the contention of an assessee who raised similar plea as the petitioner and after analysing the provisions of Section 120 of the Act observed :-

"8. From a perusal of clause 6A it is apparent that the petitioner would require permission in written of the lessor to exercise his right to sell, transfer, assign or part with the possession of the plot. But the right including the right to let the land are not barred and can be exercised with the consent of the permission to let the land was applied for but the same was refused. In any case, vesting of a right can be conditional and limited subject to certain restrictions. Insofar as the building is concerned the right of the petitioner to sub-let the same is governed by clause 7. Clause 7 starts with a non-obstante clause and permits the lessee to sublet whole or any part of the building that may be erected on the plot. A reading of these two clauses leaves no manner of doubt that while the lessor can sublet the plot with the previous consent of the lessor, no such permissions required for the sub-letting of the whole or any part of the building which is constructed on the plot. The right to let the building is unfettered. Therefore, the position is that the petitioner can undoubtedly rent the building when completed. As seen earlier, if a person has a right to let either the land or the building, which has so far not been let, the incidence of tax fell on him under Sec. 120(1)(c). As the petitioner has undisputed right to sub-let the building, the incidence of property tax, whether in regard to land or building on its completion, will fall on it. However, we hasten to add that we should not be understood as being of the view that the petitioner has no right to let the vacant land. It is obvious from the reading of clause 6A of the lease deed that the right to let the land vest in the petitioner though it may not be unrestricted one. Therefore, in any case Sec. 120(1)(c) will be attracted.

The law as laid down in the above mentioned case squarely apply to the facts of this case.

36. In similar circumstances this Court in the case of Delhi Golf Club Ltd., Vs. New Delhi Municipal Council held the Delhi Golf Club Ltd. liable to pay the property tax. Mr. Jain says on facts this case is distinguishable. According to him in the case of Delhi Golf Club Ltd. (Supra) the consideration paid was Rs. 16 lacs and the land was purchased in a public auction. Therefore, Court came to the conclusion that interest in the land passed and made the Delhi Golf Club liable to pay property tax. Moreover, Delhi Golf Club's case was under the Punjab Municipal Act. And the Club having been declared owner was liable to pay tax. But that is not the case in hand. Under the Delhi Municipal Corporation Act the tax is on the person primarily liable for payment of property tax. This distinction Mr. Jain took great pains to explain. We are afraid there does not exist any distinction on the facts. The land in question was transferred to the petitioner by the Union of India for a consideration. The quantum of consideration is irrelevant. Consideration will not change its character if it is Rs. 17.00 or Rs. 171 lakhs. In fact as soon as consideration is paid the leasehold rights in the property stood transferred to the petitioner with a further right to sub-lease the same. Thus, it cannot be said that the property in question did not pass on to the petitioner. Under the DMC Act tax is leviable on the leasehold rights and not on the individual. The petitioner not only holds the possessory and leasehold rights but also possesses legal right to further dispose of the same. This itself indicates that the leasehold rights vest with the petitioner and the property tax is being charged on this leasehold rights of the petitioner as was done in the case on Bharat Petroleum Corporation Vs. M.C.D. (supra).

37. Reliance by Mr. B.B. Jain on the decision of Supreme Court in the case of Municipal Corporation of Greater Bombay Vs. Polychem Limited, and Express Newspapers Limited Vs. M.C.D., are of no help to determine the liability of the petitioner to pay the property tax keeping in view the facts of this case. The question as to what would be the ratable value of the building and the related question like from which date tax is payable will best be looked into by the Appellate Authority as stipulated under Section 169 of the DMC Act. From which date completion certificate was granted and whether construction started prior to formal execution of the lease or the allotment letter are disputed questions of facts which cannot be gone into under Article 226 of the Constitution of India.

38. The last contention raised by Mr. B.B. Jain is that the land was not capable of being built because lay out plan for the construction had not been sanctioned till 25th March, 1994. Whereas the demand was raised by the respondent w.e.f. 2nd July, 1990. Hence by that date the land was not capable of being built. The question of land capable of being built would arise only after the sanction of the lay out plans. The same at best in this case can be assessed for the levy of property tax from 25th March, 1994.

39. According to Mr. B.B. Jain before this Court holds that land was capable of being built, it must first examine whether the provisions of Sections 312, 313 and 332 had been complied with. It is only when the requirements of Section 313 and 332 had been complied that the question of capability of the land being built would arise. We find no substance in this submission because Section 312 deals with obligation of the owner in providing private streets and access to the plot etc. Section 313 envisages lay out plans before utilising, selling or otherwise dealing with such a land. Section 332 prohibits construction of the building without sanction. The mere fact that lay out plan was not approved and got sanctioned from the respondent after a considerable time cannot be construed that the land in question was not capable of being built.

40. As per petitioner's own showing the process of construction started in 1990. Had the land not been capable of being built the process would not have started in 1990. In fact case of the petitioner squarely falls under Section 116(2) of the Act. This Court in the case of DLF United Limited Vs. Municipal Corporation of Delhi, interpreted what is land capable of being built. While interpreting the words "capable of being built" as used in Section 116(2) of the Act, it held that "spirit of the words "capable of being built" as used in Section 116 of the Act cannot be that land in question could not at all be built upon. Such a spirit is compatible only with such land which may be exclusively occupied or used for public worship or for a charitable purpose", and that "Section 115(4) of the Act determines the lands and buildings upon which the tax can be levied or cannot be levied. Section 116 of the Act only provides the method of determination of ratable value of lands and buildings which are assessable to property tax under Section 115(4) of the Act. This later section does not carve out any other class of lands in respect of which property tax cannot be levied. For that the substantive section is only 115(4) of the Act which does not create any difference between lands capable or incapable of being built upon. Irrespective of any such impediment and except only such lands and buildings exclusively occupied and used for public worship or held by a society or body for a charitable purpose, all lands and buildings in Delhi covered by the Act are liable to property tax." Therefore, there is no manner of doubt that whether the plans were got sanctioned or not or the completion certificate obtained much later, it will not make any difference. The fact remains that the land in question admeasuring 17.6 acres was capable of being built hence liable to tax.

41. As regards the contention of Mr. B.B. Jain that while assessing the tax, rebate has not been given on the unbuilt areas like common passage etc., it must be stated that is beyond the purview of this Court. For that remedy lies somewhere else.

42. After analysing the facts and the legal position as discussed above, we conclude that

(i) The petitioner/lessee is holding the leasehold rights in the property known as Community Centre, built on 17.6 acres of land and, therefore, liable to pay tax on the leasehold rights in the property as per the provision of Section 120(1)(c) of DMC Act.

(ii) That the built up flats and houses on 25 acres of land being Government property is exempt from property tax under Section 119 of the DMC Act.

(iii) The question from which date and at what rate the petitioner is liable to pay the tax can efficaciously be determined by the appropriate forum provided under the DMC Act. We have left this issue open.

43. For the reasons stated above, the petitioner is disposed of in terms of the above order. No costs.