Raj Sudha Towers (P) Ltd. vs Municipal Corporation Of Delhi
2002 Latest Caselaw 1281 Del

JUDGMENT

Mukundakam Sharma, J.

1. The present suit is filed by the plaintiff against the defendant praying for a decree of permanent injunction restraining the defendant from in any manner recovering any property tax from the plaintiff in respect of the buildings raised on the suit property or on any other rateable value and also to pass a decree of mandatory injunction directing the defendant to withdraw the warrant of attachment dated 22nd October, 1998, in respect of the suit property, namely buildings Nos. 29 and 30, Community Centre, Wazirpur Industrial Area, New Delhi.

2. The case of plaintiff as pleaded in the plaint is that the plaintiff purchased the aforesaid two plots bearing No.29 and 30, Community Centre, Wazirpur Industrial Area, New Delhi, from the President of India through Delhi Development Authority in an open auction and that the leases in respect of the said two plots were executed in favor of the plaintiff by the President of India through the Delhi Development Authority. It is also stated that possession of the aforesaid two plots No.29 and 30, were obtained by the plaintiff on 28th February, 1983 and 8th August, 1983, respectively. it is also urged that the plaintiff applied for sanction of the plans for both the aforesaid plots and with respect to plot No. 29, the plan was sanctioned on 27th April, 1983 and in respect of plot No. 39, the plan was sanctioned on 3rd January, 1984. It is also alleged that construction on both the plots was started simultaneously on 13th February, 1985 and completion certificates in respect of both the plots were applied on 9th January, 1986 and were granted on 3rd April, 1986. It is also alleged that although the completion certificates were granted on 3rd April, 1986 in respect of both plots but, the amenities were not provided for as no electricity was provided till December, 1989 and only temporary electricity connections in both the plots were provided on 20th October, 1987. It was also stated that neither water connection nor any sewage amenity was provided in the aforesaid two plots. The contentions of the plaintiff are that no vacant land tax and property tax could be levied from the lessee constructions is made by the said lessee on the land and that after construction is complete and the flats are sold out, it is the responsibility of the flat buyers to pay the property tax, if ny, and therefore, the plaintiff has no liability at all.

3. The aforesaid contentions raised in the plant were refuted by the defendant, who filed a written statement contending, inter alia, that the plaintiff is the owner of both the plots in question and, therefore, liability to pay vacant land tax and property tax is of the plaintiff. It was also stated that the rateable value in the case of plaintiff was fixed as per the provisions of Section 116(2) of the Delhi Municipal Corporation Act and other relevant provisions. It is also stated that the plaintiff did not submit any deed or document indicating transferring the various flats to different owners in accordance with the statutory requirements and, therefore, the liability of the plaintiff to pay the property tax continues.

4. On the pleadings of the parties, the following issues were framed on 10th April, 1996:-

"1. Whether the suit is barred by Section 41(h) of the Specific Relief Act and Section 478(2) of the D.M.C. Act?

2. Whether the suit is not maintainable, as alleged in the preliminary objections?

3. Whether the suit has not been properly valued for the purposes of court fee and jurisdiction?

4. Whether the plaintiff is not liable to pay vacant land tax and the property tax, as alleged in the plaint?

5. Relief."

The suit was, thereafter, listed for recording evidence of the parties. At that stage it was stated by the counsel for the plaintiff that all the issues are legal issues and , therefore, no evidence was required to be led the plaintiff. The said contention was not opposed by the counsel for the defendant. In view of the aforesaid statement of the parties, it was directed by this Court on 17th July, 1997 to list the suit for final argument in the category of Finals.

5. The main contention of the counsel appearing for the plaintiff was that the plaintiff is not the owner and is a mere tenant of the two plots under the Union of India and, therefore, there is no liability of the plaintiff to pay vacant land tax as also the property tax. It was also submitted by him that no tax could be recovered from the tenant/lessee till construction is made the completed in the suit property. It was further submitted that after construction is complete and the flats are sold out, it would be the liability and responsibility of the flat owners who purchased the flat to pay such property tax. In support of the aforesaid contentions, the counsel referred to the provisions of Sections 119,120,122 and 126 of the Delhi Municipal Corporation Act. It was also submitted by him that no amenities like sewage, water and electricity was provided by the defendant to the plaintiff and, therefore, the plaintiff has no liability to pay any property tax.

6. The aforesaid arguments were refuted by the counsel appearing for the defendant. She submitted that in terms of the provisions of Section 116(2) of the Delhi Municipal Corporation Act, even the vacant land tax could be assessed and levied on the lessee/owner. She also referred to the definition of "owner" as found in Section 2(37) and Section 120(c) of the Delhi Municipal Corporation Act as also the provisions of Section 128 of the Delhi Municipal Corporation Act, to support her contention that the vacant land tax and property tax were correctly levied on the plaintiff.

7. In the light of the submissions of the counsel appearing for the parties, I propose to dispose of the suit issue-wise.

8. Issues No.1 and 2.

Issue No. 1 and 2 are inter-connected and, therefore, I propose to dispose of both the issues together.

In the written statement a specific objection was taken by the defendant that the suit is barred under the provisions of Section 478(2) of the Delhi Municipal Corporation Act and Section 41(h) of the Specific Relief Act. A similar objection was also raised and was the contention in Ganga Ram Hospital Trust v. Municipal Corporation of Delhi; reported in 2001 v AD (Delhi) 644. In the said decision, it was held by the Division Bench of this Court that a suit of this nature is maintainable.

Counsel appearing for the defendant states that in view of the aforesaid decision of the Division Bench, she does not press her objection regarding the maintainability of the suit and, therefore, both the aforesaid issues are answered in favor of the plaintiff and against the defendant holding that the suit filed by the plaintiff is maintainable.

9. Issue No.3,

The aforesaid issue relates to valuation of the suit.

It is agreed to by the counsel appearing for the parties that the said issue is also covered by the decision of the Full Bench of this Court in Smt. Sheila Devi and Ors. v. Shri Kishan Lal Kalra and Ors.; reported in 2nd (1974) II Delhi 491. In the said decision it was held that when it is a suit for injunction, it is for the plaintiff to value his own suit and such valuation for the purpose of injunction could be done at the option of the plaintiff.

Since the aforesaid objection regarding valuation of the suit is not pressed by the counsel for the defendant, in view of the decision of the Full Bench of this Court, the aforesaid issue is also answered in favor of the plaintiff and against the defendant holding that the suit is properly valued for the purpose of Court fee and jurisdiction.

10. Issue No. 4.

This is the most relevant issue which is raised in the present suit and requires an indepth consideration.

11. It was contended on behalf of the plaintiff that there is no liability of the plaintiff to pay either any vacant land tax or property tax. Before looking into the issue of liability to pay property tax, it would be appropriate to scrutinise and decide whether there is any liability of the plaintiff to pay the vacant land tax. In this connection, it would be appropriate to refer to the definition of "owner" as given in Sub-section (34) of Section 2. The word "owner" is defined therein to include 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 it if the land of building or part thereof were let to a tenant. As is indicated from the language of the aforesaid provision, the definition is very exhaustive, wide, extensive and it is also an inclusive definition.

12. In MCD v. Pt. Madhusudan Sharma and ors. (LPA No. 74/1971) this Court held that the definition of "owner" is an inclusive definition and that he may be real owner or not the that an agent, a trustee and a guardian or minor, are covered by the concept of an "owner". Therefore, a person who has the domain over the property which may be used as he pleases, except as restricted by the law or agreement, would also be an owner in terms of the aforesaid definition.

13. Section 116 of the Delhi Municipal Corporation Act lays down the criteria for determination of rateable value of lands and buildings assessable to property taxes. It is provided therein that the rateable value of any lands of building assessable to property taxes be the annual rent at which such land or building might reasonably be expected to let from year to year less what is prescribed in the said provision. Sub-section (2) thereof provides that 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 per cent of estimated capital value of such land.

14. The aforesaid provisions make it crystal clear that property tax could be levied on any vacant land or also on land where the building is in the process of being erected or has been erected. Therefore, the primary liability to pay property tax appears to be on the land or building. In that view of the matter, whosoever is the owner of the said land or building, the liability is affixed on the said person also to pay the property tax. In view of the aforesaid provisions, it is apparent and clear that property tax could be levied also on the vacant land and, therefore, the first contention of the counsel appearing for the plaintiff that no vacant land tax could be levied by the MCD is found to be without any merit and is dismissed.

15. Reference was also made to the terms and conditions of Lease Deed executed in favor of the plaintiff. Counsel appearing for the plaintiff specifically relied upon the stipulation therein particularly to Clause (4)(a) which provides that the Lessee shall not sell, transfer, assign or otherwise part with the possession of the whole or any part of the commercial plot except with the previous consent in writing of the Lesser which shall be entitled to refuse in his absolute discretion and also to the provisions of Clause (6) thereof stating that notwithstanding the restrictions, limitations and conditions as mentioned in Sub-clause (4)(a) above, the Lessee shall be entitled to sub-let the whole or any part of the building that may be erected upon that plot for the purpose specified in the plan referred to in Clause II 3(b) on a tenancy from month to month or for a term not exceeding five years. Relying on the said provisions, counsel sought to submit that the plaintiff was not the owner but a Lessee and that also a tenant and that the property belonged to the Union of India and, therefore, no property tax could be levied on the owner which is the Union of India in view of the provisions of Sections 119 and 122 of the Delhi Municipal Corporation Act.

16. In vie of the aforesaid submissions, it would be necessary to notice the provisions of Section 119 and 120 of the Delhi Municipal Corporation Act, Section 119 of the Delhi Municipal Corporation Act provides that lands and buildings being properties of the Union shall be exempt from the property taxes specified in Section 114. In my considered opinion, the aforesaid provision of Section 119 of the Act is not applicable to the properties in question in respect of which a perpetual lease deed is executed in favor of the plaintiff and, therefore, the plaintiff cannot invoke the provisions of Section 119 of the Act in his aid and contentions in view and in the light of the facts of the present case.

17. So far the provisions of Section 120 of the Delhi Municipal Corporation Act is concerned, the same deals with the incidence of property taxes providing that the property taxes shall be primarily leviable upon the Lessee if the land or building is let upon the Lesser; if the land or building is sub-let, upon the superior Lesser; and if the land or building is let, upon the person on whom the right to let the same vests. Sub-section (2) thereof provides that 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. There is an explanation appended thereto which provides that 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. Sub-section (3) provides that 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 Installment thereof payable during the period of such ownership shall be joint and several.

18. In Municipal Corporation of Delhi v. Trigon Investment and Trading Pvt. Ltd. and Anr; , the Supreme Court held that property taxes due under the Act in respect of any land or building constitute first charge upon such land and building, subject only to the prior payment of the land revenue, if any, due to the Government thereon. It was further held that the primary liability to pay taxes is upon the Lesser where the building is let and upon the person entitled to let it, where the building is not let. It was also held that if the person primarily liable fails to pay the tax, it can be recovered from the occupier who in turn is entitled to be reimbursed by the person primarily liable. The decision goes on to hold that where a land or building is (SIC) the (SIC) is bound to give notice of such transfer to the Commissioner and failure to give such notice renders the transferor liable not only to penalty but also for payment of all property taxes from time to time payable in respect of such land or building until he gives such notice.The provisions of Section 128(4) of the Delhi Municipal Corporation Act was also noticed in the said decision which expressly provides that the continued liability to pay the taxes cast upon the transferor (in addition to penalty) would not affect the liability of the transferee for payment of the said tax. The Supreme Court also took notice of the provisions of Section 126 of the Act and held that the said provision does not have the effect of relieving a transferee of a land/building from the liability to pay property taxes duly assessed thereon and that this liability extends even for the period prior to the transfer in his favor and such taxes can be recovered from him according to law. It was conclusively held in the said decision by the Supreme Court that the substantive liability of the owner to pay taxes cannot be defeated by the non-intimation under Section 128 or by the failure of the transferee to have his name entered in the municipal records. Reference may also be made to another decision of the Division Bench of this court in LPA No. 74/71- MCD v. PT. MADHUSUDAN SHARMA and Ors. It was held in the said decision that for the purpose of determining and assessment of house tax, a person who for the time being collects rent is an owner although he may be a real owner or not. It was further held that primary liability is on the land or the building and, therefore, whosoever has the legal authority to discharge the function of an owner is answerable.

19. In my considered opinion, the aforesaid decisions are squarely applicable to the facts and circumstances of the present case. The plaintiff by virtue of definition of the word owner would come within the expression owner and it is the substantive liability of the plaintiff to pay taxes. The plaintiff has constructed buildings on the said land and has also alleged that some of the flats have already been transferred to the flat owners. However, the plaintiff has not given any notice in accordance with the mandatory teams of the statutory requirement to the Municipal Corporation of Delhi about such transfer of flats. Accordingly, the plaintiff has the liability to pay both the vacant land tax as also the property tax in the terms of the provisions of the Delhi Municipal Corporation Act. I may also appropriately refer to the decision of this Court in The Industrial Finance Corporation of India Ltd. v. M.C.D. reported in 1996 (I) A.D. ( Delhi) 535. In the said decision, the Division Bench of this Court has held that a person is liable to pay house tax when land or building is not let and right to let either of them vests on him. Section 120(1)(c) of the Delhi Municipal Corporation Act was noticed in the context.

20. In that view of the matter and in the light of the provisions of the Delhi Municipal; Corporation Act, I am of the considered opinion that property taxes including vacant land tax could be recovered from the plaintiff by the Municipal Corporation of Delhi as is sought to be done in the present case. I also hold that as the list of flats buyers and the persons to whom the flats or the buildings erected by the plaintiff were allegedly transferred, having not been submitted in accordance with the statutory requirements, the liability of the plaintiff to pay property tax in respect of those flats also continues, for when a particular mode is prescribed for doing a thing or taking an action, the same must be done in that manner and not in any other manner. Alleged non-availability of essential services is also no ground for refusal to pay property tax. All the contentions of the counsel appearing for the plaintiff are, therefore, without any merit and are rejected. Issues are answered accordingly. In the light of the aforesaid discussions, I hold that there is no merit in the suit and the same accordingly is dismissed. Interim order stands vacated. Pending application stands disposed of accordingly.