Hamdard (Wakf) Laboratories ... vs Municipal Corporation Of Delhi
2003 Latest Caselaw 96 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. The petitioner has impugned the show cause notice issued by the respondent Corporation dated 14.5.1991 in respect of bill raised for property No. 317-18 Block B, Okhla Industrial Area, Phase I, New Delhi. The property was acquired by the petitioner in pursuance to the perpetual lease deed executed on 7.8.1984 though the possession of the plot was taken on 26.3.1977.

2. The notice dated 23.3.1990 was issued to the petitioner under Section 126 of the DMC Act, 1957 for assessing the property for vacant land tax with effect from 1.4.1979 to which the petitioner filed the objections. The claim of the petitioner was that no building had been constructed on the land and only a boundary wall has been erected with a tin shed for the Chowkidar to prevent encroachment. The petitioner also claimed vacancy remission in respect of the plot for various years.

3. Learned Counsel for the petitioner submits that there are two issues raised in the present petition; first is in respect of the effect of the rateable value and the second is in respect of grant of vacancy remission.

4. Learned Counsel for the parties agree that in so far as the first issue is concerned, the same is no more res integra in view of the judgment of the Full Bench of this Court in Municipal Corporation of Delhi v. Shashank Steel Industries (P) Ltd., . Learned Counsel for the petitioner has also referred to the judgment of the Supreme Court in Housing and Urban Development Corporation Ltd. v. M.C.D., 89 (2001) DLT 185 (SC)=AIR 2001 SC 432, in this behalf. Thus in view of the execution of the lease deed on 7.8.1984 the liability to pay property tax would only arise from the said date.

5. The second issue is in respect of a claim of the petitioner for vacancy remission for which the petitioner had applied. The contention of the learned Counsel for the petitioner is that since the land in question is not occupied it is liable for vacancy remission. However, learned Counsel for the respondent Corporation submits that the petitioner is not entitled to vacancy remission since the property was never let out and the claim of vacancy remission can only be granted in cases where the properties has been let out and thereafter has remained vacant. Thus the contention is that at least one letting is required at the initial stage before such vacancy remission can be granted.

6. The present case is one of vacant land and not of vacant property. It would be necessary to reproduce the relevant sections of Delhi Municipal Corporation Act, 1957 (hereinafter referred to as the said Act):

"164. Remission, or refund of tax.--(1) If any building together with land appurtenant thereto has remained vacant and unproductive of rent for sixty

or more consecutive days, the Commissioner shall remit or refund, as the case may be, two-thirds of such portion of the general tax assessed on the rateable value thereof, as may be proportionate to the number of days during which the said building together with the land appurtenant thereto has remained vacant and unproductive of rent.

(2) If any land, not being land appurtenant to a building, has remained vacant and unproductive of rent for sixty or more consecutive days, the Commissioner shall remit or refund, as the case may be, one-half of such portion of the general tax assessed on the rateable value thereof, as may be proportionate to the number of days during which the said land has remained vacant and unproductive of rent..

166. Notice to be given of the circumstances in which remission or refund is claimed.-

167.What buildings, are to be deemed vacant.--(1)For the purposes of Sections 164 and 165, no land, building or tenement shall be deemed vacant if maintained as a pleasure resort or town or country house or be deemed unproductive of rent if let to a tenant who has a continuing right of occupation thereof, whether he is in actual occupation or not.

(2) The burden of proving the facts entitling any person to claim relief under Section 163, or Section 164 or Section 165, shall be upon him.

168. Notice to be given of every occupation of vacant land or building.--The owner of any land, building or tenement in respect of which a remission or refund of tax has been given under Section 164, or Section 165 shall give notice of the re-occupation of such land, building or tenement within fifteen days of such re-occupation."

7. Learned Counsel for the petitioner submits that the provision which dealt with the issue of vacancy remission do not provide for any qualification that there has to be an initial letting for purposes of claiming vacancy remission. Thus what is required is that land in question should have remained vacant and unproductive of rent for 60 or more consecutive dates that it should not be a land appurtenant to a building. It is thus submitted that as long as the land is qualified within these two parameters the property would be subject to vacancy remission.

Learned Counsel for the respondent on the other contends that the provision of Section 164(2) of the Act have to be read along with the provisions of Sections 166, 167 and 168 of the said Act. Learned Counsel has referred to the provisions of Section 166 of the Act to contend that the notice required to be given for availing of the vacancy remission in respect of a land only arises when such land "has become vacant and unproductive of rent". It is thus contended that the requirement is that it should have become vacant and is unproductive of rent. Thus both the requirements are necessary since the word used is "and" and not "or", The expression "has become vacant" would imply it was occupied earlier.

8. A reference has also been made by learned Counsel for the respondent to Section 168 of the Act to contend that the notice has to be given on re-occupation of

such land and such re-occupation would arise only if there is a previous occupation of land.

9. Learned Counsel for the petitioner however disputes the aforesaid interpretation of the said sections. Learned Counsel for the petitioner further submits that reading of Section 166 with Section 168 shows no difference has been provided under the Act in respect of self-occupation of the property or letting it out for determination of rateable value and that what is required is that the property should be vacant. Learned Counsel for the petitioner has also referred to the judgment of the learned Single Judge of this Court in Municipal Corporation of Delhi v. Lawrence Cold Storage Pvt. Ltd. and Anr., . In the said judgment the Departmental Instruction Policy No. 9 dated 9.7.1980 of the MCD was discussed and it was held that in case of a building the vacancy remission had been rightly allowed for the first assessment of the property. The relevant portion is as under:

"41. The MCD had considered this question whether in a property which is for the first time being assessed, whether a notice under Section 166 of the DMC Act was necessary or not Departmental Instruction Policy No. 9 dated 9.7.1980 was published by the MCD which is reproduced hereunder:

"Claim of vacancy remission in case of first assessment whether notice necessary or not-

In terms of Section 166 of the DMC Act, 1957 no remission or refund of property taxes can be made unless notice in writing of the fact that the building has become vacant and unproductive of rent has been given to the Commissioner and no remission of refund shall take effect in respect of any period commencing more than 15 days before delivery of such notice.

A question has arisen whether vacancy remission is admissible in the case of a building which was fit for occupation at an earlier date, but was actually let out much later or say after 60 days. In other words whether vacancy remission should be allowed for the period the building remained vacant and unproductive of rent prior to its first letting.

The matter has been carefully examined. Under the provisions of Section 129 of the DMC Act, the assessment is to be framed from the date of completion or date of occupation whichever first occurs. However, in the case of a building which is assessed as vacant in the first instance, necessary vacancy remission should be allowed as provided under Section 164 of the DMC Act.

A further question has arisen whether vacancy notice is necessary in such cases as required under Section 166 of the DMC Act. The legal position is required only in those cases where properties were previously on rent and subsequently became vacant and unproductive of rent. In other cases notice under Section 166 of the DMC Act is not required. It is, therefore, implied that for the buildings which were initially assessed as vacant, no vacancy notice is necessary.

Since it may not be possible in such cases for the present field staff to verify the

exact position from site, it would be proper if the assessed claiming such vacancy remission is asked to file an affidavit on a non-judicial stamp paper of Rs. 2/- to the effect that the property remained vacant and unproductive of rent during the period for which such a claim is being made."

42. In the present cases, the assessment order of the Assessing Authority was the first assessment of the property and therefore, the learned Additional District Judge, rightly allowed the vacancy remission on the rateable value of the plot till such time the property was complete and occupied.

Accordingly, the petitions are dismissed."

10. I have considered the submissions advanced by learned Counsel for the parties.

11. A reading of sections shows that no qualification as such has been put for grant of vacancy remission prescribing that there should be a prior letting before vacancy remission can be granted. However, considerable emphasis has been laid by learned Counsel for the respondent on the words used in Section 166 "has become vacant and unproductive of rent" and ''re-occupation of such land" in Section 168 of the said Act. These phrases are used to contend that a property can only become vacant if it has been earlier let out and is capable of re-occupation only if it is occupied earlier. The whole contention is actually based on the fact that the vacancy remission is really meant for properties which have been rented out but have been vacated subsequently and could not be re-let out for a period of over 60 days.

12. If the contention of learned Counsel for the respondent was to be accepted it would imply that an artificial distinction is made between properties let out and vacated and properties which have remained vacant in the beginning though such distinction is not provided in Section 164 which grants such vacancy remission. The implication would also be that while in a particular case the property was let out and vacated but could not be subsequently let out due to certain market conditions the vacancy remission would be admissible while on the other hand a property newly built, which cannot be let out due to market conditions would not be entitled to the vacancy remission. In my considered view even keeping in mind the object of grant of vacancy remission this artificial distinction should not be made. The purpose of grant of vacancy remission is to grant such remission for the period of time when the property which is capable of being let out has not been let out.

13. There is also another aspect of the matter since vacancy remission is admissible only if it is not even self-occupied. It is thus a benefit made available to the owner of the property where the property is neither occupied by a tenant nor is self-occupied. Needless to say that if the property is self-occupied and the person was away for some period of time it would not be a case for vacancy remission. Similarly Section 167 of the Act provides that no such property shall be deemed to be vacant which is maintained as a pleasure resort or town or country house.

14. A reference to the circular of MCD referred to in the judgment in the case of M.C.D. v. Lawrence Cold Storage case (supra), would also show that a question

arose whether vacancy remission is admissible in the case of a building which was fit for occupation at an earlier date, but was actually let out much later or at least after 60 days. It was decided that in case of building which is assessed as vacant in the first instance, necessary vacancy remission should be allowed. In other cases such notice envisage under Section 166 of the Act was not required. Thus in my considered view no reliance can be placed on the provisions of Sections 166 and 168 for limiting the provision of vacancy remission under Section 164 of the Act since they do not come into play. The mere fact that in the present case it is land and not a building would not make difference since Section 164(1) deals with the building while Section 164(2) deals with the land. Thus the effect of the judgment in the M.C.D. v. Lawrence Cold Storage case (supra), would also be applicable to the present case. In fact, this is in conformity with the policy decision of MCD dated 9.7.1980.

15. I am thus of the considered view that the petitioner would be entitled to vacancy remission since admittedly the land has neither been constructed upon nor occupied by the petitioner.

16. A writ of mandamus is thus issued quashing the impugned notice dated 14.5.1991 and directing the respondent to grant vacancy remission to the petitioner. However, the property tax would be levied only from the date of the execution of the lease deed which is 7.8.1984.

17. Writ petition is allowed in the aforesaid terms leaving the parties to bear their own costs.