Videocon Leasing And Industrial ... vs The Municipal Corporation Of ...
2005 Latest Caselaw 144 Del

JUDGMENT

Vijender Jain, J.

1. Rule D.B.

2. This writ petition was filed by the petitioner impugning the demand of the respondent under Section 126 of The Delhi Municipal Corporation Act, 1957 (for short `The Act') dated 30th March, 2001 and letter dated 26th April, 2001 and demand letter dated 29th August, 2001 as pursuant to direction by this Court, a rectification order under Section 176 of the Act has been passed on 8th January, 2004 which is at page 258 of the paper book, and pursuant to the demand raised in the said rectification order, same has been paid by the petitioner from 4th May, 1995 till 31st March, 2004. The only controversy which still remains as per learned counsel for the MCD is the demand of old House Tax liability prior to 4th May, 1995. Dr. Sarabjeet Sharma, learned counsel appearing for the respondent/MCD, has contended that pursuant to the perpetual lease deed entered between the petitioner and the DDA, the petitioner has taken the property along with structure standing thereupon and, therefore, the petitioner is liable to make the payment of House Tax even prior to the date of the perpetual lease deed in respect of the property in question. It was contended by Dr.Sharma that harmonious construction of the covenants of the lease deed would show that the petitioner has accepted the liability to pay House Tax even though petitioner had not come in possession of the said property. Lastly, it was contended by Dr.Sharma that in the rectification order passed by the assessing authority leave was granted to recover the dues from any one of the owners who possessed the property during the relevant time be that Skipper Construction Company Private Limited or Delhi Development Authority or the petitioner.

3. On the other hand, learned counsel for the petitioner while controverting the arguments of the counsel for the respondent, has contended that no liability except what has been paid by the petitioner pursuant to the rectification order, when the petitioner executed perpetual lease deed in respect of the property pursuant to an auction on orders of the Supreme Court of India, can be fastened on the petitioner. In support of his contention, learned counsel for the petitioner has relied upon the case Housing and Urban Development Corporation Ltd. v. M.C.D. and Anr. AIR 2001 Supreme Court 432, Hamdard (Wakf) Laboratories India v. Municipal Corporation of Delhi 103(2003) Delhi Law Times 459 and a Full Bench decision of this Court in Municipal Corporation of Delhi v. Shashank Steel Industries(P) Ltd. 100 (2002) Delhi Law Times 66(FB). We have given our careful consideration to the arguments advanced by counsel for the parties. Section 120 of the Act which is relevant for our consideration is to the following effect:-

"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 Lesser;

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

(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 of such 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 or flats or rooms, for payment of property taxes or any Installment thereof payable during the period of such ownership shall be joint and several.

4. From a careful reading of Sub-section 2 of Section 120 of the Act and after looking at the lease deed, the property tax is primarily leviable on the petitioner in terms of Sub-section 2 of Section 120 of the Act. However, that Section is silent as to from which date the incidence of property tax would be attracted in case of the property. In HUDCO's case(supra), the Supreme Court in Paragraph 8 held as under:-

"8. From the aforesaid discussion, it clearly follows that the land in question being exempt from tax by virtue of Section 119(1) of the Act as it is the property of the Union and furthermore even under Section 120(1) no tax in respect of land could have been levied in the present case on the appellant prior to the same being let to them in 1997."

5. Some dates are important to be noted for adjudicating the controversy. Initially this plot was auctioned by the DDA to one M/s Skipper Construction Company Private Limited. Disputes arose between the parties with which we are not concerned in the present writ petition. Suffice to say that the Supreme Court passed the order on 29th November, 1994 in case of Delhi Development Authority v. Skipper Construction Company Private Limited and Anr. vide S.L.P.(C) No.21000 of 1993 for the plot and incomplete structure situated at No.E-1, Block-B, Jhandewalan, New Delhi for auction sale. In said auction sale, the petitioner's bid was the highest for the said premises and was accepted by the DDA for a consideration of approximately Rs.70 crores. The DDA delivered the possession of the aforesaid premises to the petitioner on 7th April, 1995 and the lease deed between DDA and the petitioner was executed on 4th May, 1995. which was registered before the Sub-Registrar on 5th May, 1995. There is no dispute that the possession of the super structure in whatsoever form, and the appurtenant land thereto was handed over by the DDA to the petitioner on 7th April, 1995 and the lease deed was entered into on 4th May, 1995. It has been noticed by the assessing authority in its rectification order that the liability to pay House Tax from 1986 to 3rd May, 1995, when the plot in question was with the erstwhile owner was either from M/s Skipper Construction Company Private Limited or the present owner (i.e. the petitioner). No supporting facts are discernible from the record filed by the respondent. Same has also not been noticed in the rectification order by the assessing authority as to when the DDA re-entered the plot. Needless to say that when the DDA re-entered the plot it became the property of the Union and as per law laid down by the Supreme Court in HUDCO's case(supra), it will be a question which would be open whether DDA would be liable to pay House Tax or not. As we are not concerned in the present proceedings with that question, suffice to say that by no stretch of imagination on the basis of the covenant in the lease deed which was in relation to `as is and where is' status of the structure and the land it cannot be attributed that the petitioner has accepted the liability of property tax of the previous years i.e. even prior to execution of lease deed.

6. There is no merit in the submission of the learned counsel for the respondent on this score as the demand raised pursuant to the rectification order has been paid as as noticed above till 31st March, 2004. We hold that the petitioner is not liable to pay anything on account of House Tax/Property Tax liability prior to the date of execution of the lease deed dated 4th May, 1995.

7. The petitioner, however, will be liable to pay the current liability. It will, however, be open for the respondent to take appropriate action in accordance with law for the period prior to 4th May, 1995 either against Skipper Construction Company Private Limited or DDA or whosoever is liable to pay the Property Tax.

8. In terms of the above, the writ petition is allowed.

The impugned demand in so far as it assesses the Property Tax prior to 4th May, 1995 qua the petitioners is quashed.