Municipal Corporation Of Delhi vs Indian Oil Corporation Ltd. And ...
2005 Latest Caselaw 1058 Del

JUDGMENT

B.C. Patel, C.J.

1. The appeal is preferred against the judgment of the learned single Judge dated 7-1-1997 on the writ petition filed by the respondent. This is unfortunately a dispute between two authorities where the appellant is the Municipal Corporation of Delhi and the respondent is a public corporation. The dispute relates only to the assessment of the rateable value in respect of the vacant land purchased by the respondent from the DDA.

2. In determination of the rateable value, the provisions of Section 116 of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as the said Act) would be relevant. The said provision as it stood at the relevant stage of time is as under:-

"Section 116. 'Determination of Rateable value of lands and buildings assessable to property taxes -

(1) The rateable value of any lands or 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 -

(a) a sum equal to ten per cent of the said annual rent which shall be in lieu of all allowances for costs of repairs and insurance, and other expenses, if any, necessary to maintain the land or building in a state to command that rent, and

(b) the water tax or the scavenging tax or both, if the rent is inclusive of either or both of the said taxes;

Provided that if the rent is inclusive of charges for water supplied by measurement, then for the purpose of this section, the rent shall be treated as inclusive of water tax on rateable value and the deduction of the water tax shall be made as provided herein;

Provided further that in respect of any land or building the standard rent of which has been fixed under the Delhi and Ajmer Rent Control Act, 1952 (38 of 1952), the rateable value thereof shall not exceed the annual amount of the standard rent so fixed.

(Explanation 'The expressions 'water tax' and 'Scavenging Tax' shall mean such taxes of that nature as may be levied by an appropriate authority)

(2) 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."

3. It is sub-section (2) of Section 116 which would be applicable since it is the common case of the parties that the period of assessment relates to the time when the land was vacant. The controversy has been set out in paragraph 5 of the impugned order as it revolves around the interpretation and meaning to be given to the expression 'estimated capital value'. This expression has not been defined either under the Act or bye-laws framed under the Act.

4. The learned single Judge has taken note of the contractor's method as applied by the Apex court in the case of Godhra Borough Municipality v. Godhra Electricity Co. Ltd. . In the said judgment the contractor's method was discussed. The learned single Judge has taken the view that the capital value can be determined in accordance with the judgment of the Apex Court in Patel Gordhandas Hargovindas and Ors. v. The Municipal Commissioner, Ahmedabad and Anr. AIR 1983 SC 1742 while adopting he said method.

5. The contractor's method envisages five stages which have been taken note of by the learned single Judge. The first stage is the estimation of the cost of construction of the building. The second stage is to make deduction from the cost of construction to allow for age, obsolescence and any other factors necessary to arrive at the effective capital value. The third stage is to estimate the cost of the land. The fourth stage is to apply the market rate or rates at which money can be borrowed or invested to the effective capital value of the building and the land. The fifth stage is to consider whether the result of the fourth stage really represents what the hypothetical tenant would pay for the annual tenancy on the statutory terms and to make any necessary adjustments.

6. Learned counsel for the appellant contends that the aforesaid contractor's method cannot be applied to the present case since the question is one of assessment of the capital value of the vacant land and it is the price paid by the respondent to the DD for purchase of the rights which would be relevant.

7. It is to be noticed that for purposes of making the comparison of any adjoining land there has to be first available a comparable land. In the present case there is no such land available as a particular FAR has been made available as part of the arrangement of allotment of the land. Thus where FAR is more, naturally capital value of the land is liable to be higher.

8. The cases where contractor's method have been made applicable are not in respect of the vacant land but where the building had been constructed upon. There is no dispute that the value of purchase of the rights in respect of the land by the respondent from the DDA are available. It is this value which has been applied in the determination and considered by the learned Addl. District Judge, Delhi who has approved of this methodology. It cannot be said in such a case that the price of the land is 'mething more' is liable to be excluded from the capital value.

9. In view of the aforesaid we find force in the contention of the learned counsel for the appellant that the contractor's method will not be the appropriate method for determination of the capital value of the land and the methodology adopted by the court below cannot be faulted.

10. The appeal is accordingly allowed and the impugned order is set aside leaving the parties to bear their own costs.

11. We may note in the end that the matter was on the Regular Board and was passed over once and called out a second time but none has chosen to remain present for the respondent.