Hotel Queen Road Pvt Ltd vs N.D.M.C. And Ors.
2012 Latest Caselaw 4135 Del

               THE HIGH COURT OF DELHI AT NEW DELHI

%                                  Judgment delivered on: 13.07.2012

+       W.P.(C) 3453/2012

HOTEL QUEEN ROAD PVT LTD                                ...    Petitioner

                                      versus

N.D.M.C. AND ORS.                                       ...      Respondents

Advocates who appeared in this case:
For the Petitioner  : Mr B.B. Jain, Mr Mohit Choudhary, Mr A. Das,
                       Mr Rohit Bansal
For the Respondent  : Ms Madu Tewatia, Ms Sidhi Arora
                       Mr Sumit Pushkarna

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SIDDHARTH MRIDUL

                                  JUDGMENT

BADAR DURREZ AHMED, J (ORAL)

CM No. 8039/2012

Allowed subject to all just exceptions.

CM No. 8038/2012 (stay) in W.P. (C) No. 3453/2012

1. We have heard the learned counsel for the petitioner as well as the

learned counsel for NDMC. The learned counsel who had appeared on

behalf of the UOI through the Ministry of Home Affairs stated at the outset

that the Ministry of Urban Development and L&DO ought to have been

made parties in the present writ petition. According to him this is so because

the petitioner's primary case seeking a stay is that the petitioner is not the

owner of the land and building and it is the President of India who is the

owner of both the land and building situated at 19, Ashok Road, New Delhi

on which the hotel 'Royal Plaza' is being run by the petitioner.

2. This point is well taken by the learned counsel for the petitioner who

requests that the L&DO as well as the Ministry of Urban Development

should also be added as party respondents. We feel this request ought to be

accepted straightway and we direct that the L&DO as well as Ministry of

Urban Development be also added as party respondent Nos. 4 and 5. The

amended memo of party shall be filed within a week. In any event, the

learned counsel appearing on behalf of the UOI, through the Ministry of

Home Affairs, accepts the notice on behalf of both the newly added

respondents.

3. The sole ground on which the petitioner is seeking a stay of the

demand that has been raised against the petitioner in respect of the said

property situated at 19, Ashok Road, New Delhi is that his case falls under

section 66 (1)(a) of the New Delhi Municipal Council Act, 1994 (hereinafter

referred to as the said Act). On the other hand, the learned counsel for the

NDMC submitted that the present case falls within section 66(2). Insofar as,

the petitioner is concerned, it is contended that since the land as well as the

building on the said land belongs to the lessor i.e, the President of India, it is

the lessor alone who is primarily liable for paying the property taxes leviable

in respect of the said land and building. He further states that clause 8.10 of

the lease executed by the President of India in favour of the petitioner does

provide for payment of property taxes by the lessee. However, this is subject

to the condition that the said property taxes are leviable in law. He submits

that because of section 66(1) of the said Act since the property tax is

primarily leviable on the lessor, there is no liability, in law, on the petitioner

to pay the property tax insofar as the premises in question is concerned. He

placed reliance on a decision of the Supreme Court in the case of MCD v.

Shashnak Steel Industries P. Ltd.: 2009 (2) SCC 349 in order to support his

contention.

4. The learned counsel for the petitioner further submitted that this is not

a case which would fall under section 66 (1) (a) of the said Act. However, as

pointed out above, the learned counsel for the NDMC made several

submissions to the effect that it is section 66 (2) which would be applicable.

5. Section 66 (2) provides that if any land has been let out for a term

exceeding one year to a tenant and such tenant has built upon the land, the

property tax assessed in respect of that land and the building erected thereon

shall be primarily leviable on the said tenant, whether or not the land and

building are in the occupation of the such tenant. In this backdrop, the

learned counsel for the NDMC submitted that the land in question had

initially been leased by the President of India in favour of Indian Tourism

Development Corporation (ITDC). Thereafter, the ITDC erected a building

thereon and was running a hotel by the name of 'Ashok Yatri Niwas'.

Subsequently, that hotel was re-named as 'Indraprastha'. However, the

hotel ran into some difficulty and a decision was taken to disinvest.

Consequently, according to the learned counsel for the NDMC, a scheme

under section 391/394 of the Companies Act, 1956 was presented before the

Company Court whereby the entire undertaking of the 'Ashok Yatri Niwas'

which was later on known as 'Indraprastha' came to be transferred to the

petitioner. The learned counsel for the NDMC also pointed out that after the

construction of the building by the ITDC, the ITDC was paying property tax

thereon on a composite basis. Thus, according to the learned counsel for the

NDMC, since the entire undertaking of the ITDC which was being run in the

name of 'Indraprastha' got transferred lock, stock and barrel to the

petitioner, the primary liability of paying property tax would be on the

transferee i.e., the petitioner herein. Therefore, according to her, the

arguments raised by the learned counsel for the petitioner claiming that the

case fell under section 66(1)(a) of the said Act do not hold any water.

6. After having considered arguments advanced by the learned counsel

for the parties at length, we are of the prima facie view that this is not a case

which would fall under section 66 (1) (a) of the said Act. In fact, if we were

to notice the observation of the Supreme Court in paragraph 27 of the said

decision in the case of Shashnak Steel Industries P. Ltd. (supra) it would be

clear that the Supreme Court was also concerned with the distinction of

whether the case was one of letting or conferment of ownership of leasehold

rights. In that case the Supreme Court came to the conclusion, upon a

reading and analysis of the lease deed, that the same did not operate as a

conveyance of leasehold rights. On the contrary, on a prima facie view, we

find that the lease in question would operate as a transfer of leasehold rights

and therefore would operate in the nature of a conveyance of the same.

Therefore, the decision of the Supreme court in the case of Shashnak Steel

Industries P. Ltd. (supra) is clearly distinguishable.

7. In this view of the matter, and particularly because of the history of

the property as narrated by the learned counsel for the NDMC, we are prima

facie of the opinion that the case falls under section 66 (2) and therefore it

would be the tenant/ lessee, in other words the petitioner herein, in respect of

whom the property tax would primarily be leviable.

8. Therefore, as no prima facie case has been made out at this stage for

the grant of a stay, on the issue of primary liability, we are not agreeing with

the learned counsel for the petitioner and are not granting stay of the

demands raised by virtue of the Assessment Order (s) under the unit area

method which pertains to the period 1.4.2009 onwards.

9. Insofar as the period prior to 01.04.2009 is concerned the counsel are

agreed that there was a stay granted by the learned single Judge by virtue of

the orders dated 09.04.2008 and 06.03.2009 pertaining to vacancy remission

up to the date of completion of construction, in W.P. (C) No. 2592/2008

which was withdrawn with liberty to file a fresh writ petition and it is the

present writ petition which has been filed thereafter. In view of the

foregoing we see no difficulty in continuing the interim orders dated

09.04.2008 and 06.03.2009 till the decision in this writ petition insofar as the

period prior to 01.04.2009 is concerned.

The application stands disposed of.

Dasti.

BADAR DURREZ AHMED, J

SIDDHARTH MRIDUL, J JULY 13, 2012 kb