The Federation Of Hotels & Res vs Mcd
2014 Latest Caselaw 2668 Del

$~41
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
+    W.P.(C) 14853-14855/2004
     THE FEDERATION OF HOTELS & RES             ..... Petitioner
                      Through: Mr. Sanjay Gupta & Ms. Bhavna
                               Dhami, Advocates
                      versus
     MCD                                        ..... Respondent
                      Through: Ms. Madhu Tewatia & Ms. Sidhi
                               Arora, Advocates
     CORAM:
     HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA

%      SUDERSHAN KUMAR MISRA, J. (Oral)

CM APPL. NO. 4149/2013

1. This application has been moved under Section 151 CPC by the South Delhi Municipal Corporation praying that interim stay granted to the petitioner by this Court on 10.09.2004, and made absolute on 05.05.2009, be vacated; and the petitioner be directed to pay tax on the basis of the 'Unit Area Method' of computation of property tax with interest at the rate of 18% per annum on the quantum of tax which has remained unpaid by virtue of the said interim orders.

2. One of the petitioners in this matter is a, "Federation" of Hotels and Restaurants Association of India, and the second petitioner is Asian Hotels Limited who is also a member of the Federation. Admittedly, the Federation's members constitute a group of hotels and restaurants with a rating of 3 to 5 stars and above. In substance, they are aggrieved of the application of a multiplying user factor of 10 and the imposition of a tax rate of 20% by the Corporation under Section 116(E) of the Delhi Municipal Corporation (Amendment) Act, 2003.

3. When this petition was moved in the year 2004, the members of the petitioner Federation were being charged as per the 'Rateable Value' under the pre-amended D.M.C. Act. At that time, the petitioner prayed for the following reliefs before this Court;

"a) To issue an appropriate writ in the nature of certiorari for quashing and setting aside section 116(E) of the Delhi Municipal Corporation (Amendment) Act, 2003 and the Unit System for assessment of property tax enumerated therein

b) issue an appropriate writ in the nature of certiorari for quashing the user multiplier factor of 10 as imposed on the hotels by the Property Tax Guide issued by the MCD for the year 2000 to 2005

c) issue an appropriate writ in the nature of certiorari for quashing the rate of tax fixed at 20% of annual value on 3 star and above hotels;

and..."

4. At the same time, some other petitioners representing schools, hospitals and hotels had also challenged the vires of the said amendments, i.e. Section 116 (E) of the DMC (Amendment) Act, 2003 in another matter, being W.P.(C) 8030/2003. Since all matters impugning the vires of a statute are to be heard by a Division Bench, that matter was duly placed before one by the Registry; obviously, the outcome of that matter would have a direct bearing on all other pending writ petitions which were preferred on similar issues including the present writ petition.

Keeping in mind the fact that other writ petitions challenging the vires of the said amendment had been filed before the Division Bench of this

Court, the petitioner herein moved C.M. Application No. 12278/2004 praying that their aforementioned prayer (a);

"a) To issue an appropriate writ in the nature of certiorari for quashing and setting aside section 116(E) of the Delhi Municipal Corporation (Amendment) Act, 2003 and the Unit System for assessment of property tax enumerated therein."

be dropped from the writ, to avoid duplication of arguments and pleadings, and the possibility of two conflicting judgments, as the other writ petitions with similar issues were pending before this Court.

5. On 10.09.2004, this Court passed an interim order in this matter, allowing the petitioner to continue paying tax as per the 'Rateable Value' given under the pre-amended D.M.C. Act. Thereafter, on 05.05.2009, the aforesaid interim order dated 10.09.2004 was made absolute till the disposal of the writ petition.

6. Pursuant to these orders, as an interim measure, members of the petitioner Federation were permitted to continue depositing tax at the 'Rateable Value', in terms of the pre-amended Act.

7. When the matter was taken up alongwith the entire group on 05.05.2009, statement of the counsel for the parties, which included the petitioner herein, to the effect that the decision on the issues of vires of Section 116(E) of the Delhi Municipal Corporation Act pending decision before the Division Bench would have a bearing on this matter was recorded and, on that statement the matter was adjourned to 10.09.2009 to await the decision of the Division Bench. Further, this Court also noted the consensus amongst parties appearing that this matter is to be treated as the lead matter.

On the same date and, obviously in the light of the Order that had been passed by the Court in the main matter awaiting decision in Division Bench, this Court also disposed off the Application No. 10607/04 directing that the interim order dated 10.09.2004 is made absolute till decision in the writ petition.

8. Thereafter in another matter titled M/s CHL Ltd. and Anr. v. MCD and Anr., WP(C) 17113/04, seeking the same relief was filed by a party who was also a member of the Federation of Hotels and Restaurants Association of India, i.e. the first petitioner in the instant petition. Consequently, that party was also accorded similar treatment, and the benefit of the aforesaid interim order was extended to that matter also.

9. Later, in similar matters filed by some other Hotels, there was a departure from the aforesaid interim order and now interim order came to be issued by this Court on 03.03.2011 in W.P.(C) 1394/2011, titled Eros Resorts & Hotels Ltd. v. MCD on the following terms in;

"Accordingly till the decision of this petition, the petitioners to pay the property tax computed by applying multiplying user factor of four and at 10% of the annual value."

In other words, henceforth, Petitioners, who were similarly situated to the petitioners in this matter, and had also moved this Court citing the interim orders passed in favour of the petitioners in this matter, whereby they were granted interim stay, only to the extent that they would be permitted to pay tax calculated on multiplying user factor 4 and at 10% of the annual value instead of applying user factor of 10 and levying tax at the rate of 20% of the annual value as envisaged under the post-amended Act.

10. Keeping the aforementioned order in mind this Court in another similar matter, namely, M/s Tirupati Infra Projects Pvt. Ltd. v. North Delhi Municipal Corporation & Anr., in W.P.(C) 6654/2013 passed a similar order dated 08.03.2013, directing the petitioner to pay the tax as computed by multiplying user factor of 4, as an interim measure, till the final disposal of the writ petitions pending before the Division Bench of this Court.

11. On 09.01.2014, in light of the aforesaid interim orders passed by this Court on 03.03.2011 in M/s Eros Resorts and Hotels Ltd. v. MCD W.P.(C) 1394/2011, and those passed on 08.11.2013 in M/s Tirupati Infra Projects Pvt. Ltd. v. North Delhi Municipal W.P.(C) 6654/2013, this Court modified the orders passed on 05.05.2009 in M/s CHL Ltd. and Anr. v. M.C.D. and Anr. W.P.(C) 17113/2004, as well as in M/s Eros Resorts and Hotels Ltd. v. MCD W.P.(C) 1394/2011, M/s. Piccadily Hotels (P) Ltd. v. Lt. Governor of Delhi & Anr. W.P.(C) 3431/2012, and in Delhi Voluntary Hospitals Forum v. MCD W.P.(C) 17362/2004, and uniform orders were issued directing that henceforth tax was to be computed on basis of multiplying user factor of 4, till the final disposal of the matter. This was done in view of subsequent events, and with a view to keeping all similarly placed petitioners on the same ground, i.e. they were all directed to pay the amount computed by applying the multiplying user factor of 4, and the rate of tax at 10% of the annual value.

12. The Respondent Corporation has now moved the instant application praying for vacation of the original stay order granted by this Court on 05.05.2009. This application is predicated on the judgment of the Division Bench, which was finally rendered on 23.08.2012 in W.P.(C) 8030/2003, titled Vinod Krishan Kaul v. The L.G. of NCT upon the outcome of which

decisions were to be taken in all similar writ petitions. It is the case of the Respondent Corporation that the aforestated judgment of the Division Bench of this Court squarely applies to the instant petition. And further, as noted above, the Petitioners had themselves also taken the stand that the outcome of the decision of the Division Bench regarding the vires of the amendment in Vinod Krishan Kaul's case (supra) would have a bearing on the matter at hand. Furthermore, in fact, the petitioners have sought repeated adjournments in this matter to await the final decision in Vinod Kishan Kaul's case. Counsel for the respondent contends that in the light of the above, the stay granted by this Court on 05.05.2009 in favour of the petitioner should be vacated, and furthermore, the tax would have to be computed by multiplying user factor of 10 alongwith the tax being calculated at the rate of 20% of the annual value.

13. The petitioners now contend that their case is not covered by the judgment rendered in Vinod Krishan Kaul's case, as the judgment in that case was given with regard to schools, and that the petitioners, who are all members of the Federation, are 3 to 5 star rated hotels.

14. Admittedly, the Unit Area Method for computation of the tax has been upheld by the Division Bench of this Court in Vinod Krishan Kaul's case (supra). The grievance is therefore only limited to the quantum of the applicable user factor being applied to compute the amount of tax payable.

15. At present, in terms of the aforesaid interim orders dated 10.09.2004, some members of the Petitioner Federation continue to pay tax as per the 'Rateable Value' under the pre-amended Act; whereas other 3 to 5 star rated Hotels, which are similarly placed, and aggrieved by the same amendments

under the DMC Act, continue to pay tax by applying the multiplicative factor of four. A situation has thus arisen that, on one hand, the members of the petitioner Federation are paying tax as per the old 'Rateable Value', while on the other hand, Hotels which came into existence after the amendments; and then subsequently became members of the petitioner Federation itself, are paying tax which is computed by applying the user factor of four, despite the fact that in both cases the petitioners have sought identical reliefs. At this point, I may also note that due to the unavailability of the senior counsel in this present matter and the adjournments sought on this ground, this court was obliged to delink this matter from the other batch of writ petitions on the same issue. It was due to this that the petitioners were able to enjoy the benefit of the interim stay granted earlier on 10.09.2004, for so long, whilst interim orders in all the other matters in the batch were duly varied.

16. It may also be noted that an order similar to the one passed on 10.09.2004 in the instant petition was also passed subsequently in M/s CHL Ltd. and Anr. (supra). That order then came to be modified by this Court on 09.01.2014, keeping in mind the order passed on 03.03.2011 in M/s Eros Resorts and Hotels Ltd. (supra) and those passed on 08.03.2013 in M/s Tirupati Infra Projects Pvt. Ltd. (supra). All petitioner Hotels were thus placed on the same platform in the matter of interim protection; and were directed to pay the tax on the basis of the multipliying user factor of four.

17. Keeping in mind all of the above, and also the judgment rendered in Vinod Krishan Kaul's case, I am satisfied that the interim orders passed on 10.09.2004 in the case at hand must be revisited. It is therefore directed that the petitioners would now pay tax as computed by multiplying user factor of 4, and the rate of tax at 10% of the annual value, including all arrears, till the

final adjudication of the matter. Obviously, the Corporation would adjust all such amounts already paid by the petitioners as tax, with the amounts which are now due to be payable.

18. The application stands disposed off.

W.P.(C) 14853-14855/2004

19. List on 18th November, 2014.

SUDERSHAN KUMAR MISRA, J.

MAY 23, 2014 rd