Sanchar Vihar Cooperative Group ... vs M.C.D
2016 Latest Caselaw 6186 Del

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*        IN THE HIGH COURT OF DELHI AT NEW DELHI
%                          Judgment reserved on :08.09.2016
                          Judgment delivered on :22.09.2016
+        W.P.(C) 3897/2006
         SANCHAR VIHAR COOPERATIVE GROUP HOUSING SOCIETY
                                                             ..... Petitioner
                          Through    Mr.Bharat Bhushan Jain, Adv

                            versus

         M.C.D
                                                             ..... Respondent
                            Through      Ms.Amita Gupta, Advocate for MCD.

CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR

INDERMEET KAUR, J.

1 The petitioner before this Court has impugned the assessment order

dated 05.12.2003; submission is that this assessment order was predicated on

a notice dated 01.04.2002 issued under Section 126 of the Delhi Municipal

Corporation Act, 1975 (hereinafter referred to as the 'said Act'); this notice

was never received by the petitioner; the subsequent assessment order passed

ex-parte without notice to the petitioner on 05.12.2003 assessing his property

i.e. (plot No. 5, Sector-4, Dwarka, New Delhi) is bad and thus liable to be set

aside.

2 The averments in the writ petition disclose that the petitioner (Sanchar

Vihar Cooperative Group Housing Society Ltd., plot No.5, Sector-4,

Dwarka) is a cooperative society registered under the Delhi Cooperative

Societies Act. Property tax can be levied by the respondent Corporation

(Municipal Corporation of Delhi) on land and building as the case may be.

The fixation of the rateable value of the property has to be done in terms of

Section 116 of the said Act. As per Section 120 of the said act, property tax

is leviable either upon the lessor or superior lessor or the person to whom the

right to let the property vests. Submission is that the perusal of this section

shows that the lessor of the land i.e. the President of India is liable for

payment of property tax. Attention has been drawn to a lease deed executed

between the petitioner and the President of India dated 05.10.2001. It is

pointed out that this is admittedly a registered document executed by the

President of India for a period of 99 years in favour of the petitioner and in

terms of the various clauses in this lease deed which includes the covenant

that the lessee (petitioner) will not be entitled to transfer directly or

indirectly, assign or otherwise part with his right in respect of the plot or

building meaning thereby that the petitioner never had any right or authority

to transfer this land to any other person; the ownership rights vested

completely in the superior lessor (President of India) and as such the liability

to pay the property tax was only qua the superior lessor and not the lessee i.e.

the petitioner. Additional submission being that in the instant case the

building plan of the aforenoted land was sanctioned by the DDA on

04.09.2002; construction had commenced on 06.09.2002 but occupancy

certificate was applied for only on 02.09.2005; the same had not been

granted till the filing of the writ petition. Thus it was only a 'vacant land'

and therefore the property had to be assessed as a vacant land which

assessment should have been done by the DDA and not by the Corporation.

Learned counsel for the petitioner has placed reliance upon a judgment of the

Bench of this Court reported as 176 (2011) DLT 192 South Delhi Maternity

& Nursing Home (P) Ltd. Vs. MCD. This is to support his submission that

where the Occupancy Certificate has not been granted and even if the delay

in obtaining the Occupancy Certificate is on the owner, as long as the owner

has not occupied the property; the property cannot be made liable for

property tax. Learned counsel for the petitioner additionally points out that

the judgment of a Full Bench of this Court reported as 100 (2002) Delhi Law

Times 66 (FB) Municipal Corporation of Delhi Vs. Shashank Steel

Industries (P) Ltd. is fully applicable to this case and for this proposition, he

has placed reliance upon various paragraphs of the aforenoted judgment.

Moreover, notice under Section 126 of the said Act was also not received by

the petitioner. The attachment order is bad for all the aforenoted reasons.

Written submissions filed by the petitioner are also bordered on these

averments.

3 A counter affidavit has been filed by the respondent. It is pointed out

that the assessment order dated 05.12.2003 has attained a finality; the writ

petition has been filed on 10.03.2006 which is much beyond the period of

limitation; it cannot be challenged. The petitioner had an alternate remedy of

filing of statutory appeal; a writ is not maintainable. On this ground alone,

the petition is liable to be dismissed. The second submission which is also

borne out from the stand in the counter affidavit is that the provisions of

Section 120 of the said Act are inapplicable. Attention has been drawn to the

lease deed executed between the parties. It is pointed out that in terms of

clause 9 of the said lease deed the liability to pay rates and tax was upon the

petitioner. It is stated that the assessment has been made in terms of the

provisions of the Act; notice was duly served upon the petitioner; the

petitioner is not entitled to any relief. Learned counsel for the respondent

further submits that the aforenoted judgment of Shashank Steel Industries

(supra) is not applicable; that was a case where there was an inter-se dispute

between the lessee and the sub-lessee; the question which had arisen before

that Bench was as to whether lessee or the sub-lessee would be liable to pay

the tax; the facts of the said case are distinct from the present case.

4       Arguments have been heard. Record has been perused.

5       Admittedly the assessment order dated 05.12.2003 has attained a

finality. It had not been challenged as per law before the Appellate Body

under the provisions of the said Act in which an appeal has to be filed within

a statutory period of 30 days. This is an admitted position. However this

Court notes that this writ petition is pending before this Court since the year

2006 and at this stage relegating the parties back to the appellate forum may

not be in the interest of the either party. This Court thus intends to dispose

off this petition on its merits.

6 The facts of the instant case as emanated from the writ petition

disclose that this lease for the aforenoted property had been entered into

between the petitioner and the President of India on 05.10.2001. Para 9 of

the lease deed is relevant. It reads herein as under:-

"The Lessee shall from time to time and at all times pay and discharge all rates, taxes, charges and assessments of every description which are now or may at any time hereafter during the continuance of this lease be assessed, charged or imposed upon the plot hereby demised or on any

buildings to be erected thereupon or on the landlord or tenant in respect thereof."

7 This Clause in the lease deed clearly and unambiguously states that

the lessee shall from time to time and at all times pay all taxes, charges and

assessments of every description which are made in the present or in the

future till the continuation of this lease be assessed, charged or imposed upon

the plot or any building to be erected thereupon. The language of this Clause

stipulates that the liability to pay tax will be upon the lessee which in this

case is the petitioner.

8 Section 120 of the said Act reads herein as under:-

"Incidence of property taxes-(1) The property taxes shall be primarily leviable as follows:--

(a) if the land or building is let, upon the lessor;

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

(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 instalment thereof payable during the period of such ownership shall be joint and several."

9 Section 120 (1) (c) presupposes that property tax on a land or building

is leviable upon the person in whom the right to let the same vests. Sub

Clause (2) stipulates that where the term of the lease exceeds one year and

the tenant has built upon on this land, the property tax assessed shall

primarily be leviable upon the tenant; whether the land or building is in

occupation of the tenant or the sub-tenant.

10 Section 120 (2) thus makes it abundantly clear that where the lease

exceeds one year and tenant has built upon the land the liability will be that

of the lessee. The lease in the instant case is admittedly for 99 years. The

building plan for this property was sanctioned on 06.09.2002. Construction

was almost complete. This has been averred in the writ petition itself. The

petitioner however for reasons best known to them moved a formal

application for issuance of the Occupancy Certificate only on 01.09.2005.

The building was not occupied is the vehement submission of the petitioner.

11 The application seeking issuance of an Occupancy Certificate filed by

the petitioner in September, 2005 was only a formality. The petitioner

deliberately waited for more than three years to get the Occupancy

Certificate issued. This is clear from the fact averred by the petitioner

himself wherein he has stated that after the building plan was sanctioned on

06.09.2002 the building was almost completed at that point of time; that was

in the year 2002 itself. Fault on the part of the petitioner in not applying for

the Occupancy Certificate for the next three years cannot accrue to his

benefit; his submission that this land continued to remain vacant land in this

intervening period is a submission noted to be rejected; admittedly even as

per the case of the petitioners the construction of the entire building had been

completed in the year 2002 itself. The building having been almost

completed in the year 2002 the obvious presumption would be otherwise;

meaning thereby that the property was in occupation of the owner / allottee;

having remained constructed three years prior to the application seeking

issuance of the occupancy certificate. Petitioner has not been able to dispel

this presumption.

12 The judgment of South Delhi Maternity & Nursing Home (P) Ltd Vs.

MCD & Others would not apply to the facts of the instant case. In that case

there was a clear finding returned that the building remained unoccupied and

as such the liability to pay the property tax did not arise. This has been

considered by the Single Judge in para 7 of the said judgment wherein a

specific query had been put on the status of the property and it was informed

that the property was unoccupied. The corporation had acceded to this stand.

Not so in the instant case. In this case the categorical stand of the

Department / Corporation is that the property was occupied and thus liable to

tax.

13 In a judgment of a Bench of this Court in W.P. (C) No.633/1980 M/s

Nehru Place Hotels Ltd. And Anr. Vs. M.C. D. and Anr. it was held that once

the lessee has taken possession of the property and he has entered into a

lease deed with the covenant to bear the burden of tax, he cannot deny the

liability to pay the taxes which was in accordance with the covenant of the

lease. The liability of the person to pay the tax is clear.

14 Petitioner thus cannot shy away from its liability and deprive the

Municipal Corporation of its legal dues. Section 120 (2) is attracted. The

petitioner being a lessee of more than one year and having a built-up

structure, the liability would be that of the petitioner who is the "tenant"

within the meaning of the afore noted provision.

15 The judgment of the Full Bench in Shashank Steel Industries (supra) is

inapplicable to the facts of the instant case. As rightly pointed out by the

learned counsel for the respondent this was a case where the question was as

to whether the original lessee or the sub-lessee was entitled to pay the tax.

The Court after noting the contentions and counter contentions of the

respective parties had arrived at a conclusion that the liability would be upon

the original lessee. In that case, the building plans had also not been

sanctioned.

16 The judgment of a Bench of this Court in 1987 RLR 144 Municipal

Corporation Vs. Peerless Gen. Fin. Cop. is also relevant and an extract of

the same reads herein as under:-

"9. It is not as if the respondent would at no point of time become

liable to pay the tax on the said land. The term of lease in favour of the

respondent is for a period in excess of one year. As and when the conditions

contained in Section 120(2) of the Act are satisfied, then the liability to pay

the property tax would be that of the respondent not of the Government.

Section 120(2) of the Act, inter alia, provides for the payment of property tax

in respect of the land where the tenant has built a building. A reasonable

construction of the said provision would be that when the building plans are

passed and the lessor of the tenant starts construction thereon, then the

liability to pay the tax would arise on that date. It is to be noted that the

Municipal fees and taxes are levied primarily in order to augment the

resources of the Corporation and other local bodies who are required to

provide Municipal services. Therefore, it is in consonance with that policy

that, as and when the construction of a building on land commences, the

liability to pay the property tax shifts to the tenant who would thereafter be

enjoying the Municipal services which are offered by the Corporation".

17. The submission of the petitioner that notice under section 126 of the

DMC Act was not served upon the petitioner is also negatived. This is clear

from the fact that the notice was admittedly addressed to the petitioner at its

correct address. The assessment order dated 05.12.2003 also records this

address (i.e. Plot No. 15, Sector-4, Dwarka, New Delhi). The petitioner had

received the attachment order dated 17.02.2006 at the same address.

18. The assessment order dated 05.12.2003 further records that apart from

the notice under section 126 of the DMC Act (dated 26.03.2001), call letters

were also sent to the assessee for a personal hearing on 10.03.2003 and

28.10.2003 but the petitioner chose not to appear. Petitioner conveniently

denied the receipt of all these communications but chose to state that the

attachment order dated 17.02.2006 was served upon him. The address in all

these communications was the same. Further averments in the writ petition

disclose that the call letter dated 04.07.2003 alleged to have been served

upon the petitioner on 07.07.2003 bore a signature but the signature appeared

to be illegible. Petitioner has also admitted this call letter dated 04.07.2003

had been served upon a person at the site but that signature is illegible. The

notice under section 126 of the DMC Act was also pasted at the site. This

has been clearly stated in the counter affidavit. No rejoinder has also been

filed on this score. The counter affidavit further states that second call letter

dated 13.10.2003 has also been served upon the petitioner through postal

certificate. The second call letter has been sent by UPC. Presumption under

section 114(f) of the Indian Evidence Act is also attracted; presumption

being that this call letter was received by the petitioner. It was pursuant to

this communication that the assessment order dated 05.12.2003 had been

passed. This order was never challenged. It is also surprising that the earlier

communications not having been received at the same address yet the

attachment order dated 17.02.2006 was received. This was again at the same

address. It is also not the case of the petitioner that his address has changed.

19. This convenient approach adopted by the petitioner of accepting one

communication and not accepting the other cannot accrue to benefit him.

20. The petitioner has failed to dislodge the presumption that these call

letters dated 04.07.2003 and 13.10.2003 or the notice under section 126 of

the DMC Act dated 26.03.2003 were not received by them. The call letters

dated 04.07.2003 and 13.10.2003 had been sent by two modes of service i.e.

by hand and also under postal certificate. This has been clearly averred in the

writ petition. At the cost of repetition there is no rejoinder on this score. The

notice was also pasted at the site. The assessment order has also not been

challenged. It is obvious that the attachment order being a coercive process

was immediately reacted to and not the other communications.

21. This Court is of the view that in this background the petitioner does

not deserve any relief. Petition is without any merit. Dismissed.

INDERMEET KAUR, J SEPTEMBER 22nd, 2016/A