MANU/DE/8268/2006

Equivalent/Neutral Citation: 127(2006)DLT679

IN THE HIGH COURT OF DELHI

W.P. (C) Nos. 2145/2000, 7399/2001, 9641/2003, 9091, 7466/2004 and 22530/2005
Decided On: 17.01.2006
K.K. Enterprises and Ors. Vs. Municipal Corporation of Delhi
Hon'ble Judges/Coram:
Vikramajit Sen, J.
Counsels:
For Appellant/Petitioner/plaintiff: B.B. Jain and Vikram Nandarajog, Advs. in W.P. (C)
Nos. 2145/2000, 7399/2001, 9091/2004 and 22530/200
For Respondents/Defendant: Geeta Mehrotra, Adv. in W.P. (C) No. 2145/2000,
7399/2001, 9091/2004 and 22530/2005 and B.B. Jain and Vikram Nandarajog, Advs. in
W.P. (C) No. 9641/2003 and 7466/2004
Case Note:
Municipal Tax - Liability to Pay Rateable Value - Present petitions filed
against order whereby respondent imposed rateable value (RV) per annum
with effect from 1.4.1995 - Held, lesser is DDA - Instead of granting a lease of
ninety-nine years and thereby retaining luxury of theoretical or notional
ownership of land - Rights of lessee are virtually same as an absolute owner
in fee simple, and therefore property tax is livable on tenant or a sub-tenant
of such tenant - If land is capable of being built upon it is liable to property
tax, which is payable by lesser till such time as lessee builds upon it -
Construction was completed on relevant date and DDA granted Occupancy
Certificate on relevant date - Therefore with effect from relevant date liability
to pay tax rested entirely on petitioner - If any liability arose prior to
allotment it would be recoverable from DDA and thenceforward from
petitioner - Ex parte Assessment Order was passed on relevant date, therefore
property tax could have been levied only with effect by which time building
was fit for occupancy - It is not clear from records that assessment
proceedings had been initiated predicated on completion of construction of
premises - Therefore petitioner would pay property tax if calculated on basis
of vacant land, with alacrity - Second types of petition Additional District
Judge had quashed fixation of RV on strength of sale consideration alone,
without ascertaining estimated capital value of land - It is not clear from
records that construction of a building on plot has been completed, it appears
not to be so - Therefore second types of petition allowed with observation
that liability of petitioner for payment of property tax shall commence only
from year following completion of building on subject plot - Therefore
impugned Judgment is modified to this extent - Therefore RV with effect from
relevant date has correctly been set aside and ex parte nature of order RV
appears to have been fixed on auction price allowed to extent that property
tax may be levied with effect from relevant date
JUDGMENT

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Vikramajit Sen, J.
1 . In WP(C) No. 2145/2000 the Petitioner's Bid for Plot No. 7, LSC, Pocket H and J,
Sarita Vihar, New Delhi in a public auction held on 27.11.1995 had been accepted by
the DDA and a part payment was made immediately. Possession of the plot was
eventually handed over by the DDA to the Petitioner on 2.5.1996 and the Perpetual
Lease Deed for a tenure of 99 years was executed on 6.5.1996; the Building Plans
which were submitted on 27.5.1996 were sanctioned on 3.6.1996. However, on
18.3.1996 the Petitioner had already received a Notice under Section 126(4) of the
Delhi Municipal Corporation Act, 1957 (hereinafter referred to as 'the Act') from the
MCD proposing a Rateable Value (RV) of Rs.7,50,000/- per annum with effect from
1.4.1995 which is the focal point of this litigation. It is stated on behalf of the
Respondent that the Petitioner did not avail of an opportunity of being heard and hence
the RV was fixed at Rs.7,50,000/- per annum with effect from 1.4.1995 in terms of the
impugned ex parte Assessment Order dated 16.3.1999. The Petitioners have denied the
receipt of any communication other than the impugned Notice dated 18.3.1996.
INTERPLAY BETWEEN SECTIONS 124 AND 126 OF THE DELHI MUNICIPAL
CORPORATION ACT, 1957
2 . The first question which arises is whether the Notice dated 18.3.1996 is legally
efficacious for the Assessment Year (AY) 1995-96 and also for the subsequent years.
Mr. Bharat Bhushan Jain, learned counsel for the Petitioner, contends that no liability
under Section 116(2) of the Act had arisen prior to the AY 1996-97 and hence the
impugned Notice was non est; being so, it could not have any effect even for the next
succeeding year.
3. Section 124 of the Act empowers the Corporation to cause an Assessment List of all
lands and buildings in Delhi to be prepared; and in all cases in which any land or
building is for the first time assessed, or the RV of any land or building is increased,
written notice thereof must be given to the owner or to any lessee or occupier of the
subject land or building. Sub-Sections (4) and (5) of Section 124 envisages the filing of
Objections, and holding of an inquiry or investigation thereto in which the Objector
shall be allowed an opportunity of being heard. Section 125 clothes finality to an
Assessment List finalised under the preceding Section for the purpose of assessing any
tax and of the RV of all lands and buildings to which the Assessment List relates subject
to any alterations that may thereafter be carried out. Presumably, these 'alterations' are
synonymous to 'amendments' that may be made in the Assessment List under Section
126 which inter alias include insertion therein of any land or building previously
omitted, or increasing or reducing for adequate reasons, the amount of any RV and/or
the assessment thereupon; provided that no person shall by reason of any such
amendment become liable to pay any tax or increase of tax in respect of any period
prior to the commencement of the year in which the Notice under Section 124(2) is
given. The words or the rateable value of any land or building is increased has been
substituted in Section 124(3) in place of or the assessment is increased by amending
Act 42 of 1961. This seems to be irrelevant as it is precisely this exercise which is
already contemplated in Section 126(1)(d). The said surplusage and overlapping has
resulted in judicial pronouncements to the effect that there is no difference between
notices issued under Section 124 and Section 126. The prerequisites for carrying out
amendments under Section 126 is the issuance of a notice of not less than one month
and the consideration and disposal of any Objections that may have been preferred in
this regard. It will be recalled that the impugned Notice has been issued under Section
126 and not under Section 124, even though avowedly and undisputedly the land in
question was to be assessed for the first time as envisaged under Section 124(3), in

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contradistinction to any amendment that was proposed to be carried out under Section
126. This distinction cannot be lost sight of even though the procedure and
consequence of proceedings under the two provisions may lead to the same result viz.
issuance of a notice and disposal of Objections filed in response to such notice,
followed by an altered (usually increased) levy of property taxes.
4. For facility of reference Sections 116(2), 124 and 126 are reproduced below-
1 1 6 . Determination of rateable value of lands and buildings assessable to
property taxes-
(1) 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 percent of estimated capital
value of such land. 124. Assessment list (1) Save as otherwise
provided in this Act, the corporation shall cause an assessment list of
all lands and buildings in Delhi to be prepared in such form and
manner and containing such particulars with respect to each land and
building as may be prescribed by bye-laws.
(2) When the assessment list has been prepared the Commissioner
shall give public notice thereof and of the place where the list or a copy
thereof may be inspected, and every person claiming to be the owner,
lessee or occupier of any land or building included in the list and any
authorised agent of such person, shall be at liberty to inspect the list
and to take extracts there from free of charge.
(3) The Commissioner shall, at the same time, give public notice of a
date, not less than one month thereafter, when he will proceed to
consider the rateable values of lands and buildings entered in the
assessment list; and in all cases in which any land or buildings is for
the first time assessed or the rateable value of any land or building is
increased, he shall also give written notice thereof to the owner or to
any lessee or occupier of the land or building.
(4) Any objection to a rateable value or any other matter as entered in
the assessment list shall be made in writing to the Commissioner
before the date fixed in the notice and shall state in what respect the
rateable value, or other matter is disputed, and all objections so made
shall be recorded in a register to be kept for the purpose.
(5) The objections shall be inquired into and investigated, and the
persons making them shall be allowed an opportunity of being heard
either in person or by authorised agent, by the commissioner or by
officer of the Corporation authorised in this behalf by the
Commissioner.
(6) When all objections have been disposed of, and the revision of the
rateable value has been completed, the assessment list shall be
authenticated by the signature of the Commissioner or, as the case may
be, the officer authorised by him in this behalf, who shall certify that
except in the cases, if any, in which amendments have been made as
shown therein no valid objection has been made to the rateable values
or any other matters entered in the said.

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 (7) The assessment list so authenticated shall be deposited in the office
of the Corporation and shall be open, free of charge during office hours
to all owners, lessees and occupiers of lands and buildings comprised
therein or the authorised agents of such persons, and a public notice
that it is so open shall forthwith be published. 126. Amendment of
assessment list
(1) The Commissioner may, at any time, amend the assessment list -
(a) by inserting therein the name of any person whose name ought to
be inserted; or
(b) by inserting therein any land or building previously omitted; or
(c) by striking out the name of any person not liable for the payment of
property taxes; or
(d) by increasing or reducing for adequate reasons the amount of any
rateable value and of the assessment thereupon; or
(e) by making or cancelling any entry exempting any land or building
from liability to any property tax; or
(f) by altering the assessment on the land or building which has been
erroneously valued or assessed through fraud, mistake or accident; or
(g) by inserting or altering an entry in respect of any building, re-
erected, altered or added to, after the preparation of the assessment
list; Provided that no person shall by reason of any such amendment
become liable to pay any tax or increase of tax in respect of any period
prior to the commencement of the year in which the notice under Sub-
section (2) is given.
(2) Before making an amendment under Sub-section (1) the Commissioner
shall give to any person affected by the amendment, notice of not less than one
month that he proposes to make the amendment and consider any objections
which may be made by such person.
(3) Notwithstanding anything contained in the proviso to Sub-section (1) and
Sub-section (2), before making any amendment to the assessment list for the
years commencing on the 1st day of April, 1988, the 1st day of April 1989 and
the 1st day of April 1990, under Sub-section (1), the Commissioner shall give
to any person affected by the amendment, notice of not less than one month at
any time before the 1st day of April, 1992 that he proposes to make the
amendment and consider any objection which may be made by such person.
(4) No amendment under Sub-section (1) shall be made in the assessment list
in relation to--
(a) Any year prior to the year commencing on the 1st day of April,
1988, after the 31st day of March, 1991;
(b) the year commencing on the 1st day of April, 1988, or any other
year thereafter, after the expiry of three years from the end of the year
in which the notice is given under Sub-section (2) or Sub-section (3),

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 as the case may be: Provided that nothing contained in this sub-section
shall apply to a case where the Commissioner has to amend the
Assessment list in consequence of or to give effect to any direction or
order of any court. Explanation In computing the period referred to in
clause (a) or clause (b), any period or periods during which the
proceedings for the assessment were held up on account of any stay or
injunction by the order of any court, or the period of any delay
attributable to the person to whom the notice has been given under
Sub-section (2) or Sub-section (3), as the case may be, shall be
excluded.
5. One of the important distinctions in the latter two statutory provisions is that
by virtue of Sub-section (4) of Section 126 an amendment cannot be carried
out after the expiry of three years from the end of the year in which the notice
is given. Whereas under Section 124 tax can be demanded only for the period
next pursuing the year in which the Assessment has been authenticated or
finalised. The Division Bench has in Tin Can Manufacturing Company v.
Municipal Corporation 1980 RLR 643, recorded the following elucidation of the
statute -
5. On any view of the matter the objections of the appellant ought to have been decided
before the list was authenticated by the Commissioner under Sub-section (6). If the
objections are decided after the list has been authenticated, as has happened in this
case, the assessor and collector has no power to ask the appellant to pay the tax on the
revised valuation. This is the scheme of s.124. The authentication of the list is a
decisive consideration in this case. The Property Tax Bye Laws, 1959 provide in Rule 3:
Save as otherwise provided in the Act property tax shall be payable in respect of each
year on the date on which the assessment list is authenticated under sub section (6) of
section 124. It is manifestly evident that even before the above pronouncement this was
the understanding of the Corporation also, as from the year 1959-60 up to 1991-92 the
Assessment Lists have been authenticated after deciding the Objections, within the
same year as per the following Table to be found in NABHI's Guide to House Tax in
Delhi 1997 page I.154. Year Date of Publication Last Date for Receipt of Objections
Dates of Authentication 1959-60 5.6.1959 10.7.1959 15.12.1959 1960-61 21.3.1960
29.4.1960 14.10.1960 1961-62 17.4.1961 31.5.1961 17.8.1961 1962-63 26.2.1962
7.4.1962 7.7.1962 1963-64 1.6.1963 10.7.1963 6.12.1963 1964-65 20.12.1963
31.1.1964 17.8.1964 1965-66 29.12.1964 5.2.1965 27.5.1965 1966-67 25.2.1966
4.4.1966 26.9.1966 1967-68 29.10.1966 10.12.1966 11.4.1967 1968-69 20.10.1967
30.11.1967 15.4.1968 1969-70 25.10.1968 7.12.1968 28.4.1969 1970-71 24.10.1969
8.12.1969 10.4.1970 1971-72 28.10.1970 10.12.1970 21.4.1971 1972-73 10.11.1971
20.12.1971 24.4.1972 1973-74 1.11.1972 19.12.1972 21.4.1973 1974-75 1.11.1973
19.12.1973 27.4.1974 1975-76 1.11.1974 19.12.1974 22.4.1975 1976-77 15.11.1975
31.12.1975 17.4.1976 1977-78 15.11.1976 31.12.1976 21.4.1977 1978-79 18.11.1977
31.12.1977 8.5.1978 1979-80 18.11.1978 31.12.1978 5.5.1979 1980-81 17.11.1979
31.12.1979 9.7.1980 1981-82 17.11.1980 31.12.1980 7.7.1981 1982-83 25.11.1981
31.12.1981 30.6.1982 1983-84 9.8.1982 20.9.1982 16.5.1983 1984-85 22.10.1983
30.11.1983 5.7.1984 1985-86 1.12.1984 5.1.1985 27.7.1985 1986-87 29.11.1985
3.1.1986 16.6.1986 1987-88 2.2.1987 10.3.1987 8.7.1987 1988-89 2.2.1988
10.3.1988 8.7.1988 1989-90 9.1.1989 15.2.1989 13.6.1989 1990-91 30.3.1990
16.4.1990 9.7.1990 1991-92 3.4.1991 13.5.1991 12.8.1991 In the present case the
Assessment was finalised on 16.3.1999, which is within the period of three years of the
issuance of the Notice dated 18.3.1996 as envisaged by Section 126. If Section 124 is
to be applied, and the finalisation conforms with all legal provisions, tax could be levied

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and imposed with effect from 1.4.2000. In both Sections no liability can be created in
respect of any year previous to the one in which the notice has been issued.
6. The case of Shyam Kishore v. Municipal Corporation of Delhi MANU/SC/0440/1992 :
AIR1992SC2279 has singularly remarkable jural annals of its own. The focal question to
be set at rest in that Appeal was the split decision of the Full Bench of this Court on the
virus of the appeal fascicules comprising Sections 169 and 170 which mandated the
predeposit of the impugned Tax. Over a decade earlier in Lok Kalyan Samiti, New Delhi
v. Municipal Corporation of Delhi MANU/DE/0160/1978 : AIR1978Delhi189 , the issue
before the Full Bench specifically revolved around Sections 126 and 127 of the Act; and
the Judgment was authored by Yogeshwar Dayal, J., as His Lordship then was It was
laid down that it is unnecessary that proceedings in pursuance of a Section 126 notice
for increasing the rateable value and of assessment thereupon should be completed
within the year in which that notice had been given. It was further held that the RV for a
previous year can be adopted without issuing any further notices. However, when the
matter concerning the virus of Sections 169 and 170 came before the Supreme Court in
Shyam Kishore on 3.9.1992 Yogeshwar Dayal, J., now speaking for the Hon'ble
Supreme Court, repeated his own views on Section 127 already expressed in Lok Kalyan
which thereupon indirectly attained finality. The Lok Kalyan Appeal was later disposed
of by the Hon'ble Supreme Court on September 24, 1992 on the foundation of Shyam
Kishore, although the issues were decidedly different. Paradoxically, the author of the
assailed Full Bench decision in Lok Kalyan and the Appeal in Shyam Kishore was the
same Learned Judge. Be that as it may the following paragraph from Shyam Kishore,
inter alia, enunciates that notices under Section 126 need not be repeatedly issued year
after year. In my view, by extrapolation, this applies a fortiori to Section 124. All that
may happen, in the context of Section 124, is that if the Assessment List is not finalised
in the year in which the notice has been issued, the liability of payment of Tax for that
year stands extinguished. The distinction between determination of the RV and the levy
of tax predicated on it, should not become obscure or illusory. Computation of the RV is
the precursor of exigibility to property tax. What do we understand when it is said that
the Commissioner may adopt the rateable values contained in the list for any year for
the year following This really refers to adopting the rateable values given in the
previous year in respect of land or building. Once a notice under Section 126 proposing
an increase has already been given in respect of the land or building by virtue of bye-
law No. 9, the assessment list in the year in which notice is given automatically gets
amended and under Section 127 it is that rateable value which is adopted for the
following year. When the proceedings under Section 126(2) get finally determined, the
assessment list gets amended with effect from the date as found in the assessment
order and since the adoption of rateable value for any year was of the previous year in
which the notice was given, as soon as, the assessment order for the previous year gets
finalised, the demand is raised for the year in which the rateable value of the previous
year was adopted for any year, on the basis of the finalisation of the assessment of the
previous year....The proviso to Section 156(1) contemplates that even at the stage of
recovery by distress/attachment any remission of the liability in appeal should be given
effect to automatically. Thus, if the assessment list is adopted in subsequent years, and
there is modification in appeal of such an assessment list, the relief automatically has to
be given even in proceedings for recovery by distress/attachment in respect of tax
liability of the later years as well. As we have noticed earlier, after the assessment list is
amended finally in view of notice under Section 126 the rateable value is automatically
determined for the year in which the notice was given and since the provisional
amendment in the assessment list has been adopted for the later years till the
assessment is finalised, on the finalisation of the list the assessment lists which were
adopted for the subsequent years would also get amended. Thus where the provisional

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assessment is finalised it will be legitimate for the authorities to make the demand on
the basis of the list so finalised. It would also be legitimate for the authorities to raise
demand for a subsequent year where the provisional list had been adopted for the later
years. The purpose of the proviso to Section 156(1) is that where liability in respect of
an assessment order has been finalised and it is disputed in appeal only for the year in
which it was finalised the benefit as a result of appeal, if any, is given not merely for
the year in question but also for the years in which the assessment list was adopted.
The proviso contemplates that without any appeal for the later years the Commissioner
will be bound to give the remission granted in appeal for the year for which the
assessment list was amended and adopted for the later years.
7 . This is also the manner in which two learned Single Judge Benches of this Court
understood these provisions of law, viz. Santosh Chandhiok v. Municipal Corporation
1972 RLR 98 and Ansal Hotels Limited v. Municipal Corporation of Delhi
MANU/DE/0285/2003 : 104(2003)DLT142 ; the latter decision follows the former. It
needs to be clarified that B.C. Misra, J. had pointedly opined that a general assessment
list is to be prepared and finalised by the Corporation under Section 124 before the
beginning of the financial year for which it has to become effective and after its coming
into operation, if any property is erected or completed and is sought to be assessed
even for the first time, then notice will have to be issued under Section 126 of the Act
and the assessment will be operative from the beginning of the current financial year or
the completion of the building, whichever is earlier . The Learned Judge did not even
imply that the words and in all cases in which any land or building is for the first time
assessed occurring in Section 124(3) are otiose or a mere surplusage, since the
precondition for resorting to Section 126 is the finalisation of the list under Section
124. The RV of any property is not immutable. In a particular period it may be
determined only on the capital cost of the land. As and when construction is carried out,
the assessment already authenticated and thus in existence would need to be amended.
The RV may yet again need to be amended if further construction is carried out, or
lavish renovations are undertaken thereby resulting in an increase in the capital value of
the building. However, it would not be incongruent to contend that resort can be had to
Section 126 even in the event of the 'first assessment' of a building in respect of which
RV has been previously determined, since this would constitute adequate reason for
increasing the RV, as envisaged in Sub-section (d) thereof. The oft-quoted decision of
Santosh is restricted to only one paragraph in the Rajdhani Law Reports. I have,
Therefore, called for the original records. What had transpired in that case was that a
piece of land had already been assessed to property tax. Thereafter, a new building had
been erected on the said land during the Financial Year 1962-63. It was in those
circumstances that a Notice under Section 126 of the Act had been issued, indicating
that the then existing RV of Rs.1450/- was proposed to be increased to Rs.21600/-.
This changes the entire complexion of the Report, in that the learned Judge did not
intend to make Section 126 applicable even for the initial 'first assessment'. The brief
Order reported as Aggarwal Juneja Associates v. MCD 89 (2001) DLT 623, does not
further the argument of Mr. Jain. To summarise, the initial or first assessment must be
commenced and completed under Section 124. Thereafter, even if a fresh building is to
be assessed for the first, either Section 124 or Section 126 may be resorted to; in my
opinion the earlier Section has most significance. LEGAL STATUS OF THE IMPUGNED
NOTICE
8 . The obvious question that next arises is whether the subject Notice under Section
126 is devoid of legal significance and efficacy. One must always be mindful of the
salutary legal principle that where a statute requires an action to be taken in a particular
manner, it should be so done. It is well settled that a party cannot be permitted to

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travel beyond the stand adopted and expressed by it in the impugned decision. If
authority is required for this proposition it can be found in the celebrated decision on
Mohinder Singh Gill v. The Chief Election Commissioner, New Delhi
MANU/SC/0209/1977 : [1978]2SCR272 , paragraph 8 of which reads as follows:
8. The second equally relevant matter is that when a statutory functionary
makes an order based on certain grounds, its validity must be judged by the
reasons so mentioned and cannot be supplemented by fresh reasons in the
shape of affidavit or otherwise. Otherwise, an order bad in the beginning may,
by the time it comes to court on account of a challenge, get validated by
additional grounds later brought out. We may here draw attention to the
observations of Bose J. in Gordhandas Bhanji MANU/SC/0002/1951 :
[1952]1SCR135 : Public orders publicly made, in exercise of a statutory
authority cannot be construed in the light of Explanations subsequently given
by the officer making the order of what he meant, or of what was in his mind,
or what he intended to do. Public orders made by public authorities are meant
to have public effect and are intended to affect the acting and conduct of those
to whom they are addressed and must be construed objectively with reference
to the language used in the order itself . Orders are not like old wine becoming
better as they grow older.
In similar vein, in Babu Verghese v. Bar Council of Kerala MANU/SC/0168/1999 :
[1999]1SCR1121 , the Apex Court was called upon to consider a case under the
Advocates Act. While doing so it applied the same principles earlier enunciated in Taylor
v. Taylor (1875) 1 Ch D 426 and in Nazir Ahmad v. King Emperer MANU/PR/0020/1936.
The Apex Court observed as follows: It is the basic principles of law long settled that if
the manner of doing a particular act is prescribed under any statute, the act must be
done in that manner or not at all. The origin of this rule traceable to the decision in
Taylor v. Taylor which was followed by Lord Roche in Nazir Ahmad v. King Emperor.
9 . Therefore, since the Notice has invoked Section 126, should the Court not strike it
down completely if it favors the view that it is Section 124 which is attracted. It is
beyond the pale of debate that the process which had been set in motion by the
issuance of the notice was with the objective of fixing the RV of the subject property. It,
Therefore, ought to have been issued under Section 124 of the Act and not under
Section 126 of the Act. Had the RV for the land already been fixed, then both the
Sections could have been resorted to, since even the first determination of the RV in
respect of a newly constructed building would partake of the character of an amendment
to the Assessment List. A Notice under Section 124 or 126 indubitably informs the
prospective assessed of the intention of the Corporation to assess its property to tax.
Erroneous mention of Section 126 ought not to reduce the Notice to a cipher or nullity.
It has already been analysed that the procedure to be adhered to in both Sections is
similar. It has also been seen, on the strength of Shyam Kishore, that notices do not
have to be issued from year to year. Objections have been filed by the Petitioner and
have been dealt with on their merits. No prejudice, whatsoever, is caused to the
assessed by the mention of Section 126 rather than Section 124. The important
consequence is that the exigibility to pay property tax stands extinguished with the
expiry of each financial year within which the Assessment List is not
finalised/authenticated. After careful cogitation, I cannot find any other logical
conclusion. In any Objections several myriad grounds can be raised and merely because
one of them is accepted, the entire Notice would not become non est. In other words,
even if the property was not exigible to property tax till such time as the Petitioner had
come into possession of the land and had attained its title, the notice would not be

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rendered legally futile. The situation is also similar to a litigant citing and relying on an
irrelevant or incorrect provision of statute; if he is nonetheless entitled to the relief
prayed for by virtue of some other law, Courts have always abjured the adoption of a
punctilious approach declining the grant of deserved relief only because of idle
formalities appear as obstacles. The impugned Notice must be dealt with on its merits.
FROM WHICH YEAR CAN THE RV BE FIXED
10. Having come to the above conclusion it stills remains to be considered whether any
occasion for determining the RV for the year commencing 1-4-1995 had arisen founded
on the subject Notice dated 18.3.1996. In this regard I would respectfully follow the
Order of my learned Brother, Manmohan Sarin, J. in Aggarwal Juneja and hold that till
such time as ownership and possession had not reposed in the Petitioner it could not
have become the object of any assessment attempt. The Petitioner became liable for
payment of property taxes only in May 1996; thus determination of RV could not have
commenced prior to the financial year 1995-96. It will also be evident that since it was
a case of the first assessment of land, the exigibility to property tax would have arisen
only once the assessment list stood authenticated. The impugned Assessment Order is
dated 16.3.1999 and according the earliest period for which it could be relevant and
efficacious would be the financial year 1998-1999. IS THE LESSEE LIABLE FOR VACANT
LAND TAX - INTERPLAY BETWEEN SECTIONS 116 AND 120 OF THE ACT
11. This brings me to the next conundrum of whether the Lessee is liable to pay 'vacant
land tax'. This question is covered on all fours by the decision of the Full Bench of this
Court in MCD v. Shashank Steel Industries (P) LimitedMANU/DE/1553/2002 :
AIR2003Delhi110 . Section 116 of the Act vests powers in the Corporation to impose tax
on vacant lands. Section 120 of the Act, however, clarifies that it is the Lesser of the
land or building who is liable for the payment of property tax; but by virtue of Sub-
section(2) if the Lessee has built upon the land and the tenure of the Lease exceeds one
year, the liability would shift upon the latter. In Shashank the Full Bench held that in a
case where no building has been constructed the primary liability for payment of
property tax could not be shifted away from the Lesser. The Full Bench had noted the
decision in Nehru Place Hotels Ltd. v. MCD in CWP No. 633/1980 and had held that even
in the presence of a covenant in the Lease Deed rendering the tenant liable for payment
of rates, the taxes, charges and assessments of every description cannot be fastened on
the tenant. It has been held that the Corporation cannot avail of any benefits from
contractual agreements between the third parties. In other words, the Lesser would
remain liable to the Corporation for property tax; in turn the Lesser may initiate
recoveries against its Lessee, predicated on the contractual covenants. In Shashank one
of the conclusions that the Full Bench had articulated was that in a case where no
building has been constructed, the sub-lessee would not be liable to pay property tax .
Their Lordships specifically overruled the decision of a Single Judge in Vishal Builders
v. MCD which favored the view that once a property is owned or leased out by the
Union of India (UOI), as a result whereof subordinate interests are transferred, the
property would not remain the property of the UOI having regard to the definition of
land given in the Act. I cannot accept the argument of Ms. Mehrotra, learned counsel for
the MCD, that the aforementioned conclusion in paragraph 40 of the Judgment was not
the final word in view of the next succeeding paragraph where the Bench had
interpreted the words capable of being built upon . This is for the simple reason that
even the Lesser may not be liable for payment of tax if the land is not built upon or is
capable of being built upon. So far as the words capable of being built upon are
concerned the contention of the MCD to the effect that immediately on the auction the
Petitioner could have built upon the auctioned land is specious and illogical. As has
already been analysed above, the Petitioner was not in a legal position to built upon the

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land prior to May, 1996 when the possession as well as leasehold rights of the land
stood transferred to it. In the present case the Petitioner has diligently submitted the
building drawings for the sanction of the Appropriate Authority. It is conceivable that it
may not have done so for one or two years or more. Would such a party still remain
insulated from the liability for payment of vacant land tax. This is what Section 116(2)
seeks to clarify. In this example it could obviously not be contended that the Petitioner
had not built upon the land but it could have done so if requisite steps have been
initiated with diligence. It is also conceivable that a person may undertake a 'process of
erection' at snail's pace scale so that the building would take several years to be
completed. The question that would then arise is whether, within this period the
Corporation would be precluded from claiming tax. This position also stands clarified in
Section 116(2), the answer being in favor of the Corporation. In the proceeding I would
not venture to affirmatively decide the question whether a remission should be given for
a reasonable period for obtaining sanction of building plans. In the present case the
Plans have been sanctioned in June,1996 itself. The only remaining aspect is whether
even for this period it is the Petitioner and not the Lesser, that is, Delhi Development
Authority (DDA), which is liable on this account.
12. Lengthy arguments have been generated viz-a-viz Section 120 of the Act. What it
clarifies is that the Lesser shall be primarily liable for payment of property tax; the
exceptions have been spelt out in the proviso to the first sub-section, and in the second
sub-section. In the present case it must be kept in mind that the Lesser is the DDA.
Instead of granting a lease of ninety-nine years and thereby retaining the luxury of
theoretical or notional ownership of the land, the DDA could have conveyed absolute
rights of ownership, in which event the transferees would become exclusively liable for
payment of property taxes. The statute, however, also contemplates the situation where
the land has been let for a period of more than one year and the tenant carries out
construction thereon, presumably with the consent of the Lesser. As I see it, in such an
event the rights of the Lessee are virtually the same as an absolute owner in fee simple,
and Therefore property tax is livable on the tenant or a sub-tenant of such tenant. It is
necessary to underscore the fact that the Legislature has not repeated the words
'capable of being built upon', which are to be found in Section 116(2) in the succeeding
Section 120(2). Logically, if the land is capable of being built upon it is liable to
property tax, which is payable by the Lesser till such time as the Lessee builds upon it.
According to the Petitioner itself, the construction was completed on 3.9.1997 and the
DDA granted the Occupancy Certificate on 15.9.1997. Therefore, with effect from
September 1997 the liability to pay tax rested entirely on the Petitioner.
13. In the facts of the case in hand what has to be considered is whether 'vacant land
tax' could have been levied; the answer has already been given above namely that this
could have been done commencing from the year 1996- 97. The next point to be
determined is on whom the property tax is leviable; the answer is that if any liability
arose prior to 15.9.1997 it would be recoverable from the DDA and thenceforward from
the Petitioner. So far as Shashank Steel is concerned, Ms. Mehrotra has contended that
a perusal of paragraphs 41, 48 and 49 thereof indicates that the land can be assessed to
property tax. The Full Bench has inter alias opined that unless there exists any statutory
interdict, or a genuine impediment beyond the control of the assessed, the property tax
is livable in respect of a land which is otherwise capable of being built upon meaning
thereby which falls within such areas/zones of Master Plan and Zonal Development Plan,
where construction is permissible . This, however, begs the questions so far as the
issues in the present case are concerned. The intendment of Section 116(2) is very
obvious, that is, whilst agricultural land is not susceptible to tax, all lands upon which
buildings can be constructed are taxable. However, by virtue of Section 120(2) the

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incidence of tax falls on the DDA till the building is complete. Liability of DDA cannot be
foisted on the Petitioner. In Municipal Corporation of Greater Bombay v. Polychem Ltd.
MANU/SC/0328/1974 : [1974]3SCR687 , the Court has clarified that the English
doctrine of sterility does not apply in India, and Therefore, during the period when
construction is ongoing, the property may be assessed to tax as vacant land. The
natural corollary is that when the building is fit for occupancy, or has actually been
occupied as in MCD v. Piyush Traders 1989(1) RCR 389, it is susceptible to levy of
property tax as a building.
14. The legal nodes presented in these petitions still remains to be completely solved.
Receipt of the Notice dated 18.3.1996 is admitted, whilst service of the letters dated
16.3.1999 and 2.2.2000 has been denied. Mr. Jain has vehemently belaboured the
absence of reference numbers on the latter two letters. The RV was fixed at
Rs.7,50,000/- with effect with effect from 1.11.1995 by letter/Order dated 16.3.1999
and the next communication indicates that a sum of Rs.11,17,500/- was then
outstanding against the Petitioner towards property tax. Counter Affidavits have not
been filed despite the grant of several opportunities as well as the imposition of costs.
Hence, the asseverations in the Writ Petition must be deemed to have been admitted.
The only Notice which has been admitted is dated 18.3.1996 which proposed a RV of
Rs.7,50,000/- with effect from 1.4.1995, for the reason of 'First Assessment'. It must be
read as having been issued under Section 124 and, Therefore, the liability for payment
of tax would arise for the financial year immediately following the authentication of the
Assessment List. In those incidences where a Notice under Section 126 is issued liability
cannot be created retrospectively for a period beyond three years of the amendment.
The accepted position is that the ex parte Assessment Order was passed on 16.3.1999.
Under Section 124, Therefore, property tax could have been levied only with effect from
1.4.1999, by which time the building was fit for occupancy. In Shashank the Full Bench
has pronounced that property tax cannot be levied on a lessee in the absence of a
Completion Certificate. However, since the building was certified to be fit for occupancy
tax could be imposed with effect from the year 1.4.1999. If Section 126 is considered,
[which in the present case I have already held is not attracted], then the liability would
stand automatically extinguished after three years of the issuance of the Notice dated
18.3.1996. It is obvious that the impugned Assessment Order, passed on 16.3.1999,
falls within this deadline. However, even if Section 126 is applied, there can be no
incidence of tax on the Petitioners prior to the issuance of the Occupancy Certificate,
that is, 15.9.1997. Since, however, it is Section 124 which applies, and since I have
preferred the view on the strength of the ratio in Shyam Kishore that once a notice is
issued it does not have to be repeated year after, liability or rather power to levy
property tax would arise from 1.4.2000 only as held by the Division Bench in the case
of Tin Can. It is not clear from the records whether assessment proceedings had been
initiated predicated on the completion of the construction of the premises in September,
1997. If such proceedings have been started, the findings in this Judgment shall not
affect the outcome thereof. Obviously, the Petitioner would pay property tax if
calculated on the basis of vacant land, with alacrity.
15. Since confusion has been created due to the faulty reporting in Santosh Chandhiok,
the MCD cannot be seen entirely blameworthy for applying Section 126, even to First
Assessment. Therefore, imposition of costs against the MCD would not be justified.
1 6 . W.P. (C) No. 2145 of 2000 stands disposed of in these terms. WP (C) No.
7399/2001 and 22530/2005
1 7 . In these Writ Petitions it has been prayed that the Judgment and Order dated

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17.2.2001 passed by the Additional District Judge, Delhi in House Tax Appeal No.
195/2000 be quashed. The learned ADJ had quashed the fixation of the RV on the
strength of the sale consideration alone, without ascertaining the estimated capital
value of the land. The ADJ did not hold in favor of the Petitioner on the other aspects
discussed above. It is not clear from the records whether the construction of a building
on the plot in question has been completed; it appears not to be so. The Writ Petition is
allowed with the observation that the liability of the Petitioner for payment of property
tax shall commence only from the year following the completion of the building on
subject plot. The impugned Judgment is modified to this extent. It is clarified that the
Petitioner would not be liable for vacant land tax on the strength of Shashank.
18. The Petitioner asserts that she was compelled to pay a sum of Rs.35,248/- in order
to obtain a 'No dues Certificate' to enable her to process the Building Plan for sanction.
As there was no liability on the Petitioner, this amount has been demanded by the MCD
without authority of law. The claim for interest at the rate of 15 per cent per annum is
supported by several decisions including Judgment dated 1.12.2004 by Hon'ble Mr.
Justice Pradeep Nandrajog in CWP No. 18441 of 2004, Ahmedabad Municipal
Corporation v. Vireshchand Chandrakant Desai MANU/GJ/0221/2002 : AIR2002Guj379 ,
Meghraj v. Mst. Bayabai MANU/SC/0368/1969 : [1970]1SCR523 , Life Insurance
Corporation of India v. B.R. Honnappa AIR 1973 SC and Civil Revision No. 1773 of 1981
titled Bharat Bhushan Jain v. State of Haryana decided by Hon'ble Mr. Justice G.C. Mittal
of the Punjab High Court vide its order dated 8.9.1981. In view of the onerous
requirement of having to deposit a demand of tax which is unreasonable and illegal as a
precondition for the hearing of the House Tax Appeal I hold that the Respondent is
liable for payment of interest on the said sum of Rs.35,248/- at the rate of 9 per cent
per annum commencing from its receipt.
19. WP (C) Nos.7399/2001 and 22530/2005 are allowed accordingly. W.P. (C) Nos.
9641/2003 and 7466/2004
2 0 . The MCD has filed both Writ Petitions. The learned ADJ has disposed of the
Petitioner's House Tax Appeal by observing that by virtue of Shashank, it is the DDA
which is liable for vacant land tax. The RV of Rs.80,750/- with effect from 18.5.1989
has correctly been set aside.
21. In remand proceedings the Assessing Authority has refixed the RV at Rs.21,180/-
with effect from 1.1.1991 and Rs.38,260/- with effect from 1.4.1993. However, in order
to avail the remedy of an Appeal, in consonance with the enunciation of the law in
Shyam Kishore, the Petitioner had to deposit Rs.4,99,193/- on 31.3.1997. The learned
ADJ has correctly ordered the refund of Rs.5,66,394/- in proceeding under Section 151
of the CPC. There is no error in the impugned Order, and hence W.P. (C) Nos.
9641/2003 and 7466/2004 are dismissed. If the sum is not refunded within four weeks,
the MCD shall be additionally liable to pay costs of these two Petitions, adjudged at
Rs.5,000/- each. WP(C) No. 9091/2004
22. In this writ petition the admitted position is that the Petitioner had purchased Plot
No. 7, LSC, New Rajdhani, Vikas Marg, Delhi from the DDA in a public auction on
8.8.2001. Possession thereof was handed over on 26.9.2001 and Building Plans were
sanctioned by the DDA on 8.11.2001. The MCD issued a Notice dated 21.3.2002 under
Section 126 proposing RV of Rs.6,71,220/- with effect from 1.4.2001. The Petitioner
filed Objections on 8.4.2002. The construction of the building was completed on
13.5.2002 and the Completion/ Occupancy Certificate was granted on 29.7.2002. In this
factual matrix it is manifestly clear that the starting point of the Petitioner's liability for

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payment of property tax, all other statutory conditions being met, was 13.5.2002.
Learned counsel for the Petitioner has not assailed before this Court the ex parte nature
of the Order dated 6.2.2004 The RV appears to have been fixed on the auction price.
23. W.P. (C) No. 9091 of 2004 is allowed to the extent that property tax may be levied
with effect from 1.4.2004 only. January 17, 2006
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