IMPORTANT POINTS
1. Section 116(3) of the Delhi Municipal Corporation Act, 1957, is declared invalid as it delegates unguided and uncanalised legislative powers to the Commissioner to declare any plant or machinery as part of land or building for the purpose of determination of the rateable value thereof.
2. The cost of plant or machinery, lifts and air conditioners fixed on the land or building shall not be liable to be included for the determination of the rateable value of the land or building under the provisions of the Delhi Municipal Corporation Act.

Headnote:(i) Delhi Municipal Corporation Act, 1957-Section 116(3)-Constitutional validity-Rateable value, determination of-Powers of Commissioner to declare any plant or machinery as part of land or building-Uncanalised discretion-Section 116(3) declared invalid for excessive delegation of legislative powers to the Commissioner.
       Held : Despite anxiously scanning the provisions of the statute, we hardly find any such guidelines therein. The contention of the learned counsel for the respondent that the statute indicates the guidelines, namely, that the Commissioner s power to notify under Section 116 (3) is only in respect of things which are of the same nature as would fall within the ambit of expression "land", as defined under Section 2 (24), appears to be a classic case of post hoc ergo propter hoc obviously, the power given to the Commissioner under sub-section (3) of Section 116 is intended to be exercised only in a case where the plant or machinery does not fall within the ambit of the expression `land or `building as defined in the Act. It is only in such cases that the question of exercise of the discretion on the part of the Commissioner arises. Thus, the so called guideline is wholly chimerical. (Para 46)
       Applying the test laid down in the judgments J. Jayalalitha (supra) and Kishan Prakash Sharma & Ors. (supra) we are unable to find any legislative guidelines upon which the Commissioner s power under Section 116(3) could be exercised. Since the High Court had not adverted to these aspects of the matter, we allowed this contention to be elaborated by the learned counsel before us. We are satisfied that the vice discovered by this Court in Rule 7(2) of the BPMC Act, 1949 in New Manek Chowk (supra), equally invalidates Section 116(3) of the D.M.C. Act. (Para 50)
       (ii) Delhi Municipal Corporation Act, 1957-Sections 113, 114, 115, 116, 2(3), 2(38)-DMC Determination of Rateable Value Bye Laws 1994-Bye Law No. 2(e), clauses 3(1)(c)(ii) and 3(1)(d)(e) explanation (ii)-Property tax-Delite Cinema Complex-Determination of rateable value of lands and buildings-Definitions of land , building and premises , functional roles of-Whether cost of plant and machinery installed in or upon a building is includible for the purpose of arriving at rateable value of building-(No)-Cost of plant or machinery, lifts and air conditioners fixed on land or building of appellant, delite Cinema shall not be liable to be included for determination of the rateable value of land or building-Impugned assessment orders set aside and remitted to assessing authority for passing orders afresh-MCD v. Pragati Builders, 45 (1991) DLT 264 : Overruled.
       Held : In our judgment, the Full Bench of the High Court fell into error in not keeping in mind the respective functional roles of the definitions of "land", "building" and "premises" and conceptually allowing them to overlap. In any event, it cannot be forgotten that Section 116 itself indicates, in terms, how the rateable value of land and building assessable to the property taxes is to be determined. Sub-section (3) of Section 116 lays down the general rule that no account shall be taken of the value of any plant or machinery in or upon any land or building subject only to the one exception namely that if such plant or machinery has been notified by a public notice by the Commissioner, with the previous approval of the Standing Committee, then it shall be deemed to form a part of such land or building for the purpose of determination of the rateable value. The words used in sub-section (3) of Section 116 of the DMC Act are land or building . Hence, the principle of interpretation evolved in Poona Municipal Corporation (supra) was very much relevant and applicable. In any event, the definition of premises was wholly irrelevant for interpretation of sub-Section (3) of Section 116. The legislative history unmistakably points towards out to this manner of interpretation. Legislation, like history, has the habit of repeating itself. Legislative practice, which was noticed by this Court in New Manek Chowk (supra), showed that both in England and in India municipal legislation had uniformly tended to exclude the cost of plant and machinery for the purpose of computation of rateable value of land or building subject to exceptions made by statute, examples being sub-section (3) of Section 116 of DMC Act, Section 154 (2) of the BMC Act, Rule 7 (2) made under the BPMC Act, 1949 and similar statutory provisions. The Full Bench laid great emphasis on the word premises used in the Act and the enlarged meaning given to the term under the 1994 bye-laws. In the first place, rateable value is defined in Section 2 (47) as the value of any land or building fixed in accordance with the provisions of the Act and the bye-laws made thereunder for the purposes of assessment to property tax. Section 2 (47) does not even make a reference to premises . It is true that the expression premises is defined in Section 2 (38) as inclusive of any fittings affixed to a building for the more beneficial enjoyment thereof. Even assuming the contention which appealed to the High Court to be correct, we must reconcile the definition of the term "premises" in Section 2 (38) with the express words used in sub-section (3) of Section 116 of the Act. Learned counsel for the appellant is, therefore, right in his contention that whatever be the amplitude of the expression premises or the expression fittings used in clause (b) of Section 2 (38) of the Act, it cannot include plant or machinery which have been expressly excluded under Section 116 (3), except to the extent it is notified. This contention appears justified, on principle and precedent, and deserves acceptance. We are unable to accept the view of the High Court that the notification dated 23-10-1989 was issued by the DMC ex-majori cautela, nor are we in agreement with its view that lifts and air-conditioners are not plant or machinery, but fittings and fixtures. We also cannot accept the view that a lift being permanently embedded in the land duly forms part of building for computation of rateable value of the building. In our view, lifts and air-conditions are neither fittings, nor fixtures, but are plant and machinery . The concept of rateable value, as generally understood, does not admit the inclusion of the cost of such plant or machinery in the computation of the rateable value of the building. The legislature has, therefore, made a specific provision that if their cost has to be included, a previous notification has to be issued under sub-section (3) of Section 116. This was purportedly done by the notification dated 23-10-1989 and, if at all valid, it would become operative from the said date and not from any date earlier. The High Court also seems to have lost sight of the fact that the Explanation II of 1994 bye-laws was struck down by the High Court and its invalidity was upheld by this Court. (Paras 37 to 41)
       The contentions do not appeal to us. First, we must interpret the legislation by reading the words in the statute. Secondly, Section 116(3) takes care of the progressive concepts by vesting the Commissioner with the power to issue the requisite notification to include newer machinery within the ambit of land or building . Lastly, the said explanation is no longer alive and has been set aside by this Court. In the result, we accept the contention of the learned counsel for appellants and hold that cost of plant and machinery situate in or upon any land or building cannot be included in the computation of the rateable value of land and building unless a valid notification contemplated by sub-section (3) of Section 116 has been issued. (Paras 42 & 43)

JUDGMENT

Srikrishna, J.-These appeals, though arising under different factual backgrounds, raise a common question of law and challenge the correctness of a judgment of the Full Bench of the Delhi High Court. The questions involved in all these appeals are:

"Whether the cost of the plant and machinery installed in or upon a building is includible for the purpose of arriving at the rateable value of the building? and

Whether Section 116(3) of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as "the DMC Act") vests arbitrary and uncanalised discretion in Commissioner and is, therefore, invalid for excessive delegation of legislative powers?"

Civil Appeal Nos. 3313-3333/2000 & 3335/2000

2. The appellant company owned land in Delhi on which it constructed a cinema complex known as Delite Cinema Complex. The construction was completed in or about the year 1954. The company had installed certain plant and machinery, furniture and fixtures in the said construction of cinema house. By an order made on 30th May, 1988 the first respondent Municipal Corporation of Delhi revised the rateable value of the appellant s property to Rs. 2,16,970/- w.e.f. 1-4-1968, Rs. 2,18,150/- w.e.f. 1-4-1970 and Rs. 2,20,510/- w.e.f. 1-7-1970. For the purpose of arriving at the rateable value the assessing authority added the cost incurred by the appellant towards installation of plant and machinery, furniture and fixtures to the cost of the building. The appellant challenged the assessment order by a statutory appeal under Section 169 of the DMC Act contending that the costs incurred towards plant and machinery, furniture and fixtures could not be added to the cost of the building for the purpose of rateable value as they are moveable items and not part and parcel of the building. It was also contended that there was no specific notification issued by the Commissioner of the Municipal Corporation for including the value of moveable items, plant and machinery for arriving at a rateable value. The appeals filed by the appellant were allowed by the appellate court by a judgment dated 1-6-1991. The appellate court upheld the contention of the appellant and directed the Municipal Corporation to work out rateable value by deleting the cost of plant and machinery, furniture and fixtures from the cost of the building. Aggrieved by the aforesaid judgment the respondent Municipal Corporation challenged the judgment by a batch of writ petitions before the High Court of Delhi. The writ petition together with other writ petitions challenging similar orders was disposed of by a common judgment dated 19-2-1999. The High Court relying upon its own judgment in Municipal Corporation of Delhi vs. Pragati Builders & Ors. [45 (1991) D.L.T. 264] and the judgment of this Court in Hindustan Lever Ltd. vs. Municipal Corporation of Greater Bombay & Ors. [1995(3) SCC 716] took the view that the matter had to be remitted back to the assessing authority to determine the rateable value in accordance with law as pronounced in the aforesaid judgments. Although, it was specifically contended by the appellant before the High Court that a notification under Section 116(3) of the DMC Act declaring that the lift shall be deemed to form part of land and building, was published in the Newspaper on 23.10.1989 and 24.10.1989 and therefore, could have only prospective, effect, the High Court did not decide the said issue. After setting aside the judgment of the appellate authority, the issues were remitted back to the assessing authority with a direction to determine the rateable value in accordance with law leaving open all contentions to be urged before the assessing authority. This judgment is challenged by these appeals.

Civil Appeal No. 3312 & 3334 of 2000

3. In these two appeals the facts are almost same as in the previous group except that here an additional contention as to the constitutional validity of Section 116(3) of the D.M.C. Act was raised before the High Court while c

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2003 Supreme(SC) 665

Cases Referred (8)