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2011 (3) Supreme 138
SUPREME COURT OF INDIA
Dr. Mukundakam Sharma and Anil R. Dave, JJ.
Pradeep Oil Corporation — Appellant
versus
Municipal Corporation of Delhi And Anr — Respondents
Civil Appeal Nos. 6546-6552 of 2003
Decided on : 6-4-2011
[1960] 1 SCR 368; 1952 (1) All ER 149; (1974) 1 SCC 202 – Relied upon
(b) Interpretation of statutes – Appellant granted licence and grant under the Government Grants Act, 1895 – The arrangement cannot be construed under Transfer of Property Act, 1882 – Act 1885 being a special statute would prevail over the general statute, i.e. the Transfer of Property Act, 1882. (Para 17)
(c) Transfer of Property Act, 1882 – Section 105 and 108 – Lease – Mere use of the word “licensee” is not sufficient to hold the grant in question as a license – Where a deed confers a bundle of rights upon the grantee, the deed is a lease. (Paras 19 and 23)
(1994) 6 SCC 271; JT 1996 (6) 665; 1995 Supp. (4) SCC 115; 1995 Supp. (1) SCC 306; AIR 1996 SC 441 – Relied upon
(d) Easements Act – Section 52 – Licence – In order to establish a deed a licence the person claiming it has to show that despite the right to possess the demised premises exclusively; a right or interest in the property has not been created. (Para 31)
1985 Appeal Cases 809; [1989] 3 SCR 626 – Relied upon
(e) Lease and licence – Certain restrictions with regard to the construction of building, storage tank etc. are not decisive for the purpose of determining as to whether a document is a lease or license – A term of three month’s notice for determination of the agreement makes the deed a lease deed. (Paras 34 and 35)
1904-1907 All ER (Reprint) 203 – Relied upon
(f) Delhi Municipal Corporation Act, 1957 – Section 119 – MCD is entitled to recover tax for services rendered by it – Tax is imposable on buildings and even an oil tanker is a building – These provisions would apply even if the lands and buildings are the properties of Union of India – Every occupant, legal or illegal (even an encroacher), of a building is liable to pay taxes including Municipal taxes. (Para 40)
(2001) 1 SCC 455 – Distinguished
(g) Delhi Municipal Corporation Act, 1957 – Section 120(2) – The provision is applicable with regard to composite assessment of land and building – It is not applicable where the property in question is only building and no vacant land is sought to be taxed. (Para 42)
AIR 1991 SC 686 – Relied upon
(2001) 1 SCC 455 – Distinguished
Facts of the case:
Whether an agreement for erection of oil storage tank together with pump house, chowkidar cabins, switch room, residential rooms and verandah for storing oil decanted from the railway tankers, which bring petroleum products to the site at which they are decanted, would amount to lease or license, is one of the several questions which falls for consideration in these appeals.
Finding of the Court:
Section 119 of the MCD Act would not apply to the building in question.
Document in question constitutes lease in favor of the appellant-grantee who accordingly is liable to pay taxes.
Result : Appeal dismissed.
Key Points: - The distinction between lease and license depends on whether an interest in property is created, with exclusive possession raising a presumption of lease (!) (!) (!) . - The substance of the document, not its form or nomenclature, determines whether it is a lease or license (!) (!) . - Under the relevant Act, the grantee is liable for property tax as the user and beneficiary of the buildings constructed on the land (!) (!) (!) .
JUDGMENT
Dr. Mukundakam Sharma, J. —
1. Whether an agreement for erection of oil storage tank together with pump house, chowkidar cabins, switch room, residential rooms and verandah for storing oil decanted from the railway tankers, which bring petroleum products to the site at which they are decanted, would amount to lease or license, is one of the several questions which falls for consideration in these appeals, which has arisen out of a Full Bench decision rendered by the High Court of Delhi at New Delhi while disposing a batch of petitions bearing Nos. LPA 53, 54, 55, 57 and 58/1987.
2. Before dwelling into the question of law involved hereinabove and in order to appreciate the contentions raised by the parties hereto, we may notice few basic fact which has resulted into filing of these appeals.
3. The appellant herein had been granted under the Government Grant Act separate and distinct licenses by the President of India acting through Superintendent of Northern Railway, Delhi for the purpose of maintaining depot for storage of petroleum products at a yearly license fee of Rs. 20,640/- and Rs. 31,000/- per annum respectively.
4. Under the aforesaid grant, the appellant had been given the right to erect/construct ‘petroleum installation buildings’ consisting of petroleum tanks, buildings and other conveniences for receiving and storing therein petroleum in bulk, and consequently possession of land has been given.
5. Consequent to the said agreement the administration granted ‘exclusive possession’ of the said land to the appellant who entered the land for the purpose and the terms mentioned therein in the aforesaid agreement/grant. Consequently, the appellant submitted layout building plans for the construction of the oil depot and the standing committee of the Municipal Corporation of Delhi (in short “MCD”) approved the layout plan for the construction of 10 oil storage tanks of petroleum products.
6. Subsequent to that the appellant raised various constructions comprising of an administration block etc. along with huge petroleum storage tanks for storing petroleum products. A boundary wall around the installations and the administrative block was also constructed. The nature of the construction which is stated to be wide range and extensive user, is more than 40 years old now.
7. The respondent MCD vide its Order dated 17.08.1984 passed an assessment order with regard to the property tax qua the aforesaid property and confirmed the rateable value proposed by it. The said assessment order was challenged by the appellant before the appellate Court/MCD Tribunal which vide its Order dated 12.7.1985 set aside the assessment order passed by the respondent MCD and held that the appellant is only a licensee in the property and is not a tenant, therefore, no property tax can be levied on the appellant under Section 20(2) of the Delhi Municipal Corporation Act, 1957 (in short “MCD Act”). Aggrieved by the aforesaid order of the appellate Court, the respondent MCD filed a writ petition. However, the said writ petition was dismissed by the Ld. Single Judge of the Delhi High Court on 05.08.1986 holding that the petroleum storage tanks do not fall within the definition of building under the MCD Act. It was further held by the Ld. Single Judge that the grant in favour of the petitioner was a license and hence the petitioner is not liable for the payment of any property tax in respect of the land or the petroleum storage tanks. Challenging the aforesaid order of Ld. Single Judge, an LPA was filed and subsequently, the same was referred to a Full Bench of High Court. The Full Bench of the High Court vide its impugned judgment and order dated 17.09.2002 held that the petroleum storage tanks are a building and the petitioner was a lessee and not a licensee in the property in question.
8. It was forcefully argued before us by the learned counsel appearing for the appellant that no property tax is payable qua the property in question under th
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