Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2019 Supreme(SC) 51

SUPREME COURT OF INDIA
A.K. Sikri, Ashok Bhushan, JJ.
New Delhi Municipal Council Etc. Etc. - Appellants
Vs.
Association of Concerned Citizens of New Delhi & Others Etc. Etc. - Respondents
Civil Appeal No(s). 903-930 of 2019 [Arising Out of SLP (C) No. 23186-23213 of 2017] with Civil Appeal No(s). 964 of 2019 [Arising Out of SLP (C) No. 2305 of 2019] [Arising Out of Diary No. 35928 of 2017]
Decided On : 22-01-2019

Advocates:
Advocate Appeared:
Mr. Sanjay Jain, Mr. Yoginder Handoo, Ms. Rhea, Mr. Arjun Mitra, Mr. Nishant Kumar, Mr. Prashant Bhatnagar, Mr. E.C. Agrawala, Mr. Trideep Pais, Mr. N.K. Verma, Mr. Pranav Jain, Ms. Anjana Chandrashekar, Mr. Jayant Kumar Mehta, Ms. Ruby Singh Ahuja, Mr. Shravan Sahny, Mr. Nakul Gandhi, Ms. Sonali Jain, M/s. Karanjawala & Co., Mr. Saurabh Mishra, Mr. Sachit Jolly, Ms. Anuradha Dutt, Ms. B. Vijayalakshmi Menon, Mr. Kunal Dutt, Ms. F.D. Sethna, Mr. Bharat Bhushan Jain, Mr. Abhay Kumar, Mr. Abhay Jain, Mr. Saurabh Mishra, Mr. Vineet Kumar Singh, Mr. Himanshu Pal Singh, Ms. Aditi Gupta, Ms. Rakhi Ray, Mr. Sanjeev Anand, Mr. Naresh Kumar, Mr. Sangram Patnaik, Swayamsidha, Mr. Sanjay Kapur, Ms. Megha Karnwal, Mr. Bharath Gangadharan, Mr. K. Kant Kapoor, Mr. Hitesh Kumar Sharma, Ms. Madhumita Varma, Ms. Manju Jetley, Mr. Kabir Dixit, Mr. Inaheb Hussaini, Ms. Aasita

IMPORTANT POINTS
Annual rent is based on the letting yearly value of the property or comparable property in case the property in question is self occupied or vacant, the criteria being the rent realizable by the landlord and not the value of the holding.
Bye-laws basing annual rent on value of property rather than letting yearly value are ultra vires the act.

Headnote:(a) New Delhi Municipal Act, 1994 – Section 63 – Section 61 requiring property tax on lands and buildings to be between 10% to 30% of rateable value – Section 63 provides for determination of rateable value, i.e., annual rent – Annual rent is based on the letting yearly value of the property or comparable property in case the property in question is self occupied or vacant, the criteria being the rent realizable by the landlord and not the value of the holding. (Para 71, 77, 79, 81, 82)
       (1962) 3 SCR 49; (1970) 2 SCC 870; (1980) 1 SCC 685; (2002) 3 SCC 388; (2016) 12 SCC 603; (1998) 6 SCC 381 – Relied upon
       95 (2002) DLT 528 – Cited with approval
       (b) New Delhi Municipal Council (Determination of Annual Rent) Bye-laws, 2009 – Bye-law 3 and 4 – Annual rent based on value of property – Held contrary to section 63(1), NDMC Act – In excess of scope and ambit of powers vested u/s 388(1)(A)(9) of the NDMC Act – High Court rightly declaring the bye-laws ultra vires – UAM method adopted by NDMC may be better but can be enforced only if incorporated in the Bye-laws by suitable amendment. (Para 84, 86)
       Facts of the case:
       There are only around 12,000 units which are subject to assessment for property tax in the NDMC area. 20% of these are residential units and rest are commercial units. However, only 20% of the properties are private properties.
       Hitherto New Delhi Municipal Committee was also replaced by New Delhi Municipal Council (NDMC).
       As per Section 60 of the NDMC Act, the power to levy taxes, including property tax, is vested with the NDMC.
       On, 24th February, 2009, the GNCTD notified the New Delhi Municipal Council (Determination of Annual Rent) Bye-laws, 2009
       Bye-laws are declared by the High Court as ultra vires
       Finding of the Court:
       High Court rightly declared the Bye-law 2009 as ultra vires.
       Result: Appeals disposed of.

JUDGMENT :

A.K. Sikri. J.

Leave granted.

Introductory Remarks:

2. These appeals are filed by New Delhi Municipal Council (NDMC) against the judgment dated August 10, 2017 rendered by High Court of Delhi in a batch of writ petitions which were filed by the persons who have their houses/properties in NDMC area. Some of the petitions were by the associations of residents as well (hereinafter referred to as the "assessees/respondents"). In those writ petitions filed by the assessees they had challenged the constitutional validity of NDMC (Determination of Annual Rent) Bye-laws, 2009 (hereinafter referred to as the 'impugned Bye-laws'). These Bye-laws changed the earlier regime of determining the rateable value for the purposes of levying property tax. These Bye-laws seek to alter the earlier system of determining the rateable value on the basis of he annual rent at which the land or buildings may reasonably be expected to be let from year to year. On that basis annual rent used to be fixed and a particular percentage was prescribed for the purposes of payment of property tax. The impugned Bye-laws introduced the system of Unit Area Method (UAM). As per this method Unique Area Value (UAV) per sq. ft/meter of a property is fixed with reference to the characteristics of the property such as location, occupancy, age, structure of the said property. This UAV is then multiplied by the area of the vacant land or covered space to arrive at its annual value. When the annual value is determined on the basis of such a formula, property tax thereupon is to be paid by the assessees.

3. It may be mentioned at this stage itself that the impugned Bye-laws have been framed by the Government of India in exercise of powers conferred by sub-section (1) of Section 391 of the New Delhi Municipal Act, 1994 (hereinafter referred to as the 'Act'). It is also to be noted that Section 63 of the Act deals with determination of annual rent. Various grounds were raised challenging the validity of these Bye-laws and one of the grounds was that the UAM of fixing the annual value as prescribed in the Bye-laws was foreign to the provisions of Section 63 of the Act, meaning thereby that the language of Section 63 did not permit determination of annual value on such a basis as it prescribed the method of fixing annual rent on the basis of the rent which the land or building may reasonably be expected to let from year to year. It was, thus, argued by the assessees in the writ petitions that the impugned Bye-laws were ultra vires the provisions of Section 63 of the Act. The High Court chose to confine itself to this particular submission and eschewed the discussion on other grounds on which these bye-laws were also challenged. In the impugned judgment, the High Court accepts the submission of the assessees holding that the impugned Bye-laws are ultra vires the NDMC Act as they are far beyond the scope and ambit of the powers vested in NDMC under Section 388(1)(A)(9) of the Act. Section 388 gives rule making power to the NDMC.

4. When the matter was argued before us, initially the parties confined to the aforesaid aspect on which High court has rendered its decision. However, arguments were heard on the other grounds of challenge as well, so that decision is given on merits, if the circumstances so warrant. We may also mention at this stage that many applications for intervention/impleadment have been filed by those assessees who were not parties to the writ petitions in the High Court. Such assessees are satisfied with the impugned Bye-laws and, therefore, they have not supported the case set up by the NDMC.

Factual background:

5. Before adverting to the controversy, it would be appropriate to take note of some relevant facts:

6. As is well-known, during the period of the British India, Delhi became the capital of India in the year 1911. Even before it became the ca

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2019 Supreme(SC) 51

Cases Referred (15)