S. Muralidhar, J.

Introduction

1. The challenge in all these writ petitions filed under Article 226 of the Constitution is to the constitutional validity of the New Delhi Municipal Council (Determination of Annual Rent) Bye-laws, 2009 (hereinafter 'the new impugned Bye-laws'). In all these petitions barring a few no interim stay of recovery of the disputed property tax was granted. However, it was clarified that “in case at the stage of final hearing it is found that the Petitioner has deposited excess tax, directions can be passed for refund along with interest as is charged by R-1 from the defaulters.” The reference to R-1 is to the New Delhi Municipal Council (‘NDMC’) which is the principal contesting Respondent in all these petitions.

2. By the new impugned Bye-laws, the NDMC brings about a change in the method of arriving at the rateable value for the purposes of property tax. It seeks to change the existing system of determining the rateable value on the basis of the annual rent at which the land or buildings may reasonably be expected to be let from year to year to a Unit Area Method (‘UAM’). In the UAM, first the Unit Area Value (‘UAV’) i.e. per sq. Ft./meter of a property is fixed with reference to the characteristics of the property such as location, occupancy, age, structure. The UAV is then multiplied by the area of the vacant land or covered space to arrive at its annual value.

3. The new impugned Bye-laws are sought to be challenged on several grounds. Broadly it is sought to be contended that the UAM cannot be introduced by way of the new impugned Bye-laws without amending the New Delhi Municipal Act, 1994 (‘NDMC Act’) which even as of today contemplates determination of the rateable value on the basis of the annual rent at which the land or building might reasonably be accepted to be let. The contention is that the new impugned Bye-laws cannot be justified with reference to the rule making power conferred on the NDMC under Section 388 (1) A (9) of the NDMC Act. It is contended that the new impugned Bye-laws are, therefore, ultra vires the NDMC Act as they go far beyond the scope and ambit of the NDMC Act. The second broad ground of challenge, which is without prejudice to the first, is that the new impugned Bye-laws are arbitrary, unreasonable, discriminatory and irrational and, therefore, violative of Articles 14 and 19 of the Constitution of India.

4. The Court in this judgment upholds the challenge of the Petitioner as to the validity of the new impugned Bye-laws on the first ground itself. Consequently, the Court has not considered it necessary to examine the second ground of challenge at this stage. The said ground of challenge is reserved to be urged at the appropriate time in future if the same is available, when the NDMC Act is amended to bring about the change in the system of determination of the rateable value of land and building for the purposes of the levy of the property tax.

5. Although the facts in respect of each of the petitions may slightly vary, since the principal relief sought in each of them is identical, viz., declaring the new impugned Bye-laws to be unconstitutional and invalid, the Court proposes to refer illustratively to the facts in Writ Petition (C) No. 3348 of 2010 which is by an Association of Concerned Citizens of New Delhi.

Background

6. In the pre-independence era, Delhi became the capital of India in 1911. In 1912 the Delhi Enclave covering an area of 1240 sq.miles was formed. A large chunk of land acquired by the Imperial Delhi Committee was transferred to the Imperial (New) Delhi Municipal Committee). In 1925 the Chief Commissioner of Delhi upgraded this Committee to the level of a second class municipality to be governed under the Punjab Municipal Act, 1911 (‘PMA’).

7. Section 188 of the PMA conferred powers on the NDMC to make Bye-laws inter alia for carrying out the purposes of the PMA. The NDMC became a first class Municipal Committee in 1932.

8. In the post-independence