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IN THE HIGH COURT OF DELHI
Sanjeev Sachdeva, J.
Vardhman Properties Ltd. - Appellant
Versus
North Delhi Municipal Corporation - Respondent
W.P.(C) 5432 of 2021 & CM Appl. 16846-47 of 2021
Decided On : 21-05-2021
The sealing of a property for tax recovery without following prescribed legal procedures under the Municipal Corporation of Delhi Act is unlawful.
Headnote:(A) Municipal Corporation of Delhi Act, 1957 - Sections 156 and 158 - Sealing of property - Order of sealing the petitioner's property was quashed as no proper proceedings or warrants for attachment were issued, and no provision allowed sealing for tax recovery. (Paras 20-21)
(B) Arbitration and disputes - The court clarified that although there is no stay on the arbitration award, the respondent must follow proper legal procedure to enforce it. (Paras 12-19)
Facts of the case:
The petitioner challenged the sealing of their property due to disputed ground rent demands, claiming that the amount owed had not followed the correct legal procedure.
Findings of Court:
The sealing order was quashed due to lack of legal basis for the action taken.
Issues: Whether the respondent followed due process regarding the property sealing and tax recovery demands.
Ratio Decidendi: The lack of initiated proceedings under Section 156 of the MCD Act renders the sealing order unsustainable; the recovery must occur via proper legal means.
Result: Petition allowed, sealing order quashed.
JUDGMENT
Sanjeev Sachdeva, J. (Oral)--The hearing was conducted through video conferencing.
2. Petitioner impugns order dated 08.04.2021 whereby the property of the petitioner at AW Block (Circular), Sanjay Gandhi Transport Nagar, Badli, Delhi, has been sealed.
3. Issue Notice. Notice is accepted by learned counsel for the Respondent. With the consent of learned counsels for the parties, the petition is taken up for final disposal.
4. Learned counsel for the petitioner submits that the sealing order has been passed to enforce an alleged demand of ground rent. He submits that there is a dispute with regard to the claim of the respondent of the ground rent.
5. Learned Counsel further submits that though an arbitration award has been passed in favour of the respondent, however, petitioner has filed objections to the award. He further submits that out of the claimed amount of Rs.47 lakhs, principal amount, as per the respondent, as on 17.12.2020, was Rs.25,65,900/- on which respondents have firstly added interest of Rs.21,97,168/- and then added a further amount of Rs.8,57,352/-, as interest to raise a demand of approximately Rs.56,20,420/-.
6. Learned counsel submits that the demand is disputed and petitioner has already deposited the admitted amount of ground rent of Rs.8 lakhs after the passing of the award.
7. Learned counsel for the petitioner further submits that the lease deed executed in favour of the petitioner on 02.11.2006 specifically provides that in case of any dues payable to the lessor, the same would be recoverable as arrears of tax under the Delhi Municipal Corporation Act.
8. Learned counsel submits that Section 156 of the Municipal Corporation of Delhi Act, 1957 (hereinafter referred to as the MCD Act) provides that recovery of tax can be done under a warrant by attachment and sale of immovable property. He submits that there is no provision whereby the property of the petitioner can be sealed and petitioner prevented from using the property till the property is attached or sold.
9. Learned counsel submits that there is no order passed by the respondent under Section 156 of the MCD Act attaching the property of the petitioner. He further submits that the respondent has also not taken any steps to enforce the award and has sought to take coercive steps which are not permissible in law.
10. Learned counsel appearing for the respondent does not dispute the factual matrix. She, however, submits that since there is no stay of the arbitration award, respondent is entitled to take steps for recovery of its dues. She, however, concedes that no order under Section 156 MCD Act has been passed. She further submits that the Corporation is in the process of taking steps for enforcing the award.
11. Petitioner has disputed the claim of the respondent Corporation and has also filed objections to the award. No doubt there is no interim stay of the arbitration award, however, petitioner is claimed to have deposited the admitted amount with the Corporation.
12. Be that as it may, since there is no stay of the arbitration award, nothing prevents the respondent from taking steps for enforcing its rights under the award.
13. The Perpetual lease deed dated 22.11.2006 executed by the Respondent in favour of the Petitioner specifically provides that "All dues payable to the LESSOR in respect of the plot shall be recoverable as arrears of tax under the Delhi Municipal Corporation Act."
14. Section 156 of the MCD Act stipulates as under:
156. Recovery of tax.--(1) If the person liable for the payment of the tax does not, within thirty days from the service of the notice of demand, pay the amount due, such sum together with all costs and the penalty provided for in section 155, may be recovered under a warrant, issued in the form set forth in the Eighth Schedule, by distress and sale of the movable property or the attachment and sale of the immovable property, of the defaulter:
Provided that the Commissioner sh
