Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
32.
+ W.P. (C) No. 3348/2010
ASSOCIATION OF CONCERNED CITIZENS OF
NEW DELHI .....Petitioner
Through: Ms. Maninder Acharya, Senior Advocate
with Mr. Trideep Pais, Mr. Amitabh Chaturvedi,
Mr. Sahil Sood and Ms. Deeksha Gujral,
Advocates.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
28. WITH
+ W.P. (C) No. 12689/2009
BABAR ROAD COLONY LEASE HOLDER
ASSOCIATION .....Petitioner
Through: Mr. Arvind Kumar Gupta and Mr.
Alpana Malik, Advocates.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
W.P.(C) 3348/2010 & connected matters Page 1 of 40
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
29. WITH
+ W.P. (C) No. 1985/2010
WAZIR ESTATES P LTD. & ANR. .....Petitioners
Through: Mr. Sanjeev Anand and Mr. Akshay
Kapoor, Advocates.
versus
NEW DELHI MUNICIPAL COUNCIL & ANR. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
30. WITH
+ W.P. (C) No. 2315/2010
JOR BAGH ASSOCIATION & ORS. .....Petitioners
Through: Mr. Pawanjit S. Bindra, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
31. WITH
+ W.P. (C) No. 3074/2010
W.P.(C) 3348/2010 & connected matters Page 2 of 40
STATE BANK OF INDIA .....Petitioner
Through: Mr. S. L. Gupta and Ms. Mithilesh Pal,
Advocates.
versus
THE NEW DELHI MUNICIPAL COUNCIL
& ANR. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
34. WITH
+ W.P. (C) No. 4047/2010 & CM No. 20199/2016
NEW DELHI TRADERS ASSOCIATION .....Petitioner
Through: Mr. Abhimanyau Mahajan, Mr. Milan
Deep Singh and Ms. Anubha Goel, Advocates.
versus
NEW DELHI MUNICIPAL COUNCIL
& ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
WITH
36.
+ W.P. (C) No. 8679/2010
ASHOK SHARMA .....Petitioner
W.P.(C) 3348/2010 & connected matters Page 3 of 40
Through: Ms. Vasudha Jaivedi, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & GOVT. OF NCT
OF DELHI .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
37. WITH
+ W.P. (C) No. 363/2011
ABHA SINGH AND ORS. .....Petitioners
Through: Mr. Subhash C. Jindal, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ANR. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
38. WITH
+ W.P. (C) No. 7296/2011 & CM No. 16576/2011
THE MODERN SCHOOL DELHI .....Petitioner
Through: Mr. B. B. Jain, Advocate.
versus
W.P.(C) 3348/2010 & connected matters Page 4 of 40
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
39. WITH
+ W.P. (C) No. 7491/2011 & CM No. 16982/2011
JASDEV SINGH & ANR. .....Petitioners
Through: Mr. B. B. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
40. WITH
+ W.P. (C) No. 728/2012
ALKA SAHANI .....Petitioner
Through: Mr. S.K. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ANR. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
W.P.(C) 3348/2010 & connected matters Page 5 of 40
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
41. WITH
+ W.P. (C) No. 729/2012
PREETI SARAF .....Petitioner
Through: Mr. S.K. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ANR. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
42. WITH
+ W.P. (C) No. 1153/2012
SCHOKHI INDUSTRIALS PVT. LTD. .....Petitioner
Through: Mr. S.K. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
W.P.(C) 3348/2010 & connected matters Page 6 of 40
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
43. WITH
+ W.P. (C) No. 1154/2012
MAK ENTERPRISES PVT. LTD. .....Petitioner
Through: Mr. S.K. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
46. WITH
+ W.P. (C) No. 1487/2012
MG BUILDERS AND CO. PVT. LTD. .....Petitioner
Through: Mr. S.K. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
47. WITH
W.P.(C) 3348/2010 & connected matters Page 7 of 40
+ W.P. (C) No. 1492/2012
NIRJA SAWHNEY .....Petitioner
Through: Mr. S.K. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
50. WITH
+ W.P. (C) No. 1822/2012
DR. MANJU LATA SARAF & ANR. .....Petitioner
Through: Mr. S.K. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
52. WITH
+ W.P. (C) No. 2088/2012
TANIA JAIN .....Petitioner
W.P.(C) 3348/2010 & connected matters Page 8 of 40
Through: Mr. S.K. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
53. WITH
+ W.P. (C) No. 2091/2012
TANIA JAIN .....Petitioner
Through: Mr. S.K. Jain, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
54. WITH
+ W.P. (C) No. 2102/2012
TANIA JAIN .....Petitioner
Through: Mr. S.K. Jain, Advocate.
versus
W.P.(C) 3348/2010 & connected matters Page 9 of 40
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
55. WITH
+ W.P. (C) No. 3453/2012
HOTEL QUEEN ROAD PVT. LTD. .....Petitioner
Through: Mr. Mohit Chaudhary, Advocate.
versus
NEW DELHI MUNICIPAL COUNCIL & ORS. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
58. WITH
+ W.P. (C) No. 1759/2012 & CM No. 3153/2015
SIR SOBHA SINGH & SONS PVT. LTD. .....Petitioner
Through: Mr. Aman Ahluwalia, Ms. Akanksha
Munjal, Mr. Nakul Gandhi and Mr. Shravan
Sahny, Advocates.
versus
W.P.(C) 3348/2010 & connected matters Page 10 of 40
THE NEW DELHI MUNICIPAL COUNCIL & ORS. ...Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
60. WITH
+ W.P. (C) No. 645/2016
CARVANSERAI LIMITED .....Petitioner
Through: Mr. Aman Ahluwalia, Ms. Akanksha
Munjal, Mr. Nakul Gandhi and Mr. Shravan
Sahny, Advocates.
versus
NEW DELHI MUNICIPAL COUNCIL & ANR. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
61. WITH
+ W.P. (C) No. 1996/2016 & CM No. 8627/2016
INDIAN TOURISM DEVELOPMENT
CORPORATION .....Petitioner
Through: Ms. Shweta Bharti and Mr. J. K.
Chaudhary, Advocates.
versus
W.P.(C) 3348/2010 & connected matters Page 11 of 40
NEW DELHI MUNICIPAL COUNCIL .....Respondent
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
62. WITH
+ W.P. (C) No. 1997/2016 & CM No. 8629/2016
INDIAN TOURISM DEVELOPMENT
CORPORATION .....Petitioner
Through: Ms. Shweta Bharti and Mr. J. K.
Chaudhary, Advocates.
versus
NEW DELHI MUNICIPAL COUNCIL .....Respondent
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
63. WITH
+ W.P. (C) No. 1998/2016 & CM No. 8631/2016
INDIAN TOURISM DEVELOPMENT
CORPORATION .....Petitioner
Through: Ms. Shweta Bharti and Mr. J. K.
Chaudhary, Advocates.
W.P.(C) 3348/2010 & connected matters Page 12 of 40
versus
NEW DELHI MUNICIPAL COUNCIL .....Respondent
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
64. WITH
+ W.P. (C) No. 2001/2016 & CM No. 8644/2016
KIRTI ABROL & ANR. .....Petitioners
Through: Mr. Ashish Mohan and Mr. Mohit
Kumar, Advocates.
versus
NEW DELHI MUNICIPAL COUNCIL .....Respondent
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
67. AND
+ W.P. (C) No. 1581/2017 & CM No. 7124/2017
HALMIRAH ESTATE TEA PRIVATE LIMITED .....Petitioner
Through: Mr. Ajay Bhargava and Mr. Aseem
Chaturvedi, Advocates.
versus
W.P.(C) 3348/2010 & connected matters Page 13 of 40
NEW DELHI MUNICIPAL COUNCIL & ANR. .....Respondents
Through: Mr. Sanjay Jain, Senior Advocate with
Mr. Arjun Mitra, Standing Counsel, Ms. Madhu
Tewatia, Standing Counsel and Ms. Rhea Verma,
Mr. Abhishek Misra, Ms. Jaskaran Kaur,
Advocates for NDMC.
Mr. Arun Bhardwaj and Ms. Meera Bhatia,
Advocates for UOI.
CORAM:
JUSTICE S. MURALIDHAR
JUSTICE PRATHIBA M. SINGH
O R D E R
% 10.08.2017
Dr. 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
W.P.(C) 3348/2010 & connected matters Page 14 of 40
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
W.P.(C) 3348/2010 & connected matters Page 15 of 40
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 era, Delhi was declared a Union Territory. The
Municipal Corporation of Delhi (‘MCD’) came to be constituted under the
Delhi Municipal Corporation Act, 1957 (‘DMC Act’). The jurisdiction of
W.P.(C) 3348/2010 & connected matters Page 16 of 40
the MCD covers the entire Union Territory of Delhi including the rural
areas, but excluding the New Delhi Municipal Committee and Delhi
Cantonment Areas. However, the area under the jurisdiction of the NDMC
was reduced from 32 sq. miles to 16 sq. miles.
9. In terms of the powers conferred under Section 188 (v) of the PMA which
related to assessment and collection of house tax, the NDMC made the
NDMC House Tax Bye-laws, 1962 (‘the 1962 Bye-laws’). These were
th
published in the Official Gazette by a notification dated 24 April, 1964.
Provisions of the NDMC Act
10. The Government of NCT of Delhi Act, 1991 (‘GNCTD Act’) was
enacted by the Parliament in January, 1992. Several provisions of the PMA
were brought in tune with the GNCTD Act. The NDMC Act was enacted in
1994 to replace the PMA and the New Delhi Municipal Committee was
replaced by the New Delhi Municipal Council (NDMC).
11. The power of imposition of levy of taxes including property taxes was
vested under Section 60 of the NDMC Act with the NDMC. Under Section
416 (2) (a) of the NDMC Act, NDMC adopted the existing 1962 Bye-laws
insofar as they were not inconsistent with the NDMC Act.
12. Sections 60 to 81 of the NDMC Act contained provisions relating to levy
of imposition of property tax by the NDMC. Section 60 (1) (a) empowers
the NDMC to impose and levy property tax. Under Section 60(3) of the
NDMC Act such property tax shall be levied, assessed and collected “in
accordance with the provisions of the NDMC Act and the Bye-laws made
W.P.(C) 3348/2010 & connected matters Page 17 of 40
thereunder.”
13. Under Section 61 (1) of the NDMC Act, property tax shall be levied on
lands and buildings in New Delhi and "shall consist of not less than ten and
not more than thirty per cent of the rateable value of lands and buildings.”
The proviso to Section 61(1) of the NDMC Act states that the NDMC may,
"when fixing the rate at which the property tax shall be levied during any
year, determine the rate leviable in respect of lands and buildings or portions
of lands and buildings in which any particular class of trade or business is
carried on shall be higher than the rate determined in respect of other lands
and buildings or portion of other lands and buildings by an amount not
exceeding one-half of the rate so fixed.” The second proviso to Section 61
(1) states that “the tax may be levied on graduated scale, if the Council so
determines.” The explanation to Section 61 (1) states that “where any
portion of a land or building is liable to a higher rate of the tax such portion
shall be deemed to be a separate property for the purpose of municipal
taxation.”
14. Under Section 61 (2) of the NDMC Act, the NDMC can exempt from
tax the lands and buildings where “the rateable value does not exceed
Rs.1,000.”
15. The expression ‘rateable value’ is defined under Section 2 (42) of the
NDMC Act to mean “the value of any land or building fixed in accordance
with the provisions of this Act and the Bye-laws made thereunder for the
purpose of assessment to property taxes.” The conjunction ‘and’ used in the
above definition makes the legislative intent explicit. The value has to be
W.P.(C) 3348/2010 & connected matters Page 18 of 40
fixed both in accordance with the NDMC Act and the Bye-laws.
Consequently, it is inconceivable that the manner of determination of the
rateable value under the Bye-laws could be inconsistent or different from
that provided under the Act. In other words, it is not the disjunctive ‘or’ but
the conjunctive ‘and’ that has been used. Accordingly, the rateable value has
to be fixed both in accordance with the provisions of the NDMC Act and in
accordance with the Bye-laws.
16. Section 62 of the NDMC Act relates to the 'Premises in respect of which
tax is to be levied'. Section 62 (1) lists out such lands or buildings or
portions thereof which will not be subject to levy of property tax. This
includes lands exclusively occupied and used for public worship or by a
society or body for a charitable purpose. It also includes lands and buildings
vested in the NDMC in respect of which the tax, if levied, would be leviable
primarily on the NDMC and agricultural lands and buildings (other than
dwelling houses). Section 62 (3) clarifies that if a portion of the land or
building is exempted from property tax by reason of the exclusive use or
occupied for public worship or charitable purpose then such portion “shall
be deemed to be a separate property for the purpose of municipal taxation.”
17. Section 63 of the NDMC Act sets out the method of determination of
the rateable value of lands and buildings assessable to property tax. Section
63 (1) provides that the rateable value of any land or building assessable to
property tax shall be the annual rent at which such land or building might
reasonably be expected to let from year to year less a sum equal to 10% of
the said annual rent which shall be in lieu of all allowances for cost of
W.P.(C) 3348/2010 & connected matters Page 19 of 40
repairs and insurance, and other expenses necessary to maintain the land or
building in a state to command that rent. The proviso to Section 63 (1) of the
NDMC Act states that in respect of any land or building the standard rent of
which has been fixed under the Delhi Rent Control Act, 1958 (‘DRC Act’),
the rateable value thereof "shall not exceed the annual amount of the
standard rent so fixed.".
18. Section 63(2) of the NDMC Act states that the rateable value of any land
which is not built upon but is capable of being built upon and any land on
which a building is in process of erection “shall be fixed at five per cent of
estimated capital value of such land.” Under Section 63(3) the Chairperson
of the NDMC can by public notice, with the approval of the NDMC, specify
a plant and machinery which will be deemed to form part of such land and
building for the purposes of determination of rateable value. Section 65(1)
of the NDMC Act clarifies that lands and buildings being properties of the
Union shall be exempt from the property tax specified in Section 61 of the
NDMC Act.
19. Section 66 of the NDMC Act speaks of the incidence of the property tax.
It is primarily on the lessor if a building or land is given on lease. It is on the
superior lessor if the land or building is given on a sub-lease. If it is not
leased then on the person on whom the right to let the same vests.
20. Section 67 of the NDMC Act talks of apportionment of liability of the
property tax when the premises are let or sub-let. Section 68 clarifies who
will be primarily liable for the property tax due in respect of any land or
building and in the event of default of the person liable to pay such property
W.P.(C) 3348/2010 & connected matters Page 20 of 40
tax as specified in Section 66. It is clarified that this would be the occupier
of such land or building.
21. Section 70 of the NDMC Act deals with the ‘Assessment List’. This is a
list of all lands and buildings which contains such particulars with respect to
each land and building as may be prescribed by the Bye-laws. When such
Assessment List is prepared, the Chairperson under Section 70 (2) of the
NDMC Act gives a public notice thereof and every person claiming to be an
owner, lessor or occupier of a land or building included in the List shall be
at liberty to inspect the List and take extracts therefrom free of charge.
Under Section 70 (3), the Chairperson is to give a public notice of a date not
less than one month thereafter when he would proceed to consider the
rateable value of the lands and buildings entered in the Assessment List. He
is also to give the written notice where the rateable value is proposed to be
increased. Section 70 (4) of the NDMC Act provides for objections to be
filed to the Assessment List in writing to the Chairperson. Section 70 (5) of
the NDMC Act talks of an objection being notified into and investigated,
and the person making them shall be allowed an opportunity of being heard
either in person or by authorised agent before the final Assessment List is
prepared under Section 70 (6) of the NDMC Act. Section 72 of the NDMC
Act provides for amendment of the Assessment List and Section 73 for
preparation of new Assessment List.
22. Under Section 81 the Chairperson of the NDMC Act employs valuers to
give advice or assistance in respect of valuation of any land or building. This
is different from the determination of the rateable value. This valuation of
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the land or building becomes relevant when there is attachment of the
property to cover the arrears of municipal taxes and the value of such land
and building has to be determined to ascertain what could be recovered
towards the arrears.
23. Thus the legislative scheme under the NDMC Act envisages
determination of the rateable value only on one basis i.e. on the basis of the
‘annual rent’ at which the land or building might reasonably be expected to
let from year to year.
Facts relating to the NDMC Area
24. At this stage it requires to be noticed that 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. The remaining 80% are (a)
properties belonging to the Union of India (b) properties of Diplomatic
Missions and Foreign Embassies (c) properties of State Governments and
(d) properties of Railways.
25. The above four types of properties are outside the purview of property
tax assessment. This is because Articles 285 and 289 of the Constitution
prohibit levy of taxes on the properties of the Centre and State by the Centre
and State respectively. Except the properties belonging to the Union of
India, the other three types of properties do not pay even the service charges
to the local authorities. 75% of the property tax demand is collected from
just about 6.25% of the properties in the NDMC area. Therefore, the tax
base for the purpose of collection of property tax is small compared to the
W.P.(C) 3348/2010 & connected matters Page 22 of 40
MCD area. It may be mentioned that in various other cities in India like
Patna, Bangalore, Hyderabad, Ahmedabad, Mirzapur etc., the UAM has
been adopted for the imposition of property tax to increase the collection of
revenue. The quantification varies in different cities.
Background to the new impugned Bye-laws
26. The MCD constituted the V.K. Malhotra Committee in 1995 to study
and report upon the efficacy of the property tax assessment and collection
system under the NDMC Act so that the faults in the system could be noted.
The V.K. Malhotra Committee submitted its report in 2002.
27. Following the recommendations of the said Committee, an expert
committee was constituted by the Lieutenant Governor (‘LG’) of the Delhi.
For recommending the modalities required for the introduction of the UAM
of property tax assessment, the Dharmarajan Committee under the
chairmanship of Mr. K. Dharmarajan was constituted.
28. The Dharmarajan Committee gave its report following which the
th rd
GNCTD by letters dated 5 December, 2002 and 3 January, 2003 drew the
attention of the NDMC stated that it would be proper and just to have a
uniform tax system in the entire NCT of Delhi. It was suggested that the
terms of recommendation of the Dharmarajan Committee may be extended
th
to the New Delhi area. However, at the meeting of the NDMC held on 29
January, 2003 it was decided not to request the GNCTD to extend the terms
of reference of the Dharmarajan Committee to cover the New Delhi area. It
was decided to wait for the final report of the Dharmarajan Committee. It
was, however, decided that pending implementation of the Dharmarajan
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Committee report in the MCD, the decision to implement the UAM should
be explored in the New Delhi area.
29. Meanwhile on the basis of the recommendations by the Dharmarajan
Committee, the Delhi Municipal Corporation Act (DMC Act) was amended.
th
The amending Act received the assent of the President on 9 June, 2003.
Under Chapter VIII of the DMC Act titled ‘Taxation’, a new scheme under
Sections 114 to 114E, Section 115, 115A and Section 116, 116A to 116C
introduced. Inter alia under Section 116E of the DMC Act, the method for
determination of the annual value of the covered space of building and a
vacant land using the UAM was introduced. Section 116K provides for
appointment of a 'Hardship and Anomaly Committee' which comprises of a
professional from the areas of either finance, taxation, law or municipal
management as the Chairperson and four other members one of whom must
be a councillor to be nominated by the Corporation. One should be the
member of the Municipal Valuation Committee and other three members to
be nominated from among the members of the Municipal Valuation
Committee and other shall be the Additional Commissioner (Revenue) of
the Corporation. Along with amending the DMC Act, the Delhi Municipal
Corporation Bye-Laws, 2004 (‘DMC Bye-laws’) were also made in 2004.
th
30. By an order dated 10 March, 2006 the Chairperson of the NDMC
constituted a Committee known as NDMC Special Committee under Section
9 of the NDMC Act to advise upon the property tax with the following terms
of reference:
“1. To consider the overall revenue position and anticipated
revenue receipts of New Delhi Municipal Council for the next
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five years;
2. To make recommendations on the method by which the
municipal body can continue to provide high quality services
while maintaining its fiscal health;
3. To suggest the ways and means and the optimum method of
assessment of property tax (Unit Area Method/actual value etc.)
so as to maximize revenue & improve collection efficiency,
keeping in view that property tax is a key element of NDMC
revenues.”
31. In February, 2007 the NDMC Special Committee submitted its final
report. The Committee noted that it was difficult to advise a perfect tax
system. However, keeping in view the distinct advantages offered by the
UAM, the NDMC Special Committee recommended a modified form of
UAM for NDMC which attempted to balance the principles of neutrality,
stability, accountability, ease of administration, fairness based on benefits
received and the ability to pay. The NDMC Special Committee also
examined the financial position of the NDMC with special reference to the
profit profile of NDMC wherein a large percentage of properties are owned
by the Government and only a very small percentage of private properties
are liable for payment of property tax. The NDMC Special Committee stated
that it considered the following options:
“(a) Maintain the status-quo as far as the method of assessment
is concerned. Thus to continue with the annual value method of
property tax assessment but address procedural shortcomings.
Or
(b) Selective introduction of Unit Area Method in respect of
residential units that are self-occupied (or for both self occupied
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and rented) and for institutional buildings and hotels. The
remaining properties to continue under the reasonable rent
method of assessment as at present.
Or
(c) Levy uniform service charges for all non-residential
properties regardless of their ownership, government or private.
The service charges would be liable for increases from time to
time to keep pace with the inflation and increased cost of
services. The base service charges would be fixed at some
proportion of land values and unit rate subject to the condition
that they will not be lower than the existing Rateable Value
Or
(d) Introduce a modified form of Unit Area Method for all
properties by fixing the unit rates solely by category of use and
land values. Thus the lowest unit rate (or multiplicative factors)
would be in respect of a self-occupied residential property in an
area where land values are low; the highest unit rate (or
multiplicative factor) would be in respect of commercial
properties/hotels that are located in areas where land values are
the highest (land values to be computed as per Land &
Development Office rate schedules amended from time to
time)”
32. The NDMC Special Committee rejected options (a), (b) and (c). It
recommended acceptance of option (d). However, it recommended “a
formula which is revenue neutral and at the same time optimizes the
objective of vertical equity. The analysis of data compiled by the tax
department suggests that there is extreme variation in taxation of similarly
placed properties for various reasons discussed earlier. This problem will be
automatically addressed as horizontal equity is inbuilt in the Unit Area
System.”
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33. It is significant that the NDMC Special Committee did not touch upon
the manner of bringing about the above change i.e. whether it should be by
amending the Bye-laws or amending the NDMC Act itself. However, in the
position paper submitted to the NDMC Special Committee which is
prepared within the NDMC, while recommending the adoption of a
modified UAM it was suggested that it should be introduced selectively for
“self-occupied residential properties.” It was added: “However, Bye-laws
cannot go beyond what is provided in the Act. As such, depending upon the
final decision in the matter, an appropriate amendment in the Act appears to
be the only alternative.”
34. It is stated that the report of the NDMC Special Committee was also
internally circulated to all the concerned departments including finance, law
th
etc. of the NDMC. At its meeting held on 13 February, 2008 the NDMC
adopted a Resolution to the effect inter alia that the recommendations of the
NDMC Special Committee were in principle accepted. It was noted as
under:
“For NDMC however, it is proposed to introduce the Unit Area based
system for determination of ARV by amending the existing House
Tax Bye-laws. This approach provides flexibility to adjust the scheme
to suit changing requirements and resolve problems, if any, faced
during the implementation of the scheme. Amendment of Act being a
lengthy and time consuming process can be avoided.”
35. It was, therefore, decided to invite public objections to the amendments
to the 1962 Bye-laws as proposed. It is thus seen that although the NDMC
was conscious that there was need to amend the NDMC Act, it did not adopt
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that route since it considered it to be a “lengthy and time consuming
process”. Clearly, the NDMC did not understand the implications of such a
decision with reference to the legality of the proposed amendments to the
1962 Bye-laws.
Provisions of the new impugned Bye-laws
36. There were whole scale changes brought about by the new impugned
Bye-laws which ironically bore the title ‘New Delhi Municipal Councils
(Determination of Annual Rent), 2009 whereas it introduced the UAM for
determining the rateable value which is different from ‘annual rent’. Bye-
law 2 of the new impugned Bye-laws stated that the annual rent for which
the land and buildings were accepted to be let would be determined as per
37. Bye-laws 3 and 4 to make it appear that they bear a relation to annual
rent under Section 63(1) of the NDMC Act. However, Bye-law 4 introduces
a new basis and mechanism of taxation that is the UAM which is different
from the existing system of determination of annual rent. It introduces the
Base Unit Area Value concept with an assigned value of Rs.1,000 sq.m.
both in respect of covered space of a building as also land not constructed
upon pending further fixation by the valuation committee created under the
impugned Bye-Laws known as the NDMC Valuation Committee.
38. It is pointed out that new Bye-law 4 (2) does not take into account the
most vital factum of impossibility of construction in certain areas with the
Lutyens Bungalow Zone (‘LBZ’) and ‘prohibited’ or ‘regulated area’ under
the Ancient Monuments and Archaeological Sites and Remains Act, 1958.
Further the Valuation Committee under Bye-law 5 has been given powers to
W.P.(C) 3348/2010 & connected matters Page 28 of 40
determine the categories which fall under Bye-law 3 as ‘special category of
lands and buildings’, the percentage applicable for calculating the tax
liability of such special categories, the base unit area value under Bye-law
4(4) and the various factors for increasing or decreasing the tax liability
under Bye-law 4(5).
st
39. The new impugned Bye-laws came into force on 1 April, 2009. It is
th
stated that on 29 May, 2009 the NDMC Valuation Committee made
recommendations in respect of assessment of property tax under the new
impugned Bye-laws. The Petitioners have assailed these recommendations
of the NDMC Valuation Committee as being arbitrary. However, as already
pointed out earlier, the Court does not propose to consider these aspects
since it proposes to examine the first major ground of attack viz., that the
UAM could not have been introduced through the new impugned Bye-laws
but only by amending the NDMC Act itself.
40. At the time the objections were fled, it was not clear as if the impugned
Bye-laws had been placed before the Parliament. However, during the
pendency of these petitions the Bye-laws were placed before the Parliament
and, therefore, that ground of challenge no longer survives.
Submissions on behalf of the Petitioners
41. Specific to the first ground, the submissions on behalf of the Petitioner
by Mr. B. B. Gupta and Ms. Maninder Acharya, learned Senior counsel and
Mr. B.B. Jain, learned Advocate were as under:
(a) The impugned new Bye-laws which is a piece of delegated/subordinate
W.P.(C) 3348/2010 & connected matters Page 29 of 40
legislation seek to cover the very fields covered under the NDMC Act.
These new impugned Bye-laws do not supplement the existing provisions of
the NDMC Act but supplant them. They in fact mean to overwrite the
express provisions of the NDMC Act.
(b) The new impugned Bye-laws are ultra vires the provisions of the NDMC
Act and are beyond the powers delegated to the NDMC under Section 388
(1) A (9) of the NDMC Act.
(c) Reference is made to the decision in State Trading Corporation India
Limited v. New Delhi Municipal Council (2016) 12 SCC 603 where the
Court emphasised that the only basis for fixation of rateable value was the
annual rent at which the land and building might reasonably be expected to
be let and that the re-determination of such rateable value will have to be in
accordance with the proviso to Section 63(1) of the NDMC Act under Bye-
law 12 of the Bye-Laws of 1962. It was held that the Bye-law 12 of the 1962
Bye-laws was inconsistent with the provisions of the NDMC Act.
(d) The NDMC adopted a short cut to bring about whole scale changes to
the system of determination of rateable value by merely amending the Bye-
laws whereas the MCD went through the route of amending the DMC Act
itself to introduce the UAM. The amendments to the DMC Act were
unsuccessfully challenged before this Court in Vinod Krishna Kaul v. The
Lt. Governor NCT of Delhi (2012) 192 DLT 241 .
(e) Reference was made to the specific changes brought about by the new
impugned Bye-laws which bore no resemblance to the system of
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determination of rateable value in the NDMC Act. Thus the new impugned
Bye-Laws deserved to be struck down on the ground that they were ultra
vires the NDMC Act.
Submissions on behalf of NDMC
42. Mr. Sanjay Jain, learned Additional Solicitor General of India (‘ASG’)
appearing on behalf of the NDMC traced the history of the changes brought
about in the method of determination of rateable value to the judgment of
this Court in Indian Hotels Co. Ltd. v. New Delhi Municipal Council 63
(1996) DLT 163 (DB) . The Court there emphasised the need for a simplified
system of assessment and collection of taxes which was simple and
efficacious and did not cause harassment to the tax payers.
43. The learned ASG submitted that the NDMC area was of a different
character where only 20% would be the properties which are available for
tax. It had, therefore, to be viewed differently from other areas where UAM
had been introduced. He submitted that the introduction of the UAM was
preceded by a very detailed exercise undertaken by the NDMC Special
Committee. The changes brought out by the new impugned Bye-laws were
deliberated and well intended and for the benefit of the tax papers. In
seeking to support the new impugned Bye-laws and defending their validity,
Mr. Jain referred to Section 388 (1) A (9) of the NDMC Act which
specifically enabled the NDMC to make Bye-laws to provide for ‘any other
matter relating to levy, assessment, collection, refund of tax...”
Challenge to a subordinate legislation
44. At the outset, the Court would like to dwell on the legal position
W.P.(C) 3348/2010 & connected matters Page 31 of 40
regarding the challenge to the validity of a subordinate legislation. In Indian
Express Newspapers (Bombay) (P) Ltd. v. Union of India (1985) 1 SCC
641 the Supreme Court emphasised that a subordinate legislation could be
questioned on any of the grounds on which a plenary legislation is
questioned. In addition it may also be questioned on the ground that it does
not conform the statute under which it is made. The rationale for this was
that “subordinate legislation must yield to primary legislation. It could of
course also be questioned on the ground that it is manifestly arbitrary.”
45. In Supreme Court Employees’ Welfare Association v. Union of India
(1989) 4 SCC 187 it is held that the validity of a subordinate legislation can
be challenged if it is ultra vires the Constitution or the governing Act or to
the general principles of the laws of the land or is “so arbitrary or
unreasonable” that no fair minded authority could ever have made it. In
Shri Sitaram Sugar Co. Ltd. v. Union of India (1990) 3 SCC 223 a
Constitution Bench of the Supreme Court reiterated as under:
“47.Power delegated by statute is limited by its terms and
subordinate to its objects. The delegate must act in good faith,
reasonably, intra vires the power granted, and on relevant
consideration of material facts. All his decisions, whether
characterized as legislative or administrative or quasi-judicial,
must be in harmony with the Constitution and other laws of the
land. They must be "reasonably related to the purposes of the
enabling legislation". See Leila Mourning v. Family
Publications Service [411 US 356] . If they are manifestly
unjust or oppressive or outrageous or directed to an
unauthorized end or do not tend in some degree to the
accomplishment of the objects of delegation, court might well
say, "Parliament never intended to give authority to make such
rules; they are unreasonable and ultra vires": per Lord Russel of
Killowen, C.J. in Kruse v. Johnson ."
W.P.(C) 3348/2010 & connected matters Page 32 of 40
46. In St. John’s Teachers Training Institute v. Regional Director, NCTD
(2003) 3 SCC 321 the Court held as under:
“A regulation is a rule or order prescribed by a superior for the
management of some business and implies a rule for general
course of action. Rules and regulations are all comprised in
delegated legislations. The power to make subordinate
legislation is derived from the enabling Act and it is
fundamental that the delegate on whom such a power is
conferred has to act within the limits of authority conferred
by the Act. Rules cannot be made to supplant the provisions
of the enabling Act but to supplement it . What is permitted is
the delegation of ancillary or subordinate legislative functions,
or, what is fictionally called, a power to fill up details. The
legislature may, after laying down the legislative policy confer
discretion on an administrative agency as to the execution of the
policy and leave it to the agency to work out the details within
the framework of policy. The need for delegated legislation is
that they are framed with care and minuteness when the
statutory authority making the rule, after coming into force of
the Act, is in a better position to adapt the Act to special
circumstances. Delegated legislation permits utilization of
experience and consultation with interests affected by the
practical operation of statutes."
[Emphasis supplied]
47. In Delhi Administration v. Siri Ram (2000) 5 SCC 451 , the Supreme
Court reiterated the well recognised principle that the conferment of rule
making power by an Act does not enable the rule making authority to make
rules which travel beyond the scope of the enabling Act or which is
inconsistent or repugnant thereto. The following observations of the
Supreme Court in Sukhdev Singh v. Bhagatram Sardar Singh
Raghuvanshi (1975) 1 SCC 421 were reiterated:
“18... statutory bodies cannot use the power to make rules and
W.P.(C) 3348/2010 & connected matters Page 33 of 40
regulations to enlarge the powers beyond the scope intended by
the legislature. Rules and regulations made by reason of the
specific power conferred by the statute to make rules and
regulations establish the pattern of conduct to be followed.”
48. The decisions in State of Karnataka v. H. Ganesh Kamath (1983) 2
SCC 402 and Kunj Behari Lal Butail v. State of H.P. (2000) 3 SCC 40
hold likewise. In General Officer Commanding-in-Chief v. Subhash
Chandra Yadav (1988) 2 SCC 351 , the Supreme Court observed:
“14......Before a rule can have the effect of a statutory
provision, two conditions must be fulfilled, namely (1) it must
conform to the provisions of the statute under which it is
framed; and (2) it must also come within the scope and purview
of the rule making power of the authority framing the rule. If
either of these two conditions is not fulfilled, the rule so framed
would be void.”
49. In Global Energy Ltd. v. Central Electricity Regulatory Commission
(2009) 15 SCC 570 , the Supreme Court was considering the validity of
regulations governing the procedure, terms and conditions for grant of
trading licence and other related matters under the Electricity Act, 2003.
There the Electricity Act was itself silent regarding conditions for grant of
licence. However, in the regulations the pre-qualifications for grant of
licence were stipulated. The Court explained that the grant of the rule
making power “for carrying out the purposes of the Act” was a general
delegation . Thus by reason of such a provision alone, the regulation-making
power cannot be exercised so as to bring into existence substantive rights or
obligations or disabilities which are not contemplated in terms of the
provisions of the said Act.
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50. In State of Tamil Nadu v. P.Krishnamurthy (2006) 4 SCC 517 it was
observed as under:
“16. The court considering the validity of a subordinate
legislation, will have to consider the nature, object and scheme
of the enabling Act, and also the area over which power has
been delegated under the Act and then decide whether the
subordinate legislation conforms to the parent statute. Where a
rule is directly inconsistent with a mandatory provision of the
statute, then, of course, the task of the court is simple and easy.
But where the contention is that the inconsistency or non-
conformity of the rule is not with reference to any specific
provision of the enabling Act, but with the object and scheme
of the parent Act, the court should proceed with caution before
declaring invalidity.”
51. The legal position emerging from the above decisions may be
summarised thus:
(i) A subordinate legislation, including a Bye-law, is vulnerable to be
challenged as to its validity on the same ground as the primary legislation.
(ii) A subordinate legislation could be questioned on the ground that it does
not conform to the statute under which it is made.
(iii) A subordinate legislation must yield to the primary legislation. Rules
made under an Act cannot be made to supplant the provisions of the
enabling Act but to supplement it.
(iv) If the rules or Bye-laws framed are beyond the scope and purview of the
rule making power of the authority framing the rule, the rule framed would
be void. Statutory bodies, therefore, cannot use the power to make the rules
W.P.(C) 3348/2010 & connected matters Page 35 of 40
and regulations to enlarge the powers beyond the scope intended by the
legislation.
(v) Where a rule is directly inconsistent with the mandatory provisions of
the statute it will have to suffer invalidity.
Analysis of the new impugned Bye-laws
52. The new impugned Bye-laws in the present case seek to introduce a
completely different system of rateable value than what is provided under
the NDMC Act. While the NDMC Act provides for rateable value to be
determined on the basis of the annual rent at which the land or building
might reasonably be expected to let from year to year, the UAM envisages
fixing the UAV with reference to the characteristics of a property and then
multiplying the UAV by the area of the vacant land or covered space to find
out the ‘annual value'.
53. It is not as if the NDMC was unaware that this could be done only by
amending the NDMC Act. Yet only because this might be a time consuming
process it chose the short cut of making the new impugned Bye-laws
without amending the NDMC Act. Section 388 (1) of the NDMC Act begins
with the expression “Subject to the provisions of this Act”. Clearly,
therefore, the legislative intent was to confer upon the NDMC the power to
make Bye-laws which were subject to and consistent with the provisions of
the Act.
54. Secondly, Section 388 (1) A (9) of the NDMC Act confers powers to
make Bye-laws relating to the levy, assessment, collection, refund or
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imposition of taxes "under this Act". The expression 'relating to' preceding
the words “levy, assessment, collection...” clearly means, therefore, that
Bye-laws will have to be consistent with what is already provided under the
NDMC Act. A method of levy, assessment, collection of taxes which is
different from what is provided under the NDMC Act cannot possibly be
introduced by the Bye-laws in terms of Section 388 (1) A (9) of the NDMC
Act. That would make the Bye-laws inconsistent with and contrary to the
NDMC Act.
55. There are specific provisions of the NDMC Act which have been sought
to be supplanted by the Bye-laws. Illustratively, the whole system of
determination of annual rent under Section 63(1) of the NDMC Act is
sought to be substituted by the UAM. There is no provision in the new
impugned Bye-laws that could be related to Section 63(1) of the NDMC
Act. The new impugned Bye-laws create classification among assessees
which are different from the classification envisaged under the NDMC Act
and in particular classification of property as spelt out in Sections 62 and 65
of the NDMC Act. Section 66 of the NDMC Act contemplates imposition of
the property tax in respect of three categories of properties i.e. the property
that has been let, sub-let and properties that are not let out at all. There is no
further classification contemplated in the NDMC Act on the basis of nature
of rights which are created in respect of such land and buildings.
56. Under the proviso to Section 63(1) of the Act, the rateable value cannot
exceed the standard rent fixed under the DRC Act. This is sought to be
overwritten by the impugned new Bye-laws. Under the explanation to
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Section 61(1) of the Act where a portion of a land or building is liable to a
higher rate of tax then such portion will be deemed to be a separate property
for the purpose of municipal taxation. This is sought to be substituted under
the UAM which seeks to aggregate the value of land as a whole with the
value of the space covered on such land.
57. While categorising the occupancy factor, the impugned Bye-laws create
only two categories i.e. (i) self-occupied or vacant buildings or lands and (ii)
others. Thereby the letting out of a property for use by a person other than
the owner for no consideration is treated at par with the letting out such
property for consideration. These are only the illustrations of changes
brought about by the new impugned Bye-laws.
58. In State Trading Corporation India Limited v. New Delhi Municipal
Council ( supra ), the Supreme Court emphasised that the manner of
determination of rateable value has to be only in terms of Section 63 of the
NDMC Act even in respect of properties that have been sub-let and not in
terms of Bye-law 12 of the 1962 Bye-laws which were found to be
inconsistent with the provisions of the NDMC Act.
59. Consequently, as far as the present case is concerned it is plain that the
new impugned Bye-laws are ultra vires the NDMC Act. They require to be
invalidated on this ground alone.
Conclusions and directions
60. The Court accordingly strikes down the new impugned Bye-laws as
being ultra vires the NDMC Act as they are in excess of the scope and ambit
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of the powers vested in the NDMC under Section 388 (1) A (9) of the
NDMC Act.
61. Consequently, the Court invalidates all actions taken by the NDMC
under the new impugned Bye-laws in terms of levy, assessment, collection
and enforcement of demand of property tax. All property demands made
under the new impugned Bye-laws are hereby invalidated and declared
unenforceable.
62. In terms of the interim order passed by the Court, referred to
hereinbefore, the excess of the tax deposited has to be refunded but the
determination of such excess will have to await the making of the
assessments in accordance with the extant provisions of the NDMC Act.
Such refund of excess tax deposited would be in accordance with the law
and together with the interest payable thereon in terms of the NDMC Act. It
will be open to the individual tax payers to seek appropriate remedies in
regard to refund together with interest at the appropriate stage after
completion of the assessment in terms of the extant provisions of the NDMC
Act.
63. The other grounds of challenge are left open to be urged if and when the
NDMC Act is amended to bring about the change in the determination of the
rateable value. The Court expects the NDMC and the legislature to consider
the additional grounds of challenge to the new impugned Bye-laws while
considering the changes to the NDMC Act.
64. With the above observations, the writ petitions and pending applications
W.P.(C) 3348/2010 & connected matters Page 39 of 40
are disposed of but in the circumstances with no order as to costs.
S. MURALIDHAR, J.
PRATHIBA M. SINGH, J.
AUGUST 10, 2017
dn
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