Full Judgment Text
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CASE NO.:
Appeal (civil) 5898 of 1997
PETITIONER:
DELHI GOLF CLUB LIMITED & ANR.
Vs.
RESPONDENT:
N. D.M. C.
DATE OF JUDGMENT: 15/01/2001
BENCH:
S.P.Bharucha, Doraswamy Raju, Ruma Pal
JUDGMENT:
L.....I.........T.......T.......T.......T.......T.......T..J
J U D G M E N T
Raju, J.
The appellants, who had lost before the High Court,
filed this appeal against the judgment of the Delhi High
Court dated 14.7.97 in CWP No.2349 of 1995 since reported in
AIR 1997 Delhi 347, whereunder the challenge made by the
appellants to a demand raised by the respondent to the tune
of Rs.4,37,56,295.90 on account of property-tax for the
period from 1.4.69 to 31.3.95 in their house-tax bill dated
24.11.94, notice of demand dated 31.3.95 and a letter dated
13.6.95 came to be rejected. Having regard to the nature of
issues raised, certain factual details need elaborate
reference to properly deal with and appreciate the same.
The Delhi Golf Club limited (hereinafter referred to as the
Club) is a limited company incorporated under the
Companies Act, 1956 with the object of promoting the game of
Golf and for that purpose provide courses and grounds at New
Delhi or elsewhere in the State of Delhi, to lay out and
also maintain the same by providing club houses, pavilions,
lavatories, kitchens, refreshment rooms, workshops, sheds
and other conveniences for the use of its members and other
persons either gratuitously or on payment of charges. The
land measuring 183 acres situate in Wellesley Road, New
Delhi, was being used by the New Delhi Municipal Committee
(hereinafter referred to as the Municipal Committee) for
running a Golf Course till 1950 and in the year 1950, the
Municipal Committee handed over the said Golf Course to the
Club. In the year 1952, a lease deed dated 10.12.52 was
executed between the Municipal Committee and the Club under
which the land together with old buildings existing thereon
known as Golf Club with a plinth area of 3000 sq. feet and
a new building identified as Office with plinth area of 450
sq. feet was granted on lease on an annual rent of Rs.200/-
for land and Rs.50/- as rent for the old buildings and
another Rs.50/- as rent for the new buildings. Due to some
development and turn of events in the Ministry of Works
Housing and Supply, Land & Development Office, Government of
India, New Delhi, the entire property, noticed above, was
taken over by the Central Government on payment of a sum of
Rs.25,000/- as compensation for tools and plants as
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evidenced by a letter dated 19.12.63. Simultaneously, the
Land and Development Office by its letter dated 19.12.63
informed the Club about the said taking over and called upon
them to pay a sum of Rs.25,000/- by means of a cheque
towards the compensation for the tools and plants etc.,
which were in the possession and use of the Club. The Club
has been making representations for grant of a regular lease
of the land and the buildings or the super-structure
standing thereon. Though, no formal lease deed as such was
executed, the Government of India, Ministry of Works Housing
and Supply, Land and Development Office, vide its letter
dated 23.4.68 communicated the sanction of the President of
India for the temporary allotment for the period upto 1980
of land measuring about 180 acres for the use of the Club on
the terms and conditions set out therein. The Club was
obliged to use the land and buildings for the bona fide
purposes of the Golf Club and for no other purpose and was
further obligated to pay rent from 8.11.63 at the rates more
fully set out therein. A restriction on any further
construction without the prior permission of the Government
and without obtaining the prior approval of building plans
from the Local Body as well as the Land and Development
Officer was also imposed. All the trees standing on the
land were declared to be the Government property which are
not to be cut or removed without the prior approval of the
Government. The lease was also stated to be a temporary one
terminable within one month notice from either side, with an
obligation to the Club, in case of such termination to
restore and surrender possession. Certain other conditions
regarding the manner of maintenance of the properties were
also imposed and it is unnecessary to dwell at length on
those conditions. The Club made the necessary payment as
required in the letter dated 23.4.68.
While matters stood thus, the Municipal Committee
served a notice dated 13.2.69 purporting to assess the
property in the hands of the Club and proposed to assess the
house/property tax under Section 65 of the Punjab Municipal
Act, 1911 (hereinafter referred to as the Act) in relation
to the Golf area (open land) and the building standing
thereon at the annual value of Rs.1,32,83,357.71. As
required in the notice, the Club, though felt surprised,
filed its objections contending that the proposed assessment
was wrong, illegal, ultra vires and without jurisdiction
since the Club was neither the owner nor a permanent lessee
of the property in question to attract liability under
Section 61 of the Act and that, in any event, the valuation
was also arbitrary and based on merely surmises and
conjectures. The purpose and objects of the Club which was
meant for the development and protection of the game of Golf
and the fact that it is a non-profit making enterprise, was
also duly highlighted. Though an opportunity to make
personal representation was also granted in the notice,
counsel deputed along with the Accountant was said to have
been not allowed to state anything, making the entire
exercise a mere pretence. Thereupon, vide a letter dated
3.5.69, the Club was informed that the assessment has been
finally settled and confirmed with an annual value of
Rs.1,32,83,357.70 with effect from 1.4.69 vide Resolution
No.19 (156) of the Ordinary Meeting of the Committee said to
have been held on 26.3.69. On the service of the said
proceedings on the Club on 5.5.69, an appeal was filed. In
the meantime, on 8.10.69 a notice came to be issued calling
upon the payment of Rs.16,60,420.68 as house tax for the
period from 1.4.69 to 31.3.70 within 7 days from receipt of
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the notice on threat of action under Section 80 (3) of the
Act. While repudiating the said claims and demands through
its counsel on 23.10.69, and faced with the threat of
recovery proceedings by the Authorities of the Municipal
Committee, the Club filed two Suits Nos.419/69 and 367/70 in
the Court of Subordinate Judge, 1st Class, Delhi, in respect
of the assessment years 1969-70 and 1970-71 seeking for
permanent injunction restraining the Municipal Committee
from realisation, demand or recovery of any amount as
house-tax from the plaintiffs and/or enforcing the demands
made as noticed above and/or from taking coercive measures
for the realisation of the said amount in any manner. By
judgment and decree dated 27.4.73, the suits were decreed as
prayed for and it was held by the learned Judge that the
Club had only a temporary lease of the property and,
therefore, was not liable to be assessed to tax under
Section 61 of the Act, that the suit was not barred under
Section 86 of the Act and that the assessment was also not
in conformity with Section 3 (1) of the Act. Aggrieved, the
Municipal Committee pursued the matter on appeal before the
District Court in RCA No.12976 and 130/76. The learned
First Appellate Judge also concurred with the judgment and
decree of the Trial Court and the appeals came to be
dismissed on 5.3.77. Though the matter was further pursued
before the High Court on second appeal in RSA Nos.206 &
207/77, the appeals came to be dismissed as withdrawn on
30.8.1985. An application filed seeking for review in CM
No.1250/85 also came to be dismissed on 20.9.85.
Thereafter, the matter was under suspense for some
time so far as the parties are concerned. Meanwhile, the
Government of India, Ministry of Urban Development, Land &
Development Office, by its proceedings dated 20.7.94
communicated its decision to allow the Club to use the land
measuring about 179 acres beyond 31.12.90 for 20 years, i.e.
from 01.01.1991 to 31.12.2010, subject to the terms and
conditions more fully set out therein, of which the
following may be mentioned as relevant and necessary for the
purposes of this case:-
I. The period of temporary lease will be for a
period of 20 years, i.e., from 1.1.1991 to 31.12.2010.
II. (I) The Delhi Golf Club shall be required to pay
annual ground rent for 2.08 acres or area required as per
building bye-laws for the covered area @ 5% of Rs.39 lakhs
per acre.
(ii) The club shall pay the Licence Fee @ Rs.1,000/-
per acre for the green area measuring 176.92 acres.
(iii) There will be complete ban of construction on
green areas and prior permission of the Government would be
necessary for any construction on 2.08 acres.
(iv) The Delhi Golf Club shall pay the property
tax/service charges or any other taxes demanded by local
bodies to pay the Government the equivalent amount (in case
Government is billed by local bodies) for the entire land
under their occupation. Though the property taxes for the
period prior to 1.1.91 does not form part of the Current
Lease Agreement, the Club shall, however, settle all issues
pertaining to outstanding property tax etc. with NDMC as
communicated to them vide their office letter dated
26.4.1993 and make necessary payments to NDMC in this
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regard. Their will be no liability in Government of India
whatsoever towards property tax.
III. The land shall be used for its bonafide
activities of promoting the sport of Golf.
In the light of the above position, you are required
to pay the following dues to this office on account of
licence fee, ground rent etc. for the period from 1.1.91 to
31.12.1995.
A. Ground rent of area 2.08 acres @ Rs.4,05,600/-
P.A w.e.f. 1.1.91 to 31.12.95 Rs.20,28,000.00
B. Licence fees of area 176.92 acres @ Rs.1,76,920/-
P.A. w.e.f. 1.1.91 to 31.12.95 Rs.8,94,600.00
2. The Government shall reserve its right either to
cancel the lease for the green area or terminate the lease
for the covered area or both by giving six months notice in
case it is decided to put the land to alternative use for a
public purpose.
4. If the terms and conditions referred to above are
acceptable, acceptance thereof alongwith the payment of
above dues may be sent to this office within 30 days from
the date of receipt of this letter failing which the terms
communicated to you for the extension of temporary allotment
will be withdrawn and cancelled without any further notice
to you.
The other conditions also specifically provided for
including the stipulated number of nominees from the
Government of India on the Management Committee of the Club
with full voting rights, preferential rights and priority to
use upto the stipulated extent and requirement, the
Government servants as also those who come to Delhi on
tenure basis. It was followed by a further communication
dated 20.6.95 informing about the complete ban of any
construction on the land measuring 176.92 acres of green
area and the restriction to use FAR of this green area for
construction of the building. A formal lease deed
evidencing the grant of temporary lease deed incorporating
the terms and conditions governing the same was executed
between the Club and the Government of India represented by
the President on 5.8.96. The period of lease under the
document was to commence from 1.1.91 and to be in currency
for the duration of 20 years making it clear that any
continuation beyond the expiry of the said period also has
to be only on temporary basis. A perusal of the various
clauses, 21 in number, with the relevant sub-clauses therein
would go to show that except permitting the use of the land
for the Club purposes stringent and strict conditions have
been imposed therein regulating the relationship and
respective rights of parties in and over the property in
question.
At this stage, the Municipal Committee appears to have
once again woke up by initiating proceedings and ultimately
raised a demand in a revised bill No. dated 24.11.94
calling upon the Club to pay a sum of Rs.4,37,56,289.90.
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The said sum was stated to include not only the arrears of
House Tax due up to 3/94 but also the amount due for the
year ending 3/95. A similar demand dated 5.12.94 appears to
have been raised in the name of the Land and Development
Officer in which, as against the column : Name of owner L
& D.O., Nirman Bhawan, has been specified. In the orders
of assessment also the name of the owner has been specified
as Land and Development Officer, only.
On receipt of the demand dated 24.11.94 and the
further communication dated 31.3.95 issued demanding payment
of the amount on threat of coercive action, the Club has
filed a Writ Petition No. CW 2349/95 in the High Court
seeking for the relief noticed supra. The sum and substance
of the challenge made to the levy and the threat of recovery
of the tax from the Club is that the tax in question is
leviable only on an owner of the property, which the Club
is not, it being only a temporary lessee permitted with
restricted use and enjoyment of the property for the objects
of the Golf Club and that the question of liability to pay
the property tax having been already decided in favour of
the Club by Courts holding the Club to be not liable in the
earlier proceedings filed before the Civil Court, the
Municipal Committee which was a party to the same is bound
by the principle of res judicata and, therefore, cannot make
any demand of House/Property Tax from the Club. The
Division Bench of the High Court by its judgment dated
14.7.97, though partly allowed the claim for 1969-70 and
1970-71, in view of the decision in the civil suits,
repelled the challenge made by the Club on both the grounds
and rejected the Writ Petition in other respects.
Shri T. R. Andhyarujina, learned Senior Advocate for
the appellant-Club, contended that the learned Judges of the
High Court committed an error in rejecting the plea of the
Club based upon the principle of res judicata and in this
connection, invited our attention to the decisions of the
English Courts and of this Court, apart from the treatise in
Text Books on the subject. Shri V.A. Mohta, learned senior
counsel for the respondent, with equal force contesting the
claim on behalf of the appellant-Club, brought to our notice
certain decisions. We consider it unnecessary to adjudicate
on this issue, since the claim can be decided even otherwise
on merits, without detriment to the appellant-Club. We
leave open the question relating to the applicability or
otherwise of the principle of res judicata in relation to
taxation matters to be decided in an appropriate case of
necessity.
The next ground of challenge is based on the
taxability of the property in question in the hands of the
appellant-Club. Section 61 of Act enables the Municipal
Committee to impose the various category of taxes enumerated
therein. The power to levy the House/Property Tax in
question is traceable to clause (a) which refers to a tax
payable by the owner of building and lands not exceeding
fifteen percent of the annual value. In dealing with this
aspect of the matter, the High Court seems to have proceeded
on the basis of the definition of the word owner with
reference to the dictionary and other meanings of the word
in its generic sense as also upon the alleged object assumed
to be underlying Section 61 (1)(a), i.e., to tax all persons
who possess and use the land within municipal limits for the
reason that any one possessing land and using the same does
make use of municipal services. First of all, the levy is
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not a fee to be viewed as referable to the availing of
municipal services. Further, the levy envisaged under
Section 61(1)(a) is property tax levied qua ownership of the
property within the municipal limits and income therefrom,
not a service tax payable for the service rendered to the
person in occupation of the land or building. That apart,
the Act itself has a definition of its own rendering it
unnecessary to delve into general connotation of the word
and Section 3 (11) defines owner to include the person for
the time being receiving the rent of land and buildings, or
either of them, whether on his own account or as agent or
trustee for any person or society or for any religious or
charitable purpose or who would so receive the same if the
land or building were let to a tenant. In contrast, clause
(e) and (ee) of sub-section (1) of Section 61 specifically
enables the levy of tax envisaged therein on the occupier
for availing of civic services and amenities. That apart,
the proviso to clause (a), in stipulating that in the case
of lands and buildings occupied by tenants in perpetuity
the tax shall be payable by such tenants, declares the
legislative intent in specific and unmistakable terms as
well as by necessary and inevitable implication that tenants
of the category other than tenants in perpetuity are
outside the purview of Section 61 (1)(a) of the Act.
Therefore, no tenant other than one holding a lease in
perpetuity can be saddled with any liability to tax qua his
status as a mere tenant under Section 61(1)(a) of the Act.
Periodical leases with provision therefor and actual such
renewals from time to time cannot be affixed with the
character of leases in perpetuity merely because
cumulatively considered the lessee might be in physical
possession for long, particularly when there is no vested
right of renewal as such in the lessee. The Government of
India in the Ministry of Urban Development, the lessor, is
the indisputable owner of the property leased in favour of
the Club and they have not done anything which could even
indicate slightly of the grant of their rights of ownership
in favour of the Club. The respondent-Local Authority,
therefore, cannot act in a manner which is likely to even
cast a cloud around the title, ownership and right to
possession of the Government of India. Consequently, the
view expressed by the High Court that the Club would
constitute owner for purposes of the levy in question,
does not either sound to reason or can be said to be in
conformity with the statutory provisions in force and,
therefore, does not merit our approval.
The incidental question that also needs reference and
consideration is as to whether the appellant-Club can be
held or said to hold the property in question as a tenant
in perpetuity. Even a cursory perusal of the orders
sanctioning the lease as well as the terms and conditions of
the lease would make it beyond any doubt that the lease in
question is merely a temporary allotment/temporary lease and
the further stipulation that any continuance, beyond even
the expiry of 20 years for which the temporary lease has
been granted shall also be a lease on temporary basis leaves
the matter beyond any controversies whatsoever. The various
clauses in the lease deed restricting and regulating the
mode and character of enjoyment by the lessee and the
specific stipulation reserving absolute power in the lessor
to terminate the lease and resume possession as and when
required on giving a notice for the stipulated period
militates against the lease being characterised as one in
perpetuity. In the light of the above, the respondent has
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no legal authority or jurisdiction to levy the
House/Property Tax against the appellant-Club in its
capacity merely as a tenant in respect of the property,
which is the subject-matter of the lease. The fact that
certain constructions have been put up by the Club or that
while so applying to the Municipal Body for permission to
put up such constructions, the appellant-Club represented
itself to be an owner is besides the point and wholly
irrelevant in the matter of consideration of levy and
collection of House/Property Tax on the property of the
leasehold and which is the subject-matter of the lease on
the Club qua its position and status as a mere lessee. In
respect of the vacant land or land over which constructions
have been put up by the owner of the land and all the
buildings which were themselves the subject-matter of lease
granted in favour of the appellant-Club, the appellant
cannot be assessed to House/Property Tax in question or
saddled with any liability therefor. The Club was not in
the present case sought to be made liable only in respect of
constructions put up by it and held by it during the period
of subsistence of the lease. We do not, therefore, decide
whether the Club can be made so liable.
For the reasons stated above, we allow the appeal and
set aside the judgment of the Division Bench of the Delhi
High Court under challenge and consequently hold -
a) That the appellant-Club is not liable to be levied
with or directed to pay House/Property Tax in respect of the
vacant land and land and buildings put up by the lessor and
owned by it and let to the Club as part of the demised
property;
b) That the question of taxability of the
appellant-Club in respect of buildings/structures put up by
it on the leasehold land is left open;
c) This judgment relates to the levy and collection of
only House/Property Tax from the Club, directly under
Section 61(1) (a) and not of any other class/category of
taxes which may be levied under the Act and in accordance
with law; and
d) The Club is entitled to costs in these proceedings
which we fix at Rs.25,000/-.