Case: Municipal Corporation of Delhi through its Commissioner Vs. M.G. Jain

Mohan M. Shantanagoudar, J.1. The judgment of the High Court of Delhi dated 06.02.2007 passed in C.M.(M) Nos. 729/1999 and 730/1999 is under challenge in these appeals.2. For the sake of convenience, the brief facts are taken from Civil Appeal No. 948 of 2008. It is also clear that the facts in Civil Appeal No. 963 of 2008 are also similar in nature.Respondent was allotted Flat No. 56-C, Block-H, Category-III at Malviya Nagar Extension (Saket), under Self-Financing Scheme of Delhi Development Authority on 16.11.1978; the said flat was let out to Jay Engineering Works at a rental of Rs. 2,100/- per month by the respondent on 21.03.1981; the servant quarter was let out earlier to Mr. Akin and thereafter to Mr. Balveer Singh and subsequently to Mr. Anand Mukund Tigga at the monthly rent of Rs. 550/-; the Delhi Municipal Corporation sent a call letter dated 05.02.1994 pursuant to a notice under Section 126 of the Delhi Municipal Corporation Act, 1957 (since repealed after introduction of the Unit Area System) proposing ratable value at Rs. 5,360/- and invited the respondent for personal hearing; the Commissioner of Municipal Corporation amended the assessment list under Section 126 of the Delhi Municipal Corporation Act, 1957 (now repealed), inter alia, for increasing the amount of ratable value and assessment thereupon; the assessment order was passed against the respondent in respect of his premises on 28.03.1994 and ratable value was fixed at Rs. 14,810/- with effect from 01.04.1988, as also, at Rs. 21,830/- with effect from 12.07.1999; however, the ratable value of the flat along with servant quarter was fixed at Rs. 56,380/- vide another assessment order dated 18.03.1997.3. As against the same, the respondent approached the appellate forum, i.e., Additional District Judge, Delhi, who by his order dated 01.03.1999 held that since the respondent was actually receiving the rental value of Rs. 2,100/- per month, the assessing authority was not justified to assess the property on estimated rental. Having concluding so, the Additional District Judge, Delhi remanded the matter for assessment afresh on actual rental basis to the concerned authority of Delhi Municipal Corporation with a specific direction that the assessing authority of the Delhi Municipal Corporation shall afford a due and proper opportunity of being heard to the respondent.4. Municipal Corporation of Delhi, being aggrieved by the order of the Additional District Judge, Delhi dated 01.03.1999, approached the High Court of Delhi. The order of Additional District Judge, Delhi dated 01.03.1999 was confirmed by the High Court of Delhi on 06.02.2007 holding that Section 116G of the Delhi Municipal Corporation Act, 1957 is applicable to assessments even at the remanded stage, pursuant to the orders passed in appeals or in writ petitions. It was also clarified by the High Court that if the assessee at the remanded hearing, claims benefit of Section 116G of the Delhi Municipal Corporation Act, 1957, the same shall be granted to him. The said order of the High Court is under challenge in these appeals.5. At the time of motion hearing of the case in hand on 11.05.2007, this Court passed the following order:"Issue notice on the point of question of law on the interpretation of Section 116G of Delhi Municipal Corporation Act, 1957."Before proceeding further, it would be relevant to first extract Section 116G and Section 169 of the Delhi Municipal Corporation Act, both inserted with effect from 1.8.2003. Section 116G of the said Act reads as follows:"116G. Transitory provisions - Notwithstanding anything contained in this Act, as amended by the Delhi Municipal Corporation (Amendment) Act, 2003, a tax on vacant land or covered space of building or both, levied under this Act immediately before the date of coming into force of the Delhi Municipal Corporation (Amendment) Act, 2003, shall, on the coming into force of the Delhi Municipal Corporation (Amendment) Act, 2003, be deemed to be the tax on such vacant land or covered space of building or both, levied under this Act as amended by the Delhi Municipal Corporation (Amendment) Act, 2003, and shall continue to be in force until such tax is revised in accordance with the provisions of this Act, as amended by the Delhi Municipal Corporation (Amendment) Act, 2003.(2) Notwithstanding anything contained in sub-section (1), where assessment has not been finalized in respect of a vacant land or covered space of a building or both, on the date of the commencement of the Delhi Municipal Corporation (Amendment) Act, 2003 the assessee may have such land or building or both, as the case may be, assessed on the basis of the annual value.Section 169 after the amendment of 2003 reads as follows:"169. Appeal against assessment, etc. - (I) An appeal against the levy or assessment or revision of assessment of any tax under this Act shall lie to the Municipal Taxation Tribunal constituted under this section:Provided that the full amount of the property tax shall be paid before filing any appeal:Provided further that the Municipal Taxation Tribunal may, with the approval of the District Judge of Delhi, also take up any case for which any appeal may be pending before the court of such District Judge:Provided also that any appeal pending before the court of such District Judge shall be transferred to the Municipal Taxation Tribunal for disposal, if requested by the applicant for the settlement thereof on the basis of annual value.(2)(a) xxx xxx xxx(2)(b) xxx xxx xxx(2)(c) xxx xxx xxx(2)(d) xxx xxx xxx(2)(e) xxx xxx xxx(3) xxx xxx xxx(4) xxx xxx xxx(5) xxx xxx xxx"6. Learned counsel for the Municipal Corporation of Delhi has raised the question in respect of post-1994 scenario - that is after the Delhi Municipal Corporation came out with the Delhi Municipal Corporation (Determination of Rateable Value) Bye-laws, 1994 published in the Gazette on 24.10.1994. By these Bye-laws, the Delhi Municipal Corporation has taken upon itself the determination of rateable value of lands and buildings according to the principles laid down therein. The Delhi Municipal Corporation while determining the rateable value of the lands and buildings assessable to property tax at the annual rent which the building or land reasonably be expected to let from year to year under Section 116(1) of the Delhi Municipal Corporation Act, 1957. The rateable value of lands and buildings will be determined as per Bye-law 3 of 1994 Bye-laws.7. This Court in the case of Municipal Corporation of Delhi v. Mehrasons Jewellers Private Limited, (2015) 9 SCC 719 , was posed with a similar question as the one raised in these appeals, i.e., "whether the High Court was right in interpreting that Section 116G of the Delhi Municipal Corporation Act, 1957 would be applicable to assessments even at the remanded stage, pursuant to the orders passed in appeals or writ petitions". The very question was considered by this Court in the aforementioned judgment. While considering the question in detail, this Court referred to number of judgments including the judgment in MCD v. Major General Inderpal Singh Kahai, (2010) 169 DLT 352, passed by the Division Bench of the High Court of Delhi and opined that the view taken by the Delhi High Court in the said judgment was a correct view of law. In the aforesaid judgment in the case of Inderpal Singh Kahai(supra), the Delhi High Court observed thus:"9. It is clear from the third proviso to Section 169(1) of the DMC Act that even where an assessment is finalised, but an appeal is pending, an assessee is entitled to ask for a decision in the appeal on the annual value basis. In other words, even at an appellate stage, an assessee is empowered to ask for a decision on the basis of the annual value of the property.10. Therefore, three situations are postulated:Firstly, where an assessment has been finalised and no appeal is filed against it, then the assessment will continue to be operative until it is revised.Secondly, where an assessment has been finalised but an appeal has been filed against it, then as per the third proviso to Section 169(1) of the DMC Act, the assessee can ask for an assessment on the basis of the annual value of the property.Thirdly, where the assessment is not finalised, then as per Section 116-G(2) of the DMC Act, the assessee can ask for an assessment on the basis of the annual value of the property.11. It appears to us that the intention of the legislature was to commence the levy of property tax with effect from 1-4-2004 on a clean state-in respect of all pending assessments and in respect of all appeals pending against finalised assessment orders. All assessments in such cases would be made after 1-4-2004 on the option of the assessee, on the basis of the annual value of the property. If the statutory amendment is read and understood in this light, it is clear that Section 116-G(2) of the DMC Act not only entitles an assessee to seek an assessment on the annual value basis, in an assessment not yet finalized, but it also empowers the assessee in making such a demand as a matter of right.12. Looked at from another point of view, if Section 116-G(2) of the DMC Act does not so empower an assessee, then not only would the purpose of that section be lost, but a rather strange and anomalous situation would be created-namely, that in a pending appeal against a finalised assessment, an assessee can demand an assessment on the basis of the annual value of the property [third proviso to Section 169(1) of the DMC Act] but in a pending assessment, the assessee cannot demand an assessment on the basis of the annual value. Surely, such an odd situation is not postulated by the law or by the legislature.xxx xxx xxx15. In our opinion, there is an error in the submission made by the learned counsel for the Municipal Corporation. The error is in appreciating the term `finalised assessment. An assessment in the context of Section 116-G(2) of the DMC Act means an assessment that has been accepted by the assessee and is not the subject-matter of a statutory appeal. It does not include an assessment set aside in appeal nor does it include an assessment challenged by way of a statutory appeal. This being so, the assessment made by the Joint Assessor and Collector and set aside by the learned Additional District Judge by his order dated 1-4-2002 is not a `finalised assessment within the meaning of Section 116-G(2) of the DMC Act. The assessment in the case of the respondents having been set aside and remanded back for re-determination of the rateable value by the learned Additional District Judge clearly indicates that the assessment was wide open. In that sense, it was not `finalised insofar as the provisions of Section 116-G(2) of the DMC Act are concerned.16. According to the learned counsel for the Municipal Corporation, notwithstanding this, once the assessment is made by the Joint Assessor and Collector, it must be taken to be finalised for the purpose of Section 116-G(2) of the DMC Act. This submission would be correct if the assessment order is accepted by the assessee or is not challenged in appeal, but in the present case where the assessment order itself has been set aside with a direction by the learned Additional District Judge to re-determine the rateable value (and no fresh order has been passed by the Joint Assessor and Collector in terms of the directions given by the Additional District Judge) it cannot be said that the assessment has been finalised at least at the hands of Joint Assessor and Collector."8. Thereafter, this Court proceeded to observe that the word "settlement" would not in this context mean a consensual arrangement between both parties but would only mean a determination to be made by the Tribunal on the basis of annual value. This Court upheld the view of the Delhi High Court in the case of Major General Inderpal Singh Kahai(supra) that if the assessment order passed by the assessing officer is accepted by the assessee and is not challenged in appeal, then such assessment order must be taken to be finalized for the purpose of Section 116G (2) of the Delhi Municipal Corporation Act, 1957. However, where the assessment order itself has been set aside with a direction by the learned Additional District Judge to re-determine the rateable value and no fresh order has been passed by the joint assessor or collector in terms of the directions by the Additional District Judge, it cannot be said that the assessment has been finalized at least at the hands of the joint assessor or collector. After considering the entire case law on the subject, this Court in the case of Mehrasons Jewellers (P) Ltd. (supra) concluded as under:"24. This being the position in law, an assessment that has not been finalised in all cases where an appeal is pending before the District Judge, as also in all cases which have not become "final" in the sense that the appellate authority or the High Court or the Supreme Court (after 2003), in respect of an assessment of property tax prior to 2003, remands the matter for fresh determination, would all be covered by the language of Section 116-G(2). We are, therefore, of the view that the High Court is correct and this group of appeals, therefore, consequently stands dismissed."9. In view of the aforesaid, we are of the view that the issue involved in the present appeals is squarely covered by the judgment of this Court in Mehrasons Jewellers case (supra). Thus, the High Court was justified in concluding that the assessment has been finalized inasmuch as the matter is remanded by the District Court to the assessing officer for fresh determination, in accordance with law. The matter has not become final in respect of the assessment of the property tax prior to 2003.

Decision reasoning: 0[ds]s, the Delhi Municipal Corporation has taken upon itself the determination of rateable value of lands and buildings according to the principles laid down therein. The Delhi Municipal Corporation while determining the rateable value of the lands and buildings assessable to property tax at the annual rent which the building or land reasonably be expected to let from year to year under Section 116(1) of the Delhi Municipal Corporation Act, 1957. The rateable value of lands and buildings will be determined as perThereafter, this Court proceeded to observe that the word "settlement" would not in this context mean a consensual arrangement between both parties but would only mean a determination to be made by the Tribunal on the basis of annual value. This Court upheld the view of the Delhi High Court in the case of Major General Inderpal Singh Kahai(supra) that if the assessment order passed by the assessing officer is accepted by the assessee and is not challenged in appeal, then such assessment order must be taken to be finalized for the purpose of Section 116G (2) of the Delhi Municipal Corporation Act, 1957. However, where the assessment order itself has been set aside with a direction by the learned Additional District Judge tothe rateable value and no fresh order has been passed by the joint assessor or collector in terms of the directions by the Additional District Judge, it cannot be said that the assessment has been finalized at least at the hands of the joint assessor or collector.In view of the aforesaid, we are of the view that the issue involved in the present appeals is squarely covered by the judgment of this Court in Mehrasons Jewellers case (supra). Thus, the High Court was justified in concluding that the assessment has been finalized inasmuch as the matter is remanded by the District Court to the assessing officer for fresh determination, in accordance with law. The matter has not become final in respect of the assessment of the property tax prior to 2003.