DELHI GOLF CLUB LTD. AND ANR. v. N.D.M.C

Citation: [2001] 1 S.C.R. 376

Court: Supreme Court of India

Bench: S.P. BHARUCHA, DORAISWAMY RAJU, RUMA PAL

Judgment text

DELHI GOLF CLUB LTD. AND ANR. v. N. D. M. C. JANUARY 15, 2001 [S. P. BHARUCHA, DORAISWAMY RAJU AND RUMA PAL, JJ. ] Punjab Municipal Act, 1911: Property Tax-levy of-A limited company was granted temporary lease of Government land for a period of 20 years only for the purpose of running a Golf club and for no other purposes-Any continuance even after the expiry of20 years was also to be on a temporary basis-No construction on the said land was permilled without prior permission of Government- Property tax demanded from the company-Liability of-Held: The company is not a owner but only a temporary lessee-The various restriction clauses in the lease deed indicate that the company is not a tenant-in-perpetuity- Therefore, no tenant other than a tenent-in-perpetuity is liable to property tax-Hence, the company, being a mere lessee and a tenant, cannot be levied property tax. Words and Phrases: "Tenants-in-perpetuity"-Meaning of-In the context of proviso to S.

61(/)(a) of the Punjab Municipal Act, 1911. The appellant-club was allotted Government land on lease for a period of 20 years. The lease deed stipulated that any continuance even after the p expiry of20 years would also be on a temporary basis. The appellant was obliged to use the land only for the purposes of the Golf club and for no other purposes. There was also a restriction on any further construction without prior permission of the Government. The respondent-Municipal Committee demanded property tax from the appellant under Section 6l(l)(a) of the Punjab Municipal Act, 1911. The appellant filed a writ petition before the High Court challenging the aforesaid · demand, which was dismissed. Hence this appeal. Allowing the appeal, the Court HELD : I. The levy of property tax under Section 6l(l)(a) of the DELHI GOLF CLUB LTD. v. N. D. M. C. 377 Punjab Municipal Act, 1911 is not a fee to be viewed as referable to the availing of municipal services.

Further, the levy envisaged under Section 61(l)(a) of the Act 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. 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 (I )(a) of the Act. Therefore, no tenent other than one holding a lease in perpetuity can be saddled with any liability to tax qua his status as a mere tenant uncier Section 61 (I)(a) of the Act.

Periodical leases with provision therefore and actual 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, the lessor, is the indisputable owner ofthe property leased in favour ofthe 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. 1384-A-B-C-D-E-F-G] 2.

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 tern porary allotment/temporary lease and the further stipulation, that any continuance beyond even the expiry of 20 years for which the ternporary 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 wh_en 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 no legal authority or jurisdiction to levy the House/Property Tax against the appellant-Club in its capacity merely as tenant in respect of the property, which is the subject-matter of the lease. 1385-A-D] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5898 of 1997. From the Judgment and Order dated July 14,l 99T passed by 1he Division Bench of the Delhi High Court in Civil Writ Petition No. 2349/95. T. R. Andhyarujina, Sanjeev Sen, Vivek Tyagi, Shailendra Swarup, A. K. Venna, Nisha Bagchi and Ms. lndu Malhotra for the app~raring parties. The Judgment of the Court was delivered by 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 limit . 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 amourit 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 Cfub 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 c;iallenge 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 per cent 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 (I )(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 not a fee to be viewed as referable to the availing of municipal services. Further, the levy envisaged under Section 6 I(I )(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 (I) 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 (I)(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 (I )(a) of the A:ct.

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 no legal authority or jurisdiction to levy the House/Property Tax against the appellant-Club in -,, its capacity merely as a tenant in respect ofthe property, which is the subjectmatter 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 <1nd 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 -,it 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; A (c) This judgment relates to the levy and collection of only House/ . J( ·- 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. B V. S. S. Appeal allowed.