Delhi
Golf Club Limited & Anr Vs. N. D.M. C [2001] Insc 20 (15 January 2001)
S.P.Bharucha,
Doraswamy Raju, Ruma Pal Raju, J.
L.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 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 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 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.
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 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 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/-.
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