Through: Mr. Rajat Malhotra, Adv v. SOUTH DELHI MUNICIPAL CORPORATION& ANR..... Defendants
Delhi High Court·17 Nov 2014·2014:DHC:6117
HON'BLE MR. JUSTICE G.P. MITTAL G.P. MITTAL, J.
2014:DHC:6117
civilappeal_dismissedSignificant
AI Summary
The Delhi High Court held that civil courts lack jurisdiction to entertain suits challenging property tax assessments under the DMC Act where statutory appeal remedies with pre-deposit requirements exist, dismissing the plaintiffs' suit as not maintainable.
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CS (OS) No. 814/2014 HIGH COURT OF DELHI Pronounced on: 17th November, 2014
CS(OS) 814/2014 M/S G.P.S PROPERTIES PVT LTD & ANR ..... Plaintiffs Through: Mr. Rajat Malhotra, Adv.
VERSUS
SOUTH DELHI MUNICIPAL CORPORATION& ANR..... Defendants Through: Nemo.
CORAM:
HON'BLE MR. JUSTICE G.P. MITTAL G.P. MITTAL, J.
JUDGMENT
1. This suit has been filed by the Plaintiffs seeking relief of declaration that the Assessment Order no.TAX/CIR/2013/453 dated 01.03.2013 passed by the Defendants and subsequent demand for payment on the basis of the Assessment Order as well as notice and warrant of attachment issued in pursuance thereof are illegal. The Plaintiffs further seek a decree of permanent injunction qua issuance of any such demand in future. 2014:DHC:6117
2. On 24.03.2014, at the time of preliminary hearing of the suit, certain doubts were raised about the maintainability of the suit based upon the judgments in Srikant Kashinath Jituri v. Corporation of the City of Belgaum (1994) 6 SCC 572 and N.D.M.C. v. Satish Chand (2003) 10 SCC 38. The learned counsel for the Plaintiffs wanted to satisfy the Court about the maintainability of the suit. However, the matter was adjourned from time to time.
3. For judging the maintainability of the suit, it would be essential to go into the premise on which the suit has been filed. Plaintiff no.1 was allotted plots of land bearing nos.4,[5] and 6, Shivaji Complex, District Centre, Raja Garden, New Delhi and he raised construction of a Mall/commercial complex thereon and occupancy certificate dated 25.07.2008 was issued by the DDA for occupancy of the building built. Plaintiff no.2, developer for and on behalf of Plaintiff no.1 entered into various Floors Space Buyer Agreements in respect of various units sold by Plaintiff no.1 with various persons who purchased various spaces in the mall/commercial complex.
4. The Plaintiffs’ grievance is that Plaintiff no.1 had paid the property tax for the entire land and the building comprising the mall/commercial complex calculated by unit area method w.e.f. 01.04.2014 till the year 2008 amounting to Rs.51,09,217/-. Now, since various portions of the Mall have been sold in pursuance of the Floors Space Buyer Agreements, the said buyers would also become owners in respect of the proportionate common area. Thus, there was no liability on Plaintiff no.1 to pay the property tax now in respect of the said common areas and the demand of property tax for the said common areas and subsequent issuance of warrant of attachment for a sum of Rs.2,48,68,624/- from the accounts of the Plaintiffs is illegal. It is averred that the Assessment Order dated 01.02.2013 was challenged by Plaintiff no.1 by filing an appeal under Section 169 of the Delhi Municipal Corporation Act, 1957 on the ground that the demand raised by the MCD was per se illegal. However, since Plaintiff no.1 was unable to deposit the due amount as required under Section 170 (b) of the DMC Act, 1957, the appeal was withdrawn with liberty to file afresh vide order dated 25.11.2013. Hence, the instant suit has been filed as stated above. Paras 26 to 28 of the plaint are extracted hereunder:-
“26. That the said Assessment Order dated 01/02.03.2013, the consequent alleged Demand Notices and Warrants of Distress were challenged by Plaintiff No.1 in an appeal under Section 169 of the Delhi Municipal Corporation Act, 1957 on the ground of the
demand per se being illegal and without any basis. However, Plaintiff No.1 not being in a position to deposit the amount as required under Section 170(b) of the Delhi Municipal Corporation Act, 1957, the said appeal was withdrawn with liberty vide order dated 25.11.2013.
27. That the present suit is now being filed to challenge the illegal and unlawful demand raised by the Defendants seeking declaration against the impugned Demand Notices, the Assessment Order and Notices of Warrants. Further, relief of permanent injunction is also sought in consequence.
28. That it is an admitted position that area comprising the built up mall/commercial complex could’ve been sold by Plaintiff No.1. The demand however, has been raised on the premise that only rights in the 1st to 3rd floor could’ve been sold and that no rights could’ve been transferred in the Suit Property. The said premise, it is submitted, is illegal and has no basis in the terms of the lease. The Perpetual Lease Deed relied upon entails no negative covenant as read in by the Defendants in the Assessment Order dated 01./02.03.2013. Further that the Suit Property is admitted only to be utilized for parking and can hence only be used as common area and facility available to all “Floor Space Buyers”/ “owners”/ occupiers of the mall/commercial complex and can in no form or manner be retained as exclusive “owner” by Plaintiff No.1.”
5. I have heard Mr. Rajat Malhotra, learned counsel for the Plaintiffs and have perused the record.
6. Relying on Division Bench judgment of this Court in Ganga Ram Hospital Trust v. Municipal Corporation of Delhi MANU/DE/0594/2001, learned counsel for the Plaintiffs states that since there is a requirement of pre-deposit of the tax amount due before filing the appeal the same cannot be said to be an adequate and efficacious remedy and thus, the Civil Court will have jurisdiction to entertain the suit where an illegal demand is raised for recovery of property tax. The learned counsel for the Plaintiffs particularly relies on paras 27 and 28 of the judgment wherein Srikant Kashinath Jituri v. Corporation of the City of Belgaum (supra) as pointed out by the learned Single Judge in his order dated 24.03.2014 was distinguished and it was held that in view of absence of adequate or efficacious alternative remedy, the Civil Court will not lose jurisdiction to entertain the suit. In para 27, the Division Bench observed as under:-
“27. In view of the above statement of law the conclusion is inevitable that the remedy of appeal provided under Section 169 of the Act for which a pre-requisite condition is the deposit of amount in dispute in view of Section 170(b) of the Act is too onerous to be called an adequate or efficacious alternative remedy. The condition which is required to be satisfied before the right of appeal can be exercised often renders the right of appeal illusory. Without complying with the requirement of pre-deposit an appeal cannot be heard. This condition often negates the right of appeal conferred by the Statute. Therefore, it cannot be said that the Delhi Municipal Corporation Act contains an adequate or efficacious remedy by way of appeal in matters pertaining to levy and assessment of property tax under Sections 169 and 170 of the Act. When the right of appeal is such a truncated right and often it is difficult to avail of the right, the inevitable
which follows is that an aggrieved party must have a remedy and the remedy of civil suit cannot be denied to such a party.”
7. It is further urged by the learned counsel for the Plaintiffs that the dicta of Supreme Court in Satish Chand (supra) will not change the position as Munshi Ram & Ors. v. Municipal Committee Chheharta, AIR 1979 SC 1250 and Dhulabhai Etc. v. State of Madhya Pradesh & Anr., AIR 1969 SC 78, which form the basis for the judgment in Satish Chand (supra) were considered by the Division Bench in Ganga Ram Hospital Trust. Thus, reliance on Dhulabhai Etc. and Munshi Ram & Ors. and Sobha Singh & Sons (P) Ltd. V. New Delhi Municipal Committee, 34 (1988) DLT 91 will be of no consequence. It is hence urged that the judgment in Satish Chand is not attracted to the facts of the present case. The case being covered by Ganga Ram Hospital Trust, the suit is maintainable.
8. The only distinguishing feature which has been stressed by the learned counsel for the Plaintiffs for not applying the principles of Dhulabhai Etc. v. State of Madhya Pradesh & Anr., AIR 1969 SC 78 and following Ganga Ram Hospital Trust is that the provision of Section 170(b) of the DMC Act, 1957 making it mandatory to deposit the entire amount of property tax due as a condition precedent being onerous, the civil suit will be maintainable.
9. In Dhulabhai Etc. v. State of Madhya Pradesh & Anr., AIR 1969 SC 78 the exceptions, i.e., the suits which are barred were laid down. However, in para 5 of N.D.M.C. v. Satish Chand (2003) 10 SCC 38, the Supreme Court held as under:-
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5. The opening words of the section give a very wide jurisdiction to the civil courts to try all suits of a civil nature, however, this wide power is qualified by providing an exception i.e. “excepting suits of which their cognizance is either expressly or impliedly barred”. Dhulabhai v. State of M.P. [AIR 1969 SC 78] is a celebrated judgment on the point which still holds the field. It lays down the following principles:- “(1) Where the statute gives a finality to the orders of the Special Tribunals the civil court's jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. (2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not. (3) ……………… (4) ……………… (5) ……………… (6) ……………… (7) ………………”
10. The provisions of the DMC Act, 1957, which were applicable to the erstwhile areas under the Municipal Corporation of Delhi and the Punjab Municipal Act, 1911 before coming into force of the New Delhi Municipal Council Act, 1994 are pari materia. Sections 84, 85 and 86 of the Act of 1911 are extracted hereunder:-
“84. Appeals against taxation: - (1) An appeal against the assessment or levy of any or against the refusal to refund any tax under this Act shall lie to the Deputy Commissioner or to such other officer as may be empowered by the State Government in this behalf: Provided that, when the Deputy Commissioner or such other officer as aforesaid is, or was when the tax was imposed, a member of the committee, the appeal shall lie to the State Government. (2) If, on the hearing of an appeal under the section, any question as to the liability to, or the principle of assessment of, a tax arises on which the officer hearing the appeal entertains reasonable doubt, he may, either of
his own motion or on the application of any person interested, draw up a statement of the facts of the case and the point on which doubt is entertained, and refer the statement with his own opinion on the point for the decision of the High Court. (3) On a reference being made under sub-section (2), the subsequent proceedings in this case shall be, as nearly as may be, in conformity with the rules relating to references to the High Court contained in section 113 and Order XLVI of the Code of Civil Procedure. (4) In every appeal the costs shall be in discretion of the officer deciding the appeal. (5) Costs awarded under this section into the Committee shall be recoverable by the committee as though they were arrears of a tax due from the appellant. (6) If the committee fails to pay any costs awarded to an appellant within ten days after the date of the order for payment thereof, the officer awarding the costs may order the person having the custody of the balance of the municipal fund to pay the amount.
85. Limitation of appeal: - (1) No appeal shall lie in respect of a tax on any land or building unless it is referred within one month after the publication of the notice prescribed by Section 66 or Section 68, or after the date of any final order under Section 61, as the case may be and no appeal shall lie in respect of any other tax unless is preferred within one month from the time when the demand for the tax is made: Provided that an appeal may be admitted after the expiration of the period prescribed therefore by this section if the appellant satisfied the officer before whom the appeal is preferred that he had sufficient cause for not presenting the appeal within that period. (2) No appeal shall be entertained unless the appellant has paid all municipal taxes due from him to the committee upto the date of such appeal.
86. Taxation not to be questioned except under this Act: - (1) No objection shall be taken to any valuation or assessment, nor shall the liability of any person to be assessed or taxed be questioned, in any other manner or by any other authority than is provided in this Act. (2) No refund of any tax shall be claimable by any person otherwise than in accordance with the provisions of this Act and the rules thereunder.”
11. Similarly, provisions of Sections 169, 170 and 171 of the DMC Act, 1957 read as under:-
“169. Appeal against assessment, etc.
(1) An appeal against the levy or assessment of any tax
under this Act shall lie to the court of the district judge of
Delhi.
(2) …………….
(3) …………….
(4) …………….
(5) …………….
(6) …………….
170. Conditions of right to appeal:-
No appeal shall be heard or determined under section
169 unless—
(a) the appeal is, in the case of a property tax, brought within thirty days next after the date of authentication of the assessment list under section 124 (exclusive of the time requisite for obtaining a copy of the relevant entries therein) or, as the case may be, within thirty days of the date on which an amendment is finally made under
section 126, and, in the case of any other tax, within thirty days next after the date of the receipt of the notice of assessment or of alteration of assessment or, if no notice has been given, within thirty days after the date of the presentation of the first bill or, as the case may be, the first notice of demand in respect thereof: Provided that an appeal may be admitted after the expiration of the period prescribed therefor by this section if the appellant satisfies the court that he had sufficient cause for not preferring the appeal within that period; (b) the amount, if any, in dispute in the appeal has been deposited by the appellant in the office of the Corporation.
171. Finality of appellate orders The order of the court confirming, setting aside or modifying an order in respect of any rateable value or assessment or liability to assessment or taxation shall be final: Provided that it shall be lawful for the court, upon application or on its own motion, to review any order passed by it in appeal within three months from the date of the order.
12. The contention raised by the learned counsel for the Plaintiffs runs counter to the ratio in N.D.M.C. v. Satish Chand (2003) 10 SCC 38
and thus, it cannot be said that the civil suit is maintainable to challenge the liability determined by the Assessing Officer with regard to the payment of property tax simply on the ground that the Plaintiffs claim the levy to be illegal.
13. The civil suit filed by the Plaintiffs after withdrawing the appeal before the Appellate Tribunal is misconceived on the strength of Satish Chand. There is no manner of doubt that the civil suit is not maintainable. The plaint is therefore, liable to be rejected. I order accordingly.
14. Pending applications, if any, also stand disposed of.
G.P. MITTAL
(JUDGE)
NOVEMBER 17, 2014
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