Sir Sobha Singh & Sons Pvt. Ltd v. The New Delhi Municipal Council

; * IN THE HIGH COURT OF DELHI AT NEW DELHI

¶32+ W.P. (C) No. 3348/2010 ASSOCIATION OF CONCERNED CITIZENS OF NEW DELHI Petitioner Through;Ms. ManinderAcharya,SeniorAdvocate with Mr. Trideep Pais, Mr. AmitabhChaturvedi, Mr. Sahil Sood and Ms. Deeksha Gujral, Advocates. versus NEWDELHIMUNICIPALCOUNCIL& ORS Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, StandingCounsel and Ms. Rhea Verma, i Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. • j Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶28WITH + i W.iP. (C) No. 12689/2009 BABAR ROAD COLONY LEASE HOLDER ASSOCIATION Petitioner Through: Mr. Arvind Kumar Gupta and Mr. I AlpanaMalik,Advocates. [ versus NEW DELHI MUNICIPALCOUNCIL& ORS Respondents i Through: Mr. Sanjay Jain, Senior Advocate with i Mr. Arjun Mitra, Standing Counsel, Ms. Mcidhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, I Advocatesfor NDMC. W.p.(C) 3348/2010&connectedmatters I of40 Signed By:RAM DATT Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶29WITH + W.P. (C) No. 1985/2010 WAZIR ESTATES P LTD. & ANR. Petitioners Through: Mr. Sanjeev Anand and Mr. Akshay Kapoor, A.dvocates. versus NEW DELHI MUNICIPAL COUNCIL & ANR Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rliea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶30WITH + W.P. (C) No. 2315/2010 JOR BAGH ASSOCIATION & ORS. Petitioners Through: Mr. Pawanjit S. Bindra, Advocate. versus NEW DELHI MUNICIPAL COUNCIL & ORS Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madnu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, zA.dvocates for UOI.

¶31WITH + W.P. (C) No. 3074/2010 fV.p. (C) 3348/2010 & connected matters ///// ///// V. .y STATE BANK OF INDIA Petitioner Through: Mr. S. L. Gupta and Ms. MithileshPal, Advocates. versus THE NEW DELHI MUNICIPAL COUNCIL & ANR. Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶34WITH + W.P. (C) No. 4047/2010 & CM No. 20199/2016 NEW DELHI TRADERS ASSOCIATION Petitioner Through: Mr. Abhimanyau Mahajan, Mr. Milan Deep Singh and Ms. Anubha Goel, Advocates. versus NEW DELHI MUNICIPAL COUNCIL & ORS. Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI. WITH

¶36+ W.P. (C) No. 8679/2010 ASHOK SHARMA Petitioner fV.P.fCJ3348/2010 & connected matters Page 3 of40 ////// ///// I ; Through:Ms. VasudhaJaivedi,Advocate. versus NEW DELHI MUNICIPAL COUNCIL & GOVT. OF NCT OF DELHI Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, StandingCounsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶37WITH + W.P. (C) No. 363/2011 ABHA SINGH AND ORS. Petitioners Through:Mr. SubhashC. Jindal, Advocate. versus: NEW DELHI MUNICIPAL COUNCIL & ANR Respondents Through::,Mr.: Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶38WITH + W.P. (C) No. 7296/2011& CM No. 16576/2011 THE MODERN SCHOOL DELHI Petitioner Through: Mr. B. B. Jain, Advocate. versus W.P.(C)3348/2010&connectedmatters Page4of40 ////// NEW DELHIMUNICIPALCOUNCIL&ORS Respondents Through: Mr. Sanjay Jain, Senior Advocatewith Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, StandingCounsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Msv Meera Bhatia, Advocates for UOI.

¶39WITH + W.P. (C) No. 7491/2011& CM No. 16982/2011 JASDEVSINGH&ANR. Petitioners Through:Mr. B. B. Jain,Advocate. versus NEW DELHIMUNICIPALCOUNCIL& ORS. Respondente Through: Mr. Sanjay Jain, Senior Advocatewith Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, StandingCounsel and Ms. Rhea Verma, Mr. Abhishek . Misra, Ms. Jaskaran Kaur, Advocates for NDMG. Mr. ArunirBhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶40WITH + W.P. (C) No. 728/2012 ALKA SAHANI Petitioner Through:Mr. S.K. Jain, Advocate. versus NEW DELHIMUNICIPALCOUNCIL& ANR Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu W.P.(C)3348/2010&connectedmatters ^of40 /////// ///// f \ Tewatia, StandingCounsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶41V/ITH + W.P. (C) No. 729/2012 PREETI SARAF Petitioner Through:Mr. S.K. Jain, Advocate. versus NEW DELHI MUNICIPAL COUNCIL & ANR Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶42WITH + W.P. (C) No. 1153/2012 SCHOKHI INDUSTRIALS PVT. LTD. Petitioner. Through: Mr. S.K. Jain, Advocate. versus NEW DELHI MUNICIPAL COUNCIL «& ORS Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. W.p.(C) 3348/2010&connectedmatters 6of40 ////// y

¶43+ Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI. WITH W.P. (C) No. 1154/2012 MAK ENTERPRISES PVT. LTD. Through: Mr. S.K. Jain, Advocate. .Petitioner versus NEW DELHI MUNICIPAL COUNCIL & ORS Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶46WITH + W.P. (C) No. 1487/2012 MG BUILDERS AND CO. PVT. LTD. Through: Mr. S.K. Jain, Advocate. .Petitioner

¶47versus NEW DELHI MUNICIPAL COUNCIL & ORS Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI. WITH W.P.(C) 3348/2010 & connected matters ////// / o + W.P. (C) No. 1492/2012 NIRJA SAWHNEY Petitioner Through: Mr. S.K. Jain, Advocate. versus NEW DELHI MUNICIPAL COUNCIL & ORS Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶50WITH + W.P. (C) No. 1822/2012 DR. MANJU LATA SARAF & ANR. Petitioner Through: Mr. S.K, Jain, Advocate. -. versus., ' ' ' NEW DELHI MUNICIPAL COUNCIL & ORS Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, . Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶52WITH + W.P. (C) No. 2088/2012 TANIA JAIN Petitioner W.P.(C) 3348/2010 <6 connected matters //////// / Through:Mr. S.K. Jain, Advocate. versus NEW DELHI MUNICIPAL COUNCIL & ORS Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶53WITH + W.P. (C) No. 2091/2012 TANIAJAIN .....Petitioner Through: Mr. S.K. Jain, Advocate. versus NEW DELHI MUNICIPAL COUNCIL &,ORS Respondents Through; Mr. Sanjay Jain, Senior Advocate with Mr. ArjuniMitraj, Standing Counsel, Ms. Madhu Tewatia, StandingCounsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. V Mr. Arun Bhardwaj and Ms. Meera Bhatia, ^ Advocates for UOI.

¶54WITH + W.P. (C) No. 2102/2012 TANIA JAIN Petitioner Through: Mr. S.K. Jain, Advocate. versus W.P.(C)3348/2010& connectedmatters ///// NEW DELHI MUNICIPAL COUNCIL & ORS Pvespondents Through: Mr. Sanjay .Iain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶55WITH + W.P. (C) No. 3453/2012 HOTEL QUEEN ROAD PVT. LTD. Petitioner Through: Mr. Mohit Chaudhar\', Advocate. versus NEW DELHI MUNICIPAL COL^NCIL & ORS Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel. Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶58WITH + W.P. (C) No. 1759/2012 & CM No. 3153/2015 SIR SOBHA SINGH & SONS PVT. LTD. .....Petitioner Through: Mr. Aman Ahluwalia, Ms. Akanksha Munjal, Mr. Nakul Gandhi and Mr. Shravan Sahny, Advocates. versus W.P.(C)334S/2010& connected matters Page 10of 40 ///// THE NEW DELHI MUNICIPAL COUNCIL & ORS. ...Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶60WITH + W.P. (C) No. 645/2016 CARVANSERAI LIMITED Petitioner Through: Mr. Aman Ahluwalia, Ms.. Akanksha Munjal, Mr. Nakul Gandhi and Mr. Shravan Sahny, Advocates. versus NEW DELHI MUNICIPAL COUNCIL & ANR Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶61WITH + W.P. (C) No. 1996/2016 & CM No. 8627/2016 INDIAN TOURISM DEVELOPMENT CORPORATION Petitioner Through: Ms. Shweta Bharti and Mr. J. K. Chaudhary, Advocates. versus fV.P.(C) 3348/2010 & connected matters Page I] of 40 ////// -f NEW DELHI MUNICIPAL COUNCIL Respondent Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶62WITH + W.P. (C) No. 1997/2016& CM No. 8629/2016 INDIAN TOURISM DEVELOPMENT CORPORATION Petitioner Through: Ms. Shweta Bharti and Mr. J. K. Chaudhary, Advocates. versus NEW DELHI MUNICIPAL COUNCIL Respondent Through: Mr.!-SanjayJain, Senior Advocate with Mr. Arjun Mitra,.Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶63WITH + W.P. (C) No. 1998/2016 «& CM No. 8631/2016 INDIAN TOURISM DEVELOPMENT CORPORATION Petitioner Through: Ms. Shweta Bharti and Mr. J. K. Chaudhary, Advocates. W.P.(C)3348/2010&connectedmatters Page12of40 //////// versus NEW DELHI MUNICIPAL COUNCIL Respondent Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI.

¶64WITH + W.P. (C) No. 2001/2016 & CM No. 8644/2016 KIRTIABROL & ANR. Petitioners Through: Mr. Ashish Mohan and Mr. Mohit Kumar, Advocates. versus NEW DELHI MUNICIPAL COUNCIL Respondent Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra,, Standing Counsel, Ms. Madhu Tewatia,; Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, ' Advocates for UOI.

¶67AND + W.P. (C) No. 1581/2017 & CM No. 7124/2017 HALMIRAH ESTATE TEA PRIVATE LIMITED Petitioner Through: Mr. Ajay Bhargava and Mr. Aseem Chaturvedi, Advocates. versus W.P.(C) 3348/2010 & connected matters ////// //////// NEW DELHI MUNICIPAL COUNCIL & ANR Respondents Through: Mr. Sanjay Jain, Senior Advocate with Mr. Arjun Mitra, Standing Counsel, Ms. Madhu Tewatia, Standing Counsel and Ms. Rhea Verma, Mr. Abhishek Misra, Ms. Jaskaran Kaur, Advocates for NDMC. Mr. Arun Bhardwaj and Ms. Meera Bhatia, Advocates for UOI. CORAM: JUSTICE S. MURALIDHAR JUSTICE PRATHIBA M. SINGH OR PER %

10.08.2017 Dr. S. Muralidhar, J.: Introduction

¶1The challenge in all these writ petitions filed under Article 226 of the Constitution is to the constitutional validity of the New Delhi Municipal Council (Determination of Annual Rent) Bye-laws, 2009 (hereinafter 'the new impugned Bye-laws'). In all these petitions barring a few no interim stay of recovery of the disputed property tax was granted. However, it was clarified that "in case at the stage of final hearing it is found that the Petitioner has deposited excess tax, directions can be passed for refund along with interest as is charged by R-1 from the defaulters." The reference to R-1 is to the New Delhi Municipal Council ('NDMC') which is the principal contesting Respondent in all these petitions.

¶2By the new impugned Bye-lav^s, the NDMC brings about a change in the method of arriving at the rateable value for the purposes of property tax. It seeks to change the existing system of determining the rateable value on the W.P.(C)3348/2010 & connected matters Page 14 of40 ////// V ' basis of the annual rent at which the land or buildingsmay reasonablybe expectedto be let from year to year to a Unit Area Method('UAM'). In the UAM, first the Unit Area Value ('UAV') i.e. per sq. Ft./meterofa property is fixedwithreferenceto the characteristicsof the propertysuch as location, occupancy, age, structure. The UAV is then multiplied by the area of the vacant land or covered space to arrive at its annual value.

¶3The new impugned Bye-laws are sought to be challengedon several grounds. Broadly it is sought to be contended that the UAM cannot be introducedby way of the new impugned Bye-laws without amending the New Delhi MunicipalAct, 1994 ('NDMC Act') which even as of today contemplates determination of the rateable value on the basis of the annual rent at which the land or buildingmight reasonablybe acceptedto be let. The contentionis that the new impugnedBye-lawscannotbejustifiedwith reference to the rule making power conferred on the NDMC under Section 388 (1) A (9) ofthe NDMC Act. Itis contendedthatthe new impugnedBye-laws are, therefore,ultra vires the NDMC Act as they go far beyond the scope and ambit of the NDMC Act. The second broad groundof challenge, which is withoutprejudiceto the first, is that the new impugnedBye-laws are arbitrary, unreasonable, discriminatoryand irrational and, therefore, violative of Articles 14 and 19 of the Constitution of India.

¶4The Court in this judgmentupholdsthe challengeof the Petitioneras to the validity of the new impugned Bye-laws on the first ground itself. Consequently,the Court has not considered it necessary to examine the second ground of challengeat this stage. The said ground of challengeis IV.P.(C)3348/2010&connectedmatters Page 15 of40 ////// //////// to reservedto be urgedat the appropriatetime in future ifthe same is available, when the NDMC Act is amendedto bringaboutthe changeinthe systemof determinationof the rateablevalue of land and buildingfor the purposesof the levy of the property tax.

¶5Althoughthe facts in respectof each of the petitionsmay slightlyvary, since the principalreliefsought in each of them is identical,viz., declaring the new impugnedBye-laws to be unconstitutionaland invalid, the Court proposes to refer illustrativelyto the facts in Writ Petition (C) No. 3348 of 2010 which is by an Association of Concerned Citizens of New Delhi. Background

¶6In thepre-independenceera, Delhi becamethe capitalof Indiain 1911. In 1912 the Delhi Enclave coveringan area of 1240 sq.miles was formed. A large chunk of land acquired by the Imperial Delhi Committee was transferredto the Imperial(New) Delhi MunicipalCommittee).In 1925 the Chief Commissionerof Delhi upgraded this Committee to the level of a second class municipalityto be governedunder the Punjab MunicipalAct, 1911 ('PMA').

¶7Section 188 of the PMA conferredpowers on the NDMC to make Bye-laws inter alia for carrying out the purposes of the PMA. The NDMC becamea first classMunicipalCommitteein 1932.

¶8In the post-independenceera, Delhi was declareda Union Territory.The Municipal Corporationof Delhi ('MCD') came to be constitutedunder the Delhi Municipal CorporationAct, 1957 ('DMC Act'). The jurisdictionof fV.P.(C)3348/2010&connectedmatters page 16of40 ///// X K. J the MCD covers the entire Union Territory of Delhi including the rural areas, but excluding the New Delhi Municipal Committee and Delhi Cantonment Areas. However, the area under the jurisdiction of the NDMC was reduced from 32 sq. miles to 16 sq. miles.

¶9In terms of the powersconferredunderSection 188 (v) of the PMA which related to assessment and collection of house tax, the NDMC made the NDMC House Tax Bye-laws, 1962 ('the 1962 Bye-laws'). These were publishedin the OfficialGazetteby anotificationdated24^^ April, 1964. Provisions ofthe NDMC Act

¶10The Government of NCT of Delhi Act, 1991 ('GNCTD Act') was enacted by the Parliament,in January, 1992. Several provisions of the PMA were brought in tune with the GNCTD Act. The NDMC Act was enacted in 1994 to replace the PMA and the New Delhi Municipal Committee was replaced by the New Delhi Municipal Council (NDMC).

¶11The power of imposition of levy of taxes including property taxes was vested under Section 60 of the NDMC Act with the NDMC. Under Section 416 (2) (a) of the NDMC Act, NDMC adopted the existing 1962 Bye-laws insofar as they were not inconsistent with the NDMC Act.

¶12Sections 60 to 81 of the NDMC Act contained provisions relating to levy of imposition of property tax by the NDMC. Section 60 (1) (a) empowers the NDMC to impose and levy property tax. Under Section 60(3) of the NDMC Act such property tax shall be levied, assessed and collected "in accordance with the provisions of the NDMC Act and the Bye-laws made W.p.(C) 3348/2010 & connected matters ////// thereunder.'

¶13Under Section 61 (1) of the NDMC Act, property tax shall be levied oh lands and buildings in New Delhi and "shall consist of not less than ten and not more than thirty per cent of the rateablevalue of lands and buildings." The provisoto Section61(1) ofthe NDMC Act statesthat the NDMC may, "when fixing the rate at which the propertytax shall be levied during any year, determinetherate leviableinrespectof lands and buildingsorportions of lands and buildings in which any particularclass of trade or businessis carriedon shall be higherthan the rate determinedin respectof other lands and buildings or portion of other lands and buildings by an amount not exceedingone-halfof the rate so fixed." The second provisoto Section61

(1) states that "the tax may be levied on graduatedscale, if the Council so determines." The explanation to Section 61 (1) states that "where any portionofa land or buildingis liableto a higherrate ofthe tax such portion shall be deemed to be a separate property for the purpose of municipal taxation."

¶14Under Section 61 (2) of the NDMC Act, the NDMC can exempt from tax the lands and buildings where "the rateable value does not exceed Rs. 1,000."

¶15The expression'rateablevalue' is defined under ^iection 2 (42) of the NDMC Act to mean "the value of any land or buildingfixed in accordance with the provisions of this Act and the Bye-laws made thereunderfor the puipose of assessmentto propertytaxes." The conjunction'and' used in the above definitionmakes the legislativeintent explicit. The value has to be W.P.(C)3348/2010&connectedmatters Page 18 of40 ///// fixed both in accordance with the NDMC Act and the Bye-laws. Consequently, it is inconceivable that the manner of determination of the rateable value under the Bye-laws could be inconsistent or different from that provided under the Act. In other words, it is not the disjunctive 'or' but the conjunctive 'and' that has been used. Accordingly, the rateable value has to be fixed both in accordance with the provisions of the NDMC Act and in accordance with the Bye-laws.

¶16Section 62 of the NDMC Act relates to the 'Premises in respect of which tax is to be levied'. Section 62 (1) lists out such lands or buildings or portions thereof which will not be subject to levy of property tax. This includes lands exclusively occupied and used for public worship or by a society or body for a charitable purpose. It also includes lands and buildings vested in the NDMC in respect of which the tax, if levied, would be leviable primarily on the NDMC and agricultural lands and buildings (other than dwelling houses). Section 62 (3) clarifies that if a portion of the land or building is exempted from property tax by reason of the exclusive use or occupied for public worship or charitable purpose then such portion "shall be deemed to be a separate property for the purpose of municipal taxation."

¶17Section 63 of the NDMC Act sets out the method of determination of the rateable value of lands and buildings assessable to property tax. Section 63 (1) provides that the rateable value of any land or building assessable to property tax shall be the annual rent at which such land or building nJght reasonably be expected to let from year to year less a sum equal to 10% of the said annual rent which shall be in lieu of all allowances for cost of fV.P.(C)3348/2010 <6 connected matters Page 19 of40 ///// L' repairs and insurance, and other expenses necessary to maintain the land or building in a state to command that rent. The proviso to Section 63 (1) of the NDMC Act states that in respect of any land or building the standard rent of which has been fixed under the Delhi Rent Control Act, 1958 ('DRC Act'), the rateable value thereof "shall not exceed the annual amount of the standard rent so fixed.".

¶18Section 63(2) of the NDMC Act states that the rateable value of any land which is not built upon but is capable of being built upon and any land on which a building is in process of erection "shall be fixed at five per cent of estimated capital value of such land." Under Section 63(3) the Chairperson of the NDMC can by public notice, with the approval of the NDMC, specify a plant and machinery which will be deemed to form part of such land and building for the purposes of determination of rateable value. Section 65(1) of the NDMC Act clarifies that lands and buildings being properties of the Union shall be exempt from the property tax specified in Section 61 of the NDMC Act. . , ••

¶19Section 66 of the NDMC Act speaks of the incidence of the property tax. It is primarily on the lessor if a building or land is given on lease. It is on the superior lessor if the land or building is given on a sub-lease. If it is not leased then on the person on whom the right to let the same vests.

¶20Section 67 of the NDMC Act talks of apportionment of liability of the property tax when the premises are let or sub-let. Section 68 clarifies who will be primarily liable for the property tax due in respect of any land or building and in the event of defaultof the person liable to pay such property W.P.(C)3348/2010& connectedmatters Page 20 of40 ///// tax as specifiedin Section66. It is clarifiedthat this would be the occupier of such land or building.

¶21Section 70 of the NDMC Act deals with the 'Assessment List'. This is a list of all lands and buildings which contains such particulars with respect to each land and building as may be prescribed by the Bye-laws. When such Assessment List is prepared, the Chairperson under Section 70 (2) of the NDMC Act gives a public notice thereof and every person claimingto be an owner, lessor or occupier of a land or building included in the List shall be at liberty to inspect the List and take extracts therefrom free of charge. Under Section 70 (3), the Chairperson is to give a public notice of a date not less than one month thereafter when he would proceed to consider the rateable value of the lands and buildings entered in the Assessment List. He is also to give the written notice where the rateable value is proposed to be increased. Section 70 (4) of the NDMC Act provides for objections to be filed to the Assessment List in writing to. the Chairperson. Section 70 (5) of the NDMC Act talks of an objection beiiig notified into and investigated, and the person making them shall be allowed an opportunityof being heard either in person or by authorised agent before the final Assessment List is prepared under Section 70 (6) of the NDMC Act. Section 72 of the NDMC Act provides for amendment of the Assessment List and Section 73 for preparation of new Assessment List.

¶22LFnder Section 81 the Chairperson of the NDMC Act employs valuers to give advice or assistance in respect of valuation of any land or building. This is different from the determination of the rateable value. This valuation of W.P.(C) 3348/2010 & connected matters Page 21 of40 ///// > ( ; • the land or building becomes relevant when there is attachment of the property to cover the an-ears of municipal taxes and the value of such land and building has to be determined to ascertain what could be recovered towards the arrears.

¶23Thus the legislative scheme under the NDMC Act envisages determination of the rateable value only on one basis i.e. on the basis of the 'annual rent' at which the land or building might reasonably be expected to let from year to year. Facts relating to the NDMC Area

¶24At this stage it requires to be noticed that there are only around 12,000 units which are subject to assessment for property tax in the NDMC area. 20% of these are residential units and rest are commercial units. However only 20% of the properties are private properties. The remaining 80% are (a) properties belonging to the Union of India (b) properties of Diplomatic Missions and Foreign Embassies (c) properties of State Governments and

(d) properties of Railways.

¶25The above four tj'pes of properties are outside the purview of property tax assessment. This is because Articles 285 and 289 of the Constitution prohibit levy of taxes on the properties of the Centre and State by the Centre and State respectively. Except the properties belonging to the Union of India, the other three types of properties do not pay even the service charges to the local authorities. 75% of the property tax demand is collected trom just about 6.25% of the properties in the NDMC area. Therefore, tho tax base for the purpose of collection of property tax is small compared to the W.P.(C)3348/2010 & connected matters Page 22 of40 ////// I ; MCD area. It may be mentioned that in various other cities in India like Patna, Bangalore, Hyderabad, Ahmedabad, Mirzapur etc., the UAM has been adopted for the imposition of property tax to increase the collection of revenue. The quantification varies in different cities. Background to the new impugned Bye-laws

¶26The MCD constituted the V.K. Malhotra Committee in 1995 to study and report upon the efficacy of the property tax assessment and collection system under the NDMC Act so that the faults in the system could be noted. The V.K. Malhotra Committee submitted its report in 2002.

¶27Following the recommendations of the said Committee, an expert committee was constituted by the Lieutenant Governor ('LG') of the Delhi. For recommending the modalities required for the introduction of the UAM of property tax assessment, the Dharmarajan Committee under the chairmanship of Mr. K. Dharmarajan was constituted.

¶28The Dharmarajan Committee gave its report following which the GNCTD by lettersdated 5"' December,2002 and 3'"'' January,2003 drew the attention of the NDMC stated that it would be proper and just to have a uniform tax system in the entire NCT of Delhi. It was suggested that the terms of recommendation of the Dharmarajan Committee may be extended to the New Delhi area. However,at the meetingof the NDMC held on 29''' January, 2003 it was decided not to request the GNCTD to extend the terms of reference of the Dharmarajan Committee to cover the New Delhi area. It was decided to wait for the final report of the Dharmarajan Committee. It was, however, decided that pending implementation of the Dharmarajan W.P.(C)3348/2010 connected matters Page 23 of40 /////// I ; Committeereportin the MCD, the decisionto implementthe UAM should be exploredintheNew Delhiarea.

¶29Meanwhileon the basis of the recommendationsby the Dharmarajan Committee,the DelhiMunicipalCorporationAct (DMC Act) was amended. The amendingAct receivedthe assent of the Presidenton 9"^ June, 2003. UnderChapterVIII ofthe DMC Act titled 'Taxation',a new schemeunder Sections 114 to 114E, Section 115, 115A and Section 116, 116A to 116C introduced. Inter alia under Section 116E of the DMC Act, the method for determination of the annual value of the covered space of building and a vacant land using the UAM was introduced. Section 116K provides for appointmentof a 'Hardshipand AnomalyCommittee'which comprisesof a professional from the areas of either finance, taxation, law or municipal management as the Chairperson and four other members one of whom must be a councillor to be nominated by the Corporation. One should be the member of the Municipal Valuation Committee and other three members to be nominated from among, the members of the Municipal Valuation Committee and other shall be the Additional Commissioner (Revenue) of the Corporation. Along with amending the DMC Act, the Delhi Municipal Corporation Bye-Laws, 2004 ('DMC Bye-laws') were also made in 2004.

¶30By an order dated lO"' March, 2006 the Chairpersonof the NDMC constituted a Committee known as NDMC Special Committee under Section 9 of the NDMC Act to advise upon the property tax with the following terms of reference: "1. To consider the overall revenue position and anticipated revenue receipts of New Delhi Municipal Council for the next W.P.(C) 3348/2010 & connected matters ///// five years;

¶2To make recommendations on the method by which the municipal body can continue to provide high quality services while maintaining its fiscal health;

¶3To suggest the ways and means and the optimum method of assessment of property tax (Unit Area Method/actual value etc.) so as to maximize revenue & improve collection efficiency, keeping in view that property tax is a key element of NDMC revenues."

¶31In February, 2007 the NDMC Special Committee submitted its final report. The Committee noted that it was difficult to advise a perfect tax system. However, keeping in view the distinct advantages offered by the UAM, the NDMC Special Committee recommended a modified form of UAM for NDMC which attemptedto balance the principles of neutrality, stability, accountability, ease of administration, fairness based on benefits received and the ability to pay. The NDMC Special Committee also examined the financial position of the NDMC with special reference to the profit profile of NDMC whereina largepercentageof propertiesare owned by the Governmentand only a very small percentageof private properties are liable for payment of propertytax, TheNDMC SpecialCommitteestated that it considered the following options: "(a) Maintain the status-quo as far as the method of assessment is concerned. Thus to continue with the annual value method of property tax assessment but addressprocedural shortcomings. Or

(b) Selective introduction of Unit Area Method in respect of residentialunitsthat are self-occupied(or for bothself occupied fV.P.(C)3348/2010&connectedmatters Page25of40 ///// ////// > and rented) and for institutional buildings and hotels. The remaining properties to continue under the reasonable rent method of assessment as at present. Or

(c) Levy uniform service charges for all non-residential properties regardlessof their ownership,governmentor private. The service charges would be liable for increases from time to time to keep pace with the inflation and increased cost of services. The base service charges vyould be fixed at some proportion of land values and unit rate subject to the condition that they will not be lower than the existing Rateable Value Or

(d) Introduce a modified form of Unit Area Method for all properties by fixing the unit rates solely by category of use and landvalues.Thus the lowestunit rate (or ntultiplicativefactors) would be in respectof a self-occupiedresidentiafpropertyin an area where land values are low; the highest unit rate (or multiplicative factor) would be in. respect of commercial properties/hotels that are located in areas where land values are the highest (land vdues to be computed as per Land & Development Office rate schedules amended from time to time)"

¶32The NDMC Special Committee rejected options (a), (b) and fc). It recommended acceptance of option (d). However, it recommended "a formula which is revenue neutral and at the same time optimizes the objective of vertical equity. The analysis of data compiled by the tax departmentsuggeststhat there is extreme variationin taxationof similarly placedpropertiesfor variousreasonsdiscussedearlier.This problemwill be automatically addressed as horizontal equity is inbuilt in the Unit Area System." W.P.(C)3348/2019&connectedmatters Page26of40 ////// ///// ////// k I

¶33It is significant that the NDMC Special Committee did not touch upon the manner of bringing about the above change i.e. whether it should be by amending the Bye-laws or amending the NDMC Act itself However, in the position paper submitted to the NDMC Special Committee which is prepared within the NDMC, while recommending the adoption of a modified UAM it was suggested that it should be introduced selectively for "self-occupied residential properties." It was added: "However, Bye-laws cannot go beyond what is provided in the Act. As such, depending upon the final decision in the matter, an appropriate amendment in the Act appears to be the only alternative."

¶34It is stated that the report of the NDMC Special Committee was also internally circulated to all the concerned departments including finance, law etc. of the NDMC. At its meetingheld,on 13"" February,2008 the NDMC adopted a Resolution to the effect inter alia that the recommendations of the NDMC Special Committee were in principle accepted. It was noted as under: "For NDMC however, it is proposed to introduce the Unit Area based KJ system for determinationof ARV by amending the existing House Tax Bye-laws. This approach provides flexibility to adjust the scheme to suit changing requirements and resolve problems, if any, faced during the implementationof the scheme. Amendmentof Act being a lengthy and time consuming process can be avoided."

¶35It was, therefore, decided to invite public objections to the amendments to the 1962 Bye-laws as proposed. It is thus seen that although the NDMC was consciousthat there was need to amendthe NDMC Act, it did not adopt tV.P.(C)3348/20I0& connectedmatters Page27 of 40 //////// ///// y I I that route since it considered it to be a "lengthy and time consuming process". Clearly,the NDMC did not understandthe implicationsof such a decision with reference to the legality of the proposed amendments to the 1962 Bye-laws. Provisions ofthe new impugned Bye-laws

¶36There were whole scale changes brought about by the new impugned Bye-laws which ironicallybore the title 'New Delhi Municipal Councils (Determination of Annual Rent), 2009 whereas it introduced the UAM for determiningthe rateablevalue which is differentfrom 'annual rent'. Bye-law 2 of the new impugned Bye-laws stated that the annual rent for which thelandand buildingswere acceptedto beletwouldbedeterminedas per

¶37Bye-laws 3 and 4 to make it appear that they bear a relation to annual rent under Section63(1) of the NDMC Act. However,Bye-law4 introduces a new basis and mechanism of taxation that is the UAM which is different from the existing system of determination of annual rent. It introduces the Base Unit Area Value concept with an assigned value of Rs.1,000 sq.m. both in respect of coveredspace of a buildingas also land not constructed upon pending further fixation by the valuation committee created under the impugned Bye-Laws known as the NDMC Valuation Committee.

¶38It is pointed out that new Bye-law 4 (2) does not take into account the : most vital factum of impossibility of construction in certain areas with the LutyensBungalowZone ('LBZ') and 'prohibited' or 'regulatedarea' under the Ancient Monumentsand ArchaeologicalSites and Remains Act, 1958. Furtherthe ValuationCommitteeunderBye-law5 has been givenpowersto W.P.(C)3348/2010&connectedmatters Page28of40 ///////// determine the categories which fall under Bye-law 3 as 'special category of lands and buildings', the percentage applicable for calculating the tax liability of such special categories, the base unit area value under Bye-law 4(4) and the various factors for increasing or decreasing the tax liability under Bye-law 4(5).

¶39The new impugnedBye-laws came into force on 1®' April, 2009. It is stated that on 29"^ May, 2009 the NDMC Valuation Committee made recommendations in respect of assessment of property tax under the new impugned Bye-laws. The Petitioners have assailed these recommendations of the NDMC Valuation Committee as being arbitrary. However, as already pointed out earlier, the Court does not propose to consider these aspects since it proposes to examine the first major ground of attack viz., that the UAM could not have been introduced through the new impugned Bye-laws but only by amending the NDMC Act itself.

¶40At the time the objections were fled, it was not clear as if the impugned Bye-laws had been placed before the Parliament. However, during the pendency of these petitions the Bye-laws were placed before the Parliament and, therefore, that ground of challenge no longer survives. Submissions on behalf ofthe Petitioners

¶41Specific to the first ground, the submissions on behalf of the Petitioner by Mr. B. B. Gupta and Ms. Maninder Acharya, learned Senior counsel and Mr. B.B. Jain, learned Advocate were as under:

(a) The impugned new Bye-laws which is a piece of delegated/subordinate W.p.(C) 3348/2010 & connected matters Page 29 of40 /////// i legislation seek to cover the very fields covered under the NDMC Act. Thesenew impugnedBye-lawsdo not supplementthe existingprovisionsof the NDMC Act but supplant them. They in fact mean to overwrite the express provisions of the NDMC Act.

(b) The new impugnedBye-lawsare ultravires the provisionsof the NDMC Act and are beyond the pov/ers delegated to the NDMC under Section 388

(1) A(9) of the NDMC Act.

(c) Referenceis made to the decision in State Trading CorporationIndia Limited v. New Delhi Municipal Council (2016) 12 SCC 603 where the Court emphasised that the only basis for fixation of rateable value was the annual rent at which the land and buildingmight reasonablybe expectedto be let and that the re-determination of such rateable value will have to be in accordancewith the provisoto Section63(1) of the NDMC Act under Bye-law 12of the Bye-Lawsof 1962. It was held that the Bye-law12of the 1962 Bye-laws was inconsistentwith the provisions of the NDMC Act.

(d) The NDMC adopted a short cut to bring about whole scale changes to the system of determinationof rateablevalue by merelyamendingthe Bye-laws whereasthe MCD went throughthe route of amendingthe DMC Act itself to introduce the UAM. The amendments to the DMC Act were unsuccessliilly challenged before this Court in Vinod Krishna Kaul v. The Li. Governor NCT ofDelhi (2012) 192DLT241.

(e) Referencewas made to the specific changes brought about by the new impugned Bye-laws which bore no resemblance to the system of W.P.(C)3348/2010&connectedmatters Page30of40 ////////// r J determinationof rateablevalue in the NDMC Act. Thus the new impugned Bye-Laws deserved to be struck down on the ground that they were ultra vires the NDMC Act. Submissions on behalf ofNDMC

¶42Mr. Sanjay Jain, learned Additional Solicitor General of India ('ASG') appearingon behalfof the NDMC tracedthe historyof the changesbrought about in the method of determinationof rateablevalue to the judgmentof this Court in Indian Hotels Co. Ltd. v. New Delhi Municipal Council 63

(1996)DLT163 (DB). The Courtthereemphasisedtheneed for a simplified system of assessment and collection of taxes which was simple and efficaciousand did not causeharassmentto the tax payers.

¶43The learned ASG submitted that the NDMC area was of a different character where only 20% would be the properties which are availablefor tax. It had, therefore,to be viewed differentlyfrom other areas where UAM had been introduced. He submitted, that the introduction of the UAM was preceded by a very detailed exercise undertaken by the NDMC Special Committee.The changesbrought out by the new impugnedBye-lawswere deliberated and well intended and for the benefit of the tax papers. In seekingto supportthenew impugnedBye-lawsand defendingtheirvalidity, Mr. Jain referred to Section 388 (1) A (9) of the NDMC Act which specificallyenabledthe NDMC to make Bye-lawsto providefor 'any other matter relating to levy, assessment, collection, refund of tax..." Challenge to a subordinate legislation

¶44At the outset, the Court would like, to dwell on the legal position fV.P.(C)3348/2010&connectedmatters Page3] of40 /////// /////// regarding the challenge to the validity of a subordinate legislation. In Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India (1985) 1 SCC 641 the Supreme Court emphasised that a subordinate legislation could be questioned on any of the grounds on which a plenary legislation is questioned.In addition it may also be questionedon the ground that it does not conform the statute under which it is made. The rationale for this was that "subordinate legislation must yield to primary legislation. It could of course also be questioned on the ground that it is manifestly arbitrary."

¶45In Supreme Court Employees' Wdfare Association v. Union of India

(1989) 4 SCC 187 it is held that the validity of a subordinatelegislationcan be challenged if it is ultra vires the Constitutionor the governingAct or to the general principles of the laws of the land or is "so arbitrary or unreasonable" that no fair minded authority could ever have made it. In Shri Sitaram Sugar Co. Ltd. v. Union of India (1990) 3 SCC 223 a Constitution Bench of the Supreme Court reiterated as under: "47.Power delegated by statute, is. limited by its terms and subordinate to its objects. Tlie delegate must act in good faith, reasonably, intra vires the power granted, and on relevant consideration of material facts. All his decisions, whether characterized as legislative or administrative or quasi-judicial, must be in harmony with the Constitution and other laws of the land. They must be "reasonablyrelated to the purposes of the enabling legislation". See Leila Mourning v. Family Publications Service [411 US 356]. If they are manifestly unjust or oppressive or outrageous or directed to an unauthorized end or do not tend in some degree to the accomplishment of the objects of delegation, court might well say, "Parliament never intended to give authority to make such rules; they are unreasonableand ultra vires": per Lord Russel of Killowen, C.J. in Kruse v. Johnson." W.P.(C)3348/2010&connectedmatters Page32 of40 //////// I y / \

¶46In5'^. John's Teachers TrainingInstitute v. Regional Director,NCTD

(2003) 3 see 321 the Court held as under; "A regulationis a rule or orderprescribedby a superiorfor the management of some business and implies a rule for general course of action. Rules and regulations are all comprised in delegated legislations. The power to make subordinate legislation is derived from the enabling Act and it is fundamental that the delegate on whom such a power is conferred has to act within the limits of authority conferred by the Act. Rules cannot be made to supplant the provisions of the enabling Act but to supplement it. What is permittedis the delegationof ancillaryor subordinatelegislativefunctions, or, what is fictionally called, a power to fill up details. The legislaturemay, after laying down the legislativepolicy confer discretionon an administrativeagencyas to the executionof the policy and leave it to the agency to work out the details within the frameworkof policy. The need for delegated legislationis that they are framed with care and minuteness when the statutory authority making the rule, after coming into force of the Act, is in a better position to adapt the Act to special circumstances. Delegated legislation permits utilization of experience and consuhation with interests affected by the practical operation of statutes." Emphasis supplied]

¶47In DelhiAdministrationv. Siri Ram (2000) 5 SCC 451, the Supreme Court reiterated the well recognisedprinciple that the conferment of rule makingpowerby an Act does not enablethe rule makingauthorityto make rules which travel beyond the scope of the enabling Act or which is inconsistent or repugnant thereto. The following observations of the Supreme Court in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi (1975) 1 SCC 421 were reiterated: "18... statutory bodies cannot use the power to make rules and IV.P.(C)3348/2010&connectedmatters Page33of40 /////// / regulationsto enlargethe powers beyondthe scope intendedby the legislature. Rules and regulations made by reason of the specific power conferred by the statute to make rules and regulations establish the pattern of conduct to be followed."

¶48The decisions in State of Karnataka v. H. Ganesh Kamath (1983) 2 see 402 and Kunj Behari Lai Butail v. State of H.P. (2000) 3 SCC 40 hold likewise. In General Officer Comrnanding-in-Chief v. Subhash Chandra Yadav (1988) 2 SCC 351, the Supreme Court observed: "14. Before a rule can have the effect of a statutory provision, tvvo conditions must be fulfilled, namely (1) it must conform to the provisions of the statute under which it is framed;and(2) it must also come withinthe scopeand purview of the rule making power of the authority framing the rule. If either of these two conditions is not fulfilled, the rule so framed would be void."

¶49In Global Energy Ltd. v. Central Electricity Regulatory Commission

(2009) 15 SCC 570, the Supreme Court was consideringthe validity of regulations governing the procedure,terms and conditions for grant of trading licence and other related matters under the ElectricityAct, 2003. There the ElectricityAct was itselfsilentregardingconditionsfor grant of licence. However, in the regulations the pre-qualificationsfor grant of licence were stipulated. The Court explained that the grant of the rule making power "for carr}'ing out the purposes of the Act" was a general delegation. Thus by reasonofsuch a provisionalone,the regulation-making powercannotbe exercisedso as to bring into existencesubstantiverights or obligations or disabilities which are not contemplated in terms of the provisions of the said Act.. W.P.(C)3348/2010 connectedmatters Page34of40 /////// //////////

¶50In State of Tamil Nadu v. P.Krishnamurthy (2006) 4 SCC 517 it was observed as under: "16. The court considering the validity of a subordinate legislation,will have to considerthe nature, objectand scheme of the enablingAct, and also the area over which power has been delegated under the Act and then decide whether the subordinatelegislationconformsto the parent statute. Where a rule is directly inconsistentwith a mandatoryprovisionof the statute,then, of course,the task of the court is simpleand easy. But where the contention is that the inconsistency or non conformity of the rule is not with reference to any specific provision of the enablingAct, but with the object and scheme of the parent Act, the court shouldproceedwith cautionbefore decla,ringinvalidity."

¶51The legal position emerging from the above decisions may be summarised thus:

(i) A subordinate legislation, including a Bye-law, is vulnerable to be challengedasto its validityonthesamegroundasthe primarylegislation.

(ii)A subordinatelegislationcould be questionedon the groundthat it does not conform to the statute under which it is made.

(iii) A subordinatelegislationmust yield to the primary legislation.Rules made under an Act cannot be made to supplant the provisions of the enabling Act but to supplement it.

(iv) Ifthe rulesorBye-lawsframedare beyondthe scopeand purviewofthe rule makingpower of the authorityframingthe rule, the rule framed would be void. Statutorybodies,therefore,cannotuse the powerto make the rules W.P.(C)3348/2010&connectedmatters Page35of40 //////// i O and regulationsto enlarge the powers beyond the scope intended by the legislation.

(v) Where a rule is directly inconsistent with the mandatory provisions of the statute it will have to suffer invalidity. Analysis ofthe new impugned Bye-laws

¶52The new impugned Bye-laws in the present case seek to introduce a completely different system of rateable value than what is provided under the NDMC Act. While the NDMC Act provides for rateable value to be determined on the basis of the annual rent at which the land or building might reasonably be expected to let from year to year, the UAM envisages fixing the UAV with reference to the characteristicsof a property and then multiplyingthe UAV by the area of the vacant land or coveredspaceto find out the 'annual value'.

¶53It is not as if the NDMG was unaware that this could be done only by amendingthe NDMC Act. Yetonly becausethis mightbe a time consuming process it chose the short cut of making the new impugned Bye-laws withoutamendingthe NDMG Act. Section388 (1) ofthe NDMC Act begins with the expression "Subject to the provisions of this Act". Clearly, therefore,the legislativeintentwas to conferupon the NDMC the powerto make Bye-lawswhich were subjectto and consistentwith the provisionsof the Act.

¶54Secondly, Section 388 (1) A (9) of the NDMC Act confers powers to make Bye-laws relating to the levy, assessment, collection, refund or W.P.(C)3348/2010&connectedmatters page36of40 ////////////// / nA imposition of taxes "under this Act". The expression 'relating to' preceding the words "levy, assessment, collection..." clearly means, therefore, that Bye-laws will have to be consistent with what is already provided under the NDMC Act. A method of levy, assessment, collection of taxes which is different from what is provided under the NDMC Act cannot possibly be introduced by the Bye-laws in terms of Section 388 (1) A (9) of the NDMC Act. That would make the Bye-laws inconsistentwith and contrary to the NDMC Act.

¶55There are specificprovisionsofthe NDMC Actwhichhave been sought to be supplanted by the Bye-laws. Illustratively,the whole system of determinationof annual rent under Section 63(1) of the NDMC Act is sought to be substitutedby the UAM. There is no provision in the new impugnedBye-laws that could be related to Section 63(1) of the NDMC Act. The new impugned Bye-laws create classificationamong assessees which are differentfrom the classificationenvisagedunder the NDMC Act and inparticularclassificatidhofpropertyas speltout in Sections62 and 65 ofthe NDMC Act. Section66 ofthe NDMC Act contemplatesimpositionof the propertytax in respectofthree categoriesofpropertiesi.e. the property that has been let, sub-letand propertiesthat are not let out at all. There is no further classificationcontemplatedin the NDMC Act on the basis of nature ofrightswhichare createdin respectofsuch land and buildings.

¶56Under the proviso to Section 63(1) of the Act, the rateable value cannot exceed the standard rent fixed under the DRC Act. This is sought to be overwritten by the impugned new Bye-laws. Under the explanation to W.P.(C)3348/2010&connectedmatters Page37of4Q //////// / Section61(1) of the Act where a portionof a land or buildingis liable to a higherrate oftax then such portionvnW be deemedto be aseparateproperty for the purposeof municipaltaxation.This is soughtto be substitutedunder the UAM which seeks to aggregatethe value of land as a whole with the value of the space covered on such land.

¶57While categorisingthe occupancyfactor, the impugnedBye-lawscreate only two categoriesi.e. (i) self-occupiedor vacantbuildingsor lands and (ii) others. Therebythe lettingout of a propertyfor use by a person otherthan the owner for no considerationis treated at par with the letting out such property for consideration. These are only the illustrationsof changes broughtaboutbythe new impugnedBye-laws.

¶58In State TradingCorporationIndia Limitedv. New DelhiMunicipal Council {supra), the Supreme Court emphasised that the manner of determinationof rateablevalue has to be only in terms of Section63 of the NDMC Act even in respect of properties that have been sub-let and not in terms of Bye-law 12 of the 1962 Bye-laws which were found to be inconsistentwith the provisionsof the NDMC Act.

¶59Consequently,as far as the presentcase is concernedit is plain that the new impugnedBye-lawsare ultra vires the NDMC Act. They requireto be invalidated on this ground alone. Conclusions and directions

¶60The Court accordinglystrikes down the new impugned Bye-lawd as ultraviresthe NDMC Act as they are in excessofthe scopeand ambit IV.P.(C)3348/2010&connecteilmatters Page38 of40 /////// of the powers vested in the NDMC under Section 388 (1) A (9) of the NDMC Act.

¶61Consequently,the Court invalidatesall actions taken by the NDMC under the new impugnedBye-lawsin terms of levy, assessment,collection and enforcementof demand of property tax. All property demands made under the new impugned Bye-laws are hereby invalidatedand declared unenforceable.

¶62In terms of the interim order passed by the Court, referred to hereinbefore,the excess of the tax deposited has to be refunded but the determination of such excess will have to await the making of the assessmentsin accordancewith the extant provisions of the NDMC Act. Such refund of excess tax depositedwould be in accordancewith the law and togetherwith the interestpayablethereonin terms of the NDMC Act. It will be open to the individualtax. payers,to seek appropriateremedies in regard to refund together with interest at the appropriate stage after completionofthe assessmentin terms ofthe extantprovisionsofthe NDMC Act.

¶63The othergroundsofchallengeare left open to beurged if and when the NDMC Actis amendedto bringaboutthe changein the determinationofthe rateablevalue. The Court expectsthe NDMC and the legislatureto consider the additionalgrounds of challengeto the new impugned Bye-laws while considering the changes to the NDMC Act.

¶64With the above observations,the writpetitionsand pendingapplications iV.P.(C)3348/2010&connectedmatters Page39 of40 /////// /////// r, / are disposed of but in the circumstances with no order as to costs. AUGUST 10, 2017 dn iV.P.(C) 3348/2010 <6 connected matters

S. MURALIDHAR, J.

PRATHIBA M. SINGH, J. /////////