1997 JTR(SC) 1320
1998 AIR(SC) 36 ; 1997 AIR(SCW) 3981 ; 1997 69 DLT 391 ; 1997 8 JT 363 ; 1997 4 RCR(Civ) 481 ; 1997 RLR 675 ; 1997 6 Scale 353 ; 1997 8 SCC 335 ; 1997 Supp4 SCR 418 ; 1997 2 UJ 771 ; 1997 8 Supreme 522
1997(8) Supreme 522
SUPREME COURT OF INDIA
S.C. Agarwal and G.B. Pattanaik, JJ.
Municipal Corpn. of Delhi -Appellant
versus
Delhi Urban House Owners Welfare Assn. -Respondent
Civil Appeal Nos. 7131-7132 of 1997
(Arising out of SLP (Civil) Nos. 8797-8798 of 1996)
Decided on 3-10-1997
Counsel for the Parties :
For the Appellant : Ms. Madhu Tewatia, and Ranbir Yadav, Advocates.
For the Respondent : K.L. Rathee, (M.K. Garg) Advocate (NP) and R.N. Keshwani, Advocates.
IMPORTANT POINT
Explanation to Bye-law 3(i)(a) of Delhi Municipal Corporation (Determination of Ratable Valuation) Bye-laws & Bye-law 8 of the Property Tax Return do not suffer from vice of any invalidity.
Act
Referred
:DELHI MUNICIPAL CORPORATION ACT : S.135, S.131, S.481, S.116, S.481(a)
DELHI MUNICIPAL CORPORATION DETERMINATION OF RATEABLE VALUATION BYE-LAWS : .
(A) The Delhi Municipal Corporation (Determination of Ratable Valuation) Bye-laws, 1994, read in conjunction with the Delhi Municipal Corporation Act, 1957, delegate legislative authority to the Commissioner to determine rateable valuation and prescribe procedures through bye-laws such as Bye-law 3(i)(a) and its Explanation, which govern the ascertainment of annual rent via a Panel of Assessors. Simultaneously, the Delhi Municipal Corporation (Property Tax Return) Bye-laws, 1994, operate under Section 131 of the Act, mandating returns on penalty for default. The impugned provisions intersect at the statutory interpretation of how valuation inputs are fixed and how compulsory disclosure interfaces with penal consequences under the parent Act.
(B) Key principles include: (i) Bye-laws must conform to the parent Act and cannot override statutory mandates; (ii) Section 135 is an enabling power to seek advice and does not fetter discretion by pre-emptively binding the Commissioner; (iii) The valuation Panel under Bye-law 3(i)(a) is a facilitative aid, not a fetter on the Assessing Officers independent judgment; (iv) Compulsory annual returns under Property Tax Bye-laws operate outside the trigger of Section 131s requirement of Commissioner-issued requisitions, and hence non-furnishment attracts penalty without violating the Act; (v) Prevalence rent must be determined with reference to objective market parameters, but the mechanism is governed by the bye-law unless repugnant to the Act.
Facts of the case:
The Delhi High Court struck down the Explanation to Bye-law 3(i)(a) of the R.V. Bye-laws on the ground that it fetters the Commissioners discretion under Section 135 and dictates the method of determining prevalent rent via a Panel, thereby encroaching on statutory powers. The same court also invalidated Bye-law 8 of the Property Tax Return Bye-laws on the basis that it imposed a penalty regime for non-furnishment of returns, which was held repugnant to Section 131, as the obligation to file returns should arise only upon a Commissioners requisition. The appellant challenges these holdings, arguing misreading of the Act and seeks restoration of the impugned provisions.
Findings of Court:
The Supreme Court allowed the appeal in part, holding that (i) the Explanation to Bye-law 3(i)(a) does not fetter the Commissioners independent discretion under Section 135 and is not repugnant to the Act; (ii) the Panel is a facilitative mechanism and does not bind the Assessing Officer; (iii) Bye-law 8 of the Property Tax Return Bye-laws is a valid exercise of delegated legislation because the obligation to file returns arises independently of Section 131s requisition clause, and the penalty regime does not contravene the Act; (iv) the provisions of Bye-laws 3(i)(c)(ii) and 3(i)(e) of the R.V. Bye-laws remain unaltered as originally struck down.
Issues:
(i) Whether the Explanation to Bye-law 3(i)(a) is repugnant to Section 135 of the Act and fetters the Commissioners discretion; (ii) Whether the mechanism of determining prevalent rent by a Panel of Assessors binds the Assessing Officer; (iii) Whether Bye-law 8 of the Property Tax Return Bye-laws is invalid for imposing penalties for non-furnishment of returns under Section 131; (iv) Whether the filing of annual returns under the Property Tax Return Bye-laws operates independently of a Commissioners requisition.
Ratio Decidendi:
The Explanation to Bye-law 3(i)(a) is a permissible procedural framework that guides the determination of prevalent rent without binding the Commissioners independent exercise of power under Section 135, and therefore survives scrutiny. The annual return regime under Property Tax Bye-laws is distinct from the requisition-based disclosure under Section 131, and hence the penalty provisions of Bye-law 8 are not repugnant to the Act. The validity of the impugned provisions is restored accordingly.
Result:
The appeal is allowed in part; the Explanation to Bye-law 3(i)(a) and Bye-law 8 are declared valid; the unchanged portions of the High Court judgment on Bye-laws 3(i)(c)(ii) and 3(i)(e) remain in force; no costs are ordered.
(A) The Delhi Municipal Corporation (Determination of Ratable Valuation) Bye-laws, 1994, read in conjunction with the Delhi Municipal Corporation Act, 1957, delegate legislative authority to the Commissioner to determine rateable valuation and prescribe procedures through bye-laws such as Bye-law 3(i)(a) and its Explanation, which govern the ascertainment of annual rent via a Panel of Assessors. Simultaneously, the Delhi Municipal Corporation (Property Tax Return) Bye-laws, 1994, operate under Section 131 of the Act, mandating returns on penalty for default. The impugned provisions intersect at the statutory interpretation of how valuation inputs are fixed and how compulsory disclosure interfaces with penal consequences under the parent Act.
(B) Key principles include: (i) Bye-laws must conform to the parent Act and cannot override statutory mandates; (ii) Section 135 is an enabling power to seek advice and does not fetter discretion by pre-emptively binding the Commissioner; (iii) The valuation Panel under Bye-law 3(i)(a) is a facilitative aid, not a fetter on the Assessing Officers independent judgment; (iv) Compulsory annual returns under Property Tax Bye-laws operate outside the trigger of Section 131s requirement of Commissioner-issued requisitions, and hence non-furnishment attracts penalty without violating the Act; (v) Prevalence rent must be determined with reference to objective market parameters, but the mechanism is governed by the bye-law unless repugnant to the Act.
Facts of the case:
The Delhi High Court struck down the Explanation to Bye-law 3(i)(a) of the R.V. Bye-laws on the ground that it fetters the Commissioners discretion under Section 135 and dictates the method of determining prevalent rent via a Panel, thereby encroaching on statutory powers. The same court also invalidated Bye-law 8 of the Property Tax Return Bye-laws on the basis that it imposed a penalty regime for non-furnishment of returns, which was held repugnant to Section 131, as the obligation to file returns should arise only upon a Commissioners requisition. The appellant challenges these holdings, arguing misreading of the Act and seeks restoration of the impugned provisions.
Findings of Court:
The Supreme Court allowed the appeal in part, holding that (i) the Explanation to Bye-law 3(i)(a) does not fetter the Commissioners independent discretion under Section 135 and is not repugnant to the Act; (ii) the Panel is a facilitative mechanism and does not bind the Assessing Officer; (iii) Bye-law 8 of the Property Tax Return Bye-laws is a valid exercise of delegated legislation because the obligation to file returns arises independently of Section 131s requisition clause, and the penalty regime does not contravene the Act; (iv) the provisions of Bye-laws 3(i)(c)(ii) and 3(i)(e) of the R.V. Bye-laws remain unaltered as originally struck down.
Issues:
(i) Whether the Explanation to Bye-law 3(i)(a) is repugnant to Section 135 of the Act and fetters the Commissioners discretion; (ii) Whether the mechanism of determining prevalent rent by a Panel of Assessors binds the Assessing Officer; (iii) Whether Bye-law 8 of the Property Tax Return Bye-laws is invalid for imposing penalties for non-furnishment of returns under Section 131; (iv) Whether the filing of annual returns under the Property Tax Return Bye-laws operates independently of a Commissioners requisition.
Ratio Decidendi:
The Explanation to Bye-law 3(i)(a) is a permissible procedural framework that guides the determination of prevalent rent without binding the Commissioners independent exercise of power under Section 135, and therefore survives scrutiny. The annual return regime under Property Tax Bye-laws is distinct from the requisition-based disclosure under Section 131, and hence the penalty provisions of Bye-law 8 are not repugnant to the Act. The validity of the impugned provisions is restored accordingly.
Result:
The appeal is allowed in part; the Explanation to Bye-law 3(i)(a) and Bye-law 8 are declared valid; the unchanged portions of the High Court judgment on Bye-laws 3(i)(c)(ii) and 3(i)(e) remain in force; no costs are ordered.
JUDGMENT
Pattanaik, J.-Leave granted.
2. This appeal by special leave is directed against the judgment dated 18th September, 1995 passed by the Division Bench of the Delhi High Court in Civil Writ Petition No. 5102 of 1994 and Civil Writ Petition No. 555 of 1995. By the impugned judgment the provisions of Explanation to Bye-law 3(i)(a), Bye-law 3(i)(c)(ii), Bye-law 3(i)(e) of the Delhi Municipal Corporation (Determination of Ratable Valuation) Bye-laws, 1994 ("R.V. Bye-laws" for short) and Bye-law 8 of the Delhi Municipal Corporation (Property Tax Return) Bye-laws, 1994 (for short "Property Tax Return Bye-laws") have been struck down. Though the legality of the said judgment had been challenged in appeal but in course of hearing of this appeal the learned counsel for the appellant restricts the challenge only to the declaration of invalidity of Explanation to Bye-law 3(i)(a) of the R.V. Bye-Laws and Bye-law 8 of the Property Tax Return Bye-Laws. Consequently, the judgment of the High Court declaring the provisions of Bye-laws 3(i)(c)(ii) and 3(i)(e) of R.V. Bye-Laws as invalid remain unaltered.
3. Coming to the question, as to whether the High Court was justified in invalidating Explanation to Bye-law 3(i)(a) of the R.V. Bye-Laws, the High Court is of the opinion that the said provision is repugnant to Section 135 of the Delhi Municipal Corporation, Act, 1957 (hereinafter referred to as the Act ) inasmuch as it encroaches upon the powers given to the Commissioner under Section 135 to employ valuers to give him advice in connection with the valuation of any land or building. The High Court is further of the opinion that the Explanation to Bye-law 3(i)(a) binds the Assessing Officer to determine the prevalent rent on the basis of a Panel which is not permissible under the Act. The learned counsel appearing for the appellant contends that both the aforesaid reasons indicated by the High Court for invalidating the Explanation is wholly unsustainable in law as the same has been arrived at on a misreading of the relevant provisions of the Act and as such the said conclusion has to be set aside by this Court. Bye-law 3(i)(a) together with the Explanation, is extracted hereunder in extenso for better appreciation of the point in issue:
"(3)(i) For the purposes of sub-section (1) of Section 116 of the Act, the annual rent shall be determined as under:
(a) Where the premises are on rent, the rent actually realised or realizable, unless the same is collusive or concessional, shall be the annual rent. Where the tenancy commences on or after the 1st day of April, 1995 and where the Commissioner has reason to believe that the declared rent does not represent the prevalent rent of the year of letting and the difference between declared rent and prevalent rent is more than twenty five per cent of the declared rent, the annual rent shall be the prevalent rent;
Explanation.-For the purposes of this clause the prevalent rents shall be determined by a Panel of Assessors to be appointed by the Commissioner. Such Panel shall include a representative from the Government, a representative of any Taxation Department (other than the Corporation) or a valuer and a representative of the Property Owners of the zone of which the prevalent rents are to be determined.
4. Under the Delhi Municipal Corporation Act power to make Bye-laws has been provided in Section 481. Obviously, no bye-law can be framed which would be contrary to the provisions of the Act. The R.V. Bye-laws relate to taxation. It may be noticed that under Section 481A of the Act, Bye-laws framed are required to be laid before the Parliament and thus the Bye-laws also have the legislative sanction of the Parliament itself. Bye-law 3 of the R.V. Bye-Laws prescribes the procedure for determination of annual rent for the purpose of sub-section (1) of Section 116 of the Act. Section 116 indicates the mode of determination of rateable value of any land or building assessable to property taxes. Section 116(1) of the Act does not provide as to how the annual rent of the land or building which might reasonably be expected to be arrived at. Bye-law (3), therefore, provides the mode of determination of such annual rent. The Explanation to Bye-law 3(i)(a) provides that for the clause in question the prevalent rent shall be determined by a Panel of Assessors to be appointed by the Commissioner and such Panel should include a representative of the Government, a representative of any Taxation Department or a valuer and a representative of the Property Owner of the zone of which the prevalent rents are to be determined. The bye-law, therefore, is essentially a safeguard provided for the property owners and the determination thus made by a Panel of Assessors will be a safeguide for the Commissioner to exercise his ultimate power, so that, the exercise of such power cannot be said to be arbitrary or excessive. In this view of the matter, we fail to understand how the aforesaid Explanation can be said to be repugnant to the independent application of mind of the Commissioner under the Act. The High Court, therefore, was in error to hold such Explanation binds the Assessing Officer and controls the power of such Assessing Officer under the Act. In our considered opinion, the High Court was not right in arriving at the aforesaid conclusion. Further on a plain reading of Section 135 of the Act, we are not in a position to sustain the conclusion of the High Court that the Explanation contravenes the provisions of Section 135 of the Act. Section 135 is an enabling power of the Commissioner to appoint one or more competent persons to give advice or assistance in connection with the valuation of any land or building. The Bye-law in question together with Explanation merely states as to how the persons could be appointed to advice the Commissioner in connection with the valuation of any land or building and we see nothing in that Explanation which can be said to be in contravention of the provisions of Section 135 of the Act. The conclusion of the High Court on this score, therefore, is unsustainable in law. In the aforesaid premises we are of the considered opinion that the Explanation to Bye-law 3(i)(a) of the R.V. Bye-Laws does not suffer from the vice of any invalidity and we accordingly set aside the conclusion of the High Court on this score and hold that the said provision is a valid piece of legislation.
5. Coming now to the question of validity of Bye-law (8) of the Property Tax Return Bye-Laws, the said Bye-law is quoted hereunder in extenso:
8. Whosoever fails to furnish a true return to the best of his knowledge and belief, shall be:-
(a) liable to penalty which may extend to five hundred rupees. A penalty of Rs. 20/- per day may further be imposed for the period the default continues;
(b) precluded from objecting to any assessment made by the Commissioner in respect of land and building of which the owner or occupier failed to file the return or true return to the best of his knowledge and belief;
Provided that before imposition of penalty or precluding from obtaining to any assessment, the Commissioner shall give a reasonable opportunity of being heard to the owner or occupier, as the case may be.
6. In the impugned judgment the High Court being of the opinion that the aforesaid Bye-law is in contravention of Section 131 of the Act, struck down the said Bye-law. Section 131 of the Act is extracted hereunder in extenso for better appreciation of the point in issue:
131. Power of Commissioner to call for information and returns and to enter and inspect premises - (i) To enable him to determine the rateable value of any land or building and the person primarily liable for the payment of any property taxes leviable in respect thereof, the Commissioner may require the owner or occupier of such land or building, or of any portion thereof to furnish him within such reasonable period as the Commissioner fixes in this behalf, with information or with a return signed by such owner or occupier-
(a) as to the name and place of residence of the owner or occupier, or of both the owner and occupier of such land or buildings;
(b) as to the measurements or dimensions of such land or building or of any portion thereof and the rent, if any, obtained for such land or building or any portion thereof; and
(c) as to the actual cost or other specified details connected with determination of the value of such land or building.
(2) Every owner or occupier on whom any such requisition is made shall be bound to comply with the same and to give true information or to make a true return to the best of his knowledge or belief.
(3) Whoever omits to comply with any such requisition or fails to give true information or to made a true return to the best of his knowledge or belief, shall, in addition to any penalty to which he may be liable, be precluded from objecting to any assessment made by the Commissioner in respect of such land or building of which he is the owner of occupier.
7. Under Section 131, the Commissioner is empowered to call for information or returns to be filed by the owner or occupier of any land or building whenever the Commissioner decides to determine the rateable value of any land or building and under sub-section (2) of Section 131 every such owner or occupier who is required by the Commissioner to give the necessary information or return is bound to comply with the same. Sub-section (3) of the said Section indicates that non-furnishing of such information or return by the person concerned makes him liable to pay the penalty and also is precluded from objecting to any assessment made by the Commissioner in respect of such land or building. Thus under Section 131 an owner or occupier of any land or building is required to file return or information only when the Commissioner requires the same from him. In the Property Tax Return Bye-Laws, however, filing of an annual property tax return by the owner or occupier of land or building is obligatory under Bye-law (3) irrespective of whether the Commissioner requires the same or not. The liability to file the return arises under the Bye-law, if the land or building is assessable to the property tax. The conditions for making such filing of return have been indicated in different paragraphs of Bye-law (3) with which we are actually not concerned in the present appeal. Bye-law (8) provides that if a person fails to furnish a true return to the best of his knowledge and belief, then he shall be liable to penalty which may extend to Rs. 500/- and further a Rs. 20/- per day could be imposed for the period the default continues. The return required to be filed under the Property Tax Return Bye-Laws and the return required to be filed only when the Commissioner requires the same under Section 131 operate in two different fields. The former is in the nature of a statutory return required to be filed by every owner or occupier annually when the conditions mentioned in the Bye-law are attracted whereas, latter only makes it obligatory for the person concerned to file the return when the Commissioner so requires. The two provisions operate in two different fields and the High Court, therefore, was not justified in reaching the conclusion that the Regulation (8) providing for penalty of Rs. 500/- for non-furnishing of the return as contemplated under the Bye-law is repugnant to Section 131 of the Act. The aforesaid conclusion of the High Court, therefore, is set aside and Regulation (8) of the Property Tax Return Bye-Laws is declared to be a valid piece of legislation. In view of our aforesaid conclusions this appeals are allowed in part to the extent indicated above but in the circumstances there will be no order as to costs.
Appeals allowed in part.
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