http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 11  

PETITIONER: MUNICIPAL CORPORATION OF DELHI

       Vs.

RESPONDENT: M/S.TRIGON INVESTMENT ANDTRADING PRIVATE LIMITED & ANR.

DATE OF JUDGMENT:       03/04/1996

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) PARIPOORNAN, K.S.(J)

CITATION:  1996 AIR 1579            1996 SCC  (3) 630  JT 1996 (4)    75        1996 SCALE  (3)408

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T B.P. JEEVAN REDDY,J.      Leave granted. Heard counsel for both the parties.      This appeal  is preferred  by the Municipal Corporation of Delhi [Corporation] against the judgment and order of the Delhi High  Court dismissing  the writ petition filed by it. The matter  pertains to assessment of property tax. Ms.Madhu Tewatia,  learned  counsel  for  the  appellant-Corporation, submits that  the problem arising herein is a common one and the decisions  of the nature questioned herein are resulting in loss  of substantial  revenue  legitimately  due  to  the Corporation and,  therefore, the  questions  arising  herein must be  decided by this Court authoritatively to serve as a guidance  to  the  authorities  under  the  Delhi  Municipal Corporation Act, 1957 [Act].      Saket Properties  Private Limited  constructed a multi- storeyed building  on  Plot  No.21,  Yusuf  Sarai  Community Center, New  Delhi. Flats  Nos.302, 303 and 305 on the third floor of  the said building were allotted to the respondent- Trigon Investment  and Trading  Private Limited  -  under  a letter of  allotment dated  February 29, 1984 [Annexure R-1] subject to  the terms  and conditions mentioned therein. The respondent  accepted   the  allotment  and  paid  a  sum  of Rs.2,35,000/- by  way of  earnest money to Saket Properties. On February 23, 1986, says the respondent, possession of the said flats was handed over to and accepted by them [Annexure R-2].  Neither  the  Saket  Properties  nor  the  respondent intimated the  Corporation of the said allotment or delivery of possession.  This is  an admitted  fact. It  is also  the admitted case of the parties that so far no sale deed(s) has been executed and/or registered in respect of the said flats as appears to be the general position and practice obtaining in Delhi.      On July  11, 1990,  the Deputy  assistant Assessor  and Collectors, M.C.D.  issued a "call letter for hearing of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 11  

objection under  Section 126  of the  Municipal  Corporation act, 1957"  to the  respondent requesting  him to attend the office in  connection with  the finalisation  of the  rental value of the aforesaid flats. The respondent replied on July 17, 1990  stating that  Sri  K.K.  Dwivedi,  its  authorised representative, is  being deputed  to represent the case and to discuss  the matter  and provide necessary information to the officer.  On August  10, 1990, another notice was issued by the  said officer  to the respondent to attend the office on  17   August  1990   alongwith  necessary  documents  and evidence. On  August 30, 1990, the Deputy Assistant Assessor and Collector  made the order of assessment. The order dated August 30, 1990 recites the following facts: (a) Though  call letters  dated July 11, 1990 and August 10, 1990 were  sent to  the tax-payer,  no one  had attended the office nor were any documents produced b) The  flats were  purchased by  the tax-payer  from  Saket Properties Private  Limited [the  original  owner]  and  the possession of  the flats  was offered  to the  respondent on April 1,  1985. Accordingly,  the liability  of  payment  of property tax  by the  respondent is fixed from April 1, 1985 as per  the terms  of the agreement entered into between the builder/promoter and the respondent. (c) De  jure title of the flats has not so far been bestowed upon the  respondent because  no proper  sale deed  has been executed. (d) A  notice under Section 126 of the Act with consolidated R.V.  for   the   entire   building   was   given   to   the builder/promoter proposing the R.V. (e) In  the above  circumstances, the assessment is made ex- parte; the  rental  value  is  determined  at  Rs.3,37,800/- taking the  prevailing rental value in the said complex. The rateable value is determined at Rs.3,04,020/-. Billing shall be done on the above basis.      On  receiving   the  aforesaid  assessment  order,  the respondent addressed  a letter  dated September  17, 1990 to the assessing  officer asking  for rectification of the said order. Two grounds were mentioned in the letter. They are:      "(1) The  date of possession of the      flat was  23.2.1987. 1.4.1985 which      has erroneously  been mentioned  in      the order  and attested photo-state      copy of  the possession  letter  is      enclosed.      (2) The  flats have  been given  on      rent in  March, 1987  @ Rs.16,800/-      per month. The annual rent of these      flats would  be Rs.16,800/- x 12  =      Rs.     2,01,600     and     (not?)      Rs.3,37,800/- as  mentioned in  the      assessment order.      Attested copy  (Photo-stat) of  the      rent receipt  for the month of May,      1989 is enclosed."      The letter  requested that  the assessment order may be rectified in  the light  of the  above  facts.  It  must  be mentioned that  no other  objection, legal  or factual,  was raised in  the said  letter apart  from the  two  objections mentioned above.      Probably finding  that no action was being taken on its rectification application,  the respondent  filed an  appeal before the  learned District  Judge, Delhi against the order of assessment  dated August  30,1990. In  the Memorandum  of Appeal, the  respondent stated  that possession of the flats

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 11  

had been  handed over to it on February 23, 1987 pursuant to the agreement  of sale  but  that  no  sale  deed  has  been executed till  then. It  referred to  the letting out of the said flats  and then  stated that  the Corporation  has  not served any  notice on  it under Section 126 of the Act which is a  pre-condition to  a  valid  assessment.  It  was  also submitted that  the Corporation  is barred  from making  any assessment for  any period  prior to  April 1,  1988  as  no notice was  served  on  it  [appellant  before  the  learned Additional District Judge] till that date. It submitted that the rental  value has been wrongly assessed at Rs.3,37,800/- and that  it ought  to be  Rs.2,01,600/- in the light of the rent being received by it.      On September  9, 1992,  the appeal  was allowed  by the Learned Additional  District Judge  in toto.  It is  equally relevant to  notice the  reasons  for  the  said  order.  It states: (i) The  assessment order itself states that though the said flats were  purchased by  Trigon Investment Private Limited, de jure  title has  not so far been bestowed upon it since a proper sale deed is yet to be executed. (ii) "  A consolidated  notice of  the   entire building was given to  the builder  w.e.f. 1.4.1985.  However, since  the tax-payer  did  not  attend  the  office  nor  the  required documents were  submitted, the assessing authority proceeded ex-parte and  decided the  case as above. On the face of it, the order is bad in law." (iii) "Admittedly  no notice  U/s.126 of  the D.M.C. Act has been served  upon the  appellants (Trigon  Investments). The notice if  any was  served upon  the Builder/promoter and no sale  deed   has  yet   been  executed  among  the  parties. Therefore, no  title has passed on to the appellants nor the transfer appears to have been conveyed." (iv) "Therefore,  the appellants  cannot be subjected to any tax for  such a year in which no notice has been served upon them. The  order is  accordingly set  aside  and  is  hereby quashed."      The appellant-Corporation  questioned the  order of the learned Additional  District Judge by way of a writ petition [C.W.P.No.411 of  1994] in  the Delhi  High Court.  The writ petition  was  dismissed  at  the  admission  stage  without issuing a  notice to  the respondent.  The order of the High Court posed  the question  arising in  the matter thus: "The short question  which arises  for decision  is  whether  the petitioner-  M.C.D.   is  entitled  to  assess  tax  on  any individual  without   serving  a   notice  as   contemplated U/s.126". The order states that the property in question was constructed by  the builder  who had entered into agreements for sale  of various  portions of  the  said  property  with several parties,  that in 1985 a notice under Section 126 is stated to  have been issued to the builder in respect of the said property inviting objections and that later on, another notice under  Section 126  was issued to the builder styling it as  a consolidated notice. The order further recites that the persons  in whose  favour the agreement for transfer has been executed by the builder did not get their names mutated in the  records of  the Corporation and that call letter was issued to the respondent, who is one of the transferees from the builder, in the year 1990 only. The call letter is not a notice contemplated  by Section  126 of  the Act.  The order then notices  the submission  of the learned counsel for the Corporation in  the following words: "The Ld.Counsel for the petitioner has  vehemently argued  that even  if no mutation had taken place in law, even then the person who had entered into an  agreement with  the builder  for  purchase  of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 11  

particular flat becomes liable to pay tax in view of Sec.120 of the  Municipal Corporation  Act and  as a  matter of fact such person  steps into  the shoes of the Original owner and the Notice  served under  Sec.126 on the Builder be deemed a good notice  served on the transferee from the Builder". The High Court  opined that the said submission is unacceptable. It observed  that under  Section 120,  the property  tax  is primarily the  liability of the  lessor and  then posed  the question  "(H)owever,  the  question  arises    whether  the persons who   are  liable to pay property tax  by virtue  of Sec.120   of the   Act  can be  made liable  for Tax without serving a notice U/s.126 of the Act." It answered  the  said question   in   the   following  words: "Section 126  of the Act lays  down that  the Commissioner may at any  time amend the Assessment  list and  the proviso to that section  makes it   incumbent that  no person  shall  by reason of any such amendment become  liable to  pay any tax or increase of  tax in   respect of  any  period  prior  to  the commencement of the Order  in which  the notice  U/Sub-sec.2 is  given. Sub- sec.2   makes it  clear that  the Commissioner shall give to any person  affected by  the Assessment  notice of  not less than   one month  that he  propose to make the amendment and consider any  objection which  may be  made by  such person. Admittedly, no  notice as  contemplated by  these provisions had been  served on  the Respondent."  The High  Court  then referred  to   the  submission   of  the   counsel  for  the Corporation  based  upon  Section  128(4),  which  makes  it obligatory on  the part of the vendor to intimate the factum of transfer  to the  Corporation and also making the failure to give  such notice  punishable. The  High Court  observed, "mere fact  that no such notice had been given to the M.C.D. regarding transfer  of the  portion of  the property  by the Builder would  not mean  that  the  M.C.D.  is  entitled  to recover property  tax from  the transferee without complying with the  provisions of  Sec.126 of the Act." The High Court observed further,  "in case  no intimation has been given to the M.C.D.  regarding transfer  of the property by the Owner and the  M.C.D. on  its own  has not  been able  to find the names of  such transferees,  the interest  of the M.C.D. are well protected  by provision  of Sec.  128(4)  where  it  is clearly laid down that the liability to pay the property tax shall in  that case will continue to be of the Owner and the Owner would  also be  subjected to  the imposition  of  some penalty."      Ms. Madhu Tewatia, learned counsel for the Corporation, invited our  attention to the relevant provisions of the Act and submitted  that the  view taken  by the  High  Court  is inconsistent therewith.  Admittedly, she  submitted, neither the builder  nor the  purchaser-respondent had intimated the Corporation of  the said  transaction between them. Prior to 1990, the  Corporation was not aware that the respondent had purchased the  said flats. The Corporation had in due course given notices  to the builder in the year 1985 who failed to respond to the same. The liability to pay taxes got fastened to the premises in accordance with law and that liability is not erased  by the  failure of  the builder to respondent to the notices.  When the  Corporation came  to know  that  the respondent has  purchased the said flats, it issued notices, "call letters",  to  it  in  the  year  1990  and  made  the assessment  order   dated  August   30,  1990.  The  learned Additional District Judge has allowed the appeal on a ground which is  altogether different from the grounds urged by the respondent in  the appeal.  The learned  Additional District Judge states - according to the learned counsel, erroneously -that since  de jure  title has  not been transferred to the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 11  

respondent, the respondent cannot be subjected to any tax in respect of  an year for which no notice has been served upon him and that notices served upon the builder/promoter are of no avail  against the  respondent. But  when it came to High Court, the  view taken  by the  High Court  is that  even if transferor and  transferee have  failed to  comply with  the mandatory statutory requirement in Section 128, still no tax can be  levied upon the transferee until and unless a notice under Section  126 is  served upon him. Far the period prior to the  service of  such notice  upon  the  transferee,  the Corporation’s  remedy   is  suggested   to  be  against  the transferor. Counsel  submits that  this is  contrary to law. The learned  counsel also  pointed out that on receiving the assessment order dated August 30, 1990, the respondent filed an application  for rectification wherein it did not dispute or deny  its liability to pay the property tax in respect of the  said   flats;  its   only  submission  was  that  since possession of  the  flats  have  been  delivered  to  it  on February 23,  1987, the  tax must  be levied only from March 1987 and  not from  April 1,  1985. [It, of course, disputed the quantum of rental value also.] Learned counsel also upon clause (12)  of the Allotment Letter, according to which the allottees/purchasers were  made liable  for "their  share of ground rent,  property taxes,  water charges  and any  other cesses which may be levied on the property". The said clause also contemplates  that the  Corporation  will  normally  be expected to  demand the  property taxes  directly  from  the allottees/purchasers. This clause, says the learned counsel, clearly makes  the purchaser  liable for  the property taxes levied on  the said  flats irrespective  of the fact whether the levy  was prior  to allotment  letter and/or delivery of possession or subsequent thereto.      Sri B.B.Jain, learned counsel for the first respondent, relied upon the decision of the expression "Owner" in clause (37)  of  Section  2  of  the  Act  and  submitted  that  no assessment of  property tax  can be made upon the respondent until and  unless a  notice under Section 126 is served upon it and  in no event can the respondent be made liable to pay the property  tax for  the period anterior to the service of the notice  under Section  126. The  learned counsel  relied upon certain  decisions of  the Delhi High Court referred to in the  first respondent’s counter and submitted that no tax can  be   levied  upon   a  building  until  the  completion certificate is issued. He pointed out that possession of the flat was  handed over to the respondent only on February 23, 1987 and  hence, no  tax can  ever be  levied for the period anterior to  the said date. Counsel submitted that until and unless an  assessment is  made with notice to the respondent as contemplated by Section 126, it cannot be made liable for the tax and certainly not for the anterior period.      It is  necessary to  notice the  relevant provisions of the Act  for a  proper appreciation of the questions arising herein. Among  the taxes  which the Corporation is empowered to levy  by Section  113, "property taxes" is the first one. Sections 114  to 135  occur under  the sub-heading "property taxes".  Section  114(1)  states  that  "save  as  otherwise provided in  this Act, the property taxes shall be levied on lands and  buildings in  Delhi  and  shall  consist  of  the following, namely...". Section 115 specifies the premises in respect of  which property  taxes are  to  be  levied  while Section 116  prescribes the  basis upon  which the  rateable value of  the lands  and buildings  has  to  be  determined. Section 120(1)  then says  that "the property taxes shall be primarily leviable  as follows:  (a) if the land or building is let, upon the lessor; (b) if the land or building is sub-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 11  

let, upon  the superior  lessor; (c) if the land or building is unlet,  upon the person in whom the right to let the same vests." Section  122 declares  that on  the failure  to  pay taxes by  the person  primarily liable therefor, it shall be open to  the Commissioner  to recover  the same  "from every occupier  of   such  land  or  building  by  attachment,  in accordance with  section 162  of the  rent payable  by  such occupier, a  portion of  the total  sum due  which bears, as nearly as  may be,  the same  proportion to  that sum as the rent annually  payable by  such occupier  bears to the total amount of  rent annually  payable in respect of the whole of the land or building". Sub-section (2) empowers the occupier from whom  the amount  is recovered under sub-section (1) to claim reimbursement  from the person primarily liable/owner. Section 123 declares that "property taxes due under this Act in respect  of any  land or  building shall,  subject to the prior payment  of the  land revenue,  if  any,  due  to  the Government thereon, be a first charge.... (b) in the case of any other  land or  building, upon such land or building and upon the  goods and  other movable properties, if any, found within or  upon such  land or  building and belonging to the person liable  for such  taxes". Section  124 prescribes the procedure according  to which  assessment list  of all lands and buildings  in Delhi  is  to  be  prepared.  Section  126 provides for  the amendment  of the assessment list. In view of the  strong reliance  placed upon  the said  section,  it would be  appropriate to  set out  sub-sections (1)  and (2) thereof in full. They read:      "126.-Amendment of assessment list:      (1) The  Commissioner may,  at  any      time, amend the assessment list--      (a) by  inserting therein  the name      of any  person whose  name ought to      be inserted; or      (b) by  inserting therein  any land      or building previously omitted; or      (c) by striking out the name of any      person not  liable for  the payment      of property taxes; or      (d) by  increasing or  reducing for      adequate reasons  the amount of any      rateable   value    and   of    the      assessment thereupon; or      (e) by  making  or  cancelling  any      entry   exempting   any   land   or      building  from   liability  to  any      property tax; or      (f) by  altering the  assessment on      the land or building which has been      erroneously  valued   or   assessed      through fraud, mistake or accident;      or      (g) by  inserting  or  altering  an      entry in  respect of  any  building      erected,  re-erected,   altered  or      added to,  after the preparation of      the assessment list;           Provided that  no person shall      by reason  of  any  such  amendment      become liable  to pay  any  tax  or      increase of  tax in  respect of any      period prior to the commencement of      the Year (in which the notice under      sub-section (2) is given).      (2)  Before  making  any  amendment

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 11  

    under    sub-section     (1)    the      Commissioner  shall   give  to  any      person affected  by the  amendment,      notice of  not less  than one month      that  he   proposes  to   make  the      amendment    and    consider    any      objections which  may  be  made  by      such person."      Section 128  is equally  relevant. Sub-section  (1)  of Section 128  provides that "whenever the title of any person primarily liable  for the  payment of  property taxes on any land or  building is  transferred, the person whose title is transferred and  the person  to whom  the same  is    to  be transferred shall   within  three months after the execution of the   instrument of  transfer or  after its registration, if   it is registered, or after the transfer is effected, if no instrument  is executed,  give notice of such transfer in writing to  the Commissioner."  Sub-section (4)  of  crucial relevance and it reads:      "Every person  who makes a transfer      as aforesaid  without  giving  such      notice to  the Commissioner  shall,      in addition to any penalty to which      he  may   be  subjected  under  the      provisions of  this  Act,  continue      liable  for   the  payment  of  all      property taxes  from time  to  time      payable in  respect of  the land or      building transferred until he gives      such notice  or until  the transfer      has   been    recorded    in    the      Commissioner’s book, but nothing in      this  section   shall  be  held  to      affect   he    liability   of   the      transferee for  the payment  of the      said tax."      Section 131  empowers  the  Commissioner  to  call  for information and  returns and  also to  enter on  premises to enable him  to determine  the rateable  value of any land or building.       Now,  what do  the above provisions mean and indicate? According to  us,  the  scheme  and  purport  of  the  above provisions is  this: the  property taxes are levied upon the lands and  buildings in  Delhi [Section  114(1)] .  Property taxes due  under the  Act in respect of any land or building constitute first charge upon such  land and building subject only to the prior payment of the land revenue if any, due to the  Government   thereon  [Section   123(1)].  The  primary liability to pay taxes is upon the lessor where the building is let  and upon  the person  entitled to  let it, where the building is  not let  [Section 120]. If the person primarily liable fails  to pay  the tax,  it can be recovered from the occupier who  in turn  is entitled  to be  reimbursed by the person primarily  liable  [Section  122].  Assessment  lists containing the  specified particulars have to be prepared by the Corporation  [Section 124].  The  lists  prepared  under Section 124  can be  amended at  any  time  in  any  of  the situations mentioned  in sub-section (1) of Section 126. The situations specified in sub-section (1) of Section 126 inter alia are  insertion of the name of a person whose name ought to be  inserted, insertion of any land or building which was omitted and  insertion or alteration of any entry in respect of any  building re-erected,,  altered or  added  after  the preparation  of  the  assessment  list.  Before  making  any amendment under sub-section (1), the Commissioner shall give

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 11  

to any  person affected  by amendment  a notice  of not less than one  month of  his intention  to make the amendment and consider any  objection received  in  that  behalf  [Section 126(2)]. No  person shall  become liable  to pay  any tax or increase of  tax in  respect of  any  period  prior  to  the commencement of  the year  in which notice under sub-section (2) is  given [Proviso  to Section  126(1)]. Where a land or building is  transferred, the  transferor is  bound to  give notice of such transfer to the Commissioner. If the transfer is effected  by the  registered document, such notice has to be given  within three months of the registration and if the transfer is  effected under  an instrument of transfer which is not  registered, within  three months of the execution of such instrument.  Failure to  give such  notice renders  the transferor liable not only to penalty but also to payment of all property  taxes from  time to time payable in respect of such land  or building  until he gives such notice [Sections 128(1) and  (4)]. At  the  same  time,  sub-section  (4)  of Section 128  expressly provides that the continued liability to pay  the taxes  case upon the transferor [in addition  to penalty] shall  not affect  the liability  of the transferee for the  payment of the said tax. Now what do the words "but nothing  in  this  section  shall  be  held  to  affect  the liability of the transferee for the payment of the said tax" in sub-section  (4) of  Section 128 mean and signify? In our opinion, the  said words  have to be understood in the light of the  preceding provisions,  viz., that  the levy  of  the property tax  is upon the lands and buildings, that the said tax  constitutes  the  first  charge  upon  such  lands  and buildings and  that while the liability to pay tax lies upon the transferor,  the transferee  is not  freed from the said liability on  that account. The expression "transfer" is not defined in  the Act.  If so,  it has to be understood in its normal sense,  i.e., in  the sense  it is  understood in the Transfer of  Property Act  but with  the rider  that Section 128(1) recognizes  a transfer,  even where the instrument of transfer is  not registered. The fact that possession of the flats was  delivered to  the respondent, that the respondent has paid  the full  consideration for the said flats and the further fact  that the  respondent has let out the flats and is in exclusive receipt of the rent clearly establishes that the is  a transferee  within the  meaning  of  Section  128. Indeed, he would be the "owner" as defined by clause (37) in Section 2  of the  Act. He  would be  the "owner" within the meaning of and for the purposes of the Act - whatever may be the position  in general  law. In that sense, the respondent is equally  liable to  pay the said taxes. This liability of the transferee  arising from  the  fact  of  his  being  the "owner" of  the concerned  land or  building should  not  be mixed up  or confused  with the  proviso to  Section 126(1). Since the  property tax  constitutes first  charge upon  the land/building and because the land/building is fastened with this   liability,    the   liability    travels   with   the land/building. The  transferee is liable to pay the property taxes due  thereon not  only for  the period  subsequent  to transfer in  his favour  but even for the period anterior to the transfer.  What Section  128 does  is to  keep alive and continue the  liability of  the transferor  to pay  property taxes even  after the  transfer till  he  gives  the  notice contemplated by  Section 128(1). While making him so liable, Section 126(4)  declares that  this liability  cast  on  the transferor  shall   not  relieve  the  transferee  from  the obligation to  pay the  said tax,  as explained  above. This liability  of   the  transferee  is  in  no  way  qualified, curtailed or  abridged by  any  provision  in  Section  126.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 11  

Section 126  deals with amendment of assessment list and the procedural  aspects   concerning  amendment.   By   way   of illustration, take  a case where property tax as assessed on a building,  say, with  effect from  April 1,  1987 but  the transferor does not give notice of transfer. Later, on April 1, 1990, the name of the transferee is inserted in the place of the  transferor by  amending the assessment list. Can the transferee say  in such  a case that he is not liable to pay the taxes  for the  period prior to April 1, 1990? If he can say so in law, would it not make Section 128(4) and Sections 119  and   123  [property   taxes  being   levied  upon  the lands/buildings and  their constituting  a first  charge  on such lands/buildings]  nugatory and  meaningless? So  far as transferee is  concerned, therefore, Section 126 does not in any manner  cut down his liability or exonerate him from the liability resting upon him by virtue of this case, it is not necessary to  go into  the scope and purport of Section 126. It is enough to clarify that whatever its scope and purport, it does  not have  the effect of relieving a transferee of a land/building from  the liability to pay property taxes duly assessed upon  such land/building  and that  transfer in his favour and such taxes can be recovered from him according to law.      Now, coming  to the  facts of  the case, we way make it clear that there are certain factual aspects which we cannot decide  in this  appeal for the reason that they have not  been  gone  into  or  pronounced  upon  either  by  the assessing authority  or by  the Learned  Additional District Judge or  by the  High Court.  They are: what was the notice given to  the builder  in 1985  and what  happened  pursuant thereto? Whether  any assessment  of property  tax upon  the building as  a whole,  or upon the flats in question, as the case may  be, was made pursuant to such notice or not? If an assessment was  already made  pursuant to the notices issued to the  builder in  the years  1985/1986,  why  was  another assessment made on August 30, 1990 and why does the order of assessment say  that the  "liability of  payment of property tax by  the flat  owner is  fixed from  April 1, 1985 as per agreement and  terms with the builder/promoters? Or was it a case of  increase in  the R.V.?  It is  obvious that  if  an assessment of  property taxes was made upon the builder, the said property  taxes constitute  a  first  charge  upon  the building irrespective of the fact whether the assessment was made on  the building treating it as one unit (as compendium of several  flats) or  upon each  flat of  groups of  flats, separately. Such  property taxes,  being a first charge upon such  building/flats,  can  be  recovered  either  from  the builder/promoter  or  flat  the  transferee  thereof.  Their liability is joint and several subject to the rider that the liability of  the builder/promoter  ceases once  he gives  a notice contemplated  by Section  128(1)(1) . In other words, if the  tax had been assessed pursuant to the notices served upon the  builder/promoter in the years 1985 or 1986, as the case may  be, or at any time earlier to the assessment order dated August 30, 1990, such tax has to be paid by one or the other among the transferor and transferee.      It is  equally necessary to clarify that the Act places the  obligation   upon  the   transferor  to   intimate  the Corporation of  any  transfer  and  also  provides  for  the consequences flowing  from failure  to inform.  The Act does not  contemplate   the  Corporation  going  about  enquiring whether and  when a  particular land/building is transferred and to  whom? Any  notices required  to  be  issued  by  the Corporation can be validly issued to the transferor until he intimates the  Corporation of the transfer and it would be a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 11  

validly and sufficient service in law; the transferee cannot contend that  since he has not been served with the relevant notice, the assessment made or any other action taken is bad law. If  he takes a transfer from a particular person, it is his duty  to ensure that the transferor sends the intimation contemplated by  Section 128(1)  and his [transfereo’s] name is recorded  as the  owner in  the place  of the transferor. Unless the  transferee’s name  is recorded as the "owner" or as the  person primarily  liable, the Municipality cannot be found fault  with for  not sending  relevant notices  to the transferee. The  substantive liability of the "owner" to pay taxes cannot be defeated by the non-intimation under Section 128 or  by the  failure of  the transferee  to have his name entered in the Municipal records.      It is  again made  clear that if a valid assessment was made at  any  time  prior  to  1990,  that  assessment  will continue to  be valid  and no  notice  or  fresh  order  was necessary in the year 1990, unless the assessment was sought to be  increased. Merely  because a  proceeding  by  way  of affirmation of  an existing  levy was  taken with  notice to transferee by  way of  abundant caution,  or  under  a  mis- apprehension of  law, the earlier assessment validly made is not effaced.  If, however,  there was  no assessment earlier and the 1990 assessment is the only assessment in respect of the flats in question, then it is obvious that no tax can be levied  for  the  anterior  period.  The  respondent  cannot contend that  because  no  notice  was  given  to  him,  any assessment   made    prior   to   1990,   with   notice   to builder/promoter [whether  on the  building as a whole or on each flat  or group  of flats  separately]   is  illegal  or invalid. In  this behalf,  it  is  relevant  to  notice  the following averment  made  by  the  respondent  in  Para  3-F [panultimate para]  of his  counter-affidavit filed  in this appeal. It is stated therein:      "It would also be relevant to place      on record  that  the  notice  under      section 126  of the  DMC Act  dated      21.8.86 was  issued and served upon      M/S   Saket    Properties   Private      Limited proposing  to increase  the      reteable value  of  Rs.  1,22,500/-      per annum  to Rs.  12,42,000/-  per      annum w.e.f.  1-4-85 for the reason      ’Newly  Built   Property’   against      which   the   builder   had   filed      objections  dated   25.4.86   (copy      annexed hereto  marked as Annexure-      R-2)  whereby   the   builder   had      specifically  brought  out  to  the      notice of  the respondent  that the      building  was  incomplete  and  was      under      construction.      These      objections were never considered by      the respondent and had visited this      assessee with  an assessment w.e.f.      1-4-1985  without   application  of      mind  especially   when  the   said      property  was   not  liable  to  be      assessed as  per the  law laid down      by the  Delhi High  Court  and  the      substantive   law    contained   in      section  129   of   the   DMC   Act      reproduced  herein  above,  against      all norms  and for the reasons best      known to it."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 11  

This paragraph  tends to show that a separate assessment was made by  the Corporation in respect of the flats in question with notice  to builder  with effect  from April 1, 1985. If this is so and if it has become final, it is obvious that it can be  recovered both  from the  builder [Saket  Properties Private Limited]  and  the  [first]  respondent  herein.  It should be remembered that the builder has failed to intimate the  Corporation   as  required   by  Section   128(1)  and, therefore, it  continues to  be  liable.  But  so  does  the transferee too because the taxes constitute the first charge upon the  flats and  also by virtue of Section 128(4). While deciding the  matter pursuant  to this  order,  the  learned Additional District Judge shall also take the above averment into consideration.      The Act  does not  contemplate  a  situation  -  it  is necessary to  emphasise  nor  should  the  courts  create  a situation by  a process  of interpretation,  where has  been duly assessed.      The appeal  is accordingly  allowed. The  orders of the High Court and the Learned Additional District Judge are set aside and  the matter  is remitted to the Learned Additional District Judge  for disposal  of the appeal according to law and  in   the  light   of  the  position  of  law  explained hereinabove. Learned  Additional  District  Judge  shall  be entitled to  call upon  both the parties to adduce necessary evidence  to  decide  the  questions  arising  herein,  both factual and  legal, according  to  the  appeal  within  four months from  the date  of receipt of the copy of this order. Both the parties shall present themselves before the Learned Additional  District   Judge  on   April  16,1996  which  is specified as  the date  of hearing  in the appeal before the Learned Additional  District Judge, It shall also be open to the parties  to file  such documentary evidence as they wish to in  support of  their respective  cases. No oral evidence shall, however, be permitted.      There shall be no order as to costs.