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PETITIONER: COMMON CAUSE REGISTERED SOCIETY

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT18/08/1987

BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH DUTT, M.M. (J)

CITATION:  1987 AIR 2211            1987 SCR  (3) 996  1987 SCC  (4)  44        JT 1987 (3)   352  1987 SCALE  (2)254

ACT:     Delhi  Municipal  Corporation Act,  1957:  s.6--Property constructed in stages--Assessment of Property Tax--’Rateable value’Determination of--Market value of land not to be added over again.

HEADNOTE:     In  Dr.  Balbir Singh & Ors.  v.  Municipal  Corporation Delhi & Ors., [1985] 2 SCR 439 this Court while laying  down principles  for determination of rateable value  for  making assessment of property tax of premises constructed in stages in  Delhi, emphasised that  "the formula set out in  sub-ss. (1)(A)(2)(b) and (1)(B)(2)(b) of s. 6 of the Delhi Municipal Corporation Act, 1957 cannot be applied for determining  the standard  rent of an addition, as if that addition  was  the only structure standing on the land. The assessing  authori- ties cannot determine the standard rent of additional struc- ture  by taking the reasonable cost of construction  of  the additional  structure and adding to it the market  price  of the  land  and applying the statutory percentage of  to  the aggregate amount."     The petitioner-society and the Municipal Corporation  in their applications to this Court sought clarification of the above observations. Dismissing the applications,     HELD:  The  matter has been  categorically  decided  and there  is absolutely no ambiguity which requires  clarifica- tion. When at a different stage, additional construction  is raised  on the property already valued, the market value  of the  land is not to be taken into account as It has  already been considered while fixing the valuation of the  preexist- ing construction. [1000D-E, G]

JUDGMENT:     ORIGINAL JURISDICTION: Civil Misc. Petition No. 18280 of 1987 Etc. IN Writ Petition No. 6945 of 1982. 997

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(Under Article 32 of the Constitution of India).     K.L. Rathee, S. Balakrishnan and Harish N. Salve for the Petitioner.     Ranjit  Kumar, Pramod Dayal and R.B. Datar for  the  Re- spondents. The following Order of the Court was delivered:     A  three-Judge  Bench of this Court in the case  of  Dr. Balbir Singh & Ors. v. Municipal Corporation, Delhi &  Ors., [1985] 2 SCR 439 elaborately examined the provisions of  the Delhi  Municipal Corporation Act of 1957 for the purpose  of ascertaining the manner of determination of "rateable value" which  was necessary for making assessment of  property  tax under  that Act. This Court classified the  properties  into four categories. :-    (1) self-occupied;    (2) partly self-occupied and partly tenanted;    (3)  restrictive  lease-hold  on  which  construction  is raised; and    (4) where the property has been constructed in stages. So far as the fourth category is concerned (and these appli- cations are concerned with that) this Court said:-                         "The fourth category of premises  we               must  deal  with  is the  category  where  the               premises  are constructed in stages. The  dis-               cussion  in  the preceding paragraph  of  this               judgment provides an answer to the question as               to how the rateable value of this category  of               premises is to be determined when the premises               at  the first stage of construction are to  be               assessed  for  rateable value,  the  assessing               authorities would first have to determine  the               standard  rent of the premises under  sub-sec-               tion  (2)  (a)  or  2(b)  or  (1)(A)(2)(b)  or               (1)(B)(2)(b) of Section 6 as may be applicable               and  keeping in mind the upper limit fixed  by               the standard rent and taking into account  the               various factors discussed above, the assessing               authorities  would have to determine the  rent               which the owner of the premises               998               may  reasonably expect to get if the  premises               are let out to a hypothetical tenant and  such               rent would represent the rateable value of the               premises."               Having said so generally, this Court proceeded               to  examine the different facets of the  ques-               tion and stated:-                        "When  any  addition is made  to  the               premises at a subsequent stage, three  differ-               ent  situations may arise. Firstly, the  addi-               tion  may  not be of a distinct  and  separate               unit of occupation but may be merely by way of               extension  of the existing premises which  are               self-occupied.  In  such a case  the  original               premises  together with the additional  struc-               ture would have to be treated as a single unit               for the purpose of assessment and its rateable               value would have to be determined on the basis               of  the  rent which the owner  may  reasonably               expect to get, if the premises as a whole  are               let  out,  subject to the upper limit  of  the               standard  rent determinable under  the  provi-               sions  of sub-section (1)(A)(2)(b) of  Section               6. Secondly, the existing premises before  the               addition  might be tenanted and  the  addition

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             might be to the tenanted premises so that  the               additional  structure  also form part  of  the               same  tenancy.  Where such is  the  case,  the               standard  rent  would be  liable  to  increase               under Section 7 and such increased rent  would               be  the  standard rent of the  premises  as  a               whole and within the upper limit fixed by such               standard rent, the assessing authorities would               have to determine the rent which the owner may               reasonably expect to get if the premises as  a               whole are let out as a single unit to a  hypo-               thetical tenant and in such a case, the actual               rent  received would be a fair measure of  the               rent which the owner may reasonably expect  to               receive  from such hypothetical tenant  unless               it is influenced by extra-commercial consider-               ations.  Lastly,  the  addition may  be  of  a               distinct  and separate unit of occupation  and               in  such  a case, the rateable  value  of  the               premises  would have to be determined  on  the               basis  of  the  formula laid down  by  us  for               assessing the rateable value of premises which               are partly self-occupied and partly  tenanted.               The  same principles for determining of  rate-               able  value would obviously apply in  case  of               subsequent additions to the existing premises.               The  basic  point to be noted  in  all  .these               cases  is--and  this is what we  have  already               emphasised  earlier--that the formula set  out               in               999               sub-section  (1)(A)(2)(b) and (1)(B)(2)(b)  of               Section  6 cannot be applied  for  determining               the  standard rent of an addition, as if  that               addition  was the only structure  standing  on               the  land.  The assessing  authorities  cannot               determine the standard rent of the  additional               structure  by  taking the reasonable  cost  of               construction  of the additional structure  and               adding to it the market price of the land  and               applying the statutory percentage of 7-1/2  to               the aggregate amount." Initially an application was made by Common Cause, petition- er in original Writ Petition No. 6945 of 1982 for clarifica- tion  of the judgment confined to the last category  of  the fourth group referred to above. Later the Corporation itself made  an application for the same purpose and impleaded  the Government Servants Cooperative House Building Society as  a party to that application. On October 1, 1985, a little more than 10 months after the original judgment, these cases were listed  for  directions.  A two-Judge  Bench  consisting  of Bhagwati,  CJ and Pathak, J., as the learned  Chief  Justice then  was,  (both of them being parties to  the  three-Judge Bench decision) gave the following direction:-               "The  assessments made on the  properties  in-               volved  in  these cases are set aside  if  and               only  if any appeals were filed  against  such               assessments  or objections were raised to  the               draft  or provisional assessments and in  such               cases,  fresh assessments are directed  to  be               made  in accordance with the law laid down  by               this  Court,  save and except in  those  cases               where the question in regard to the  valuation               of  the land in relation to  the  subsequently               constructed additional structures is involved,

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             which  question we have yet to decide in  CMP.               125  13/83  in Writ Petition No.  6945/82  and               other  connected matters fixed for hearing  on               29.10.85.  Where  no  appeals  were  preferred               against the assessments and no objections were               filed  against  draft or  provisional  assess-               ments,  the assessments will not be liable  to               be  set  aside  and in such  cases,  the  writ               petitions  and appeals will, to  that  extent,               stand dismissed. That  is  how these applications have now  been  placed  for consideration.     Long  arguments  have  been advanced before  us  by  Mr. Datar, appearing for the Municipal Corporation; Common Cause and the 1000 Government Servants Cooperative House Building Society  have resisted  the  application by  advancing  counter  arguments through  their  respective counsel. Mr.  Datar  stated  that clarification  is confined to cases of subsequent  construc- tion  raised  upon existing construction and the  manner  of valuing  the  land  for determination of the  value  of  the property.  This  question  was  pointedly  examined  by  the three-Judge Bench and at page 475 of the Reports, this Court held:-               "      The market price of the land cannot  be               added  twice over, once while determining  the               standard  rent of the original  structure  and               again  while determining the standard rent  of               the additional structure. Once the addition is               made,  the  formula  set  out  in  sub-section               (1)(A)(2)(b)  and (1)(B)(2) (b) of  section  6               can  be applied only in relation to the  prem-               ises  as  a  whole and  where  the  additional               structure consists of a distinct and  separate               unit  of occupation, the standard  rent  would               have to be apportioned in the manner indicated               by us in the earlier part of this judgment." This Court had, therefore, clearly indicated that when at  a different  stage, additional construction was raised on  the property  already valued, the market value of the  land  was not to be taken into account as it had already been  consid- ered  while  fixing the valuation of the  pre-existing  con- struction. The Corporation did not challenge the correctness of  the  decision but only wanted clarification.  Since  the matter has been directly decided and there is absolutely  no ambiguity,  an  application of this type on  behalf  of  the Corporation does not lie. We were told by Mr. Salve, learned counsel for Common Cause that their application had emanated when the Corporation wanted to act contrary to the  judgment of  this Court in regard to this category of  constructions. Later on the Corporation wanted the cover of a clarificatory order  of  this Court for the procedure adopted  by  it  for reflecting  the market value of the land more than  once  in situations appertaining to the category.     On our finding that this Court has categorically decided that the market value of land is not to be added over again, there  is  no  ambiguity which  requires  clarification.  We decline  to  make  any clarificatory order as  there  is  no necessity.  All  the Civil Misc. Petitions  are  accordingly dismissed. P.S.S.                                             Petitions dismissed. 1001

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