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HOTEL QUEEN ROAD PVT LTD vs AND ORS

High Court Of Delhi|13 July, 2012
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JUDGMENT / ORDER

BADAR DURREZ AHMED, J (ORAL)
CM No. 8039/2012
Allowed subject to all just exceptions.
CM No. 8038/2012 (stay) in W.P. (C) No. 3453/2012
1. We have heard the learned counsel for the petitioner as well as the learned counsel for NDMC. The learned counsel who had appeared on behalf of the UOI through the Ministry of Home Affairs stated at the outset that the Ministry of Urban Development and L&DO ought to have been made parties in the present writ petition. According to him this is so because the petitioner’s primary case seeking a stay is that the petitioner is not the owner of the land and building and it is the President of India who is the owner of both the land and building situated at 19, Ashok Road, New Delhi on which the hotel ‘Royal Plaza’ is being run by the petitioner.
2. This point is well taken by the learned counsel for the petitioner who requests that the L&DO as well as the Ministry of Urban Development should also be added as party respondents. We feel this request ought to be accepted straightway and we direct that the L&DO as well as Ministry of Urban Development be also added as party respondent Nos. 4 and 5. The amended memo of party shall be filed within a week. In any event, the learned counsel appearing on behalf of the UOI, through the Ministry of Home Affairs, accepts the notice on behalf of both the newly added respondents.
3. The sole ground on which the petitioner is seeking a stay of the demand that has been raised against the petitioner in respect of the said property situated at 19, Ashok Road, New Delhi is that his case falls under section 66 (1)(a) of the New Delhi Municipal Council Act, 1994 (hereinafter referred to as the said Act). On the other hand, the learned counsel for the NDMC submitted that the present case falls within section 66(2). Insofar as, the petitioner is concerned, it is contended that since the land as well as the building on the said land belongs to the lessor i.e, the President of India, it is the lessor alone who is primarily liable for paying the property taxes leviable in respect of the said land and building. He further states that clause 8.10 of the lease executed by the President of India in favour of the petitioner does provide for payment of property taxes by the lessee. However, this is subject to the condition that the said property taxes are leviable in law. He submits that because of section 66(1) of the said Act since the property tax is primarily leviable on the lessor, there is no liability, in law, on the petitioner to pay the property tax insofar as the premises in question is concerned. He placed reliance on a decision of the Supreme Court in the case of MCD v.
Shashnak Steel Industries P. Ltd.: 2009 (2) SCC 349 in order to support his contention.
4. The learned counsel for the petitioner further submitted that this is not a case which would fall under section 66 (1) (a) of the said Act. However, as pointed out above, the learned counsel for the NDMC made several submissions to the effect that it is section 66 (2) which would be applicable.
5. Section 66 (2) provides that if any land has been let out for a term exceeding one year to a tenant and such tenant has built upon the land, the property tax assessed in respect of that land and the building erected thereon shall be primarily leviable on the said tenant, whether or not the land and building are in the occupation of the such tenant. In this backdrop, the learned counsel for the NDMC submitted that the land in question had initially been leased by the President of India in favour of Indian Tourism Development Corporation (ITDC). Thereafter, the ITDC erected a building thereon and was running a hotel by the name of ‘Ashok Yatri Niwas’. Subsequently, that hotel was re-named as ‘Indraprastha’. However, the hotel ran into some difficulty and a decision was taken to disinvest. Consequently, according to the learned counsel for the NDMC, a scheme under section 391/394 of the Companies Act, 1956 was presented before the Company Court whereby the entire undertaking of the ‘Ashok Yatri Niwas’ which was later on known as ‘Indraprastha’ came to be transferred to the petitioner. The learned counsel for the NDMC also pointed out that after the construction of the building by the ITDC, the ITDC was paying property tax thereon on a composite basis. Thus, according to the learned counsel for the NDMC, since the entire undertaking of the ITDC which was being run in the name of ‘Indraprastha’ got transferred lock, stock and barrel to the petitioner, the primary liability of paying property tax would be on the transferee i.e., the petitioner herein. Therefore, according to her, the arguments raised by the learned counsel for the petitioner claiming that the case fell under section 66(1)(a) of the said Act do not hold any water.
6. After having considered arguments advanced by the learned counsel for the parties at length, we are of the prima facie view that this is not a case which would fall under section 66 (1) (a) of the said Act. In fact, if we were to notice the observation of the Supreme Court in paragraph 27 of the said decision in the case of Shashnak Steel Industries P. Ltd. (supra) it would be clear that the Supreme Court was also concerned with the distinction of whether the case was one of letting or conferment of ownership of leasehold rights. In that case the Supreme Court came to the conclusion, upon a reading and analysis of the lease deed, that the same did not operate as a conveyance of leasehold rights. On the contrary, on a prima facie view, we find that the lease in question would operate as a transfer of leasehold rights and therefore would operate in the nature of a conveyance of the same.
Therefore, the decision of the Supreme court in the case of Shashnak Steel Industries P. Ltd. (supra) is clearly distinguishable.
7. In this view of the matter, and particularly because of the history of the property as narrated by the learned counsel for the NDMC, we are prima facie of the opinion that the case falls under section 66 (2) and therefore it would be the tenant/ lessee, in other words the petitioner herein, in respect of whom the property tax would primarily be leviable.
8. Therefore, as no prima facie case has been made out at this stage for the grant of a stay, on the issue of primary liability, we are not agreeing with the learned counsel for the petitioner and are not granting stay of the demands raised by virtue of the Assessment Order (s) under the unit area method which pertains to the period 1.4.2009 onwards.
9. Insofar as the period prior to 01.04.2009 is concerned the counsel are agreed that there was a stay granted by the learned single Judge by virtue of the orders dated 09.04.2008 and 06.03.2009 pertaining to vacancy remission up to the date of completion of construction, in W.P. (C) No. 2592/2008 which was withdrawn with liberty to file a fresh writ petition and it is the present writ petition which has been filed thereafter. In view of the foregoing we see no difficulty in continuing the interim orders dated 09.04.2008 and 06.03.2009 till the decision in this writ petition insofar as the period prior to 01.04.2009 is concerned.
The application stands disposed of. Dasti.
BADAR DURREZ AHMED, J SIDDHARTH MRIDUL, J JULY 13, 2012 kb
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Title

HOTEL QUEEN ROAD PVT LTD vs AND ORS

Court

High Court Of Delhi

JudgmentDate
13 July, 2012
Judges
  • Badar Durrez
  • Idul