DELHI GOLF CLUB LTD. AND ANR. versus N.D.M.C.

Citation: [2001] 1 S.C.R. 376 · Decided: 15-01-2001 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
DELHI GOLF CLUB LTD. AND ANR. 
v. 
N.D.M.C. 
JANUARY 15, 2001 
B 
[S.P. BHARUCHA, DORAISWAMY RAJU AND RUMA PAL, JJ.] 
Punjab Municipal Act, 1911: 
Property Tax-levy of-A limited company was granted temporary 
C lease of Government land for a period of 20 years only for the purpose of 
running a Golf club and for no other purposes-Any continuance even after 
the expiry of 20 years was also to be on a temporary basis-No construction 
on the said land was permilled without prior permission of Government-
Property tax demanded from the company-Liability of-Held: The company 
is not a owner but only a temporary lessee-The various restriction clauses 
D in the lease deed indicate that the company is not a tenant-in-perpetuity-
Therefore, no tenant other than a tenent-in-perpetuity is liable to property 
tax-Hence, the company, being a mere lessee and a tenant, cannot be levied 
property tax. 
E 
Words and Phrases: 
"Tenants-in-perpetuity"-Meaning of-In the context of proviso to 
S.61(/)(a) of the Punjab Municipal Act, 1911. 
The appellant-club was allotted Government land on lease for a period 
of 20 years. The lease deed stipulated that any continuance even after the 
p expiry of20 years would also be on a temporary basis. The appellant was 
obliged to use the land only for the purposes of the Golf club and for no other 
purposes. There was also a restriction on any further construction without 
prior permission of the Government. 
The respondent-Municipal Committee demanded property tax from the 
G appellant under Section 6l(l)(a) of the Punjab Municipal Act, 1911. The 
appellant filed a writ petition before the High Court challenging the aforesaid · 
demand, which was dismissed. Hence this appeal. 
H 
Allowing the appeal, the Court 
HELD : I. The levy of property tax under Section 6l(l)(a) of the 
376 
DELHI GOLF CLUB LTD. v. N.D.M.C. 
377 
Punjab Municipal Act, 1911 is not a fee to be viewed as referable to the A 
availing of municipal services. Further, the levy envisaged under Section 
61(l)(a) of the Act is property tax levied qua ownership of the property within 
the municipal limits and income therefrom, not a service tax payable for the 
service rendered to the person in occupation of the land or building. The 
proviso to Clause (a), in stipulating that in the case of lands and buildings B 
occupied by "tenants-in-perpetuity" the tax shall be payable by such tenants, 
declares the legislative intent in specific and unmistakable terms as well as 
by necessary and inevitable implication that tenants of the category other 
than 'tenants-in-perpetuity' are outside the purview of Section 61 (I )(a) of the 
Act. Therefore, no tenent other than one holding a lease in perpetuity can 
be saddled with any liability to tax qua his status as a mere tenant uncier C 
Section 61 (I)(a) of the Act. Periodical leases with provision therefore and 
actual renewals from time to time cannot be affixed with the character of 
leases in perpetuity merely because cumulatively considered the lessee might 
be in physical possession for long, particularly when there is no vested right 
of renewal as such in the lessee. The Government of India, the lessor, is the 
indisputable owner of the property leased in favour of the Club and they have D 
not done anything, which could even indicate slightly of the grant of their 
rights of ownership in favour of the club. The respondent-Local Authority, 
therefore, cannot act in a manner, which is likely to even cast a cloud around 
the title, ownership and right to possession of the Government of India. 
1384-A-B-C-D-E-F-G] E 
2. Even a cursory perusal of the orders sanctioning the lease as well 
as the terms and conditions of the lease would make it beyond any doubt that 
the lease in question is merely a tern porary allotment/temporary lease and 
the further stipulation, that any continuance beyond even the expiry of 20 
years for which the tern porary lease has been granted shall also be a lease F 
on temporary basis, leaves the matter beyond any controversies whatsoever. 
The various clauses in the lease deed restricting and regulating the mode 
and character of enjoyment by the lessee and the specific stipulation reserving 
absolute power in the lessor to terminate the lease and resume possession 
as and wh_en required on giving a notice for the.stipulated period militates 
against the lease being characterised as one in perpetuity. In the light of the G 
above, the respondent has no legal aut
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