KRISHNA MOHAN PVT. LTD. versus MUNICIPAL CORPORATION OF DELHI AND ORS.

Citation: [2003] SUPP. 1 S.C.R. 848 · Decided: 28-07-2003 · Supreme Court of India · Bench: RUMA PAL · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
KRISHNA MOHAN PVT. LTD. 
v. 
MUNICIPAL CORPORATION OF DELHI AND ORS. 
JULY 28, 2003 
B 
(RUMA PAL AND B.N. SRIKRISHNA, JJ.] 
Delhi Municipal Corporation Act, 1957; Sections 2(3), 2(24), 2(38), 
2(47), 116(3), 169 and 171 and Bye-Laws thereunder: Property tax-Levy 
of-Rateable value-Inclusion of cost of the Plant/machinery affixed therein--
C Vesting of arbitrary and uncanalised discretion with the authority under 
Section 116(3) of the Act-Constitutionality of-Held: Jn the absence of any 
provision of law for an appeal against inclusion of any plant/machinery 
within land/building by the authority for determination of rateable value, 
such discretion vested with the authority under Section 116(3) invalid-Cost 
D of such machinery not liable to be included for determination of rateable 
value-Assessing authority directed to assess rateable value afresh-Directions 
issued-Interpretation of Statutes-Transfer of Property Act-Section 3. 
Words and Phrases: 
E 
'Rateable value '-Meaning and scope of in the context of Delhi 
Municipal Corporation Act. 
In these appeals, the assessees challenged the correctness of the 
judgment of the Full Bench of the Delhi High Court upholding the levy of 
property tax by the respondent-Corporation. The common questions oflaw 
F which arose for consideration of the Court in these appeals were: 
G 
H 
I. 
Whether the cost of the plant and machinery installed in or upon 
a building is includible for the purpose of arriving at the rateable 
value of the building; and 
2. 
Whether Section 116(3) of the Delhi Municipal Corporation 
Act, 1957 vests arbitrary and uncanalised discretion in the 
Commissioner and is, therefore, invalid for excessive delegation 
of legislative powers. 
It was contended for the appellant-assessees that the Corporation had 
848 
I .. 
KRISHNA MOHAN PVT. LTD. v. M.C.D. 
849 
no power to levy property tax by including the cost of machinery installed in A 
or upon a building within the rateable value of the property, since it was 
expressly excluded under the Act; and that the reasons enunciated by this 
Court in New Manek Chowk Case striking down Rule 7(2) under the Bombay 
Provincial Municipal Corporation Act due to excessive delgation of power of 
legislature, were equally applicable to sub-section (3) of Section 116 of the· B 
DMCAct 
On behalf of the respondents, it was submitted that the Municipal 
Legislation must be interpreted progressively; that the rateable value of a 
building/premises must be taken to be the letting return inclusive of all plant/ 
machinery affixed therein since it is for the enjoyment of the tenant; that C 
since guidelines for exercise of delegated power are discernible in the Statute, 
it could not be held unconstitutional. 
Allowing the appeals, the Court 
HELD: I.I. The distinction drawn between the Delhi Municipal D 
Corporation Act and Bombay Provincial Municipal Corporation Act is hardly 
valid. While in the case of the DMC Act, the Commissioner is required to 
obtain the approval of the Standing Committee before notifying any plant or 
machinery under sub-section (3) of Section 116, under the BPMC Act, the 
Commissioner has to do it with the approval of the Corporation, which means 
almost the same thing. If the delegated power was treated as wholly unguided E 
and uncanalised under BPMC Act, it should be so under the DMC Act also. 
However, it cannot be said that Section 116(3) is beyond the legislative 
competence of the Legislature for the reason that the DMC Act is not the 
result of exercise of the legislative powers relatable to List II of the Vllth 
Schedule of the Constitution by the State Government, but is enacted by F 
Parliament in exercise of its powers referable to List I of Vllth Schedule of 
the Constitution. [865-G-H; 866-A-BI 
New Manek Chowk Spg. And Wvg. Mills Cb. Ltd. etc. v. Municipal 
Corporation of the City of Ahmedabad and Ors., AIR (1967) SC 801, referred 
to. 
G 
1.2. The Full Bench of the High Court fell into error in not keeping in 
mind the respective functional roles of the definitions of"land", "building" 
and "premises" and conceptually allowing them to overlap. In any event, 
Section 116 itself indicates, in terms, how the rateable value of land and 
building assessable to the property taxes is tu be determined. [868-B-CI 
H 
850 
SUPREME COURT REPORTS [2003) SUPP. I S.C.R. 
A 
Hindustan lever ltd. v. Municipal Corporation of Greater Bombay and 
Ors., 1199513 SCC 716, relied on. 
Poona Municipal C
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