LexMUNICIPAL CORPORATION OF DELHI versus SHASHNAK STEEL INDUSTRIES (P) LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A B [2008] 16 S.C.R. 100 MUNICIPAL CORPORATION OF DELHI v. SHASHNAK STEEL INDUSTRIES (P) LTD. (Civil Appeal Nos. 6802-6806 of 2003) NOVEMBER 17, 2008 [S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] Delhi Municipal Corporation Act, 1957: s.120(1)(c) - Property tax - Perpetual sub-lease - Between the President C of India, as lessor, Cooperative society as lessee and respondent as sub-lessee - Liability of sub-lessee to pay property tax under s.120(1)(c) on the ground that sub-lease operated as conveyance - Held: The sub-lease did not operate as conveyance, in view of number of restrictions put D on sub-lessee which prevented sub-lessee from full enjoyment of leasehold rights - Since it was case of letting and not of conferring ownership rights on sub-lessee, s.120(1 )(c) did not apply - Corporation was not right in imposing primary liability to pay property tax on the sub- E lessee under s.120(1)(c) of the Act. A perpetual sub-lease dated 20.2.1981 was executed between the President of India, as the lessor, Mohan Cooperative Industrial Estate Ltd. as a lessee and respondent as a sub-lessee of an industrial plot. F According to the appellant-Corporation, the perpetual sub-lease dated 20.2.1981 operated as a conveyance having the effect of transferring the leasehold rights of land in favour of respondent who on purchase became the owner thereof and consequently exigible primarily to G pay property tax under s.120(1)(c) of the Delhi Municipal Corporation Act, 1957. The High Court held that on account of various restrictions put on the sub-lease, it cannot be said that H 100 ; MUNICIPAL CORPORATION OF DELHI v. SHASHNAK 101 STEEL INDUSTRIES (P) LTD. respondent-sub-lessee was the owner of the industrial A plot. Hence the instant appeal. It was contended for the appellant-Corporation that under the deed dated 20.2.1981, lessor conferred leasehold rights to the sub-lessee to which the lessee B was a confirming party; that the sub-lessee was required to pay premium amount in addition to rent and on payment thereof the sub-lessee became the owner of the lease-hold rights. Dismissing the appeal, the Court c HELD: 1. The nature of the tenancy created by any document must be determined by· construing the document as a whole. Whether it is tenancy for life or a permanent tenancy must ultimately depend upon the 0 terms of the contract itself. [Para 9] (114-A-B] Sivayogeswara Cotton Press, Devangere and Ors. v. M. Panchaksharappa and Anr. AIR (1962) SC 413, relied on. 2.1. The Deed dated 20.2.81 shows that there was a E lease deed dated 20.3.80 between the lessor and the lessee in the first instance under which the lessee Mohan Co-operative Industrial Estate Ltd. was given the authority to sub-lease on such premium and yearly rent as may be fixed by the lessor (President of India) and the lessor F demised the lease in perpetuity to the lessee-Mohan Co- operative Industrial Estate Ltd. The sub-lessee applied for the lease to the ~essee, the lessee agreed to sub-let and the lessor (President of India through Delhi Administration) agreed to confirm a perpetual sub-lease. G Therefore, the lessor and not the lessee is the confirming 1 party to the sub-lease between the lessee-Mohan Co- operative Industrial Estate Ltd. on one hand and the respondent-sub-lessee on the other hand. The lessor is the confirming party because under the Deed in question H 102 SUPREME COURT REPORTS (2008] 16 S.C.R. A rent and premium was revisable periodically and the determination of the revised/enhanced rent/premium was left to the lessor though rent and premium was payable by the sub-lessee to the lessee. [Para 11] [115-B-H; 116- A] . B 2.2. The purpo~e of the Deed in question is relevant. What was demised was an industrial plot. Initially, the lessee was given the authority to sub-lease the industrial plot on such premium and yearly rent as may be fixed by the lessor. The lessee was a society registered under C Bombay Co-operative Societies Act, 1925; one of its members was respondent-sub~lessee who had agreed under the Deed in question to set up an industrial unit. Under one of the terms, the sub-lessee was required to pay premium and rent to be fixed by the lessor. However, D both rent and premium was payable by the sub-lessee to the lessee. The sub-lessee had agreed to put up at its own expense a factory on the industrial plot within two years from 20.2.81. Under the De
Excerpt shown. Read the full judgment & AI analysis in Lexace.