NEW DELHI MUNICIPAL COMMITTEE versus M/S. GYMKHANA CLUB LTD. AND ORS.

Citation: [1994] 3 S.C.R. 429 · Decided: 08-04-1994 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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NEW DELHI MUNICIPAL COMMITTEE 
A 
v. 
M/S. GYMKHANA CLUB LTD. AND ORS. 
APRIL 8, 1994 
[B.P. JEEVAN REDDY AND BL HANSARIA, JJ.] 
B 
t 
Municipalities : Punjab Municipal Act-Provisions applied to New 
Delhi Municipal Committee-S.3(1)(c)-House tax-Annual Value-Es-
timated market value of the site and land attached to the house or build-
ing-Whether to be taken into consideration while determining Annual c 
Value-Held : Yes.· 
In this appeal against the Delhi High Court's judgment, the appel-
Ian! Committee raised the question as to the inclusion of the value of land 
in determining the annual value of the buildings for the purpose of 
assessing house tax. 
D 
'· 
Some of the respondents contended that they have only leasehold 
!-
interest in the land; that the land cannot be transferred without sanction in 
.. 
writing of the authority and the use of the land has also been restricted by 
some covenants and therefore there cannot be any market value for such E 
~ 
land. 
Allowing the appeal, this Court 
HELD : 1.1. Even a land taken on lease can have market value; what 
' 
would be market value would, of course, be determined by the conditions F 
governing the grant oflease; and after taking into account the limitation or 
~ 
restriction placed on the lease as incorporated in the lease deed, the market 
} 
value would be reduced or discounted appropriately. Before adverting to 
the conditions of grant of lease in the present cases, it may be pointed out 
that though Balbir Singh's case [1985] 2 SCR 439 dealt with valuation of G 
land taken on sub-lease from cooperative house Building Society by its 
members, which Society had taken lease from the Government, what has 
been stated about the market value of the sub-leased land would proprio 
vigore apply to leased land and this aspect of that case does not make a 
difference in principle insofar as the present cases are concerned regarding 
determination of market value of leased land. [432-H; 433-A-C] 
H 
429 
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430 
SUPREME COURT REPORTS 
[1994] 3 S.C.R. 
A 
1.2. For fixing the annual value of the premises at hand, it is the 
B 
c 
D 
E 
F 
market value of the site and lane! attached to the house or building which 
has to be taken note of. As to what would be the market value is, however, 
a matter which has to be worked out by the concerned authority keeping 
in view the restrictive clauses of each of the lease deeds, bearing in mind 
what has been stated in this regard in Balbir Singh's case. The notional 
market value shall have to be discounted appropriately, as the restrictions 
subject to which leases were granted, would undoubtedly depress the same. 
[ 435-H, 436-A-B] 
Balbir Singh v. Municipal Corporation Delhi, (1985] 2 SCR 439, relied 
on. 
Dewan Dau/at Rai Kapoor v. New Delhi Municipal Committee, [1980] 
1 SCC 685 and Commissioner of Wealth Tax v. PN Sikand, (1977] 2 SCC 
798; Halsbury's Laws of England, Fourth Edn., Vol. 39 Paras 97 and 98 and 
R.E. Megarry's 'The Rent Act' p.119, referred to. 
CIVIL APPELLATE JURISDICTION : Civil appeal No. 2705 of 
1982 etc. etc. 
From the Judgment and Order dated 30.9.81 of the Delh High Court 
in Court Writ Petition No. 528 & 529 of 1976. 
B. Sen and R.K. Maheshwari for the Appellants. 
S.S. Chadha, H.K. Puri, S.K. Mehta, Vikramjeet Sen and Mukul 
M udgal for the Respondents. 
The Judgment of the Court was delivered by 
HANSARIA, J, Leave granted. 
New Delhi Municipal Committee is the appellant in all the cases. It 
has felt aggrieved at the judgmenl of the High Court of Delhi passed in 
the writ petition filed by it which was taken up for hearing alongwith some 
G other writ petitions filed, inter a/ia, by Delhi Gymkhana Club Limited, who 
is the principal respondent in some of the appeals. The subject matter of 
the writ petitions before the High Court related to the fixation of 'annual 
value' for the purpose of determining house tax to be paid by the respon-
dent herein. The stand of the Municipal Committee before the High Court 
H was that in fixing annual value under the provisions of section 3 of th~ 
• 
( 
>-· 
N.D.M.C. v. GYMKHANA CLUB [HANSARIA,J.] 
431 
Punjab Municipal Act, the provisions of which Act admittedly apply, the A 
estimated market value of the site and land attached to the house or 
building has also to be taken into consideration as required by clause (c) 
of sub-section (1) of the aforesaid section. This contention has not been 
accepted by the High Court, the result of which is tha
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