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Common Cause Registered Society v. Union Of India And Others
Factual and Procedural Background
The present order arises out of a set of civil miscellaneous applications filed nearly twenty months after the Supreme Court’s three-judge Bench decision in Balbir Singh (Dr) v. Municipal Corporation, Delhi, (1985) 1 SCC 167. The original judgment had laid down the methodology for determining the “rateable value” of properties under the Delhi Municipal Corporation Act, 1957, and, in particular, classified properties constructed in stages as the fourth category for assessment purposes.
Common Cause, the petitioner in Writ Petition No. 6945 of 1982, initially sought a clarification confined to the fourth category, specifically where additional construction was raised on an existing structure. The Municipal Corporation of Delhi (“the Corporation”) later filed its own application for clarification and impleaded the Government Servants Cooperative House Building Society as a party.
On 1 October 1985, a two-judge Bench (Bhagwati, C.J. and Pathak, J.), both members of the earlier three-judge Bench, set aside certain assessments and directed fresh assessments except in cases involving the valuation of land for subsequently constructed additions—an issue reserved for decision in these very applications. The matter has now been listed before the Court to resolve that limited question.
Legal Issues Presented
- Whether, when additional construction is raised at a later stage on already assessed property, the market value of the land can be added a second time while determining the standard rent and rateable value under the Delhi Municipal Corporation Act, 1957.
- Whether any ambiguity exists in the earlier judgment of Balbir Singh necessitating a clarificatory order by the Court.
Arguments of the Parties
Municipal Corporation of Delhi (Applicant)
- Contended that the applications sought only a clarification on how to value the land component when additional construction is carried out on an existing structure.
- Highlighted passages from the earlier judgment to argue that the issue of land valuation in such circumstances required judicial clarification.
Common Cause and Government Servants Cooperative House Building Society (Respondents)
- Opposed the Corporation’s application, asserting that the three-judge Bench had already decided the issue unambiguously.
- Alleged that the Corporation sought the so-called clarification merely to justify a practice of adding the market value of land more than once, contrary to the judgment.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Balbir Singh (Dr) v. Municipal Corporation, Delhi (1985) 1 SCC 167 | Established that, for properties constructed in stages, the market value of land cannot be added twice in computing standard rent and rateable value. | The Court relied on this precedent to conclude that the issue had been conclusively settled and no clarification was necessary. |
Court's Reasoning and Analysis
The Court examined the passages of the earlier Balbir Singh judgment, specifically the directive that “the market price of the land cannot be added twice over” when determining standard rent for additional structures. It found that:
- The three-judge Bench had categorically ruled out any re-addition of land value once it had already been factored into the assessment of the original structure.
- No ambiguity existed in the operative portion of that judgment; therefore, a clarificatory order was unwarranted.
- The Corporation’s application effectively sought to reopen, rather than clarify, a settled question of law, which was impermissible.
Holding and Implications
DISMISSED: All civil miscellaneous petitions seeking clarification are rejected.
Implications: The earlier ruling in Balbir Singh remains intact. Assessing authorities under the Delhi Municipal Corporation Act must not include the market value of the land more than once when computing the rateable value of properties where additional construction has been undertaken. No new precedent is created; the decision simply reinforces the existing legal position.
Order
1. A three Judge Bench of this Court in the case of Balbir Singh (Dr) v. Municipal Corporation, Delhi (1985) 1 SCC 167, (1985) 2 SCR 439, (1985) 152 ITR 388 elaborately examined the provisions of the Delhi Municipal Corporation Act of 1957 for the purpose of ascertaining the manner of determination of “rateable value” which was necessary for making assessment of property tax under that Act. This Court classified the properties into four categories:
“(1) self-occupied;
(2) partly self-occupied and partly tenanted;
(3) restrictive leasehold on which construction is raised; and
(4) where the property has been constructed in stages.”
So far as the fourth category is concerned (and these applications are concerned with that) this Court said:
“The fourth category of premises we must deal with is the category where the premises are constructed in stages. The discussion in the preceding paragraph of this judgment provides an answer to the question as to how the rateable value of this category of premises is to be determined. When the premises at the first stage of construction are to be assessed for rateable value, the assessing authorities would first have to determine the standard rent of the premises under sub-section (2)(a) or (2)(b) or (1)(A)(2)(b) or (1)(B)(2)(b) of Section 6 as may be applicable and keeping in mind the upper limit fixed by the standard rent and taking into account the various factors discussed above, the assessing authorities would have to determine the rent which the owner of the premises may reasonably expect to get if the premises are let out to a hypothetical tenant and such rent would represent the rateable value of the premises.”
Having said so generally, this Court proceeded to examine the different facets of the question and stated:
“When any addition is made to the premises at a subsequent stage, three different situations may arise. Firstly, the addition may not be of a distinct and separate unit of occupation but may be merely by way of extension of the existing premises which are self-occupied. In such a case the original premises together with the additional structure would have to be treated as a single unit for the purpose of assessment and its rateable value would have to be determined on the basis of the rent which the owner may reasonably expect to get, if the premises as a whole are let out subject to the upper limit of the standard rent determinable under the provisions of sub-section (1)(A)(2)(b) of Section 6. Secondly, the existing premises before the addition might be tenanted and the addition might be to the tenanted premises so that the additional structure also form part of the same tenancy. Where such is the case the standard rent would be liable to increase under Section 7 and such increased rent would be the standard rent of the premises as a whole and within the upper limit fixed by such standard rent, the assessing authorities would have to determine the rent which the owner may reasonably expect to get if the premises as a whole are let out as a single unit to a hypothetical tenant and in such a case, the actual rent received would be a fair measure of the rent which the owner may reasonably expect to receive from such hypothetical tenant unless it is influenced by extra-commercial considerations. Lastly, the addition may be of a distinct and separate unit of occupation and in such a case, the rateable value of the premises would have to be determined on the basis of the formula laid down by us for assessing the rateable value of premises which are partly self-occupied and partly tenanted. The same principles for determining of rateable value would obviously apply in case of subsequent additions to the existing premises. The basic point to be noted in all these cases is — and this is what we have already emphasised earlier — that the formula set out in sub-section (1)(A)(2)(b) and (1)(B)(2)(b) of Section 6 cannot be applied for determining the standard rent of an addition, as if that addition was the only structure standing on the land. The assessing authorities cannot determine the standard rent of the additional structure by taking the reasonable cost of construction of the additional structure and adding to it the market price of the land and applying the statutory percentage of 7½ to the aggregate amount.”
Initially an application was made by Common Cause, petitioner in original Writ Petition No. 6945 of 1982 for clarification of the judgment confined to the last category of the fourth group referred to above. Later the Corporation itself made an application for the same purpose and impleaded the Government Servants Cooperative House Building Society as a party to that application. On October 1, 1985, a little more than 20 months after the original judgment, these cases were listed for directions. A two Judge Bench consisting of Bhagwati, C.J and Pathak, J., as the learned Chief Justice then was, (both of them being parties to the three-Judge Bench decision) gave the following direction:
“The assessments made on the properties involved in these cases are set aside if and only if any appeals were filed against such assessments or objections were raised to the draft or provisional assessments and in such cases, fresh assessments are directed to be made in accordance with the law laid down by this Court, save and except in those cases where the question in regard to the valuation of the land in relation to the subsequently constructed additional structures is involved, which question we have yet to decide in CMP 12513/83 in Writ Petition No. 6945/82 and other connected matters fixed for hearing on October 29, 1985. Where no appeals were preferred against the assessments and no objections were filed against draft or provisional assessments, the assessments will not be liable to be set aside and in such cases, the writ petitions and appeals will, to that extent, stand dismissed.”
That is how these applications have now been placed for consideration.
2. Long arguments have been advanced before us by Mr Datar, appearing for the Municipal Corporation; Common Cause and the Government Servants Cooperative House Building Society have resisted the application by advancing counter-arguments through their respective counsel. Mr Datar stated that clarification is confined to cases of subsequent construction raised upon existing construction and the manner of valuing the land for determination of the value of the property. This question was pointedly examined by the three-Judge Bench and at page 475 of the Reports, this Court held:
“The market price of the land cannot be added twice over, once while determining the standard rent of the original structure and again while determining the standard rent of the additional structure. Once the addition is made, the formula set out in subsection (1)(A)(2)(b) and (1)(B)(2)(b) of Section 6 can be applied only in relation to the premises as a whole and where the additional structure consists of a distinct and separate unit of occupation, the standard rent would have to be apportioned in the manner indicated by us in the earlier part of this judgment.”
This Court had, therefore, clearly indicated that when at a different stage, additional construction was raised on the property already valued, the market value of the land was not to be taken into account as it had already been considered while fixing the valuation of the pre-existing construction. The Corporation did not challenge the correctness of the decision but only wanted clarification. Since the matter has been directly decided and there is absolutely no ambiguity, an application of this type on behalf of the Corporation, does not lie. We were told by Mr Salve, learned Counsel for common cause that their application had emanated when the Corporation wanted to act contrary to the judgment of this Court in regard to this category of constructions. Later on the Corporation wanted the cover of a clarificatory order of this Court for the procedure adopted by it for reflecting the market value of the land more than once in situations appertaining to the category.
3. On our finding that this Court has categorically decided that the market value of land is not to be added over again, there is no ambiguity which requires clarification. We decline to make any clarificatory order as there is no necessity. All the civil miscellaneous petitions are accordingly dismissed.
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