Municipal Corporation of Delhi Vs. Dharma Properties and anr. - Court Judgment

S. Ravindra Bhat, J.

1. The present appeal under letters patent is directed against the judgment and order of a learned Single Judge dated 21st February, 2002, rejecting the writ petition preferred by the appellant (hereafter called MCD ). The issue involved is what is meant by to give a notice, as per Sections 126(2) and (4)(b) of the Delhi Municipal Corporation Act, 1957 (hereafter called the Act).

2. The first respondent owns a property in Green Park Extension, New Delhi. The annual rateable value of the property was Rs.16,300/-. On 25.3.1998, the appellant issued a notice in terms of Section 126 proposing to enhance the rateable value to Rs.16,30,70/- (Rs. Sixteen Lakhs Thirty Thousand Three Hundred Seventy) w.e.f. 1.4.1997. This notice was dispatched under registered A/D cover on 27.3.1998. It was received by the first respondent on 4.4.1998.

3. The order finalising the assessment was made on 11.3.2001. As per this order, rateable value was fixed at Rs.11,35,260/- w.e.f. 1.4.1997; Rs. 15,66,720/- w.e.f. 1.3.1998 and Rs. 16,30,370/- w.e.f. 1.1.2001. The assessment order noted that the property had been let out and that the first respondent had secured a security deposit.

4. The assessment order was challenged by the first respondent through an appeal under Section 169 of the Act. The first respondent inter alias contended that the notice dated 25.3.1998 was in fact received by it through registered post only on 4.4.1998 and, thereforee, the same was time barred. It was also contended that the notice in question could not be used for finalising assessments of later and subsequent years in the absence of independent notices in that regard.

5. The learned Additional District Judge returned a finding that the notice proposing enhancement in rateable value had to be served on or before 31.3.1998 and was in fact served only on 4.4.1998. He thereforee held that the notice was time barred. The learned Appellate Court had also relied upon the Division Bench Judgment of this Court delivered in K.L. Rathi v. MCD, : 90(2001)DLT170 (hereafter called Rathi's case ) , that the action of enhancement of the rateable value was vitiated by law, since the requirement of serving the notice was not a mere formality but had to be complied with.

6. The appellant approached this Court by filing a writ petition which was dismissed by the learned Single Judge.

7. Ms. Amita Gupta and Ms. Geeta Mehrotra, Advocates appearing for the appellant have assailed the judgment under appeal. It is first contended by the learned counsel that as per Section 444(1) of the Act, giving of a notice would imply its dispatch by registered post. In the present case, admittedly the dispatch of the notice took place well before 31.3.1998. Consequently, the notice was within time. Secondly, it is contended that the judgment relied upon by the Additional District Judge, and affirmed by the learned Single Judge, namely, Rathi's case has since been reviewed by an order of this Court dated 20th September, 2002 which had recalled the order and left the question open for decision. Eventually, the Division Bench dismissed that appeal. Thirdly, it is contended that the giving of a notice is akin to the act of making or completing an assessment. In both the cases, the objective sought to be achieved is indication to, or informing the assessed about the notice or the order respectively. If one keeps in mind this objective, it is contended, the point of time when the dispatch of the notice took place, completes the obligation of the MCD. That is the time when MCD would be deemed to have given notice to the assessed. Fourthly, learned counsel placed considerable emphasis on the expression at any time occurring in Section 126(1) of the Act to say that the assessment list could be amended at any time. Hence, it is contended, the giving of notice is merely procedural, and meant to sub-serve the primary objective of having to amend the assessment list. If one keeps this in mind, it is submitted that the provisions in Section 444(1) and Section 126(4) have to be read in a harmonious manner to ensure that wherever amendments to the assessment list having to be carried out are done having regard to the ground reality.

8. The counsel has also relied upon the final judgment of the Division Bench in LPA No. 118/1994 titled as K.L. Rathi v. UOI, delivered on 3.11.2003 where the Court held that the issue as to when and how the notice was served is a disputed question of fact which was correctly not adjudicated upon by the learned Single Judge in writ jurisdiction. Learned counsel also relied upon the direction contained in that judgment to the effect that the Single Judge's order permitting the issue of a supplemental notice could not be faulted.

9. Learned counsel for the appellant has further relied upon the decision of the learned Single Judge in Ansal Hotel Limited v. MCD2 (hereafter called Ansal Hotel's case, : 104(2003)DLT142 for the proposition that the even if the notice in the preset case was to be construed as not properly served for the year ending 31.3.1998, it would nevertheless form the basis for the subsequent assessment which might not be covered by any subsequent notice. In other words, counsel sought to support that part of the assessment order for a later period, namely, between 1.4.1998 and 31.3.2001. In this regard, the learned counsel have also relied upon the judgment of the Supreme Court in Shyam Kishore and Ors. v. MCD and Ors., 48 (1992) DLT 277.

10. Mr. Sudhir Nandrajog, learned counsel for the first respondent submits that the order of the learned Single Judge does not require any interference. According to him, the giving of a notice qualitatively differs from the making of an order. He submits that the scheme of Section 126 of the Act is such that the giving of notice initiates the proceedings for amendment of the assessment list which culminates in the making of an assessment order. The expression give thereforee has a more positive conntation; although it cannot be inter-changed with the term received , nevertheless it implies the idea of communicating or informing the recipient of the notice. If that objective was to be kept in mind the mere dispatch of notice would not conclude the issue. In support of this submission, learned counsel had relied upon the decision of the Supreme Court in K. Narasimhiah v. H.C. Singri Gowda, and Ors., : [1964]7SCR618 (hereafter called Narasimhiah's case ) . Reliance has also been placed upon the decision of the Supreme Court in Banarsi Devi v. Income Tax Officer, : [1964]53ITR100(SC) . In both the cases, the court had occasion to consider the various nuances of the expressions give and issue .

11. Learned counsel for the first respondent has also submitted that the expression any time occurring in Section 126(1) is controlled by the non obstinate clause occurring in Section 126(4) which in fact mandates a time frame within which amendments to assessment lists for years commencing after 1.4.1988 can be made. In the present case, it is submitted that the notice was in fact given, when actually tendered through registered post on 4.4.1998, it proposed amendments w.e.f. 1.4.1997; hence the adjudication in that regard had to be completed before the three years period. Admittedly, that was not done and what is more, without issue of separate notices for subsequent periods' a common assessment order enhancing the rateable value in a graded manner was passed. This, it is contended, goes to the root of the matter since without a valid notice, there can be no assessment order and once a notice is held to be beyond time, that illegal notice cannot be the foundation for assessments for subsequent year. Learned counsel submits that in the absence of any provision to support the action, the assessment for the entire period is vitiated.

12. Sections 126 and 444 which are material for the purposes of appeal are extracted below:

126. Amendment of assessment list. (1) The Commissioner may, at any time, amend the assessment list -

(a) by inserting therein the name of any person whose name ought to be inserted; or

(b) by inserting therein any land or building previously omitted; or

-(c) by striking out the name of any person not liable for the payment of property taxes; or

(d) by inserting or reducing for adequate reasons the amount of any rateable value and of the assessment thereupon; or

(e) by making or cancelling any entry exempting any land or building from liability to any property tax; or

(f) by altering the assessment on the land or building which has been erroneously valued or assessed through fraud, mistake or accident; or

(g) by inserting or altering an entry in respect of any building erected, re-erected, altered or added to, after the preparation of the assessment list;

Provided that no person shall by reason of any such amendment become liable to pay any tax or increase of tax in respect of any period prior to the commencement of the year [in which the notice under sub-section (2) is given].

(2) Before making any amendment under sub-section (1) the Commissioner shall give to any person affected by the amendment, notice of not less than one month that he proposes to make the amendment and consider any objections which may be made by such person. 444. Service of notices, etc.--(1) Every notice, bill, summons, order, requisition or other document required or authorised by this Act or any rule, regulation or bye-law made there under to be served or issued by or on behalf of the Corporation, ory any of the municipal authorities specified in section 44 or any municipal officer, on any person shall, save as otherwise provided in this Act or such rule, regulation or bye-law, be deemed to be duly served----

(a) where the person to be served is a company, if the document is addressed to the secretary of the company at its registered office or at its principal office of place of the business and is either---

(i)sent by registered post, or

(ii)delivered at the registered office or at the principal office or place of business of the company;

(b) Where the person to be served is a partnership, if the document is addressed to the partnership at its principal place of business, identifying it by the name or style under which its business is carried on, and is either--

(i)sent by registered post, or

(ii)delivered at the said place of business;

(c) Where the person to be served is a public body, or a corporation, society or other body, if the document is addressed to the secretary, treasurer or other head officer of that body, corporation or society at its principal office, and is either--

(i)sent by registered post, or

(ii)delivered at that office;

(d) in any other case, if the document is addressed to the person to be served and --

(i)is given or tendered to him, or

(ii)if such person cannot be found, is affixed on some conspicuous part of his last known place of residence or business, if within the Union Territory of Delhi, or is given or tendered to some adult member of his family or is affixed on some conspicuous part of the land or building, if any, to which it relates, or

(iii)is sent by registered post to that person.

13.A combined reading of Section 126(1)(2) and (4) would disclose that the Commissioner has power to amend the assessment list at any time, in order to increase or reduce the rateable value of any property. Section 126(2) and (4) prescribe the procedure in that regard. Briefly that procedure is:

(i) The Commissioner has to give notice of at lease one month about the proposed amendment to the assessed; (Section 126(2) ).

(ii) the assessment pursuant to the notice has to be completed within three years from the end of the year in which the assessed is given notice;

(iii) the amendment made pursuant to the notice cannot relate back to any point in time prior to the commencing of the assessment year in which the notice is given (Section 126(1) proviso).

14. The crucial action which would initiate the proceedings, as far as amending the assessment list for enhancement or reduction of rateable value, would be the giving of notice to the assessed. This is to be followed with the other steps by which the assessed as to prefer objections within one month, after which hearing would be given and would culminate in the passing of an order within the three years period reckoned form the end of the year in which the notice is given under Section 126(2). thereforee, both the contents of the notice, time period from which it proposes the enhancement and the date of its being given to the assessed become critical factors. In the present case, if the notice is said to have been given on any date which ended with the year in which the notice was given, namely, 31.3.1998 the order would be valid in respect of that notice.

15. The expression giving of a notice has been used in Sections 124(2)(3), 126(1) proviso (2) and (4) of the Act. Section 444 deals with the manner in which notices, bills, summons, orders etc. are required to be served or issued. It provides by a faction, that such service would be completed having regard to certain eventualities. Four eventualities have been contemplated in Section 444(1). The first relates to a company where service is deemed complete if the documents concerned are sent by registered post or delivered at the registered office. Similarly, in the case of partnership or corporation, the sending by registered post or delivery at the office or at the place of business is deemed to complete the service of notice; in the case of an individual, service is deemed complete if it is given or tendered to him or if he cannot be found through affixation or if it is sent by registered post to that person.

16. The expression give however does not find mention in any of the eventualities prescribed by Section 444. We thereforee have to construe the expression sent by registered post or delivered in the office or address of the assessed in the context of the present dispute.

17. While dealing with the expression give a notice, in the context of a dispute relating to three days notice for a general meeting, the Supreme Court, in Narasimhiah's case held as follows:

giving of anything as ordinarily understood in the English language is not complete unless it has reached the hands of the person to whom it has to be given. In the eye of law however giving is complete in many matters where it has been offered to a person but not accepted by him. Tendering of a notice is in law thereforee giving of a notice even though the person to whom it is tendered refuses to accept it. Thus as soon as the person with a legal duty to give the notice dispatches the notice to the address of the person to whom it has to be given, the giving is not complete.

18. In the Banarsi Debi's case the Supreme Court considered the impact of Section 27 of the General Clauses Act which reads as follows:

27. Where any Central Act or Regulation made after the commencement of this Act authorises or requires any document to be served by post, whether the expression serve or either of the expressions, give or send or any other expressions used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing , prepaying any posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.

19. The Court held that Parliament used the words serve , give and send as interchangeable terms. thereforee, it was held that the expression issue to and serve upon were equivalent expressions. The Court held that the dictionary meaning of the expression issue takes in the entire process of sending the notice as well as the service thereafter. The said word used in S.34(1) of the Act thus was interpreted by the Court to mean serve . The limited meaning, namely, sand was held to exclude from the operation of the provision a class of cases and introduce anomalies in the circumstances by interpretation. Hence, the Court accepted the wider meaning of the word issued bears.

20. The Supreme Court again had occasion to consider Section 27 of the General Clauses Act in the judgment of K. Bhaskaran v. Sankaran Vaidhyan Balan, : 1999CriLJ4606 (hereafter called Bhaskaran's case )) . There the issue involved was the giving of notice under Section 138 of the Negotiable Instruments Act to drawer of a cheque which is returned un-paid. The Court invoked Section 27 of the General Clauses Act and held that a presumption could be drawn in accordance with Section 27 if it is proved that the person required to send the notice or sends it by registered post, at the correct address, which is delivered in the ordinary course of post, until a contrary fact is proved.

21. The entire basis of an assessment and as in the present case amendment to assessment list is the issuance of notice. This factor assumes considerable significance because the rateable value is sought to be made effective from commencement of the year in which the notice is given. If the notice is given on the last date of the concerned year, it would nevertheless relate back and the consequence of a higher rateable value would follow. If, however, the notice is not so issued the entire proposal to amend would be endangered.

22. As noticed earlier, Section 444 does not use the expression give . However, it indicates the mode of serving notices. The limitation of accepting an interpretation that would connote its receipt are obvious. As has been noticed by the Supreme Court in Bhaskaran's case, the object of giving could be defeated by refusal. The judgment of the Supreme Court in Narasimhiah's case on the other hand indicates that mere dispatch or the date of dispatch itself would complete the process of giving of a notice or the serving of a notice. The process of giving would imply the following steps:

(i) issue of the notice;

(ii) the dispatch of the notice;

(iii) receipt of notice.

23. Although the last point in time would logically culminate in the giving of a notice nevertheless its uninhibited acceptance as the meaning of give may not be appropriate. There can be various situations in which the notice properly issued and dispatched might not be received such as refusal, absence of recipient/assessed, or adoption of dilatory tactics by the recipients. Each of this would defeat the purpose of an otherwise legitimate exercise of carrying out increase or modification in an assessment list.

24. In our opinion, the most appropriate manner to deal with issue would be to construe Section 444(1) having regard to Section 27 of the General Clauses Act. The General Clauses Act provides that unless a different intention appears the giving of a notice is deemed to be completed in the manner provided for, namely, by dispatching through registered post at the proper address and upon expiry of a reasonable period from the date of such dispatch, till a contrary event is proved. It would be clear that the underlying theme of Section 27 is two fold. First it enacts the mode of service; second it also provides for or enacts a presumption, though rebuttable, of fact. If one keeps this in mind, these two, the requirement of Section 444(1) would mean that giving of a notice under Section 126(1) is complete not on the date of its dispatch through registered post but on the expiry of a time on which the notice would be delivered in the ordinary course of post, unless a contrary date is proved.

25. The language of Section 444(1) and the modes of service enacted by it, also supports our conclusion. They show, in sub-clause (b) in respect of each of the four modes, that delivery- which is a definite act that implies actual receipt, is contempted is a mode of service. This mode would in fact colour the expression give , and also the first part of the clause, in each of the four situations, where the notice is to be sent by registered post.

26. If one bears the above in mind, the MCD would have been well within its right to contend that notice was given within a time during which it could have been received in the ordinary course of post after it was dispatched on 27.3.1998. However, the fining here is that it was in fact received on 4.4.1998. thereforee, a contrary event, namely, its receipt on 4.4.1998 has been proved. That is a finding of fact. thereforee, in the present case, the date on which the notice was given was the actual date on which it was received, namely, 4.4.1998.

27. On the issue of giving of notice, thereforee, we are of the opinion that the view taken by the learned Single Judge was correct and requires no interference.

28. The second issue which was argued related to the validity of the assessment order in respect of periods which were not covered by any notice. The learned counsel for the appellant sought to support the assessments for the years commencing 1.4.1998, 1..1999, and 1.4.2000 by urging that even if the notice could not cover the period 1.4.1997 to 31.3.1998 nevertheless since it was received on 4.4.1998, and in fact the assessment was completed within the three years period contemplated under Section 126(4) it was legally valid, for those later periods.

29. Learned counsel relied on certain observations of the Supreme Court in Shyam Kishore's case (supra) and Ansal Hotel's case in support of his submission.

30. In Ansal Hotel's case, no doubt, the learned Single Judge observed that even though the notice was served later, nevertheless since material existed to support the assessment, the assessed could not deny liability. It would be noticed that the facts of that case pertain to first assessment. That decision was rendered in relation to Section 126. However, it covered a fact situation where Section 124 applied. Further more, nothing was brought to our notice to support the contention that when there is ainding of no notice or where a notice is held to be beyond period of time, thereby rendering it invalid, nevertheless for subsequent periods, it could be construed as valid and form the basis of revision/amendments/enhancements of the existing rateable value. In this context, the observations in Shyam Kishore's case are of no assistance to appellant. That decision was rendered in the absence of Section 126(4). The Supreme Court dealt with the situation where the time limit imposed by Section 126(4), was not in issue. The principal question arising for decision was the validity of certain provisions that require pre-deposit of tax as a condition of consideration of appeals.

31. The learned counsel for MCD have relied upon the final judgment in LPA 118/ 94, viz. K.L. Rathi's case, where the court, after holding that the issue of notice and disputes raised in that regard, had not disturbed the view taken by the learned single judge, permitting assessment after issue of a supplemental notice. We may notice that the court primarily was deciding whether the notice in question in that case, had been served as per law; the finding endorsed was that the notice had indeed been served within time, as per law. Hence, the issue of a supplemental notice in the event of the notice for one period being void, or a nullity did not arise for consideration. We are thereforee unable to accept the contention that the said order is an authority for the proposition that even if a notice is declared void or found to be a nullity for the reason of its not being served in time according to law, it would nevertheless constitute the foundation for another period or periods of assessment.

32. In the decision reported as Saviti Devi v. Municipal Corporation of Delhi, (55) 1944 DLT 391 a Division Bench Judgment permitted issuance of a supplementary notice; however, the operative part of directions clearly mentioned that the permission to do so was in the peculiar facts of the case.

33. The contention of the appellants about the notice being valid for a future period, other than the one for which it is given cannot be accepted in view of the Explanationn to Section 126(4). It provides for only one situation where the time period can e stretched, viz. Where the assessment is held up ( after due service of notice) due to a stay order by a court of law. That covers only one eventuality, namely assessment proceedings. The fact that the other periods have not been mentioned leads to the inference that the delay in issuance of notice, or delays in other situations have been intentionally left out, and the consequence of such imperatively framed time periods being breached, result in invalidity of the action. The judgment of a Constitution Bench of the Supreme Court in Superintendent of Taxes -vs- Onkarmal Nathmal Trust, : AIR1975SC2065 rendered in the context of a period of limitation prescribed in a taxing statute is an apt authority on the point that such stipulations ( as in Section 16) are not mere periods of limitation; they also act as fetters on the jurisdiction of the taxing authority, which is required to act within the limitation imposed by the statute. Our view is also fortified by another Division Bench judgment in Prem Pra had Juneja v. Municipal Corporation of Delhi, 1996 (2) AD (Del) 69. That case was examined the legality of the notice on the question of whether sufficient reasons were given; it did not deal with the situation where the notice itself transgressed the time-limit prescribed by law. thereforee, the Court after holding that the notice was bereft of particulars, permitted a supplementary notice, since not taking such a course would have meant a tax holiday to the assessed. Implicit in such reasoning is the recognition of the fact that the notice was validly served, but the action was curable, since reasons in support of the notice could be issued later, through such supplementary notice. Here, such a course would not be possible, since initiating action is impressible in law.

34. We are also not persuaded to agree with the appellant that by virtue of bye-laws the notice would itself result in a provisional assessment that would be eventually finalised. By doing so, we would be injecting life to something which is in fact a nullity, namely, a notice that is issued beyond time limit prescribed.

35. On the second issue, thereforee, we hold that in the absence of any notice for the periods commencing from 1.4.1998, the appellant cannot rely upon the notice in question here, namely, issued on 25.3.1998 once the same has been declared illegal and void. As a result, the assessment for the period up to March 2001 are also based upon no material and notice and were rightly declared as illegal by the learned Additional District Judge and affirmed by the learned Single Judge.

36. In the light of the above discussion, the appeal is dismissed with no orders as to costs.