K. K. Complex (P) Limited v. State of Rajasthan — 1996 DIGILAW 64 (RAJ)

Honble RAVANI, CJ. – Both these Special Appeals are directed against the judgment and order passed by the learned Single Judge in S.B. Civil Writ Petition No. 4483/93 decided on May 16, 1994 (Coram : Mrs. Mohini Kapur, J.) and in S.B. Civil Writ Petition No. 3120/94 decided on June 3, 1994 (Coram : Arun Madan, J.). (2). In substance, the Appeals relate to the liability of the appellant-petitioner company to pay the land and building tax in respect of the property known as the old State Garrage, purchased by it in public auction held by the Jaipur Development Authority on January 8, 1992. (3). Briefly stated, the facts are as follows :– (4). The Jaipur Development Authority put up for auction the lease hold rights for 99 years in respect of the property known as the Old State Motor Garrage, situated at M.I. Road. Promoters of the Company participated in the auction and highest bid was of Rs. 13 crores 17 lakh. The auction was confirmed. Thereafter the promoters formed the company. The company paid certain amount. The company apprehended that the auction may be cancelled for one reason or the other. Hence the company filed a Petition in this Court, inter alia, praying that the Jaipur Development Authority be directed not to cancel the auction. The Petition was dismissed. The matter was carried in appeal. In appeal (D.B. Civil Special Appeal No. 443/92) consent terms were arrived at between the parties and were placed before the Court on January 30, 1993. The Court passed order in terms of the consent filed by the parties. The consent terms read as follows :– a) On deposition of the amount of Rs. 4 crore the JDA will ensure that exemption from urban land ceiling and regulation act will be given within 60 days from the date of making of an application in this regard. b) The main temple area including the passage area will be excluded from the allotment. c) Rs. 2 crore would be paid by the petitioner on 30.1.93, Rs. 2 crore would be paid by 20th Feb., 1993 and the balance would be paid by the petitioner in monthly instalments, subject to the condition that each instalment shall be of a minimum amount of Rs. c) Rs. 2 crore would be paid by the petitioner on 30.1.93, Rs. 2 crore would be paid by 20th Feb., 1993 and the balance would be paid by the petitioner in monthly instalments, subject to the condition that each instalment shall be of a minimum amount of Rs. 20 lac and whole of the outstanding amount shall be paid within a maximum period of 12 months from the date of the said agreement. d) Physical possession of the property shall be handed over to the petitioner as soon as Rs. 4 crore is paid by the petitioner as per the agreement. e) Boundary on Amrapura Temple side will be constructed by the JDA so as to enclose the approach to temple from M.I.Road. The main temple area including the passage area will be excluded from the allotment and no cost of land so excluded will be charged. f) The lease deed shall be executed by the JDA in favour of the peti- tioner only after receipt of full payment by the petitioner and in the event of any default by the petitioner in payment of the dues the allotment will stand automatically cancelled. g) That prejudice to the terms of the said agreement the Honble High Court shall decide the question as to the claim for interest and pena- lty. Pursuant to the consent terms, the company deposited further amount of Rs. 4 crore on February 16, 1993 and it was put into possession. After obtaining the possession the company obtained order from the State Government and sought exemption from the operations and implementation of the provisions of the Urban Land (Ceiling & Regulation) Act, 1976 (for short the Act of 1976). Thereafter the respondent No.2 herein i.e. Assistant Director (Chandpol zone), Land & Building Department, Jaipur, issued notice calling upon the petitioner company for making assessment of the market value of the property for purposes of levy of tax. The petitioner company filed reply dated June 9, 1993. After considering the reply, respondent No.2 passed order dated July 16, 1993 and assessed the tax at Rs. 25 lakh 13 thousand for the year 1993-94. The petitioner company challenged the legality and validity of the order of assessment by filing S.B. Civil Writ Petition No. 4483/93. Pursuant to the order of assessment dated July 16, 1993, several demand notices were issued to the company. 25 lakh 13 thousand for the year 1993-94. The petitioner company challenged the legality and validity of the order of assessment by filing S.B. Civil Writ Petition No. 4483/93. Pursuant to the order of assessment dated July 16, 1993, several demand notices were issued to the company. The company filed another writ petition S.B. Civil Writ Petition No. 3120/94 challenging the demand notices. (5). The writ petition No. 4483/93 was decided by the learned Single Judge (Coram : Mrs. Mohini Kapur, J.)_ as per judgment and order dated May 16, 1994 and the Petition was ordered to be dismissed. Similarly another petition No. 3120/94 was dismissed on June 3, 1994 (Coram : Arun Madan, J.). It is against the aforesaid judgments and orders that these two appeals are filed. (6). In both these appeals the contention of the company is that it has not become owner of the land and, therefore, it is not liable to pay the tax. It is conten- ded that unless the lease-deed is executed in its favour, the company cannot be said to be owner. Only after the execution of the lease-deed, the rights, title and interest in the property would be transferred in its favour. Till such formalities are completed, the company cannot be said to be the legal owner of the property and, therefore, it is not liable to pay the tax. In respect of this submission several cases decided under the Income-Tax Act and some cases decided under the Transfer of Property Act, have been relied. (7). The question as to whether the company is liable to pay the tax or not, is to be decided by referring to the provisions of the Rajasthan (Land & Building) Taxes Act, 1964 (for short `the Act). The term `owner is defined in Section 2 (10) of the Act. It is an inclusive definition. It takes within its sweep any person who receives rent or who would be entitled to receive the rent. The definition makes it very clear that it has nothing to do with the provisions of other Acts, namely, the Transfer of Property Act and the Income-Tax Act. This is so because the liability to pay the tax arises in view of the provision of Section 3 of the Act which is the char- ging section. The owner of the property is liable to pay the tax. This is so because the liability to pay the tax arises in view of the provision of Section 3 of the Act which is the char- ging section. The owner of the property is liable to pay the tax. As stated above, the definition of `owner takes within its sweep any person who receives the rent. Such person need not have legal title to the property in his favour. Even a person within inchoate title in the property, if he is entitled to receive the rent, he would be `owner within the meaning of the term defined in Section 2 (10) of the Act. In view of this inclusive definition, in a given case, even a person without any title, whatsoever, and who might have been in unlawful possession of the land, may become liable to pay the tax if it is shown that he in fact receives the rent. Therefore, in view of this position of the provisions of the Act, arguments based on the jurisprudential concept of ownership of property and the attempt to buttress the same by referring to decisions under the Income-Tax Act and under the Transfer of Property Act, has no merit and the same cannot be accepted. (8). In the instant case, in reply to the notice served upon the company by respondent No. 2, the company referred to the consent terms arrived at between the parties and which were produced before this court in Appeal No. 4483/93. By referring to these consent terms, it is stated that there is no provisions in the agreement entitling the company to collect any rent. The reply to the notice has been skillfully drafted. However, the skillfull drafting may conceal the substance of the matter but it cannot destroy or transfer the substance of the matter. Once the facts are properly examined and things are perceived in proper light, it becomes evident that the company has become ``owner of the land in question as per the definition of the term ``owner occurring in Section 2 (10) of the Act. This is the reason why the company has not made categorical statement in reply to the notice or even in the writ petition that it is not entitled to receive rent. This is the reason why the company has not made categorical statement in reply to the notice or even in the writ petition that it is not entitled to receive rent. The right of the com- pany to receive rent from the property does not flow from the agreement dated January 30, 1993 which was produced before the Court. The agreement was arrived at between the parties for a limited purpose of putting the dispute involved in the litigation to an end. The agreement has little to do with the entitlement of the company to receive rent of the property. Therefore, reference to the agreement alone, is not sufficient and that cannot be taken as the determinative factor. (9). In the instant case, the promoters of the company made bid to purchase the land admeasuring about 9020.40 sqm. Their highest bid was of Rs. 13 crores 17 lakh. After the bid was accepted and the auction was confirmed, they formed the company. The company sought exemption from the appropriate government under the provisions of the Act of 1976. Thereafter the company started construction on the land. As per the terms & conditions of the auction, it could use the land for the purpose of commercial complex and/or hotel. The company invested about 15 to 20 crore of rupees. The company has started constructing the commercial complex. The company posed itself to be the owner of the land before the authorities exercising powers under the Act of 1976. If all these facts are examined together with the provisions of the Act, by no stretch of reasoning it can be said that the company has not become the owner of the land inasmuch as even the company does not say that it is not entitled to receive the rent. (10). The contention that the company would become owner only after the execu- tion of lease-deed in its favour by the Jaipur Development Authority, has also no merit. The Jaipur Development Authority would continue to be the legal owner of the property even after execution of the lease-deed. But that circumstance cannot and will not absolve the company from the liability to pay the tax. The liability of the company to pay the tax arises for the reason that it has become `owner of the land as per the provisions of the Act. But that circumstance cannot and will not absolve the company from the liability to pay the tax. The liability of the company to pay the tax arises for the reason that it has become `owner of the land as per the provisions of the Act. Simply because the legal ownership of the land continues to be that of the Jaipur Development Authority also (a local authority), the company does not get exemption from the liability to pay the tax. Unless this harmonious interpretation is given to the provisions of Section 6 of the Act, which provides for exemption in respect of certain property, the working and im- plementation of the Act would become impossible. Such interpretation would lead to absurd results. Wherever it is possible to harmonise two apparently conflicting provisions of law, efforts must be made by the Court to harmonise the two provisions and iron out the apparent conflict. In view of this position, the arguments based on the provision of Section 6 of the Act and contention that so long as the Jaipur Development Authority continues to be the owner, the company would not be liable to pay the tax, has no merit and the same is rejected. (11). The learned counsel submitted that the assessment of the market value of the property at Rs. 16 crores 80 lakhs is excessive. It may be noted that this contention was not raised before the learned Single Judge. Even so, the contention may be examined. The land was put up for auction on January 8, 1992. Thereafter it got stuck up in litigation. Clouds were cleared when parties entered into consent terms on January 30, 1993. In January 1992 the company had purchased the land at Rs. 13 crores 17 lakh plus Rs. 4 lakh of urban assessment charges. The property is situated in prime business locality of the city of Jaipur. It is hard reality of the eco- nomic life of the country that prices of immovable property and particularly that of vacant land in urban agglomeration areas are rising at an unabated speed. Even if one puts the appreciation in this property at 15% only i.e. at the lowest possible rate, then also the market value assessed by respondent No.2 at Rs. 16 crore 80 lakh, would appear to be just and reasonable. On the contrary, it is on the lower side. Even if one puts the appreciation in this property at 15% only i.e. at the lowest possible rate, then also the market value assessed by respondent No.2 at Rs. 16 crore 80 lakh, would appear to be just and reasonable. On the contrary, it is on the lower side. There is no substances in this contention either. (12). No other contention is raised. (13). Both the Appeals are required to be dismissed and the same are hereby dismissed. (14). The stay granted earlier on July 13, 1994 in both the Appeals, stand vacated.