Delhi HC rejects Khan Market Association's plea seeking uniform valuation method to determine property tax

The Delhi High Court on Friday rejected a plea by Khan Market Welfare Association seeking directions to the New Delhi Municipal Council (NDMC) to adopt a uniform valuation method for calculating property tax in its jurisdiction [Khan Market Welfare Association v UOI & Ors]. 

NDMC area includes locations such as Connaught Place, Khan Market, Chanakyapuri and many other posh commercial and residential locations in Lutyens' Delhi.

A Division Bench of Justices Anil Kshetarpal and Shail Jain dismissed the plea, holding that the Court cannot issue directions on how a statutory authority like NDMC should formulate and administer the methodology for determination of rateable value (an official estimate of a property's annual open-market rental value).

“The Court cannot, under the guise of issuing a mandamus, substitute its own formulation for that of the competent statutory authority. The principle is not that the exercise of statutory power is immune from judicial review, rather, it is that judicial review is directed towards the legality of the exercise of power and not towards the Court itself undertaking the function entrusted to the statutory authority,” the Court observed. 

The Bench also rejected the association’s plea to constitute an expert committee to inquire into alleged frauds, irregularities and discrepancies in the fixation of rateable values throughout the jurisdiction of the NDMC. 

“A direction of this nature would require the Court to create an administrative mechanism, prescribe its composition and remit, and entrust it with functions which have not been shown to have been statutorily vested in such a body. The jurisdiction under Article 226 cannot ordinarily be invoked for creation of such an institutional mechanism merely because the Petitioner alleges irregularities in the functioning of a statutory authority,” it ruled. 

The Khan Market Welfare Association approached the High Court seeking directions to the NDMC to adopt a uniform valuation method until the Unit Area Method (UAM) was formally implemented. It also sought constitution of an expert committee to probe alleged irregularities, and strict compliance with various provisions of the NDMC Act. 

It was argued that NDMC was drawing on the UAM, actual rent, comparable rent and historical values to determine rateable values for similarly placed properties in areas like Khan Market and Connaught Place, resulting in wide disparities in tax liability.

NDMC countered that Section 63(1) of the Act does not prescribe a rigid formula. It said that actual rent, comparable rent and hypothetical rent are merely evidentiary tools for arriving at the statutory standard of reasonably expected rent, varying naturally with a property's use and occupation status. 

After considering the case, the Court rejected the petition. The Court observed that the petitioner failed to highlight any statutory duty that NDMC had failed to perform. 

It also flagged maintainability issue as the alleged prejudice was personal to individual assessees rather than the association. The Khan Market Welfare Association could not aggregate members' grievances into a single mandamus claim, the Court concluded. 

Senior Advocate Kirti Uppal along with advocates Shaini Bhardwaj and Avichal Mishra appeared for the petitioner. 

Advocates Raghvendra Upadhyay, Amit Dhankhar, Prem Singh, Yoginder Handoo, Raghav Alok, Ashwin Kataria, Khushboo Mittal, Garvit Solanki, Gaurav Vishwakarma and Aditya Aggarwal appeared for the respondents.

[Read Judgment]