TMI Blog2011 (4) TMI 1499X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as possible be gathered from the expression used in the document itself. By reason of the agreement in question, the buildings in question do not belong to the Administration. Admittedly, it belongs to the grantee i.e. Appellant herein. As discussed, the Oil tanks has been construed as buildings for the purposes of tax. Therefore, Section 119 of the MCD Act would not apply to the building in question. That being the case, the grantee/Appellant is liable to pay tax although the ownership of the land may belong to the Administration. Section 115 of the MCD Act clearly provides that the general tax shall be payable in respect of lands and buildings. Such lands and buildings may be in lawful occupation of the owner. Once it is held that the grantee were liable to pay tax, the same becomes payable from the date of accrual of the liability. The said position is also fortified from specific stipulation in the agreement that the liability to pay all taxes including municipal taxes is on the grantee. Therefore, we are of the considered view that the document in question constitutes lease in favor of the Appellant-grantee; and accordingly liable to pay taxes. It is well settled legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for the purpose and the terms mentioned therein in the aforesaid agreement/grant. Consequently, the Appellant submitted layout building plans for the construction of the oil depot and the standing committee of the Municipal Corporation of Delhi (in short MCD ) approved the layout plan for the construction of 10 oil storage tanks of petroleum products. 6. Subsequent to that the Appellant raised various constructions comprising of an administration block etc. along with huge petroleum storage tanks for storing petroleum products. A boundary wall around the installations and the administrative block was also constructed. The nature of the construction which is stated to be wide range and extensive user, is more than 40 years old now. 7. The Respondent MCD vide its Order dated 17.08.1984 passed an assessment order with regard to the property tax qua the aforesaid property and confirmed the rate able value proposed by it. The said assessment order was challenged by the Appellant before the appellate Court/MCD Tribunal which vide its Order dated 12.7.1985 set aside the assessment order passed by the Respondent MCD and held that the Appellant is only a licensee in the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question as to whether such an oil storage tank would be building or not is no longer res Integra in view of judgment of the Supreme Court in the case of Municipal Corporation of Greater Bombay v. Indian Oil Corporation AIR 1991 SC 686. It has been further contended that that the question as to whether the indentures in question constitute lease or license so as to attract the provisions of Section 120 of the MCD Act would depend upon the construction thereof. It was urged that having regard to the nature of the interest conveyed, it would be erroneous to construe the instrument as a license as the land having been used for the purpose of construction of a building, the object thereof being clear, it could not have been construed to be a license and must be construed to be a lease. It was further argued that it is not a case where it could be said that no interest in the land had been created by reason of the instruments in question. 10. Before addressing the rival contentions, it would be useful to reiterate few relevant provisions of the MCD Act. 2(3) building means a house, out-house, stable, latrine, urinal, shed, hut wall (other than a boundary wall) or any other struc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parliament may by law otherwise provide, he exempt from all taxes imposed by a State or by any authority within a State. (2) Nothing in Clause (1) shall, until Parliament by law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State. 12. It would be useful to examine at this stage the definition of lease and license as envisaged under Section 105 of the Transfer of Property Act, 1882 and Section 52 of the Indian Easements Act, 1882 respectively. Section 105 of the Transfer of Property Act, 1882 reads: 105. Lease Defined.-A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. On the other hand, Section 52 of the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred is called the leasehold interest. The Lesser parts with his right to enjoy the property during the term of the lease, and it follows from it that the lessee gets that right to the exclusion of the Lesser. Whereas Section 52 of the Indian Easement Act defines a license. Under the aforesaid section, if a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof it will be a license. The legal possession, therefore, continues to he with the owner of the property, hut the licensee is permitted to make use of the premises for a particular purpose. But for the permission his occupation would be unlawful. It does not create in his favor any estate or interest in the property. There is, therefore, clear distinction between the two concepts. The dividing line is dear through sometimes it becomes very thin or even blurred. Alone time it was thought that the test of exclusive possession was infallible and if a person was given exclusive possession of a premises, it would conclusively establish that he was a lessee. But there was a change and the recent trend of judicial option is reflecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntee has been described as licensee. But in our considered view the mere use of the word licensee would not be sufficient to hold the grant in question as a license. Simply using the word licensee would neither be regarded as conclusive nor determinative. In terms of Clause (1) of the said indenture the licensee was to have the use of a piece of land for maintaining a depot for petroleum goods received through railways but thereby his rights to deal with the property and the goods brought thereon had not been taken away. Clearly, an embargo has been placed as regards the user of the construction made thereon to the extent that the same would be used solely for the storage of petroleum products but such restriction by itself can also be imposed in a case of lease. The grant in question clearly states that the constructions are to be made as per specifications approved by the Chief Inspector of Explosives which condition was also otherwise governed by the provisions of Explosives Act. Further, the pipelines are required to be laid at railway levels or demised in favor of the grantee, where for expenses are to be paid by it. It further sates that the pipelines are to be laid under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the licensee shall follow all petroleum rules and regulations applicable to the construction, maintenance of petrol pump or stores and for public safety. It is significant to note that the aforesaid clause clearly provides that all taxes in respect of the said patrol pump, stores, buildings under the control of the licensee shall be paid by the licensee. However, the rights of the parties on determination of the grant have been specified. 23. The aforesaid clauses of the indenture in question clearly shows that a bundle of rights have been conferred upon the grantee i.e. the Appellant herein. 24. It is well settled legal position that a deed must be read in its entirety and reasonably. The intention of the parties must also as far as possible be gathered from the expression used in the document itself. 25. In Union Bank of India v. Chandrakant Gordhandas Shah (1994) 6 SCC 271, an instrument was held to be a deed of lease as the lessee was conferred right to exclusive possession where for various terms of the indenture which were taken into consideration for finding out whether the same was lease or a license. Similarly, In Vayallakath Muhammedkutty v. Illikkal Moosakutty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and order dated 3.5.1993 of Andhra Pradesh Admn. Tribunal at Hyderabad in OA No. 47322/91 and 5668/92, is distinguishable. 28. In Lilawati H. Hiranandani v. Usha Tandon AIR 1996 SC 441, an assignment made to the effect that the owner permitted the licensee to occupy a portion with no right or interest created in his favor and also undertaken to vacant the premises within one month, was held to be a case of license. 29. In view of the aforesaid well settled legal position, whether a particular document will constitute lease or license would inter alia depend upon certain factors which can be summarized as follows: (a) whether a document creates a license or lease, the substance of the document must be preferred to the form; (b) the real test is the intention of the parties -- whether they intended to create a lease or a license; (c) if the document creates an interest in the property, it is a lease; but if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a license; and (d) if under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim that rent would be paid annually. 33. In Copt. B.V. D'Souza v. Antonio Fausto Fernandes (1989) 3 SCR 626, this Court observed: However, this cannot answer the disputed issue as it creates a license or lease, the substance of the document must be referred to the form, As was observed by this Court in Associated Hotels of India Ltd. v. R.N. Kapoor (1960) 1 SCR 368, the real test is the intention of the parties --whether they intended to create a lease or license. If an interest in the property is created by the deed it is a lease but if the document only permits another person to make use of the property of which the legal possession continues with the owner it is a license. If the party in whose favor the document is executed gets exclusive possession of the property prima facie he must be considered to be a tenant: although this factor by itself will not be decisive. Judged in this light, there does not appear to be any scope for interpreting Ex. 20 as an agreement of leave and license. 34. It is true that there are indeed certain restrictions which have been imposed by the Administration with regard to the construction of the building storage tank, etc., but in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of DMC Act. 38. By reason of the provisions of the DMC Act, the MCD is required to render several services as specified therein for the purpose whereof, tax is required to be imposed both on land as also on building. The definition of land and building as provided in the DMC Act must be given its full effect. As mentioned hereinbefore in the case of Municipal Corporation of Greater Bombay case (supra), even an oil tanker has been held to be building. 39. The tax is imposed upon the holders of land and building by the MCD which is compensatory in nature. The word letting out in the context of the grant therefore must receive its purposive meaning. The MCD renders services and the benefits of such services are being taken by all concerned, viz., the owner of the land or building. Even a person who is in possession of a land or building, whether legal or illegal, takes benefits of such services rendered by the MCD. The MCD for the purpose of realization of tax is not concerned with the relationship of the parties. It is concerned only with imposition and recovery of tax which is payable on all lands and buildings in accordance with law. The exceptions thereof hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not under Section 120(2) DMC Act after construction was made by HUDCO and lease deed executed by the government. In that case, this Court has held that vacant land belonging to the Government was not taxable by virtue of Section 119 DMC Act and Article 285 of the Constitution of India. However, in our considered view, the case at hand is totally different. The HUDCO judgment dealt with the case where vacant land belonging to the lessor/Government and in regard whereto no lease deed had been executed and no construction had been made by the lessee/HUDCO. The land belonging to the central government was sought to be taxed under Section 120(1) of the DMC Act which fastens liability on the lessor. Since land belonged to UOI the same was exempted from payment of tax until the lease deed was executed and construction made thereon by HUDCO-under Section 120(2) 42. Incidence to pay tax under Section 120(2) DMC Act is with regard to a composite assessment of land and buildings as Section 120(2) talks of a composite assessment only. In the present case vacant land or property of Railways is not sought to be taxed as was in the case of HUDCO v. MCD under Section 120(1) DMC Act, but prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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