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Amit Gupta Advocate (Real Estate Attorney)

HC Comes to Rescue

Delhi High Court strikes down the NDMC Bye-laws for determination of Annual Rent as being ultra vires the NDMC Act 

Takeaways from the JUDGMENT

·         Any excess amount collected on the pretext of the New Bye Laws will have to be refunded by the NDMC.

·         The Unit Area Method was struck down and the earlier method of arriving at the rateable value is restored.

·         The Hon’ble High Court observed that the New Bye Laws were actually replacing the provision of the principal act.

·         The Hon’ble High Court has kept the gates open for the litigants as and when the NDMC brings these changes through the route of amendment of the NDMC Act itself.

   In a big relief to property tax payers in the NDMC area, the Delhi High Court has struck down the New Delhi Municipal Council (Determination of Annual Rent) Bye-laws, 2009 (“Bye Laws”), and asked it to refund the excess tax collected by it.  The Byelaws brought a change in the method of arriving at the rateable value for the purposes of payment of property tax. According to the bylaws, the rateable value was to be determined on the basis of a Unit Area Method (“UAM”). In the UAM, first the Unit Area Value (“UAV”) i.e. per Sq. Ft./ Mtrs. Of a property is fixed with reference to the characteristics of the property such as location, age, structure etc. The UAV is then multiplied by the area of the vacant land or covered space to arrive at its annual value.     The Hon’ble Delhi High Court struck down these bye-laws by observing inter-alia:

  1. These bye-laws introduced a completely different system of rateable value than what is provided under the principal act.
  2. Just because amending the act would have been a time-consuming process, it chose to introduce the new rules.
  • Under the proviso of Section 63 (1) of the Act, the rateable value cannot exceed the standard rent fixed under the DRC Act. This was illegally overwritten by the new rules.
  1. In State Trading Corporation India Ltd. Vs, NDMC, the SC stated that the manner of determination of rateable value has to be only in terms of Section 63 of the NDMC even in respect of properties that have been sub-let.

On the basis of the above and other similar observations, the Hon’ble High Court of Delhi struck down the Bye Laws as being ultra vires to the principal act.

The Court struck down the new BYE LAWS as they are in excess of the scope and ambit of the powers vested in the NDMC under Section 388 (1) A(9) of the NDMC Act

Source :

Amit Gupta

Amit Gupta Advocate (Real Estate Attorney)



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