Municipal Council Delhi, whether owner or licensee of the land transferred by the Government? Supreme Court clarifies nature of the title

Supreme Court: The Division Bench comprising of Hemant Gupta* and V. Ramasubramanian, JJ., set aside the order of Delhi High Court whereby the High Court had held that the Municipal Council could not impose different policies on lands transferred to it by the government than those imposed on lands owned by it. The Bench clarified,

“…the rights of Government of India in administering the markets as a lessor or licensee alone was transferred (to the Council) and not the land or the building thereon. The Council was to administer the properties as a delegate of the Union.”

Factual Matrix

A show cause notice was issued to the occupant-respondent alleging sub-letting and unauthorised construction in a stall located at Baba Kharag Singh Marg. The occupant-respondent claimed ownership of the property stating that the shop was allotted to one Maheshi Dhoundiyal and the same was sublet in the year 1999 to the occupant and later on it was transferred in her favour in the year 2000. The occupant-respondent relied upon the Circular dated 25-07-1996 as well as the policy adopted by the Government in pursuance of the Cabinet decision dated 31-08-2000 whereby occupants of the shops in the 14 specified markets were resolved to be granted ownership rights.

However, the Estate Office passed an order of eviction, ordering eviction of the allottee from whom the occupant had purchased the stall in question. The appeal against the said judgment was dismissed by the learned Additional District Judge.

Findings of the High Court

In appeal the High Court of Delhi allowed the petitions holding that merely because market in question i.e., Baba Kharag Singh Marg Market had fallen into the lap of New Delhi Municipal Council by virtue of notification dated 24-03-2006, it did not mean that the policy regarding substitution/mutation of ownership for that market could be different from the one adopted by the Council for all other markets managed by it. Accordingly, the High Court held that the Council could not treat them differently and the occupant was held to be entitled to regularization of allotment in accordance with its policies.

Nature of the Title

The predecessor of the occupant-respondent was allotted the site in question on 04-08-1998. Some of the conditions of the license deed read thus:

“The licencee(s) shall not permit the said premises or any part thereof being used by any other person for any purpose whatsoever without the previous consent in writing of the Government and in default thereof shall be liable for ejectment. The licencee(s) shall not introduce any partner nor shall he/they transfer possess on of the premises or part thereof or otherwise carry on the business in the premises alienate his interest in the premises.”

A partnership deed was executed by the predecessor of occupant-respondent on 12-06-2000 with the occupant-respondent wherein the predecessor had kept only 20% share in the partnership firm and the remaining 80% share was that of the occupant. The partnership was dissolved within 2 months with the condition that the predecessor of the occupant would have no objection for transfer of the shop in favour of the occupant-respondent and regularization in her name.

Contention of the Parties

On 24-03-2006, the Ministry of Urban Development, Government of India transferred certain markets to the Council and Municipal Corporation of Delhi w.e.f. 01-04-2006. The argument of the occupant-respondent was that the policy of regularization/restoration of allotment followed by the local bodies should be applied to the site in question rather that policies followed by the Land & Development Office and Directorate of Estates. Reliance was also placed upon an advertisement issued by the Government of India published in the Hindustan Times on 06-08-2001 to confer ownership rights to the shopkeepers of 12 markets. It was argued that the Government of India on 25-07-1996 allowed regularization of shops, stalls, flats which had come into occupation of the respective premises on or before 20-10-1989.

The appellant argued that the license deed executed in the year 1998 had clearly prohibited subletting of premises, including induction of a partner. It was also argued that the notice published on 06-08-2001 would not be applicable to the stalls located at the Baba Kharag Singh Marg market and that the administrative decision of the Cabinet dated 20-10-1989 had ceased to operate. Moreover, the occupant was not in possession of the stall on or before 20-10-1989 and the public notice dated 06-08-2001 specifically stipulated that the earlier decision of the Cabinet dated 20-10-1989 shall cease to operate.

Analysis and Findings

Rejecting the claim of the occupant-respondent upon communication dated 08-07-2008 wherein the Director of Estates had communicated to the Council that all powers to administer the markets shall now rest with Council/MCD and that the Council may take appropriate action in this particular case at their end, the Bench held that the letter dated 08-07-2008 was interdepartmental communication and not any policy decision or circular meant for public. Thus, the Bench stated, interdepartmental communications are not the enforceable orders of the Union or of the Council.

Noticing that there was a clear stipulation in the license deed executed by the predecessor of the occupant that she should not induct any partner or sublet the premises, the Bench remarked,

“…in utter violation of the terms of the license, firstly, the partnership was executed and within two months, it was dissolved. The act of the predecessor of the occupant and the occupant are clearly and unequivocally in contravention of the terms of the license deed.”

The notification dated 24-03-2006 explained that the Council was to function as a lessor or licensee and was to exercise all powers being performed by Land and Development Office, Directorate of Estates and Central Public Works Department, as the case may be. Thus, the rights of Government in administering the markets as a lessor or licensee alone was transferred and not the land or the building thereon and the Council were to administer the properties as a delegate of the Union. Similarly, the regularization/restoration of allotment of shops in para 3 of the Notification was in terms of the policy of the Union and not that of Council as it stated:

“…the guidelines and procedure followed by Land & Development Office and Directorate of Estates in the matter of…regularization/restoration of allotment of shops may also be followed”.

Thus, the Bench held that if there was a policy of regularization or restoration of the Union, the same was to be followed by the Council which was evident from the fact that the revenue generated from the transfer of markets had to be deposited in a separate corpus of funds to be utilized only for the purpose of development of markets and for no other purpose and such income would not accrue to the Council as a part of their budget. Therefore, the Bench held,

“…the markets transferred by the Government of India to the Council have to be dealt independently and separately than the properties owned by the Council as the Council has no title over such markets as it has been asked only to manage them on behalf of the Government of India.”


In the backdrop of above, the Bench held that the orders passed by the High Court were erroneous in law and the same were set aside. The order of eviction affirmed by the Additional District Judge was restored.

[New Delhi Municipal Council v. Ganga Devi, 2021 SCC OnLine SC 803, decided on 27-09-2021]

Kamini Sharma, Editorial Assistant has put this report together 

Appearance by:

Counsel for the Appellant: Yoginder Handoo

Counsel for the Respondents: Anil Kumar Tandale, B. V. Balaram Das and   Aarthi Rajan

*Judgment by: Justice Hemant Gupta

Know Thy Judge| Justice Hemant Gupta

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