$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI HON'BLE MR. JUSTICE v. MUNICIPAL CORPORATION OF DELHI, SERVICE TO BE EFFECTED THROUGH ITS COMMISSIONER, TOWN HALL, CHA

10, as originally recommended by the expert committee. 14. Thereafter, on 20.09.2006, MVC-II was constituted. The first meeting was held on 05.10.2006, and the Committee conducted 34 meetings in total. The interim report was submitted on 25.05.2007, recommending UF-4 for un-starred hotels, UF-5 for hotels up to 3-star, UF-7 for hotels up to 5-star, and UF-10 for hotels above 5-star. However, the report of MVC-II was never accepted or implemented by the MCD. Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV

15. MVC-III constituted Notification No. F.4/4/2008/UD/15596 dated 08.09.2009. The Committee submitted its interim report to MCD under Section 116A on 25.06.2010, recommending UF-8 for 3 and 4-star hotels and UF-10 for 5-star and above. In compliance with Section 116B (1) of the DMC Act, MCD placed the report in the public domain via advertisement dated

02.01.2011, websites, and physical copies zonal offices. Representations and public hearings followed. The final report was submitted on 28.04.2011, fixing UF-4 for hotels below 3-star and UF-10 for 3-star and above hotels. The implementation of the recommendations of MVC III took place in the unified MCD on 15.07.2022. 16. Thereafter, MVC-IV was constituted on 01.02.2017. However, its recommendations were never adopted or enforced by the MCD. 17. Subsequently, MVC-V was constituted on 05.10.2021 by the Government of NCT of Delhi. Its interim report was submitted on

13.08.2022. A public notice was uploaded on the MCD website on

24.08.2022, followed by a press publication on 25.08.2022. The MVC-V received 461 objections, and public hearings were conducted on

09.09.2022, 10.09.2022, 17.09.2022, and 24.09.2022. 18. On 30.09.2022, the MVC-V submitted its Final Report to the MCD, which was officially accepted on 04.11.2022. MVC-V recommended a UF of 8 for 5-star and above hotels, while UF-4 was assigned to all other types of hotels. Subsequently, on 19.04.2023, the MCD implemented the MVC-V recommendations, which came into effect from 01.04.2023. Submissions made by petitioners 19. Mr. Harish Malhotra, learned senior counsel appearing for the petitioner in W.P. (C) No. 1394/2011, vehemently criticizes the Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV imposition of UF-10 and the levy of property tax at the rate of 20% on hotels categorized as 3-star and above. He contends that such classification is arbitrary, ultra vires the DMC Act, and lacks any rational nexus with the object sought to be achieved. He contends that the instant petition pertains to two hospitality establishments located in Mayur Vihar District Centre, New Delhi, initially rated as 5-star and 4-star hotels, but reclassified as 4-star hotels as of February 2022. According to him, despite this downgrade, the impugned taxing provisions continue to be enforced without distinction, treating both properties as falling under the 3-star and above category, thereby attracting the highest UF-10 and tax rate of 20%. 20. Learned senior counsel submits that the UAM introduced under Sections 116A to 116E of the DMC Act requires the annual value of a building to be computed based on the UAV, total covered space, and multiplicative factors such as structure, age, usage, and occupancy status. He further submits that under the proviso to Section 116C of the DMC Act, the MCD is obligated to either adopt the MVC's recommendations or obtain express Government approval to deviate. However, according to Mr. Malhotra, a UF-10 for 3-star and above hotels finds no traceable authority in the DMC Act and is therefore, patently ultra vires. 21. In this regard, he points out that the original interim report of MVC recommended a UF-5, which was later revised in the Final Report. It is contended that no reasons or objective criteria whatsoever, have been provided for this revision, exposing the arbitrary and whimsical nature of the actions of MVC and MCD. Moreover, it is contended by Mr. Malhotra that the adoption by MCD of a UF-10 without statutory sanction and in deviation from the recommendations of MVC, without seeking government approval, constitutes a violation of Section 116C. Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV

22. Further, according to learned senior counsel, Section 116E (4) mandates that in cases of mixed land usage, the annual value should be computed separately for parts of the building used for different purposes. In the present case, Mr. Malhotra points out that the hotels have heterogeneous functional spaces, inter alia, approximately 40% guest rooms (residential use), 20% for restaurants/shops (commercial use), and 40% for plant and machinery, storage, public areas, and parking (utility use). Yet, learned senior counsel contends, the MCD applies a uniform UF-10 across all areas, in clear breach of the statutory mandate under Section 116E (4). 23. It is further argued that the indiscriminate inclusion of basements, primarily used for storage and parking, in the computation of „covered space‟ is impermissible in law. Learned senior counsel then points out that under applicable building Bye-laws, such areas are exempt from Floor Area Ratio (hereinafter referred to as „FAR‟) and cannot be equated with revenue-generating areas. Moreover, according to Mr. Malhotra, Section 116E of the DMC Act does not define a basement as „covered space‟ unless converted to commercial use. Therefore, he further reiterates that the approach of the MCD in taxing such areas at the highest rate and factor is impermissible in law. 24. More importantly, learned senior counsel points out that the star classification system, used as the basis for applying UF-10, lacks any statutory recognition. According to him, it is a voluntary metric, designed by the Department of Tourism to promote hospitality standards and not a parameter for tax assessment. Reliance is placed on the decision of this Court in Vinod Krishan Kaul and Ors. v. Lt. Governor of Delhi and Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV Ors.2,wherein it was held that economic classification alone, such as school fee structure, cannot justify differential tax treatment, emphasizing the need for rational and legally sanctioned bases for classification. 25. Furthermore, Mr. Malhotra also assails the imposition of a 20% tax rate, although within the permissible bracket under Section 114D of the DMC Act (6%-20%), for being mechanically applied to all hotels without any disclosed criteria or justification. Reliance is placed by him on the decision of the Supreme Court in Jindal Stainless Ltd. (2) v. State of Haryana3. It is argued that the MCD provides identical services to all hotels irrespective of star rating, and thus no justification exists for a higher levy on 3-star and above hotels. 26. The classification of star hotels for the purposes of property tax, it is averred by Mr. Malhotra, violates Article 14 of the Constitution, which prohibits unreasonable and arbitrary classifications. According to him, the differential treatment between 1-2 star and 3-star and above hotels, despite similar facilities and municipal service usage, lacks any intelligible differentia and fails the test of reasonable classification as enshrined under Article 14 of the Constitution. Reliance is also placed on the decision of the Supreme Court in Lokmanya Mills Barsi Ltd. v. Barsi Municipality,4 and the decision of the Karnataka High Court in Baldwin Girls' High School, Bangalore v. Corporation of the City of Bangalore5. 27. Further reliance is also placed on the decision of the Supreme Court in Municipal Corporation of Delhi v. Shashank Steel Industries 22012 SCC OnLine Del 4355 3 (2006) 7 SCC 241 4 1961 SCC OnLine SC 287 51983 SCC OnLine Kar 79 Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV Pvt. Ltd.,6 State of U.P. v. Maharaja Dharmander Prasad Singh7, and Babaji Kondaji Garad v. Nasik Merchants Coop. Bank Ltd.8 28. Mr. B.B. Gupta, learned senior counsel appearing in W.P.(C) No. 4505/2011, reinforces the aforenoted arguments by highlighting the violation of procedural safeguards under Sections 116A to 116C of the DMC Act. He submits that once the MCD declared its intention under Section 116B of the DMC Act, it could not enhance the UF without notice or consultation, thereby violating legitimate expectations and principles of natural justice. He argues that the mechanical application of the maximum tax rate of 20%, without any policy basis or transparent criteria, amounts to excessive delegation. He also challenges Bye-law 14 for impermissibly expanding the definition of covered area to include basements and mezzanines, which violates the parent statute and planning norms. He places reliance upon the decision in Vinod Krishan Kaul to reaffirm that delegated legislation cannot override statutory protections. 29. Mr. Tarun Johri, learned counsel appearing on behalf of the petitioner in W.P.(C) No. 4956 of 2021 and W.P.(C) No. 3507 of 2022, contends that the impugned assessment orders, demand notices, and warrants of distress issued by the MCD seeking to recover property tax and service charges in respect of the property at Sector-21, Metro Station Complex, Dwarka, namely, the Taj Vivanta Hotel, are ex facie illegal, arbitrary, and unsustainable in law. It is submitted that the subject property cannot be equated with other 5-star hotels for assessment purposes, as the same was developed on land allotted permanently to DMRC by the DDA under the DDA (Disposal of Developed Nazul Land) Rules, 1981, with express limitations on FAR (1.00) and ground coverage to Notice -Challenge 12.02.2018, 01.01.2020 23.02.2018 Order andAssessment (for 18.03.2020 period 2016-17 to 2019- letter 20) and Demand dated 19.03.2020,of Rs. 5,38,67,917/- Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV W.P.(C)- -Challenge to inclusion of basements, mezzanine floors and stilts meant for and Non-FAR parking areas in covered area , liable primary Not person/entity payment of property tax assessable as vacant land tax, UF- 10, tax rate of 20%,; -Challenge categorization of the area in Mahipalpur Extension and not as per area Nangal Dewat.

51. It is evident from the record that the petitioners, apart from mounting a general challenge to the classification of star-rated hotels as a distinct category for taxation and the imposition of UF-10 coupled with a 20% property tax levy, have also impugned several individual assessment orders issued by the MCD. In this context, it is pertinent to refer to the decision rendered by this Court in Harshvardhan Bansal, wherein it has been observed that adjudication of such claims would invariably necessitate a fact-intensive scrutiny in each case. The Court held that in the absence of complete factual records pertaining to each individual property and assessment before the Court, it would be inappropriate to render any definitive finding at this stage. Furthermore, it was also noted that the statutory scheme under Section 169 of the DMC Act provides for an alternate remedy to approach the MTT, if any person is aggrieved by an order of assessment and consequential demand. Accordingly, it is incumbent upon the petitioners, insofar as their challenge pertaining to the individual assessment orders is concerned, to first avail and exhaust the remedy of approaching the MTT. Thus, the Court restricts adjudication in the instant lis to only the legal issues and grants liberty to Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV the parties to agitate the remaining issues as per the extant mechanism as provided under the DMC Act. Further, it is also clarified that the rights and contentions of the parties with respect to the issue sub judice in W.P.(C) 831 of 2019, as submitted by Mr. Johri and Mr. Nayar, are left open. 52. Thus, upon careful examination of the rival submissions and the material on record, it is seen that the following broader issues emerge for consideration: - (i) Whether the imposition of a uniform UF-10 and a 20% property tax rate on hotels classified as 3-star and above, particularly when such classification is based on voluntary star ratings, violates Article 14 of Constitution being arbitrary? (ii) Whether inclusion of non-FAR, non-revenue spaces like basements and stilts in 'covered space' for the calculation of property tax is ultra vires Section 116 E of the DMC Act? (iii) Whether the recommendations of MVC, as adopted by the MCD, were consistent with the procedural mandate provided under Sections 116A to 116C of the DMC Act? Issue No. (i) 53. The principal submission raised on behalf of the petitioners is that the classification of hotels based on the star ratings conferred by the Ministry of Tourism (hereinafter referred to as „MoT‟) lacks statutory backing and violates the parameters enumerated under Section 116A of the DMC Act. It is vehemently contended that the said star ratings are intended merely to further promotional or branding objectives and are Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV entirely voluntary in nature. In the absence of any demonstrable and rational correlation with the burden on civic infrastructure or the economic determinants envisaged under the DMC Act, such ratings cannot, by themselves, constitute a legitimate basis for assessment of municipal tax liability. 54. Contrarily, MCD has contended that such classification satisfies the dual tests of intelligible differentia and rational nexus with the objective sought to be achieved, as the star hotels form a separate and reasonable class by virtue of their economic superiority, higher tariffs, integrated infrastructure, and other amenities. Thus, as contended, the tests of Article 14 of the Constitution are duly satisfied. 55. In order to examine whether such classification of hotels as per the star rating, for the purposes of levy of property tax, satisfies the rigour of Article 14 of the Constitution and comes under the exception of reasonable classification, a meticulous delineation of the provisions of the DMC Act is required. Legislative Framework of Classification under the DMC Act 56. Section 116A of the DMC Act provides a structured framework for the classification of properties by the MVC. The aforementioned section is extracted herein for reference: "The Municipal Valuation Committee shall recommend classification of the vacant lands and buildings in any ward of Delhi, referred to in section 5, into colonies and groups of lands and buildings after taking into account the following parameters: (a)settlement pattern such as plotted housing, group housing, colony with flats only, urban village, unauthorised colony, resettlement colony, rural village and non-residential areas; (b)availability of civil and social infrastructure; (c)access to roads; (d)access to district centres, local shopping centres, convenience- shopping centres, and other markets; (e)land prices as may, from time to time, be notified by the [Government] [Substituted by Delhi Act 12 of 2011, section 2(b), Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV the Delhi (w.e.f. 13-1-2012).] or "Central Government" Development Authority; (f)use-wise category of any building including residential building, business building, mercantile building, building for recreation and sports purposes, industrial building, hazardous building and public purpose building including educational, medical and such other institutional building and farmhouse, as may be specified by [a Corporation;] [Substituted by Delhi Act 12 of 2011, section 2(a), "for the Corporation" (w.e.f. 13-1-2012)] (g)in the case of buildings used for business, mercantile, recreation and sports, industrial, hazardous, storage or farmhouse purposes, the location of such buildings adjacent to such categories of streets, as may, subject to the provisions of sub-section (2), be specified by [a Corporation] [Substituted by Delhi Act 12 of 2011, section 2(a), "for the Corporation" (w.e.f. 13-1-2012)]; (h)the types of buildings which may be classified as pucca, semi- pucca or katcha, as may be specified by [a Corporation] [Substituted by Delhi Act 12 of 2011, section 2(a), "for the Corporation" (w.e.f. 13-1-2012)]; (i)the age-wise grouping of buildings as may be specified by [a Corporation] [Substituted by Delhi Act 12 of 2011, section 2(a), "for the Corporation" (w.e.f. 13-1-2012)]; and (j)such other parameters as may be considered relevant by the Municipal Valuation Committee. (2)The Municipal Valuation Committee shall recommend, group wise, (a)the base unit area value of any owner-occupied vacant land, or any wholly owner-occupied building of pucca structure, constructed in the year 2000 or thereafter, and put to exclusive residential use, (b)the factor for increasing or decreasing, or for not increasing or decreasing, the base unit area values specified in clause (a), separately in respect of each of the parameters of type of colony, use, age, type of structure and occupancy status of the vacant land or building, as the case may be, subject to a lower limit of zero point five and upper limit often point zero.”

57. Under the aforenoted provision, MVC has been empowered to recommend the classification of vacant lands and buildings within each ward of Delhi into distinct colonies and groups. The classification so recommended is to be based on a diverse set of parameters, including settlement pattern, availability of civic and social infrastructure, road access, proximity to commercial centres, government-notified land prices, the use-wise category of the building (residential, mercantile, industrial, Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV etc.), street categorization, type and age of structures, and such other factors as deemed relevant by the MVC. It is noteworthy that the list of parameters is not exhaustive, and the statutory leeway of MVC to take into account such other factors as may be deemed relevant, is not curtailed. 58. Pursuant to the functions and powers enshrined in the legislation, the Expert Committee, constituted for the purpose of recommending a fair and rational basis for determining base unit area values under the area- based property tax system, undertook a detailed study of classification principles adopted by the civic bodies in other Indian cities, such as Ahmedabad and Patna. However, the Committee found that these models were unsuitable for Delhi due to various inherent limitations. 59. Specifically, the Patna Municipal Corporation‟s classification based on street width was considered unfit for Delhi, as it would give rise to disputes and discretionary interpretations, particularly in the case of corner plots or properties abutting multiple roads. Furthermore, the existence of long arterial roads with varying property values along their lengths, and the address system of Delhi being based on colony nomenclature rather than street names, made such a system unworkable. Additionally, the Committee observed that properties located on main roads in residential areas may face disadvantages such as noise and traffic, contrary to the assumption of premium valuation. 60. The Ahmedabad model, which classifies the city into four zones based on land values, was similarly deemed inapplicable to Delhi. The Committee noted that Delhi suffers from a lack of reliable transaction data and a distorted property market, where sale transactions are often unrecorded or inaccurately recorded, and rental values are frequently under-reported. Hence, sole reliance on average land or rental values was Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV considered inadequate for forming groups. 61. Instead, the Committee concluded that a comprehensive approach reflecting the overall development of a colony was necessary. This included evaluating physical infrastructure, the availability of social services, the economic profile, and the paying capacity of residents. It was further held that classification based on a multiplicity of factors would reduce the impact of potential distortion arising from the misapplication of any single factor, thereby enhancing objectivity and fairness. 62. In consonance with the aforesaid approach, in its meeting held on

27.09.2002, the Expert Committee constituted a Sub-Committee to classify all colonies/ land under the jurisdiction of MCD. 63. The terms of reference for the Sub-Committee included formulating general principles for classification based on available data on capital values, rental values, and other relevant factors, evaluating development levels and municipal services, grouping colonies and lands into a reasonable number of homogeneous categories, and suggesting appropriate multiplicative factors for different types of colonies and lands, including urban villages, unauthorized colonies, and rural areas. 64. On 27.10.2002, the Sub-Committee submitted its report. A classification matrix was developed using ten factors, including average capital and rental values, infrastructural facilities, road and market access, and socioeconomic profile. Grade points were assigned to each factor, converted to a composite score, and used to categorize colonies into seven grades from A to G. 65. The proposed classification was published in leading newspapers for public feedback, with the last date for submission of suggestions and objections initially set as 31.10.2002, later extended to 15.09.2002. 66. More than 2000 representations were received, examined by a Task Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV Force led by the Chief Town Planner of MCD. The Task Force‟s recommendations on modifications to the classification were again published widely. Based on the deliberations of the Expert Committee in its 8th meeting, and the inputs of the Sub-Committee and the Task Force, a final ward-wise list of colonies with their respective classifications was prepared. 67. The expert committee, in its report dated 31.01.2003, made several notable observations with respect to the use factor for non-residential properties. Their analysis revealed considerable inconsistencies in the unit area tax rates applied to commercial properties. For instance, properties falling under Category 'E' were found to be paying the highest unit rates of tax than those in Categories 'A' and 'B'. Interestingly, Category 'F' properties were paying even less than those in Category 'G', further highlighting anomalies in the tax burden distribution. Even within a single category, the tax paid per square foot varied widely, underscoring the lack of standardization and the prevalence of under-assessment. 68. The committee also studied the disparity in taxation across different types of commercial use. The data showed that cinemas were taxed at the lowest rate of approximately Rs. 9.19 per sq.ft., while hotels were taxed at a much higher rate of Rs. 50.79 per sq.ft. Notably, markets and shops were taxed at a relatively low rate of Rs. 20.42 per sq.ft., compared to offices which were taxed at Rs. 37.6 per sq.ft. 69. To address these disparities, the committee recommended a rationalized and uniform use factor system that could be applied consistently across property types and usage categories. The proposed framework introduced standard UF to be multiplied with the CF in determining the final annual value for tax purposes. 70. The recommendations made by the expert committee were as Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV follows: (i) properties for recreational uses, schools, and educational institutions should be assigned a UF- 3 (ii) public utilities, a UF-4; (iii) hospitals, nursing homes, and industrial properties, a UF- 6; and (iv) business offices and mercantile establishments, a UF- 8. The highest UF– 10 was reserved for star hotels and banks, reflecting their commercial profitability. Public purpose buildings, particularly those offering non- profit services such as education and healthcare, were recommended to be taxed at the same rate as residential properties. 71. Following the submission of recommendations by the Expert Committee, the MVC-I was constituted pursuant to a Government Order dated 28.10.2003. The MVC-I was tasked with making recommendations on the classification of colonies, fixation of base unit area values, and determining applicable multiplicative factors, while also considering the objections received in response to the public notice issued earlier by the Corporation. 72. Recognizing the constraints of time and the extensive work already undertaken by the Expert Committee, the MVC decided to proceed tentatively on the basis of the proposals of the MVC. A public notice was issued on 30.10.2003 inviting comments on the proposed classifications, values, and factors. Nearly 600 representations were received in response to the public notice. In a bid to ensure transparency and inclusivity, the MVC resolved to consider all suggestions received. 73. MVC-I undertook comprehensive a consultative process, organizing multiple public hearings and stakeholder meetings, including with resident welfare associations, trade bodies, and sectoral interest groups. To objectively assess the specific concerns raised, the Committee arranged field inspections for verification of facts and referred several cases to the Chief Town Planner. It also drew upon data from the office of Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV the Assessor & Collector regarding land use patterns, covered area, and revenue collection to inform its deliberations. 74. In its interim report dated 31.12.2003, the MVC-I endorsed the Expert Committee's approach of classifying colonies into categories A to G and added a new category 'H' for rural villages. Category 'D' was chosen as the baseline for determining the base unit area value, set at Rs. 320 per square metre, with adjustments of +25% for higher categories and -15% for lower ones. The final unit area values ranged from Rs. 630 per sq.m. (Category A) to Rs. 100 per sq.m. (Category H). Additional parameters such as rental values, socio-economic profiles, and geographical positioning were also incorporated rationalize classifications. 75. More importantly, MVC-I heard the representatives of the Hotel and Restaurant Association of Northern India, who argued that hotels typically have large public areas, such as lobbies, and significant service areas, including kitchens and laundry facilities. They suggested that the tax under the new system should be limited to the covered areas occupied by the rooms available for letting. The representatives further contended that the proposed tax under the new system, especially for star hotels, which is calculated using the UF-10, would place an unsustainable financial burden on them. This, they argued, would make them internationally uncompetitive and also less competitive compared to hotels in the NDMC area within Delhi. In response to these concerns, the Committee, after considering the submissions of the association, recommended a UF-5, instead of the initially proposed UF-10, for star hotels. 76. Notably, the MVC-I, in its interim report, revised the categorization of non-residential property uses, reducing them from ten to five simplified Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV categories to streamline tax administration. These included: (1) Public purpose uses (UF-1), (2) Utilities and recreation (UF-2), (3) Industrial uses (UF-3), (4) General business uses such as offices, hotels, shops, and restaurants (UF- 4), and (5) Star hotels, telecom towers, and hoardings (UF -5). 77. However, the final report of the MVC-I included a critical reassessment of the UF, particularly in light of objections raised after its interim recommendations. Initially, the MVC had proposed significantly reduced UFs compared to those of the Expert Committee. However, while members of the public still viewed these reduced UFs as excessive, the Assessor and Collector of the MCD raised a formal protest, asserting that the lowered values would severely impact revenue collected from existing non-residential properties. 78. After a comprehensive review of all submissions and revenue data presented, the MVC-I ultimately proposed the following revised use factors: I. Public purposes: UF = 1 II. Public Utilities: UF = 2 III. IV. Business, Restaurants, Hotels up to 2-Star: UF = 4 V. 3-Star and above Hotels, Towers and Hoardings: UF = 10 Industry, Entertainment, Recreation, and Clubs: UF = 3

79. Keeping in view the aforesaid background, the classification done by the expert committee has to be tested on the anvil of Article 14 of the Constitution. Test of Reasonable Classification under Article 14 of the Constitution 80. Article 14 of the Constitution guarantees equality before the law and equal protection of the law. It prohibits discrimination by the State, Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV ensuring that all individuals are to be treated equally in similar situations. The underlying idea of constitutional equality is equal treatment of equally placed persons. However, our constitutional scheme and jurisprudence are sensitive to pragmatic concerns and reserve due space for necessities, which may require classification of certain persons for different treatment. Such classification by the State and instrumentalities is permitted, however, it has to be justiciable. 81. The fundamental criterion for evaluating the constitutionality of any legislative classification under Article 14 of the Constitution lies in the classic doctrine of reasonable classification. This doctrine rests upon two inseparable conditions, generally known as the twin or dual test, i.e.: - a) Firstly, the presence of an intelligible differentia that sets apart those who are grouped within the classification from those who are excluded; b) Secondly, a rational nexus between the classification and the purpose intended to be achieved by such classification.

82. Article 14 of the Constitution eschews class legislation but accommodates legislative classification, provided it adheres constitutional parameters of reasonableness, fairness, and non- arbitrariness. This exception takes inspiration from the Aristotelian logic that all persons similarly circumstanced should be treated alike, and differential treatment must be justifiable in terms of purpose and method. 83. The Supreme Court, over the years, has crystallized this principle into a canon of constitutional review. This Court in Harshvardhan Bansal, upon an extensive review of various precedents and decisions rendered by the Supreme Court, reaffirmed that the constitutional mandate of Article 14 of the Constitution is anchored in the doctrine of reasonable Signature Not Verified Signed By:PRIYA Signing Date:16.09.2025 10:54:22 Signature Not Verified Signed By:PURUSHAINDRA KUMAR KAURAV classification. The Court reiterated that any legislative or executive differentiation must satisfy a twin test. Drawing upon the seminal exposition in D.S. Nakara v. Union of India16, it was held that Article 14 of the Constitution strikes not at classification per se, but at class legislation and invidious discrimination. 84. The Court reiterated that perfect equality is neither envisaged in the Constitution nor required. Rather, classifications based on real and substantive distinctions, reasonably allied to statutory purpose, are permissible. Endorsing the position elucidated in Rajbala v. State of Haryana17, the Court acknowledged that legislative classification, even if it engenders incidental inequality, would withstand constitutional scrutiny if it flows from a legitimate policy rationale. 85. Simultaneously, the Court adverted to the doctrinal evolution marked by the emergence of the test of "manifest arbitrariness," rooted in the proposition that arbitrariness is the antithesis of equality. It was observed that any legislative or executive measure that is capricious, irrational, or devoid of any discernible principle would be constitutionally dubious under Article 14 of the Constitution. The relevant extract of the decision in Harshvardhan Bansal reads as under: - “A glance over the well settled jurisprudence on Article 14 would evince that the thrust of permissible classification rests on an intelligible differentia which distinguishes persons or things that are grouped together from others, left out of the groups, and the differentia therein, must have a rationale nexus to the object sought to be achieved by the Statute in question. In case of permissible classification, mathematical nicety and perfect equality may not be desirable to be reckoned. One of the earliest authoritative referencesbwith respect to the extent and scope of Article 14 of the Constitution of India can be gainfully found in the case of D.S. Nakara and Ors. v. Union of India17, wherein, the Supreme Court has emphatically noted as under:-