REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 5653 of 2014

MUNICIPAL CORPORATION OF DELHI          .... Appellant(s)

Versus

NORTH DELHI POWER LTD. (NOW TATA POWER DELHI  DISTRIBUTION LTD.) AND ANR.  

                                                … Respondent(s) WITH

CIVIL APPEAL No.5654 of 2014

TATA  POWER  DELHI  DISTRIBUTION  LTD.  (FORMERLY KNWON AS NORTH DELHI POWER LTD.)

    .....Appellant(s)

Versus

MUNICIPAL CORPORATION OF DELHI (NOW KNOWN AS  NORTH DELHI MUNICIPAL CORPORATION)           

… Respondent(s) WITH  

CIVIL APPEAL No._7389_of 2016 (Arising out of SLP (C) No.17317 of 2015)

GOVERNMENT OF NCT OF DELHI                .... Appellant(s)

Versus

NORTH DELHI POWER LTD. (NOW TATA POWER DELHI  DISTRIBUTION LTD.) AND ANR.

.… Respondent(s)

1

J U D G M E N T

L. NAGESWARA RAO, J.

Leave  granted  in  Special  Leave  Petition  (Civil)

No.17317/2015.

The  issues  in  these  three  Civil  Appeals  are  the

exigibility and incidence of property tax over a plot of 8,080

square meters of land.   

2. On  26.03.2003,  the  Assessment  and  Collection

Department of the Delhi Municipal Corporation determined

the  rateable  value  of  a  vacant  plot  of  8,080  sq.  meters

allotted  to  North  Delhi  Power  Limited  at  Rs.58,53,960/-

with  effect  from  01.04.2002.   M/s  North  Delhi  Power

Limited  filed  an  appeal  under  Section  169  of  the  Delhi

Municipal Corporation Act, 1957 before the District Judge,

Delhi  challenging  the  order  dated  26.03.2003.  By  a

judgment  dated  03.01.2004  in  H.T.A.  No.164/2003,  the

Additional  District  Judge,  Delhi  held  that  the  land  in

dispute  stood  transferred  to  the  Delhi  Government  and

hence  it  was  entitled  for  exemption  from  payment  of

property tax in view of Section 119 (1) of Delhi Municipal

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Corporation Act,  1957.  It  was also held that  M/s North

Delhi Power Limited was a licensee of the Government.  On

the basis of the above findings, the District Judge allowed

the  appeal  and  quashed  the  assessment  order  dated

26.03.2003.   Aggrieved  by  the  said  judgment  dated

03.01.2004  of  the  District  Judge,  Delhi,  the  Municipal

Corporation Delhi approached the High Court of Delhi by

filing Writ Petition No.3193/2004.  A Single Judge of  the

Delhi High Court allowed the writ petition holding that the

North Delhi  Power  Limited is  liable  to  pay the  tax.   The

Single Judge held that the provisions of Section 120 (1) (c)

of the Delhi Municipal Corporation Act, 1957 are applicable

as North Delhi  Power Limited was entitled to let  out  the

properties  on  which  basis  it  became  liable  to  pay  taxes.

With  reference  to  the  Delhi  Electricity  Reforms  (Transfer

Scheme) Rules, 2001 which would be dealt in detail later,

the Single Judge held that North Delhi Power Limited is an

effective and full successor in respect to all matters relating

to all liabilities and assets and further held that there is no

material  to  establish  that  the  Delhi  Electricity  Reforms

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(Transfer Scheme), 2001 ruled out liability of  North Delhi

Power Limited from municipal taxation. North Delhi Power

Limited filed L.P.A.No.2630/2005, challenging the judgment

dated  25.07.2005  passed  by  the  Single  Judge  in  Writ

Petition No.3913/2004.  A Division Bench of the High Court

of Delhi held that Delhi Power Company Ltd. was the owner

of  land  and  land  rights  during  the  relevant  assessment

years  i.e.  2002-2003  and  2003-2004,  that  the  statutory

transfer  scheme  creates  a  licence  in  favour  of  the  Delhi

Power  Company  Ltd.  and  that  the  distribution  licence

issued by  Delhi  Electricity  Regulatory  Commission under

Section  20  of  the  Delhi  Electricity  Reforms  Act,  2000  is

distinct from the licence for land granted in its favour. As

Delhi  Power  Company  Ltd.  was  not  a  party  with  the

proceedings  before  the  Division  Bench,  the  matter  was

remanded back to the Deputy Assessor and Collector of the

Respondent-Municipal  Corporation  of  Delhi  for

determination as to whether North Delhi Power Limited or

Delhi  Power  Company  Ltd.  is  liable  to  pay  property  tax.

The  Deputy  Assessor  and  Collector  of  Municipal

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Corporation, Delhi was directed to give a hearing to both

North  Delhi  Power  Limited  as  well  as  to  Delhi  Power

Company Ltd. before passing any final order.   

3. Aggrieved by the said judgment dated 09.12.2013 in

L.P.A. No.2630/2005, Tata Power Delhi Distribution Limited

(formerly  North  Delhi  Power  Limited  referred  to  as

‘Distribution  Company’  hereinafter)  filed  Civil  Appeal

No.5654/2014.  The Municipal Corporation of Delhi referred

to  as  ‘Corporation’  hereinafter  for  convenience,  also  filed

Civil Appeal No.5653/2014, aggrieved by certain findings in

favour of the Distribution Company. Civil Appeal No.______

of 2016 (arising out of Special Leave Petition (C) No.17317

of  2015)  was  filed  by  Government  of  NCT  of  Delhi

(hereinafter  referred  to  as  ‘Government’),  challenging  the

findings recorded by the Division Bench of the High Court

that  the  vacant  land  stood  transferred  to  Delhi  Power

Company  Ltd.  and  the  Government  is  not  owner  of  the

vacant land.    

4. It would be useful to refer to the provisions, Statutes

and the Rules for better appreciation of the dispute involved

5

in this case. Chapter VIII of the Delhi Municipal Corporation

Act,  1957 deals  with  taxation.   Section  114 provides  for

imposition of tax on land and buildings in Delhi.   Section

119 of the Delhi Municipal Corporation Act exempts lands

and  buildings  being  properties  of  the  Union  from  the

property tax specified in Section 114.  Section 120 of the

Delhi Municipal Corporation Act deals with the incidence of

property tax according to which the property tax shall be

primarily leviable on the lessor if the land or building is let,

upon the superior lessor if the land or building is sub-let

and if  the land or  building is  un-let  upon the person in

whom  the  right  to  let-out  the  same  vests.   The  Delhi

Electricity Reforms Act, 2000 was enacted for restructuring

the  electricity  industry,  to  increase  the  avenues  for

participation of private sector of the electricity industry and

generally for taking measures conducive to the development

and  the  management  of  the  electricity  industry  in  an

efficient, commercial, economic and competitive manner in

the  National  Capital  Territory  of  Delhi.    The  process  of

unbundling  of  the  Delhi  Vidyut  Board was  dealt  with  in

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Sections 14 and 15 of the Act which are as follows:-  

PART V

“REORGANISATION OF ELECTRICITY INDUSTRY 14. Incorporation of companies for the purpose of generation,  transmission  or  distribution  of electricity.  (1) The government may, as soon as may be after the

commencement  of  this  Act,  cause  one  or  more

companies  to  be  incorporated  and  set  up  under  the

provisions of the Companies Act, 1956 for the purpose

of generation, transmission or distribution of electricity,

including companies engaged in more than one of the

said activities, in the National Capital Territory of Delhi

and may transfer the existing generating stations or the

transmission system or distribution system, or any part

of  the  transmission  system or  distribution system,  to

such company or companies.  

(2) The Government may designate any company set up

under  sub-section  (1)  to  be  the  principal  company to

undertake all  planning and coordination  in  regard  to

generation or transmission or both; and such company

shall  undertake  works  connected  with  generation  or

transmission  and  determine  the  requirements  of  the

territory  in  consultation  with  the  other  companies

engaged in generation or transmission for the National

Capital Territory of Delhi, the Commission, the Regional

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Electricity  Board  and the  Central  Electricity  Authority

and any other authority under any law in force for the

time being, or any other Government concerned.  

(3)  The  companies  incorporated  and  set  up  under

sub-section (1) shall undertake the functions specified

in  this  section  and  such  other  functions  as  may  be

assigned to them by the Government.  

(4) Subject to the provisions of this Act and of the duties

and functions assigned to the companies incorporated

and  set  up  under  sub-section  (1),  other  companies

engaged in generation, transmission or distribution of

electricity, or more than one of the said activities, may

be  incorporated  and  set  up  in  the  National  Capital

Territory of Delhi.  

(5)  The  Government  may,  in  consultation  with  the

Commission, determine the lines that shall  be treated

as transmission or distribution lines for the purpose of

division  of  responsibilities  between  the  companies

incorporated  and  set  up  under  this  section,  having

regard to the voltage levels of such lines and any other

factor, which it may consider relevant.  

(6) The Government may convert the companies set up

under  this  Act  to  joint  venture  companies  through  a

process  of  disinvestment,  in  accordance  with  the

transfer scheme prepared under the provisions of this

Act.  

(7)  Upon the transfer of  all  functions of  the Board to

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corporate entities in terms of this Part, the Government

may  appoint  an  administrator  for  the  purpose  of

finalisation  of  the  accounts  of  the  Board  for  all  the

pending  years  till  the  date  of  such  transfer  and

thereafter for winding up the Board in such manner as

the Government may direct.  

15.  Reorganization  of  Delhi  Vidyut  Board  and transfer  of  properties,  functions  and  duties thereof. (1) With effect from the date on which a transfer scheme prepared by the Government to give effect to the objects

and purposes of this Act, is published or such further

date  as  may  be  specified  by  the  Government

(hereinafter  referred  to  as  “the  effective  date”),  any

property,  interest  in  property,  rights  and,  liabilities

which immediately before the effective date belonged to

the Board shall vest in the Government.  

(2)  The  Government  may  transfer  such  property, interest  in  property,  rights  and  liabilities  to  any

company or companies established under section 14 for

the  purpose  in  accordance  with  the  transfer  scheme

prepared therefore.  

(3) Such of the rights and power to be exercised by the Board under the Electricity (Supply)  Act,  1948 (54 of

1948), as the Government may,  by notification in the

official  Gazette,  specify,  shall  be  exercisable  by  a

company or companies established as the case may be,

9

under section 14, for the purpose of  discharge of  the

functions and duties with which it is entrusted.  

(4) Notwithstanding anything contained in this section or any other Act, where:  

(a)  the transfer scheme involves the transfer of  any

property or rights to any person or undertaking not

wholly  owned  by  the  Government,  the  scheme

shall  give  effect  to  the  transfer  only  after  asset

valuation;  

(b)  where  any  transaction  of  any  description  is

effected in pursuance of a transfer scheme, it shall

be binding on all  persons including third parties,

even if such persons have not consented to it.

(5) The  Government may  require  any  transmitting  or distributing company established under the provisions

of sub-section (1) of section 14 (hereinafter referred to

as "the transferor licensee") or any generating company

to  draw up  a  transfer  scheme  to  vest  in  a  further

licensee  or  licensees  (the  "transferee  licensee  or

licensees"), or any generating company, any property,

interest  in  property,  rights  and liabilities  which  have

been  vested  in  the  transferor  licensee  or  generating

company, as the case may be, under this section and

publish the same in the official  Gazette.  The transfer

scheme to be notified under this sub-section shall have

the same effect as a transfer scheme under sub-section

(2).  

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(6)   A transfer scheme may-  (a)  provide  for  the  formation  of  subsidiaries,  joint

venture  companies  or  other  schemes  of  division,

amalgamation,  merger,  reconstruction  or

arrangements;  

(b) define the property, interest in property, rights and

liabilities to be allocated-

(i)  by specifying or describing the property, rights

and liabilities in question,  

(ii)  by  referring  to  all  the  property,  interest  in

property,  rights  and  liabilities  comprised  in  a

specified part of  the transferor's under-taking,

or  

(iii) partly in one way and partly in the other :  

Provided that the property, interest in property,

rights  and  liabilities  shall  be  subject  to  such

further transfer as the Government may specify;

(c) provide that any rights or liabilities specified or

described in the scheme shall be enforceable by or

against the transferor or the transferee;  

(d) impose on any licensee an obligation to enter into

such written agreements with, or execute such other

instruments  in  favour  of  any  other  subsequent

licensee as may be specified in the scheme;  

(e)  make  such  supplemental,  incidental  and

consequential  provisions as the transferor licensee

considers appropriate including provision specifying

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the order in which any transfer or transaction is to

be regarded as taking effect;

(f)  provide  that  the  transfer  shall  be  provisional

subject to the provisions of section 18.  

(7) All debts and obligations incurred, all contracts entered into  and all  matters  and things  done  by,

with or for the Board, or a company or companies

established as the case may be, under section 14 or

generating  company  or  distribution  company  or

companies  before  a  transfer  scheme  becomes

effective shall, to the extent specified in the relevant

transfer scheme, be deemed to have been incurred,

entered into or done by, with or for the Government

or  the  transferee  and  all  suits  or  other  legal

proceedings  instituted  by or  against the  Board  or

transferor,  as  the  case  may  be,  continued  or

instituted  by  or  against  the  Government  or

concerned transferee, as the case may be.  

(8) In the event a licensee is required to vest any part of its undertakings in another licensee pursuant

to sub-section (5), the Government shall amend the

transferee licence in accordance with section 24 or

revoke its licence in accordance with section 23.

(9) The Board shall cease to exist with the transfer of  functions  and  duties  specified  and  with  the

transfer of assets as on the effective date.

(10) The exercise by a licensee of  any of  Board’s

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rights and powers may be made on such conditions

as  shall  be  specified  in  the  transfer  scheme

including a condition that such rights and powers

shall  be  exercised  by  the  licensee  only  with  the

approval of the Commission/Government”.  

5. The Delhi Electricity Reforms (Transfer Scheme) Rules,

2001  were  notified  on  20.11.2001  and  were  given  effect

from 01.07.2002.  As per Rule 3 all the assets of the Delhi

Vidyut  Board  stood  transferred  and  vested  in  the

Government absolutely.  Rule 4 classified the undertakings.

In  this  case,  we  are  concerned  with  the  distribution

undertakings  as  set  out  in  Schedule  ‘F’  thereof  and  the

holding company as set out in Schedule ‘G’. The assets set

out  in  Schedule  ‘F’  stood  transferred  and  vested  in

DISCOM-3 and the assets and liabilities set out in Schedule

‘G’ stood transferred to the Holding Company.   Sub-rule 5

of  Rule  5  provides  that  the  distribution  companies  shall

issue  shares  and  instruments  in  favour  of  the  holding

company as specified in Schedules A to F, in consideration

of the vesting of the undertakings.  Rule 9 postulates that

the classification and transfer of the undertakings, unless

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otherwise  specified  in  any  other  order  made  by  the

Government  shall  be  provisional  and  shall  become  final

upon the expiry of three months from the date of transfer.

According to Rule 12 (1) if any doubt, dispute, difference or

issue arises in regard to transfer under the said Rules, the

decision of the Government shall be final and binding on all

the parties.   

6. Schedule  F  of  the  Rules  deals  with  the  assets  and

liabilities and proceedings concerning distribution and their

transfer.  There is a proviso to items I, II and III of part I of

Schedule ‘F’ which is as follows:-  

“PROVIDED  THAT  notwithstanding  I,  II  and  III

above and that the land was being used immediately

before date of the transfer exclusively or primarily for

the business of the transferee, no part of the land shall

form part of the assets transferred under these rules.

The transferee shall be entitled to use such land as a

licensee  of  the  government  on  payment  of  a

consolidated  amount  of  one  rupee  only  per  month

during the period the transferee has the sanction or

licence or authorization to undertake the transmission

business.  As  and  when  such  licence  or  sanction  or

authorization is revoked or cancelled or not renewed or

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the  area  of  supply  where  the  land  is  situated  is

withdrawn  from  the  transferee,  the  licence  to  the

transferee in respect of such land shall cancelled’’.

Schedule  ‘G’  gives  details  of  the  assets  and  liabilities

transferred to the holding company which includes land and land

rights.   

7. Mr. Dhruv Mehta, Senior Advocate, Ms. Madhu Tewatia and

Ms.  Avanish  Ahlawat,  Advocates  appeared  and  made  their

submissions  on  behalf  of  the  Distribution  Company,  the

Corporation and the Government respectively.   

8. Mr.  Dhruv  Mehta,  submitted  that  the  Government

continues to be the  owner of  the  land in question and hence

there  is  an  exemption  from  payment  of  property  tax  as  per

Section 119 of the Delhi Municipal Corporation Act, 1957.  It is

his  further  submission  that,  in  any  event,  the  Distribution

Company is a licensee under the Government as per the Delhi

Electricity Reforms (Transfer Scheme) Rules, 2001 and hence it

does  not  fall  within  the  purview  of  Section  120  of  the  Delhi

Municipal Corporation Act, 1957.   He also submitted that the

Government of NCT of Delhi has taken a categoric stand that the

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land  belongs  to  the  Government.  He  relied  upon  the  Cabinet

decision dated 06.01.2001 and other clarifications issued by the

Government in this regard.  Mr. Mehta relied upon Rule 12 (1) of

the Delhi Electricity Reforms (Transfer Scheme) Rules, 2001 to

contend  that  the  opinion  of  the  Government  regarding  the

ownership  of  the  land is  final  and binding.    Mr.  Mehta also

submitted  that  the  Division  Bench  committed  an  error  in

remanding the matter back to the Authority after recording the

finding that Tata Power Delhi Distribution Ltd. is only a licensee.  

9. Ms. Madhu Tewatia, Advocate appearing for the Corporation

submitted that the land belongs to Delhi Power Company Ltd.

which is the holding company in accordance with Schedule G of

the Transfer Scheme Rules.  She further submitted that Section

120 (1) (c) of the Delhi Municipal Corporation Act, 1957 would be

clearly  applicable  to  the  facts  of  the  instant  case  as  the

Distribution Company has the right to let out the land in dispute.

This liability to pay the property tax under Section 120 (1) (c) is

irrespective of the fact that the land belongs to the Government

or to the holding company i.e. Delhi Power Company Ltd. Ms.

Tewatia  contended  that  the  clarifications  issued  by  the

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Government  and  the  Cabinet  decision  relied  upon  by  the

Distribution Company would not fall within the purview of Rule

12(1)  of  the  Transfer  Scheme Rules.   She  contended that  the

findings recorded by the Division Bench to the effect  that  the

Distribution Company is a licensee and that the licence relating

to land alone would be a decisive factor to determine ownership

without reference to the distribution licence are not correct.   

10. Ms.  Avanish  Ahlawat,  Advocate,  appearing  for  the

Government submitted that the Government is the owner of the

land, there is no transfer of  land to the holding company and

that  the  entry  land  and  land  rights  as  found  in  Schedule  G

should not be given too much importance and has to be read in

conjunction  with  the  other  provisions  of  Schedule  F  and  the

other Rules.  

11. We have  carefully  considered the  submissions  made  and

examined the material on record.  The first point that falls for our

consideration  is  exigibility  of  tax  over  the  land  of  8,080  sq.

meters.   Section  119  of  the  Delhi  Municipal  Corporation  Act

exempts  the  properties  of  the  Union  from  taxation.   We

entertained  a  doubt  about  the  properties  of  Union  Territories

17

being treated as properties of the Union.  The administration of

Union Territories is by the Central Government but that does not

mean  that  Union  Territories  become  merged  with  the  Central

Government.  They  are  centrally  administered  but  retain  their

independent entity.  [See: Satyadev Bhushari Vs. Padam Dev &

Ors. (1955) 1 SCR 549; Government of NCT Delhi and ors. Vs.

All India Central Civil Accounts, JAO’s Association and ors.

(2002) 1 SCC 344; Chandigarh Administration and Anr. Vs.

Surinder Kumar and Ors (2004) 1 SCC 530].   But, we refrain

from adjudicating this issue as constitutional questions are not

decided unless they directly arise for consideration.   

12. Dismal  performance  of  the  Electricity  Boards  led  to  a

decision of unbundling generation, transmission and distribution

activities which were separated for increasing efficiency.  Private

participation  in  the  Electricity  industry  was  also  envisaged.

Broadly  understood,  the  scheme  contemplated  by  the  Delhi

Electricity Reforms Act and the Rules framed therein is that the

assets  of  the  erstwhile  Delhi  Vidyut  Board  initially  stood

transferred  and  vested  absolutely  in  the  Government.   The

undertakings were transferred to generation,  transmission and

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distribution  companies.   The  shares  of  these  companies  were

allotted to the Holding Company which is Delhi Power Company

Ltd. which is a wholly owned Government company.  Land and

land  rights  also  were  transferred  to  the  Holding  Company.

Thereafter the process of privatization takes place by divesting

shares in the distribution companies.  It is clear that the transfer

of all the assets including land to the Government is a transitory

step as the Holding Company is to be in total control.  In the

above background, the question is whether the land belongs to

the Government and exempt from tax.  No doubt, all the assets of

Delhi  Vidyut  Board  stood  transferred  and  vested  in  the

Government.  It is also clear that the distribution undertaking

with assets mentioned in Items I, II & III of Part I of Schedule F

were transferred to the Distribution Company.  The proviso to

Items I, II & III of Part I of Schedule F to the Transfer Scheme

Rules  contemplates  that  land  which  was  exclusively  and

primarily  being  used  for  business  purpose  by  the  transferee

before the transfer does not form part of the assets transferred

and the transferee would be a licensee of the Government for the

said land on payment of a nominal amount.  Schedule ‘G’ deals

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with transfer in favour of  the Holding Company and land and

land rights is one of the entities therein.  Mr. Mehta submits that

the transfer of assets and liabilities are dealt with in Schedule F

and  it  is  clear  from  the  said  Schedule  that  the  Distribution

Company is a licensee of the Government.  He further submitted

that Government continues to be the owner of land and the entry

land and land rights is vague and has to be ignored as it is not

applicable to the land already covered by Schedule F.  Whereas,

the  case  of  the  Corporation  is  that  there  is  no  ambiguity  in

Schedule G.  Land was transferred to the Holding Company and

Section  119  of  the  Delhi  Municipal  Corporation  Act  is  not

applicable.   The High Court  held  that  the  initial  transfer  and

vesting of land is in the Government, then Distribution Company

becomes licensee of the Government qua land and finally there is

a transfer of land to the Holding Company.  In view of the fact

that Government was not to hold any asset and the vesting of

land in the Government was only transitory in nature, we uphold

the  findings  of  the  High  Court  that  Holding  Company  is  the

owner of land.  

13. We proceed to deal with the point as to whether there is any

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contradiction in Schedule ‘F’ and ‘G’ pertaining to the ownership

of land.  We see no conflict in the two Schedules.  The proviso to

items I to III in Part I of Schedule ‘F’ refers to land which was

exclusively and primarily being used for the purpose of business

by the transferee on the date of transfer not forming part of the

assets transferred to Distribution Company.  Such land would be

subject matter of a license by the Government in favour of the

transferee. Only such land which satisfies the condition as stated

above will be treated as licensed to transferee.  All other lands

would be part of  land transferred to the  Holding Company as

contemplated in Schedule ‘G’.  Hence, we see no conflict in the

Schedules.   

14. Another issue connected to the ownership of the land is the

stand of the Government that the land continues to be vested in

the Government.  Reference was made to the Cabinet decision

dated 06.01.2001. M/s SBI Capital Market Limited (referred to as

‘SBI Caps’ hereinafter) was appointed by Delhi Vidyut Board for

restructuring of the Board.  A report was submitted by the SBI

Caps by which they recommended that the land in possession of

Delhi  Vidyut  Board which  were  earmarked for  the  purpose  of

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electricity  generation,  transmission and distribution  cannot  be

used for any other purpose without bringing about a change in

land use  by  the  Competent  Authority.   The  SBI  Caps further

recommended that the ownership of the land should be retained

by the State Government and land should be provided on licence

to  the  successor  entities.  This  recommendation  made  by  the

Consultant i.e. SBI Caps was approved in the Cabinet decision

on 06.01.2001.  Apart from the said Cabinet decision, we were

also shown some material which indicated that the Government

was maintaining its stand that the land belongs to them.  As we

have interpreted the provisions of the Act, Rules and the Transfer

Scheme to conclude that the land transferred and vested in the

Holding Company, the Cabinet decision dated 06.01.2001 which

was much prior to the Statutory Scheme cannot be taken into

consideration to reach a different conclusion.    

15. Another issue that calls for consideration is relating to the

scope of Rule 12 (1) of the Transfer Scheme Rules.  Rule 12(1) of

the Rules reads as under:-

“Decision of Government final:- (1) If any doubt, dispute, difference  or  issue  shall  arise  in  regard  to  the  transfers under these rules, subject to the provisions of the Act, the

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decision  of  the  Government  thereon,  shall  be  final  and binding on all parties.”  

The stand of  the  Government  that  the  land continues  to

vest in it would not amount to a decision by the Government in

resolving a dispute between the parties to the Transfer Scheme.

Rule  12(1)  will  not  be  applicable  in  the  instant  case  as  the

interpretation of the provisions of  the statute and the rules is

involved in adjudication of the dispute.  

16. A similar provision fell for consideration before this Court in

Municipal  Commissioner  of  Dum Dum and Ors.  Vs.  Indian

Tourism Corporation and ors., reported in (1995) 5 SCC  251.

The issue in that case was whether the properties vested in the

International  Airport  Authority  of  India  could  be  called  as

properties of the Union, within the meaning of Article 285 of the

Constitution of India and exempted from tax.  The Government of

India  asserted  that  the  properties  of  the  Authority  are  the

properties of the Union and reliance was placed on certain letters

of the Government for the above assertion. Section 12(3) of the

International Airport Authority of India Act, 1971 provided that

decision of the Central Government shall be final, if any dispute

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or doubt arises, as to which of the properties, rights or liabilities

of  the  Central  Government  have  been  transferred  to  the

Authority.  Interpreting the said provision, this Court held that a

dispute  under  Section  12(3)  should  be  between  the  Union  of

India and the Authority.  It was also held that the decision would

not bind the Municipal Corporation.  In addition to the points

mentioned above, Ms. Madhu Tewatia submitted that there was

no  opportunity  given  to  the  Municipal  Corporation  by  the

Government  before  taking  such  stand.   In  view  of  the  above

discussion,  we  uphold  the  findings  recorded  by  the  Division

Bench in the impugned judgment that the Government is not the

owner of the land.   

17. Having answered the point about the exigibility of tax, the

point  which  remains  to  be  decided  is  the  incidence  of  tax.

Section 120(1) of the Delhi Municipal Corporation Act reads as

follows:-

“120. Incidence of property taxes  (1)  The  property  taxes  shall  be  primarily  leviable  as

follows:—

(a) if the land or building is let, upon the lessor;  

(b)  if  the  land or  building  is  sub-let,  upon the superior

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lessor;  

(c)  if  the  land  or  building  is  unlet,  upon the  person  in

whom the right to let the same vests:  

Provided that the property taxes in respect of  land or building, being property of the Union, possession of which

has  been  delivered  in  pursuance  of  section  20  of  the

Displaced Persons (Compensation and Rehabilitation) Act,

1954 (44 of  1954),  shall  be primarily leviable upon the

transferee.”

18. The  High  Court  remanded  the  matter  back  to  the

Deputy Assessor and Collector of Municipal Corporation of

Delhi  for  determination  as  to  whether  the  Distribution

Company or the Holding Company i.e. Delhi Power Company

Ltd. is liable to pay the property tax.  The High Court also

said that Holding Company was not a party to the case and

in view of  the findings recorded in the judgment that  the

Holding Company is the owner of the land, the matter has to

be  decided  by  the  Assessing  Authority  after  giving  an

opportunity to the Holding Company.   

19. According to Section 120 (1) (c), the person who has a

right  to  let  would  be  liable  to  pay  tax  for  un-let  land.

Admittedly, this land is un-let.  Incidence of tax has to be

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decided by the Authority after taking into consideration the

provisions of the Act, rules and the licences, including the

distribution licence.  The High Court held that the licence

pertaining to land as per the Transfer Scheme would show

that the Distribution Company is only a licensee and not a

lessee.  The  High  Court  further  held  that  the  distribution

licence under Section 20 of the Delhi Electricity Reforms Act,

2000 is distinct and separate from the licence for land.  It

was  further  held  by  the  High  Court  that  the  distribution

licence can neither govern nor be used as a tool to interpret

the licence for land.   We do not agree with the said findings

of the High Court. Section 120 (1) (c) contemplates that a

person who has the right to let out un-let land is liable to

pay tax.  His status as a lessor or licensee is irrelevant.  If

the distribution licence empowers the Distribution Company

to  let  out  the  land,  notwithstanding  the  fact  that  the

Distribution Company is a licensee as per Schedule ‘F’ of the

Transfer Scheme Rules, it would still  have to pay the tax.

For the reasons afore-stated, we confirm the order of remand

passed by the High Court in the impugned judgment with a

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direction to the Deputy Assessor and Collector of Municipal

Corporation  of  Delhi  to  consider  the  provisions  of  Delhi

Municipal  Corporation  Act,  Delhi  Electricity  Reforms  Act,

Transfer Scheme Rules and the Distribution licence issued

under  Section  20  of  the  Delhi  Electricity  Reforms Act  for

deciding the matter pertaining to the incidence of tax.   

The  appeals  are  disposed  of  in  terms  of  the  above

directions.     

                 ................................J.                                     [ANIL R. DAVE]

                                             ................................J.                                                [L. NAGESWARA RAO]

New Delhi; August 10, 2016

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