HOUSING AND URBAN DEVELOPMENT CORPORATION LTD.versusM.C.D AND ANR.

A                   HOUSING AND URBAN DEVELOPMENT
                           CORPORATION LTD.

                                M.<:;.D. AND ANR.

                               DECEMBER 13, 2000
B
         [B.N. KIRPAL, U.C. BANERJEE AND BRIJESH KUMAR, JJ.]


          Municipalities:

c         Delhi Municipal Corporation Act, 1957:

          Ss. 119 and l 20(i)-Property tax-Land belonging to Union of India-
    Given to Housing and Urban Development Corporation on l. l l.1990-Lease
    deed er:ecuted on 4. 7.1997-Municipal Corporation making assessment for
D   the period 2.7.1990 to 31.3.1995-Held, land being the property of Union
    of India and as such exempt from tax by virtue of s. 119(/)-Even uls 120(/)
    no tax would have been levied on Housing Corporation in respect of the said
    land prior to the same being let out in 1997-Expression "'any other person"
    u!s 119(2) would refer only to that person to whom possession uls 20 of
    Displaced Persons (Compensation and Rehabilitation) Act has been
E   delivered-Words and Phrases.

          CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6645 of I 999.

          From the Judgment and Order dated 31.8.1999 of the Delhi High Court
    in C.W.P. No 3179of1994.
F
         Harish N. Salve, Solicitor General, C. Mukhopadhaya, Manish Kumar
    and V. Krishna Murthy for the Appellant.

         M.L. Varma, Sr. Adv., Ms. Arnita Gupta and Dhananjay Kumar Singh for
    the Respondents.
G
         The following Order of the Court was delivered :

          On !st November, 1990, 42.6 acres of Government land at Andrews Ganj,
    Delhi was given by the Government of India to the appellant for development.
    According to the terms of the allotment letter, 17 .6 acres of land was to be
H                                       666
         HOUSING AND URBAN DEVELOPMENT CORPN. LTD. v. M.C.D                 667
developed by the appellant and utilised as a hostel and guest house facilities,    A
conference hall, shopping and other community centre facilities. Out of the
money earned therefrom, on 25 acres of land flats were to be constructed for
housing Government servants. The said letter envisaged that a lease to this
effect would be executed in future.

      Possession was taken and on 25th March, 1994. even though formal             B
lease had not been executed in favour of the appellant, assessment under the
provisions of the Delhi Municipal Corporation Act, 1957 (for short "the Act")
was made to property tax for the period 2nd July, 1990 to 31st March 1995.
The assessment was made at the rate of 5 per cent of the value of the land.
The assessment was on the vacant land as no building as on that day had            C
yet been erected.

       The challenge of the appellant to the said levy based on the provisions
of Section 119 of the Act did not succeed. It was the contention of the
appellant that the land in question belonged to the Central Government and
by virtue of the sub-section (1) of Section 119 no tax thereof could be levied.    D
Having failed in the High Court, the present appeal by special leave has been
filed.

       Learned Solicitor General for the appellant submits, as had been
 contended earlier, that under Section 119(1) the lands and buildings being the
 properties of the Union are exempt from tax. He submits that the provisions       E
 of sub-section (2) of Section 120 did not come into play because a formal
 lease deed was executed in favour of the appellant by the Central Government
only on 4th July, 1997 and it is only thereafter that the interest in the land
could be said to have passed on to the appellant. He further submits that
even under Section 120(1) the property tax is primarily leviable if the land is    F
let upon the lessor, if it is sublet upon the superior lessor and if it is unlet
then upon the person. In whom the right to let the same vests. He submits
that admittedly no lease deed has been executed during the period 2nd July,
 1990 to 31st March, 1995 and, therefore, the land was unlet. He then contends
that the right to let this land still vested with the Central Government and did
not vest at that point of time with the appellant, for no right under a lease      G
to that effect had been created.

      Section 119 on which reliance is placed reads as follows:

          "119. Taxation of Union properties---( I) Notwithstanding anything
       contained in the foregoing provisions of this Chapter, lands and            H
     668                    SUPREME COURT REPORTS [2000) SUPP. 5 S.C.R.

A            buildings being properties of the Union shall be exempt from the
             property taxes specified in section 114:

                Provided that nothing in this sub-section shall prevent the
            Corporation from levying any of the said taxes on such lands and
            buildings to which immediately before the 26th January, 1950, they
B           were liable or treated as liable, so long as the tax continues to be
            levied by the Corporation on other lands and buildings.

                 (2) Where the possession of any land or building, being property
             of the Union, has been delivered in pursuance of section 20 of the
             Displaced Persons (Compensation and Rehabilitation) Act, 1954 (44)
c           of 1954) to a displaced person, or any association of displaced persons,
            whether incorporated or not, or to any other person hereafter in this
            sub-section and the proviso to sub-section (\)of section 120 referred
            to as the transferee, the property taxes specified in section 114 shall
            be leviable and shall be deemed to have been leviable in respect of
            such land or building with effect from the 7th day of April, 1958 or
D
            the date on which possession thereof has been delivered to the
            transferee, whichever is later, and such property taxes shall,
            notwithstanding anything in the proviso to sub-section (I) of section
            126 or any other provision of this Act, be recoverable with effect from
            that day or date, as the case may be."
E
          It is clear from a reading of sub-section (I) of Section 119 that lands
    and buildings which are the properties of the Union are exempt from property
    tax. Mr. M.L. Varma, learned senior counsel appearing for the respondents,
    however, contended that under sub-section (2) of Section 119 when possession
    of the land is given to any person then property tax can be recovered from
F   that person.

          In our opinion, on a correct reading of Section 119(2), the aforesaid
    consequence does not follow. Sub-section (2) of Section 119 provides that
    where possession of the land or building being the property of the Union has
G   been delivered in pursuance of Section 20 of the Displaced Persons
    (Compensation and Rehabilitation) Act to (a) displaced person or (b) an
    association of displaced persons or (c) to any other person, then the property
    tax can be recovered from the person in possession. It is clear that the
    expression 'to any other person' can only be that person to whom possession
    has been delivered in pursuance of the provisions of Section 20 of the
H   Displaced Persons (Compensation and Rehabilitation Act). This obviously is
         HOUSING AND URBAN DEVELOPMENT CORPN. LTD. v. M.C.D.                 669
not the position in the present case. Possession was not given to the appellant A
under the said Act and, therefore, sub-section (2) of Section 119 does not
come into play.

      From the aforesaid discussion, it clearly follows that the land in question
being exempt from tax by virtue of Section 119( I) of the Act as it is the
property of the Union and furthermore even under Section 120( I) no tax in          B
respect of land could have been levied in the present case on the appellant
prior to the same being let to them in 1997.

     For the aforesaid reasons, this appeal is allowed and the judgment of
the High Court and the order of assessment are set aside.
                                                                                    c
       There will be no order as to costs.

      We make it clear that we are not examining or expressing any opinion
on the liability of the allottees of HUDCO to pay tax under the Delhi Municipal
Corporation Act.
                                                                                    D
R.P.                                                           Appeal allowed.