M/S. WELSPUN PROJECTS LTD. (FORMERLY KNOWN AS M/S. MSK PROJECTS INDIA LTD.)versusDIRECTOR, STATE TRANSPORT, PUNJAB AND ANR.

                             (2016] 8 S.C.R. 410


A                    MIS. WELSPUN PROJECTS LTD.
     (FORMERLY KNOWN AS M/S. MSK PROJECTS INDIA LTD.)
                                       v.
         DIRECTOR, STATE TRANSPORT, PUNJAB AND ANR.
B                   (Civil Appeal Nos. 4944-4945 of2016)
                         NOVEMBER 08, 2016
                 [ANIL R. DAVE, R.K. AGRAWAL AND
                     L. NAGESWARA RAO, JJ.]
           Punjab Municipal Corporation Act, 1978 - ss.2(35), 97(2)
c   and 157 - House tax assessment - Notice to appellant-company -
    Company informed that it was not the owner of the premises in
    question since it was only handling the project of State Transport
    Depart111ent on B. 0. T basis (Build, Operate and Transfer basis) -
    State Transport Authorities informed that the co111pany was liable to
D   pay the tax - 'Funjab lnji·astructure Regulatory Authority held that
    State 1l·amport Authorities were liable to pay the tax - High Court,
    in appeal, held that the liability ll'as on the Company - On appeal,
    held: The rights and obligations between the Transport Authority
    and the Company are governed by 'Co11cessio11 agreements' between
E   them and Lease Deeds - As per the Lease Deeds, the Company iras
    not liable to pay any fees, rent, tax or any other charge in respect
    of the premises except lease rental of Rs. 1 - Even if the company as
    a tenant is liable uls. 2(35) rlw s.97(2), yet in view of s. 157(1), the
    Government is e111powered to exempt such tax - Thus the company
    not liable to pay any house tax under the Act.
F         Allowing the appeals, the Court
        HELD: 1. The inter-se relationship between the parties and
  all the relative rights and obligations are entirely governed by
  the Concession Agreements and the Lease Deeds. From a perusal
  of Clauses 6 and 13(e) of the lease deeds, the appellant-Company
G was required to pay rent of Re. 1 only as lease rental and further
  the Government has specifically mentioned that except the lease
  rental, it shall not levy any fees, rent, tax or any other charge on
  the lessee for the lease of the demised premises. [Paras 7 and
  13)(415-B; 417-B)
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                                    410
    MIS. WELSPUN PROJECTS LTD. v. DIRECTOR, STATE                    411
            TRANSPORT PUNJAB AND ANR.

      2. Even though under the provisions of Section 2(35) read A
with s.97(2) of the Punjab Municipal Coq>0ration Act, 1976
normally the tenant who has been given land on lease for a term
exceeding 1 (one) year is primarily liable to pay taxes on lands
and buildings yet in view of the provisions of Section 157(1) of
the Act, the Government is empowered to exempt in whole or in
                                                                 8
part from the payment of any such tax any person or class of
persons or any property or description of property which in the
present case has been done on behalf of the Government when
the lease deeds were executed. [Para 13][417-C-D]
       3. Clause 24.l(a) of the Concession Agreement which deals C
with the local taxation, states that the concession period shall
include all charges towards import license, toll, customs, duties,
import duties etc. which is to be payable by the appellant-Company.
In view of the specific exemption given under the lease-deed
regarding payment of any taxes on the demised premises, the
appellant-Company is not at all required to pay any municipal D
taxes on the demised premises. The house tax was being paid
by the transport department prior to the signing of the Concession
Agreement and if it was intended that this burden should be
passed on to the appellant-Company, a clear clause interpreting
this point would have certainly been inserted in the Agreement
itself. Not only this, the Department continued to pay the house E
tax for 3 to 4 years even after the date of the signing of the
agreement. jPara 1411417-F-H]
       4. The appellant-Company is not liable to pay any house
tax nnder the Act and the demand and payment of house tax from
the appellant-Company was without the authority of law and the        F
appellant-Company is entitled to the refund of the amount of
house tax paid by it alongwith rate of interest at the rate of 10%
p.a. from the date of cleposit.[Para 15)(418-A-B]
      Delhi Golf Club Ltd. and Another v. N.D.M.C., (2001)
      2 SCC 633: 2001 (1) SCR 376 - referred to.                      G
                       Case Law Reference
2001. (1) SCR 376             referred to            Paras
      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4944-
4945 of2016.                                                          H
412            SUPREME COURT REPORTS                            [2016] 8 S.C.R.


A           From the Judgment and Order dated 14.11.2011 of the High Court
      of Punjab and Haryana at Chandigarh in FAQ No. 3372 of 2011 and
      FAO No. 3488of2011.
        Pravin H. Parekh, Sr. Adv, Vishal Prasad, Aditya Sharma, Ms.
  Ritika Sethi, Ms. Rashi Gupta, Ms. Pavitra Singh (For M/s. Parekh &
B Co.) Advs. for the Appellant.
            S. K. Pabbi, AAO. Ajay K. Singh, Ms. Disha Singh, Shivendu
      Gaur, (For Kuldeep Singh) Abhay Kumar, Shekhar Kumar, Advs. for
      the Respondents.
            The Judgment of the Court was delivered by
 c
         H..K. AGRAWAL, J. I. Challenge in the above said appeals is to
  the legality ofthe impugned common judgment and order dated 14.11.2011
  rendered by learned single Judge of the High Court for the States of
  Punjab & Haryana at Chandigarh in F.A.O. Nos. 33 72 and 3488of2011
  whereby the High Court allowed the appeals tiled by the respondent-
D State.
            2. Factual position in a nutshell is as follows:-
         (a) On 22.06.2005, a Concession Agreement was entered into
   between the Government of Punjab (through Director, State Transport,
 E Punjab) and Mis Welspun Projects Ltd. (formerly known as M/s MSK
   Projects India Ltd.)-the appellant-Company to design, finance, construct,
   operate and maintain the Bus Terminal Project at Jalandhar on Build,
   Operate and Transfer (8.0.T} basis and to determine, levy, demand,
   collect and retain the fees for a period of8 years, 5 months and 21 days.
         (b) A similar Concession Agreement was entered into between
 F the paities mentioned above for the Bus Terminal at Ludhiana on the
   same basis for a period of I0 years and 3 months.
         (c) On 16.08.2005 and 25.10.2005, lease deeds were entered into
   between the parties for the project sites at Jalandhar and Ludhiana
   respectively. According to the said lease deeds, the appellant-Company
 G was required to pay only the annual rent of Re. 1 as lease rental.
            (d) On 26.11.2008, the Commissioner, Municipal Corporation,
      Jalandhar-Respondent No. 2 herein issued a notice under Section 103 of
      the Punjab Municipal Corporation Act, 1976 (in short 'the Act') stating

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    M/S. WELSPUN PROJECTS LTD. v. DIRECTOR, STATE                           413
    TRANSPORT PUNJAB AND ANR. [R.K. AGRAWAL, J.]

that the premises in question was assessed for an annual rental value of A
Rs. 3,98,73,600/- for the year 2008-09.
       (e) Similarly, on 08.02.2010, the appellant-Company received a
notice from the Municipal Corporation, Ludhiana stating the house tax
assessment for the year 2008-09 and 2009-10 had been carried out and
the said prope11y at Ludhiana was assessed at Rs.64,59,588.80/- for an 13
annual rental value of the premises.
       (f) The appellant-Company informed Respondent No. 2 herein
that it was handling the project on BOT basis and as such the actual
owner is the State Transport Authorities. However, when the contents
of the notices were brought to the knowledge of the State Trnnsport          c
Authorities, the State Transport Authorities informed that the appellnnt-
Company is the actual user, occupant and beneficiary of the properties
of the Bus Terminals and as such is liable to pay all taxes including
House Tax as per the terms and conditions of the Concession
Agreements.
                                                                        D
      (g) Being aggrieved by the demand notices, the appellant-Company
approached the High Court. The High Court, vide order dated 09.02.20 I0
directed the appellant-Company to approach Punjab Infrastructure
Regulatory Authority {PIRA). The appellant-Company preferred Petition
Nos. I and 2 of 20 I0 before the PIRA against the State Transport
Authorities of Jalanadhar and Ludhiana respectively.                    E
      (h) Vide orders dated 08.09.2010 and 15.12.2010, the PIRA
allowed the petitions filed by the appellant-Company. Being aggrieved
by the above orders, the State Transport Authorities preferred F.A.O.
Nos. 3372 and 3488 of201 l before the High Com1.
                                                                             F
       (i) Learned single Judge of the High Court, vide common judgment
and order dated 14.11.2011, allowed the appeals tiled by the respondents
herein.
      O)Aggrieved by the order dated 14.11.2011, the appellant-Company
has preferred these petitions before this Court by way of special leave.     a
      3. We have heard learned counsel for the parties and perused the
records.
     4. Concession Agreement was entered into between the
Government of Punjab through the Director Transport, Punjab and Mis
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414             SUPREME COURT REPORTS                           [2016] 8 S.C.R.


A     MSK Projects Ltd., to design, finance, construct, operate and maintain
      the Bus Terminal Projects at Jalandhar and Ludhiana on B.O.T. basis
      and to determine, levy, demand, collect and retain the fees. Lease deeds
      were also executed between the parties. Municipal Corporation is alleged
      to have issued notices for recovery of House Tax which led to the issue
      in question. The appellant-Company filed Petition No. I and Petition
 B
      No. 2 before the PIRA which was allowed vide orders dated 08.09.20 I0
      and 15.12.2010. Being aggrieved by the above said orders, the State
      Transport Authorities filed FA 0 Nos. 33 72 and 3488 of 2011 before the
      High Court. Learned single Judge of the High Court allowed the same
      vi de common order dated I 4. I 1.20 I I.
 c        5. Learned senior counsel for the appellant-Company contended
   that fastening the liability on the appellant- Company is manifestly
   erroneous and is based on without complete and comprehensive
   appreciation of relevant aspects of the case in proper manner and is
   liable to be set aside. There is overwhelming material and also the case
 D in De/Iii Golf Club Ltd. am/Anotlter vs. N.D.M.C., (200 I) 2 SCC 633
   is squarely applicable to the facts of the present case and, therefore, the
   impugned order of the High Court is liable to be set aside. Per contra
   learned Additional Advocate General forthe respondent-State strenuously
   argued that in view of the various clauses in the Concession Agreement
   as well as the provisions of the Act, the High Court was justified in
 E fastening liability upon the appellant-Company for payment of the house
   tax for the period under consideration.
             6. Learned senior counsel for the appellant-Company strenuously
      contended that it does not fall in the category of the "owner" as defined
      under Section 2(35) of the Act and is neither an owner nor a tenant nor
 F    is entitled to receive rent etc. In a special arrangement determined by
      the Concession Agreements and the Lease Deeds, the appellant-Company
      is required to pay only Re. 1/- as annual rent to the Director State
      Transprn1, Punjab and is entitled to collect all the incomes from the Project
      for a short and limited period so as to enable the appellant-Company to
 G    recover the investments made in the Projects. Though the buildings on
      the Project sites have been raised by the appellant-Company, it has been
      done for the respondent-State who owns the land as well as the building.
      Therefore, under section 97 of the Act, no house tax could be levied on
      it. On the other hand, such a tax is entirely the liability of the Director,
      State Transport, Punjab. The appellant-Company further referred to
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    MIS. WELSPUN PROJECTS LTD. v. DIRECTOR, STATE                              415
    TRANSPORT PUNJAB AND ANR. [R.K. AGRAWAL, J.]

Clause 13(e) of the Lease Deed which stipulates, "that except the lease        A
rental specified in Clause 6 of the Lease Deed, it (Lessor) shall not levy
any fee, rental, tax or any other charge on the lessee for the demised
premises". It further stipulates that the appellant-Company will only pay
Re. I/- as annual lease rental.
        7. Undoubtedly, the inter-se relationship between the pa11ies and      B
all the relative rights and obligations are entirely governed by the
Concession Agreements and the Lease Deeds. It is thus to be seen first
of all that if these Agreements can provide any conclusive direction to
settle the matter in hand.
       8. For appreciating the relevant provisions of the Lease Deeds           c
and Concession Agreements referred to above, it is to be mentioned
here that house tax is always assessed and paid in accordance with the
provisions of the Act. The definition of owner has been described in
sub-Section 35 of Section 2 which reads as under:
       "2(35) "Owner" includes a person who for the time being                  D
       is receiving or is entitled to receive, the rent of any land or
       building whether on his own account or on account ofhimself
       and others or as an agent, trustee, guardian or receiver for
       any other person who should so receive the rent or be
       entitled to receive it ifthe land or building or part thereof
       were let to a tenant;"                                                   E
      9. Section 97(2) of the Act (as it stood atthe relevant time) provides
with the incidence of tax on lands and buildings. It reads as under:-
       "97(2) - Incidence of taxes on lands and buildings:-
       Jf any land has been let for a term exceeding one year to a
                                                                                F
       tenant and such tenant has built upon the land, the taxes on
       land and buildings assessed in respect of that land and the
       building erected thereon shall be primarily leviable upon the
       said tenant, whether the land and building are in the
       occupation of such tenant or sub-tenant of such tenant."
                                                                                G
      10. Clause 6 and Clause 13( e) of the first lease deed dated
16.08.2005 are reproduced below:-
       "6. The Lessee shall pay unto the Lessor an annual rent of
       Re 1/- as lease rental, which shall be paid as an advance
       lease rental in single lump sum payment of Rs. 15/- (in
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416            SUPREME COURT REPORTS                             [2016] 8 S.C.R.


A           consideration of a possible extension of the Concession
            Period) on or prior to the date upon which this deed is
            executed.
            I 3(e). That except the lease rental specified in Section 6
            hereof, it shall not levy any fee, rental, tax or any other
B           charge on the Lessee for the lease of the Demised
            Premises."
            11. Another lease deed was executed on 25.10.2005. Clause 6
      and Clause 13(e) of the said lease deed are reproduced below:-
            ''6. The Lessee shal I pay unto the Lessor an annual rent of
 c          Re 1/- as lease rental, which shall be paid as an advance
            lease rental in single lump sum payment of Rs. 15/- (in
            consideration of a possible extension of the Concession
            Period) on or prior to the date upon which this deed is
            executed.
 D          13( I)(e). That except the lease rental specified in Section
            3 hereof, it shall not levy any fee, rental, tax or any other
            charge on the Lessee for the lease of the Demised
            Premises."
             12. From a perusal of the aforesaid clauses, it is clear that they
 E    are identical and no change has been made. The Concession Agreement
      was executed on 22.06.2005. Clause 24.1 (a) of the Agreement, which
      is relevant and heavily relied upon by the respondents, is reproduced
      below:-
            "24.1 Local Taxntiou:-
 F          n. The concession period shall include all charges towards
               impo1t license, toll, customs, duties, import duties, business
               taxes etc. that may be levied in accordance with the
               applicable laws as on the proposal acceptance date in
               India on the concessionaire's equipment, plant and
 a             Machinery and Materials (whether pennanent, temporary
               or consumable) acquired for the purpose of this
               concession agreement and on the services to be
                performed under this concession agreement. Nothing in
               this concession agreement shall relieve the
               concessionaire from its responsibility to pay any tax that
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    MIS. WELSPUN PROJECTS LTD. v. DIRECTOR, STATE                              417
    TRANSPORT PUNJAB AND ANR. [R.K. AGRAWAL, J.]

         may be levied in India on profits made by it in respect of            A
         this concession agreement.
       13. It may be mentioned here that both the lease deeds were
executed by the Director, State Transport, Punjab for and on behalf of
the Governor of the State of Punjab. From a perusal of Clauses 6 and
13(e) of the lease deeds reproduced above, we are of the opinion that B
the appellant-Company was required to pay rent of Re. I only as lease
rental and further the Government has specifically mentioned that except
the lease rental, it shall not levy any fees, rent, tax or any other charge
on the lessee for the lease of the demised premises. We find that even
though under the provisions of Section 2(35) read with 97(2) of the Act, C
normally the tenant who has been given land on lease for a term exceeding
 1 (one) year is primarily liable to pay taxes on lands and buildings yet in
view of the provisions of Section 157(1) of the Act, the Government is
empowered to exempt in whole or in part from the payment of any such
tax any person or class of persons or any property or description of
 property which in the present case has been done on behalf of the D
government when the lease deeds were executed. For ready reference,
Section 157(1) of the Act is reproduced below:-
      "157. Powers of Government in regard to taxes-( 1)
      The Government may by order exempt in whole or in part
      from the payment of any such tax any person or class of                   E
      persons or any property or description of property."
        14. A reading of Concession Agreement dated 22.06.2005, more
so, Clause 24.1 (a) which deals with the local taxation states that the
concession period shall include all charges towards import license, toll,
customs, duties, import duties etc. which is to be payable by the appellant-    F
Company. In view of the specific exemption given under the lease deed
regarding payment of any taxes on the demised premises, in our
considered opinion, the appellant-Company is not at all required to pay
any municipal taxes on the demised premises. We may also mention
here that the house tax was being paid by the transport department prior
to the signing of the Concession Agreement and if it was intended that          G
this burden should be passed on to the appellant-Company, a clear clause
interpreting this point would have certainly been inserted in the Agreement
itself. Not only this, the Department continued to pay the house tax for
3 to 4 years even after the date of the signing of the agreement.
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418             SUPREME COURT REPORTS                            [2016] 8 S.C.R.



A           15. In view of the forgoing discussion, we are of the considered
      opinion that the appellant-Company is not liable to pay any house tax
      under the Act and the demand and payment of house tax from the
      appellant-Company was without the authority of law and the appellant-
      Company is entitled to the refund of the amount of house tax paid by it
      alongwith rate of interest at the rate of I 0% p.a. from the date of deposit.
B
             16. In view of the above, the impugned judgment and order of the
      High Court dated 14.11.2011 is set aside and, consequently, the appeals
      are allowed.


C     Kalpana K. Tripathy                                            Appeals allowed.




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