MUNICIPAL CORPORATION OF DELHIversusNORTH DELHI POWER LTD. (NOW TATA POWER DELHI DISTRIBUTION LTD.) AND ANR.

                        [2016] 9 S.C.R. 633



            MUNICIPAL CORPORATION OF DELHI                               A
                                 v.
  NORTH DELHI POWER LTD. (NOW TATA POWER DELHI
           DISTRIBUTION LTD.) AND ANR.
                  (Civil Appeal No. 5653 of2014)                         B
                        AUGUST 10,2016
       [ANIL R. DAVE AND L. NAGESWARA RAO, JJ.]
       Municipalities - Property tax - Delhi Mw1icipal Corporation
Act, 1957 - s.119(1) and ss.114/120(l)(c)/169 - Exemption of
government land from property tax - Lm1d in question initially stood
                                                                         c
transferred to the government then to the Distribution Company as
licensee and then to the Holding Company - Ownership, if continued
to vest in the government and thus exempted from property tax or in
the Distribution Company/Holding Company making them liable to
pay tax - Held: Under the scheme contemplated by Delhi Electricity .     D
Reforms Act and Rules framed therein, assets (including land) of
erstwhile Delhi Vidyut Board initially stood transferred and vested
absolutely in the government and then undertakings were
transferred to generation, transmission and distribution
companies - Thereafter shares of these companies were allotted to
                                                                         E
the Holding Company, Delhi Power Company Ltd., a wholly owned
government company - Land and land rights were also transferred
to the Holding Company - Hence, it is clear that transfer of all
assets including land to the government was a transitory step as it
was the Holding Company which was to be in total control - Thus,
land belongs to the Holding Company and not the government and           F
hence not exempted from tax uls.119(1) - High Court's order
remanding matter back to the Deputy Assessor and Collector, MCD
confirmed with direction to consider provisions of DMC Act, Delhi
Electricity Reforms Act, Transfer Scheme Rules and the distribution
licence issued u/s.20, Delhi Electricity Reforms Act to decide matter
                                                                         G
pertaining to incidence of tax - Delhi Electricity Reforms Act, 2000 -
ss.14, 15 & 20 - Delhi Electricity Reforms (Transfer Scheme) Rules,
2001 - rr. 314/5(5)/9112(1).
     Delhi Electricity Reforms (Transfer Scheme) Rules, 2001 -
Schedules 'F' and 'G' - Distribution undertakings as set out in
                                                                         H
                              633
 634              SUPREME COURT REPORTS                       (2016] 9 S.C.R.



     A   Schedule 'F' and Holding Company as set out in Schedule 'G' - If
         any conflict between the two as regards the ownership of land which
         stood transferred to the Holding Company - Held: No contradiction
         in Schedule 'F' and 'G' pertaining to ownership of land - Only the
         land which was exclusively and primarily used for purpose of
         business by transferee on date of transfer, as referred to in proviso
     B
         to items I to III in Part I of Sch. 'F ', not forming part of assets
         transferred to Distribution Company, would be subject matter of a
         licence by the government in favour of transferee - All other lands
         would be part of land transferred to the Holding Company as
         contemplated in Sch. 'G '.
     c
..            Delhi Electricity Reforms (Transfer Scheme) Rules, 2001 -
       Ownership of land transferred - Determination on basis of cabinet
       decision - Held: Cabinet decision dated 6.1.2001 to the effect that
       the land belongs to the government was much prior to the statutory
       scheme and hence; cannot be taken into consideration to reach a
     D different conclusion.

                Delhi Electricity Reforms (Transfer Scheme Rules), 2001 -
         r.12(1) - Adjudicatory powers of Government - Scope of - r. 12(1)
         provided that in case of any dispute, difference or issue with regard
         to transfer under the Rules, decision of the Govt. shall be final and
     E   binding on all parties - Held: Stand of the Government that land
         continues to vest in it would not amount to a decision by Government
         in resolving a dispute between parties to the Transfer Scheme -
         r. 12(1) not applicable in the instant case as the adjudication of
         dispute involves interpretation of provisions of the statute and rules
 ,F      - Division Bench s findings that Government is not the owner of
         land, upheld.
             Delhi Municipal Corporation Act, 1957 - s. l 20(l)(c) -
       Incidence of property taxes - Held: s. 120(l)(c) contemplates t_hat a
       person having right to let out un-let land is liable to pay tax - Since,
     G the distribution license empowers the Distribution Company to let
       out land, notwithstanding the fact it is a licensee under Sch. 'F' of
       Transfer Scheme Rules, it would still be liable to pay tax - Matter
       remanded back to Deputy Assessor and Collector of MCD to decide
       incidence of tax.

     H
  MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI                         635
                  POWER LTD.

      Disposing of the appeals, the Court                                A
       HELD: 1.1 Broadly understood, the scheme contemplated
by the Delhi Electricity Reforms Act, 2000 and Rules fr~med
therein is that the assets of erstwhile Delhi Vidyut Board initially
stood transferred and vested absolutely in the Government. The
undertakings were then transferred to generation, transmission           B
and distribution companies. Shares of these companies .were
allotted to the Holding Company, Delhi Power Company Ltd., 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 transfer of all the assets including land    c
to the Government was a transitory step as the Holding Company
was 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          D
the distribution undertaking with assets mentioned in Items I, II
& III of Part I of Schedule F to the Delhi Electricity Reforms
(Transfer Scheme) Rules, 2001 were transferred to the
Distribution Company. 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              E
purpose by the transferee before the transfer does not form part
of the assets transferred and the transferee would be a licnesee
of the Government for the said land on payment of a nominal
amount. Schedule 'G' deals with transfer in favour of the Holding
Company and land and land rights is one of the entities therein.         F
The High Court held that initial transfer and vesting of land was
in the Government, then Distribution Company becomes licensee
of the G.overnment qua land and finally there is 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, the findings of the High Court that       G
Holding Company is the owner of land and not the government,
is upheld. (Para 12)(647-D-H; 648-A-C]
     1.2 There is no conflict between Schedule 'F' and 'G' to
the Delhi Electricity Reforms (Transfer Scheme) Rules, 2001 as
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636           SUPREME COURT REPORTS                      [2016) 9 S.C.R.



A     regards the ownership of land. Proviso to items I to m 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
·B
      land which satisfies this condition would be treated as licensed
      to transferee. All other lands would be part of land transferred to
      the Holding Company as contemplated in Schedule 'G'. [Para
      13)(648-D-F]
            2. Another issue connected to the ownership of the land is
 c the stand of the Government that the land continues to be vested
      in the Government. Reference was made to Cabinet decision
      dated 06.01.2001. Since, provisions of the Act, Rules and Transfer
      Scheme have been interpreted to conclude that the land stood
      transferred and vested in the Holding Company, the Cabinet
 D    decision dated 06.01.2001 which was much prior to the Statutory
      Scheme cannot be taken into consideration to reach a different
      conclusion. [Para 14][648-F-G; 649-B-C]
            3. Another issue that calls for consideration relates to the
      scope of Rule 12(1) of the Transfer Scheme Rules. Stand of the
 E    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 adjudication of dispute
      involves interpretation of the provisions of the statute and the
      rules. In view of the above; findings recorded by Division Bench
 F    that Government is not the owner of land, upheld. [Paras 15,
      16)[649-C, E; 650•B]
         4. Insofar as the point pertaining to the incidence of tax is
   concerned, according to Section 120 (1) (c) of the Delhi Municipal
   Corporation Act, 1957, the person who has a right to let would
 G be liable to pay tax for un-let land. Admittedly, the land in question
   is un-let. Incidence of tax has to be decided by the Authority
   after taking into consideration the provisions of the Act, rules
   and the licenses, including the distribution licence. The finding
   of the High Court that licence pertaining to land as per the
 H Transfer Scheme shows that the Distribution Company is only a
  MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI                        637
                  POWER LTD.

licensee and not a lessee cannot be accepted. Section 120 (1) (c)       A
contemplates that a person who has the right to let out on-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
                                                                        B
Transfer Scheme Rules, it would still have to pay the tax. For the
reasons afore-stated, order of remand passed by the High Court
is confirmed with a 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         c
issued under Section 20 of Delhi Electricity Reforms Act to decide
matter pertaining to incidence of tax. (Paras 17, 19][650-C, H;
651-A-B, C-E)
      Municipal Commissioner of Dum Dum and Ors. v.
      Indian Tourism Corporation and Ors.(1995) 5 SCC 251               D
      : 1995 (2) Suppl. SCR 433 - explained.
      Satyadev Bhushari vs. Padam Dev & Ors. (1955) 1 SCR
      549; Government of NCT Delhi and Ors. v. All India
      Central Civil Accounts, JAO s Association and Ors.
      (2002) 1 sec 344 : 2001 (3) Suppl. SCR 494;                       E
      Chandigarh Administration and Am: v. Surinder Kumar
      and Ors. (2004) 1 SCC 530 : 2003 (6) Suppl. SCR
      283 - referred to.
                       Case Law Reference
0?55) 1 SCR 549                referred to             Para 11          F
2001 (3) Suppl. SCR 494        referred to            Para 11
2003 (6) Suppl. SCR 283        referred to            Para 11
1995 (2) Suppl. SCR 433        explained             · Para 16
     CIVIL APPELLATE JURISDICTION; Civil Appeal No. 5653
                                                                        G
of2014.
      From the Judgment and Order dated 09.12.2013 of the High Court
of Delhi at New Delhi in LPA No. 2630 of2005
                              WITH
      C. A. No. 5654 of2014                                             H
638            SUPREME COURT REPORTS                           [2016] 9 S.C.R.



A           C. A. No. 7389 of 2016.
           Dhruv Mehta, Sr. Adv., Ms. Madhu Tewatia, Praveen Swarup,
      Anupam Verma, Nikhil Sharma, Pukhrambam Ramesh Kumar, Sumit
      Kumar Vats, Devashish Marwah, Ms. Avnish Ahlawat, Dr. Monika
      Gusain, Advs. for the appearing pa1ties.
 B          The Judgment of the Court was delivered by
             L. NAGESWARA RAO, J. I. Leave granted in Special Leave
      Petition (Civil) No.1731712015.
            The issues in these three Civil Appeals are the exigibility and
c     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.58,53,9601- with effect from 01.04.2002. Mis North Delhi Power
 D    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.16412003, 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
 E    119 (1) of Delhi Municipal Corporation Act, 1957. It was also held that
      Mis North Delhi Power Limited was a licensee of the Government.
      On the basis of the above fjndings, 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 DistrictJudge, Delhi, the Municipal
      Corporation Delhi approached the High Court of Delhi by filing Writ
 F
      Petition No.319312004. 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 (I)
      (c) of the Delhi Municipal Corporation Act, 1957 are applicable as North
      Delhi Power Limited was entitled to let out the properties on which
 G    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 (Transfer Scheme), 200 I ruled out liability of
 H
  MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI                               639
         POWER LTD. [L. NAGESWARA RAO, J.]

North Delhi Power Limited from municipal taxation. North Delhi Power           A
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 ofland and land rights during the relevant
assessment years i.e. 2002-2003 and 2003-2004, that the statutory transfer
                                                                               B
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 DelhiElectricity 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                 c
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 Corporation, Delhi was directed to give a hearing
to both North Delhi Power Limited as well as to Delhi Power Company
                                                                               D
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     E
Appeal No.5653/2014, aggrieved by certain findings in favour of the
Distribution Company. Civil Appeal No. _ _ of2016 (arising out of
Special Leave Petition (C} No.17317 of2015) was filed by Government
ofNCT of Delhi (hereinafter referred to as 'Government'), challenging
the finding::: recorded by the Division Bench of the High Court that the       F
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 in this case. Chapter
VIII of the Delhi Municipal Corporation Act, 1957 deals with taxation.         G
Section 114 provides for imposition of tax on land and buildings in Delhi.
 Section 119 of the Delhi Municipal Corporation Act exempts la~ds 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
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640             SUPREME COURT REPORTS                            [2016] 9 S.C.R.



A     shall be primarily leviable'on the lessor ifthe 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
B
      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
      Sections 14 and 15 of the Act which are as follows:-
 c                                     PARTY
            "REORGANISATJON OF ELECTRICITY INDUSTRY
             14. Incorporatio11 of co111pa11ies for the purpose of
             generation, transmission or distribution of electricity.
 D           (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 pwpose of generation.
             transmission or distribution of electricity, including
 E           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.
 F
             (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
 G           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
             Electricity Board and the Central Electricity Authority
             and any other authority under any law in force for the
 H
MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI                   641
       POWER LTD. [L. NAGESWARA RAO, J.]

  time being, or any other Government concerned.                 A
  (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    B
  and functions assigned to the companies iiicorporated
  and set up under sub-section (1), other companies
  engaged in generation, transmis;;ion or· cfistribuiion of
  electricity, or more than one of the said 9ctivities, may
  be incorporated and set up in the National Capital             c
  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             D
  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            E
  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
  corporate entities in terms of this Part, the Government
  may appoint an administrator for the purpose of
                                                                  F
  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
                                                                 G
  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
                                                                 H
642      SUPREME COURT REPORTS                         [2016] 9 S.C.R.


 A    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
 B    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
 c    Board under the Electricity (Supply) Act, 1948 (54 of
      1948), as the Govern111ent may, by notification in the
      official Gazette, specify, shall be exercisable by a
      company or companies established as the case may be,
      under section 14, for the purpose of discharge of the
      functions and duties with which it is entrusted.
 D
      (4) Notwithstanding anything contained in this section
      or any other Act, where:
      (a)the transfer sche111e involves the transfer of any
         property or rights to any person or undertaking not
 E       wholly owned by the Govern111ent, 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
         011 all persons including third parties, even if such
         persons have not consented to it.
 F
      (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
 G
      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
 H
MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI                        643
       POWER LTD. [L. NAGESWARA RAO, J.]

  publish the same in the official Gazette. The transfer              A
  scheme to be notified under this sub-section shall have
  the same effect as a tram/er scheme under sub-section
  (2).
  (6) A transfer scheme may-
  (a) provide for the formation of subsidiaries, joint                B
      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-                                     C
  (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            D
      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;                               E
  (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                  F
  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                G
  the order in which any transfer or transaction is to be
  regarded as taking effect;
  (/)provide that the transfer shall be provisional subject
  to the provisions of section 18.
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644            SUPREME COURT REPORTS                        [2016] 9 S.C.R.



A           (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
B
            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 transfer01; as the case may be, continued or
c           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
D           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.
 E          (JO) The exercise by a licensee of any of Board's 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
 F          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
 G    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
 H
  MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI                               645
         POWER LTD. [L. NAGESWARA RAO, J.]

and instruments in favour of the holding company as specified in Schedules     A
A to F, in consideration of the vesting of the undertakings. Rule 9
postulates that the classification and transfer of the undertakings, unless
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 (I) if any doubt, dispute,
                                                                               B
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 prov.iso
to items I, II and III of part I of Schedule 'F' which is as follows:-
                                                                               c
           "PROVIDED THAT notwithstanding I, II and Ill
       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                  D
       licensee of the government on payment of a consolidated
       amount oj one rupee only per month during the period
       the tramferee has the sanction or licence or
       authorization to undertake the transmission business.
       As and when such licence or sanction or authorization                    E
       is revoked or cancelled or not renewed or 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     F
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.                                                        G
      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
                                                                                H
646             SUPREME COURT REPORTS                           [2016] 9 S.C.R.



A  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 ofNCT
  'Of Delhi has taken a categoric stand that the 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
B
   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
C 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 (I) (c) of the
D     Delhi Municipal Corporation Act, 1957 would be clearly applicable to
      the facts of the instant case as the Distribution Compatiy has the right to
      let out the land in dispute. This liability to pay the property tax under
      Section 120 (I){ 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 Government
E     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 detennine ownership
 F    without reference to the distribution licence are not correct.
             I 0. 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
G     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
H
    MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI                               647
           POWER LTD. [L. NAGESWARA RAO, J.]

 of the Union from taxation. We entertained a doubt about the properties         A
 of Union Territories 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
                                                                                 B
                           of
 SCR 549; Government 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.                                                                  c
         12. Dismal perfonnance of the Electricity Boards led to a decision
  ofunbundling 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         D
 ·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 distribution
  companies. The shares of these companies were allotted to the Holding
  Company whicJ1 is Delhi Power Company Ltd. which is a wholly owned
  Government company. Land and land rights also were transferred to              E
  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         F
  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 & Ill 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                  G
  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 Iicenesee of the Government for the said land on payment of
   a nominal amount. Schedule 'G' deals with transfer in favour of the
                                                                                 H
648            SUPREME COURT REPORTS                           [20',6] 9 S.C.R.



A     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
 B
      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 Comi held
      that the initial transfer and vesting of land is in the Government, then
 c    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 Co mi that Holding Company is the owner of land.
 D           13. We proceed to deal with the point as to whether there is any
      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
 E    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 paii ofland transferred to the Holding Company
      as contemplated in Schedule 'G'. Hence, we see no conflict in the
 F    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. Mis SBI Capital Market Limited (referred to as 'SBI Caps'
 G    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 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
 H
  MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI                                 649
         POWER LTD. [L. NAGESWARA RAO, J.]

further recommended that the ownership of the land should be retained            A
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 06.01.200 I. Apatt
from the said Cabinet decision, we were also shown some material which
indicated that the Government was maintaining its stand that the land
                                                                                 B
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          c
scope of Rule 12 (I) of the Transfer Scheme Rules. Rule 12(1) of the
Rules reads as under:-
      " Decision of Government final:- 0) If any doubt,
      dispute, difference or issue shall arise in regard to the
      transfers under these rules, subject to the provisions of                  D
      the Act, the 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               E
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.                      F
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 oflndia
and exempted from tax. The Government of India asserted that the
properties of the Authority are the properties of the Union and reliance         G
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 or doubt arises, as to which of the properties, rights or liabilities
of the Central Government have been transferred to the Authority.
                                                                                 H
650             SUPREME COURT REPORTS                            [2016) 9 S.C.R.



A     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,
B
      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:-
c
            "120. l11cidence of property taxes
             (1) The property taxes !>·hall be primarily leviable as
             follows:-
              (a) if the land or building is let, upon the lessor;
D
             (b) if the land or building is sub-let, upon the superior
             lessor;
             (c) if the land or building is unlet, upon the person in
             whom the right to let the same vests:
 E           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
 F           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
 G    tax. The High Comi also said that HoldingCompanywas 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.
 H           19. According to Section 120 (I) (c), the person who has a right
   MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI                                  651
          POWER LTD. [L. NAGESWARA RAO, J.)

to let would be liable to pay tax for un-let land. Admittedly, this land is        A
un-let. Incidence of tax has to be decided by the Authority after taking
into consideration the provisions of the Act, rules and the licences,
including the distribution licence. The High Coutt 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
                                                                                   B
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.
s'ection 120 (I) ( c) contemplates that a person who has the right to let          c
out un-let land is liable to pay tax. His status as a lessor or licensee is
irrelevant. Ifthe distribution licence empowers the Distribution Company
to let out the land, notwithstanding· the fact that the Distributio11 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
                                                                                   D
order of remand passed by the High Court in the impugned judgment
with a 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.             E
       The appeals are disposed of in terms of the above directions.
Divya Pandey                                               Appeals disposed of.




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