Western Coalfields Ltd. v. Municipal Council, Birsinghpur Pali, (SC)
BS159078
SUPREME COURT OF INDIA
Before:- S.P. Bharucha and N. Santosh Hegde, JJ.
Civil Appeal No. 6734-A of 1983 (with CMP 10272 of 1983, SLP 5706/97 T.C. 359/ 83). D/d.
12.1.1999.
Western Coalfields Ltd. - Appellant
Versus
Municipal Council, Birsinghpur Pali and another - Respondents
Madhya Pradesh Municipalities Act, 1961, Section 127A - Coal Mines (Nationalization) Act, 1973, Sections 3, 5 and 11 - Property tax - Colliery - Western Coalfiled Ltd.as a company, is legal entity - Held property in its own right and for itself and not on behalf of Union of India - Exemption from property tax - Not available.
[Para 6]
Cases Referred :-
N.D.M.C. v. State of Punjab, (1997) 7 SCC 339 .
Air India Statutory Corporation v. United Labour Union, (1996) 11 JT (SC) 109 : 1997 Lab IC 365).
Municipal Commissioner of Dum-Dum Municipality v. Indian Tourism Development Corporation, (1995) 5 SCC 251.
JUDGMENT
The appeal relates to the Birsinghpur colliery. It was nationalised by reason of the Coal Mines (Nationalisation) Act, 1973 and, by reason of a direction issued by the Central Government, under Section 5 thereof, it vested in the appellant. The first respondent sought to levy property tax on the colliery. The levy was challenged by the appellant by way of a writ petition before the High Court of Madhya Pradesh. The writ petition was summarily dismissed, relying upon the judgment of this Court in the case of the appellant itself (1982) 1 SCC 125. This appeal against the order of summary dismissal is filed by special leave.
2. The first respondent sought to tax the property of the colliery in exercise of the power contained in Section 127A of the M.P. Municipalities Act, 1961. Section 127A contains sub-section (2) which states that property tax shall not be leviable on "building and lands owned by or vesting in (i) the Union Government............".
3. Sections 3, 5 and 11 of the Coal Mines (Nationalisation) Act, 1973, so far as they are relevant to this appeal, read thus :
"3. Acquisition of rights of owners in respect of coal mines.- (1) On the appointed day, the right, title and interest of the owners in relation to the Coal Mines specified in the Schedule shall stand transferred to, and shall vest absolutely in, the Central Government free from all encumbrances.
5. Power of Central Government to direct vesting of rights in a Government company- (1) Notwithstanding anything contained in Sections 3 and 4, the Central Government may, if it is satisfied that the Government company is willing to comply, or has complied with such terms and conditions as that Government may think fit to impose, direct, by an order in writing, that the right, title and interest of an owner in relation to a coal mine referred to in Section 3, shall, instead of continuing to vest in the Central Government, vest in the Government Company either the date of publication of the direction or on such earlier or later date (not being a date earlier than the appointed day), as may be specified in the direction.
(2) Where the right, title and interest of an owner in relation to a coal mine vest in a Government company under sub-section (1) the Government Company shall, on and from the date of such vesting, be deemed to have become the lessee in relation to such coal mine as if a mining lease in relation to the coal mine has been granted to the Government company and the period of such lease could have been granted under the Mineral Concession Rules; and all the rights and liabilities, of the Central Government in relation to such coal mine shall on and from the date of such vesting, be deemed to have become the rights and liabilities, respectively, of the Government company.
(3) The provisions of sub-section (2) of Section 4 shall apply to a lease which vests in a Government company as they apply to a lease vested in the Central Government and references therein to the "Central Government" shall be construed as references to the Government Company.
11. Management, etc. of coal mines.- (1) The general superintendence, direction, control and management of the affairs and business of a coal mine, the right, title and interest of an owner in relation to which have vested in the Central Government under Section 3, shall-
(a) in the case of a coal mine in relation to which a direction has been made by the Central Government under sub-section (1) of Section 5, vest in the Government company specified in such direction or"
4. A nine-Judge Bench of this Court dealt with the right of a State to tax Union property in the case of N.D.M.C. v. State of Punjab, (1997) 7 SCC 339 . It held (para-graph 170) this :
"(b) The levy of property taxes under the aforesaid enactments on lands and/or buildings belonging to the State Governments is invalid and incompetent by virtue of the mandate contained in Clause (1) of Article 289. However, if any land or building is used or occupied for the purposes of any trade or business - trade or business as explained in the body of this judgment - carried on by or on behalf of the State Government, such land or building shall be subject to levy of property taxes levied by the said enactments. In other words, State property exempted under Clause (1) means such property as issued for the purpose of the Government and not for the purposes of trade or business;"
5. Mr. Raval, learned Additional Solicitor General appearing for the appellant, drew our attention also to paragraph 147 of the judgment where it was held that there is no way in which a State legislature can levy tax upon the property of the Union. The said paragraph goes on to discuss when the Union can levy tax in respect of property owned by a State. Mr. Raval also drew our attention to the judgment of this Court in Air India Statutory Corporation v. United Labour Union, (1996) 11 JT (SC) 109 : 1997 Lab IC 365) where, in the context of deciding what was an instrumentality of the State for the purposes of Article 12, it was said :
"Though the instrumentality, agency or person conducts commercial activities according to business principles and are separately accountable under their appropriate bye-laws or Memorandum of Association, they become the arm of the Government." Mr. Raval's contention is that the property in the colliery at Birsinghpur vests in the appellant-company on behalf of the Union and, therefore, by reason of Section 127A(2) of the M.P. Municipalities Act, may not be made subject to the levy of property tax by the first respondent.
6. The answer, in our view, is to be found in the plain language of Sections 3,5 and 11 of the Coal Mines (Nationalisation) Act, 1973, which we have reproduced above. Under Section 3, from the appointed date the right, title and interest of the erstwhile owner of the Birsinghpur colliery in its property stood transferred to and vested absolutely in the Union. Section 5 empowered the Union, if it was satisfied that a Government Company was willing to comply with or had complied with such terms and conditions as the Union might think it fit to impose, to direct in writing "that the right, title and interest of an owner in relation to a coal mine, referred to in Section 3, shall, instead of continuing to vest in the Central Government, vest in the Government company . . . . . . . " . Therefore, the right, title and interest of the erstwhile owner of the Birsinghpur colliery in its property, which vested in the Union on the appointed day, instead of continuing to vest in the Union, was, by reason of the direction issued by the Union under Section 5, vested in the appellant. Section 11 dealt with the management of the coal mine whereas Section 5 dealt with the right, title and interest in the property of the coal mine. Under Section 5 the general superintendence, direction, control and management of the affairs and the business of the colliery, which by reason of Section 3 had vested in the Union, now "vest in the Government Company" in whose favour the direction under Section 5 had been made. In other words, by reason of Sections 5 and 11, the right, title and interest of the erstwhile owner of the Birsingpur colliery in the property thereof as also in the superintendence, control, management and business thereof, which had vested in the Union, now vested in the appellant consequent upon the direction in that behalf issued by the Union under Section 5. The appellant, as a company, is a legal entity. It holds its property in its own right and for itself. It is, therefore, that we cannot accept the submission of Mr. Raval that the property of the Birsinghpur colliery vests in the appellant-company on behalf of the Union and that, for that reason, cannot be subjected to the levy of property tax under Section 127A of the M.P. Municipalities Act, 1961.
7. The reference to the judgment in the case of Air India Corporation (supra) is inapposite in the present context, for the observation therein that was relied upon was made in the context of determining what is an instrumentality of the State for the purposes of Article 12.
8. We would not add that the issue that we are here concerned with is substantially covered by the judgment of this Court in Municipal Commissioner of Dum-Dum Municipality v. Indian Tourism Development Corporation, (1995) 5 SCC 251 and, agreeing with that judgment, we see no reason to accept Mr. Raval's submission that it needs to be reconsidered.
9. The civil appeal is, therefore, dismissed, with costs.
SLP 5708/97
10. By reason of the order that we have passed in CA6734-A of 1983, the SLP is dismissed, the facts being substantially similar. No order as to costs.
TC 359/83
11. By reason of the order that we have passed in CA6734-A of 1983, the transferred case is dismissed, the facts being substantially similar. No order as to costs.
Order accordingly.