Civil Appeal No 123N of 1973
From the Judgment and Order dated 26
1972 of the Andhra Pradesh High Court in Writ Appeal No 444 of 1968
B Parthasarthy and G N
Rao for the Appellant
B Kanta Rao for the Respondents
The Judgment of the Court was delivered by THAKKAR J
Is the Municipal Corporation of Hyderabad prohibited from levying Municipal taxes from persons induct ed by it in the property of its own ownership under the hire purchase agreement The validity of levy of Municipal taxes by the Municipal Corporation of Hyderabad from allottees to whom the Municipal Corporation had allotted buildings con structed under Low Income Housing Scheme launched by it was questioned by the allottees
The learned Single Judge upheld the validity but the Division Bench in
appeal Under Clause 15 of the Letters Patent
took a contrary view
The Municipal Corporation has preferred the present appeal Appeal by Special Leave and has contended that the learned Single Judge was right in upholding the levy and the Divi sion Bench was wrong in holding it invalid
The facts giving rise to the writ petition instituted by the 72 allottees to whom the houses were allotted need to be stated briefly The Hyderabad Municipal Corporation started a scheme called Low Income Housing Scheme in 1957
In pursuance of that scheme the Corpo ration constructed several houses in various parts of the Hyderabad City including the locality of Malakpet
After the houses at Malakpet were completed applications were invited from persons belonging to 110 that group for the purpose of allotting these houses
The writ petitioners applied and the Corporation allotted the houses to them
They are occupying the houses since 1959
The writ petitioners executed agreements in favour of the Corporation
According to the terms of the agreement the allottees were put in posses sion of the houses allotted to them
The allottees were to pay 20 of the sale price as the first instalment and they were required to pay the balance in monthly instalments
The agreement specifically provides that the houses would remain till the payment of the last instalment and execution of a conveyance in favour of the writ petitioners as the property of the Corporation
The allottee has been strictly prohibited from selling or mort gaging or otherwise disposing of the house or even to sublet or part with possession of the same
Even after the writ petitioners become owners of the houses they are precluded from selling the same within five years of such date
The agreement further provides that all municipal taxes and water taxes and electrici ty charges would be borne by the allottees
The writ petitioners were served with a demand notice on 31 12 1964 asking them to pay house taxes from 1 4 1961 onwards
The demand no tice which the writ petitioners received on 16 4 1965 required the writ petitioners to file objections if any before 15 days of the receipt of the notice
The writ petitioners accordingly filed their objections on 29 4 1965
The principal contention of the peti tioners was that the houses are not liable to be taxed as they vest in the Municipal Corpo ration and as the writ petitioners are not the owners of the houses Negativing this contention the Municipal Corporation served a notice dated 19 6 1966 demanding from the petitioners taxes for the period commencing from 1st April 1961 to 31st March 1965
It is this demand notice which has given rise to the writ petition giving rise to the present appeal
The challenge to the levy of taxes is built on the argument that inasmuch the houses under the hire purchase agreement have not yet vested unto the allottees the property vests unto the Municipal Corporation and under the circumstances Section 2021 of the Hyderabad Municipal Corporation Act Act prohibits the levy of the general tax in respect of these houses
111 In order to deal with the plea of the allottees which was negatived by the learned Single Judge but sustained by the learned Judges of the Division Bench the relevant provisions of the Act require to be noticed
They are Sections 1971i 1991 2021 and 204 1  It is no doubt true that until all the instalments under the hire purchase agreement were paid the allottees would not become the owners of the houses for the title would vest unto them only upon the payment of all the instalments as per the stipulation contained in the agreement
At the relevant point of time the instalments had not yet been fully paid
The title in regard to the houses therefore continued to vest unto the Municipal Corporation at the relevant time
The question then is whether Section 2021c makes it unlawful to levy general tax from the allottees of these buildings
The scheme underlying the aforesaid packet of provisions embodied in the Act deserves to be analysed in this context
Section 1971i casts a legal obligation on the Municipal Corporation to levy taxes on lands and buildings
Section 1991 makes it obligatory subject to the exceptions limitations 1
Section 1971i For the purposes of this Act the Corporation shall impose the following taxes namely a taxes on lands and buildings X X X X 1991 The following taxes shall subject to exceptions limitations and conditions herein provided be levied on buildings and lands in the City and shall hereinafter be referred to as property taxes namely a a general tax b a water tax c a drainage tax d a lighting tax e a conservancy tax 2021 The general tax shall be levied in respect of all buildings and lands in the city except a buildings and lands solely used for purposes connected with the disposal of the dead b buildings and lands or portions thereof solely occupied and used for public worship or for a charitable or educa tional purpose c buildings and lands vesting in the corporation d buildings and lands vesting in the Central Government or state Government used solely for public purposes and not used or intended to be used for purposes of profit in re spect of which the said tax if levied would under the provisions hereinafter contained be primarily leviable from the Central Government or State Government as the case may be 2041 Property taxes shall be leviable primarily from the actual occupier of the premises upon which the said taxes are assessed if such occupier holds the said premises imme diately from the Government or from the Corporation 112 and conditions embodied in the relevant provisions to levy a general tax water tax drainage tax lighting tax and conservancy tax on the buildings and lands in the City of Hyderabad
Whilst the legislature makes it obligatory on the Corporation to levy the aforesaid taxes in so far as gener al tax is concerned an exception is carved out under Section 2021 and the Municipal Corporation is relieved from the obligation of imposing taxes in respect of buildings which are specified in clauses a to d
Evidently the exception is made on policy and principle
Not arbitrarily
Essential ly the properties which are used for public purposes or for purposes of the community are exempted
For instance by clause a buildings and lands which are used for purposes connected with the disposal of the dead are exempted inas much as the entire community is interested in such a user
The same principle is discernible in regard to clause b which provides for exemption in regard to lands or buildings solely occupied for public worship or for charitable or educational purpose
The same philosophy is discernible in the exemption accorded under clause d to properties be longing to Central or State Government which are used solely for a public purpose
Be it realized that clause d makes it abundantly clear that the exemption will not be extended to properties belonging to the Central Government and State Government if the same are used for purposes of profit and not for a public purpose
The user for the purposes of the community is the rationale of the thread of principle which runs through all these three clauses viz clauses a b and d for granting exemption
So far as clause c which has given rise to the present controversy is concerned a different principle is at the bottom different but no less rational
The philosophy underlying the exemption is rooted in pragmatism
In so far as buildings and lands which are the properties of the Corporation and are used for its own purposes it would be an exercise in futility to collect taxes from itself in order to augment its own resources
Surely the resources would not stand augmented when the Municipal Corporation collects the taxes from itself
How would one benefit by taking money from one pocket and put ting it in another pocket of oneself By transfering from one drawer of one s own cash box into another drawer of the same cash box The whole purpose of levying tax is to aug ment its resources and not merely to engage in an exercise in accountancy by crediting in one account and debiting in another which does not result in its resources being aug mented in reality
In fact a sizable staff would have to be employed for making the valuation of the properties for making assessment of the properties and for making credit and debit entries in the relevant accounts
That is the obvious reason why buildings and lands which vest in the Corporation and which are in its own use and 113 occupation are sought to be exempted from the levy
Of course clause c which provides for exemptions in respect of buildings and lands vesting in the Corporation is not very happily or perfectly worded
Had it been drafted with the care and precision to be expected from a perfect drafts man who exists only in theory and not in practice there would have been no scope for the controversy
But then if the entire scheme is viewed in a common sense manner so that the scheme makes sense the matter cannot present any serious problem
Section 2041 which is a part of the packet of sections relating to this subjectmatter clinches the issue in favour of the Municipal Corporation of Hydera bad the appellant herein
It in terms provides that proper ty taxes shall be leviable primarily from the actual occupi er of the premises upon which the said taxes are assessed if such occupier holds the said premises immediately from the Government or from the Corporation
If the property taxes were not to be levied in respect of the property belonging to the Corporation which is used and occupied by allottees or other occupiers there would be no point or purpose in making the provision in the aforesaid manner
The provision in terms applies to a situation where the build ings or the premises are in actual occupation of a person or body other than the Municipal Corporation itself
1n such an event the property taxes would be leviable primarily from the said occupier as if the said occupier holds the property from the Corporation itself
This leaves no room for doubt that the Corporation is entitled to impose taxes on the buildings which may be owned by itself but which may be in occupation of others
Otherwise the provision contained in Section 2041 would be rendered aimless and otiose
Surely the legislature was enacting a purposeful provision and not a purposeless provision without aim or object
For the aforesaid reasons we are of the opinion that the learned Single Judge was right in taking the view that the buildings and lands vesting unto the Corporation not only in title but also in possession as polarized from those vest ing in title only but not in possession were exempted from the obligation imposed by the legislature to levy the property taxes
Buildings and lands which were merely owned by the Corporation but were in actual possession or under the actual use and occupation of some one else that is to say persons or bodies other than the Corporation itself are not exempted
In order to attract Section 2021c a property must satisfy a dual test
The property must not only be owned by the Corporation it must also be in the occupation of the Corporation itself
It is in this sense that the word vesting  has been used
And the proposition that the expression vest  is capable of being used in this sense depending on the context in which it is emp 114 loyed is supported by the observations made by this Court in Fruit  Vegetable Merchants Union vs Delhi Improvement Trust AIR 1954 SCp 344
It has been observed therein that the word vest is a word of variable import and a property must vest in title or may vest in possession or it may vest in a limited sense as indicated in the context    Reliance has been placed in this context on a passage from Richardson vs Robertson 1862 6 LTp 75 wherein it is stressed that the vesting  often means vesting  in posses sion
The scheme of the relevant sections has to be read and construed in a meaningful purposeful and rational manner
The expression vest  employed in Section 2021c under the circumstances must of necessity be construed as vesting both in title as well as in possession
Be it realized that there can be no principle in exempting the tenants inducted by the Municipal Corporation in its property from payment of taxes if the terms of the lease so provide
Just as the tenants who occupy the properties belonging to private citizens have to pay property taxes if the terms of the agreement so provide the tenants inducted by the Municipal Corporation in buildings owned by itself have to pay the property taxes if the agreement so provides
There can be no rational basis for exempting the tenants or persons inducted by the Municipal Corporation in its own buildings from payment of such taxes
The concerned provision therefore cannot be read in the manner suggested by the respondents
The learned Single Judge was perfectly justified in negativ ing their contentions and in dismissing their writ petition
The learned Judges of the Division Bench were in error in reversing the learned Single Judge
We therefore allow this appeal set aside the order passed by the Division Bench and restore the order passed by the learned Single Judge dismissing the writ petition
There will be no order as to costs
MLA Appeal allowed


Summary:
The appellant Municipal Corporation of Hyderabad con structed houses under Low Income Housing Scheme and allot ted them to the respondents on hire purchase
The agreements executed by the respondents in favour of the appellant provided 1 that the houses would remain till the payment of the last instalment and execution of a conveyance in favour of the respondents as the property of the Corpora tion and ii that all Municipal taxes water taxes and electricity charges would be borne by the allottees
The appellant served demand notices on the respondents to pay house tax in respect of their houses
By that time the instalments had not been fully paid
The respondents challenged the levy of tax on the ground that s2021 of the Hyderabad Municipal Corporation Act prohibits the levy of general tax in respect of the aforesaid houses since they had not yet vested unto the allottees under the hire purchase agreement
A Single Judge negatived the plea of the respondents allottees and upheld the validity of tax but the Division Bench in a Letters Patent Appeal took a contrary view
Hence this appeal by special leave
Allowing the appeal HELD 1 In order to attract s2021c of the Hydera bad Municipal Corporation Act a property must satisfy a dual test
The property must not only owned by the Corpora tion it must also be in the occupation of the Corporation itself
It is in this sense that the word vesting  has been used
The expression vest  employed in s2021c under the circumstances must of necessity be construed as vesting both in title as well as in possession
113G H Fruit  Vegetable Merchants Union vs Delhi Improvement Trust 108 AIR 1954 SCp 344 and Richardson vs Robertson 1862 6 LTp 75 relied upon
2 The scheme underlying sections 197 199 200 and 204 of the Act has to be read and construed in a meaningful pur poseful and rational manner
Section 1971i casts a legal obligation on the Municipal Corporation to levy taxes on lands and buildings
Section 1991 makes it obligatory subject to the exceptions limitations and conditions to levy a general tax water tax drainage tax lighting taxconservancy tax on the buildings and lands in the City of Hyderabad
Whilst the legislature makes it obligatory on the Corporation to levy the aforesaid taxes in so far as general tax is concerned an exception is carved out under s2021 and the Municipal Corporation is relieved from the obligation of imposing taxes in respect of buildings which are specified in clausesa to d
The exception is made on policy and principle
Not arbitrarily
Essentially the properties which are used for public purposes or for pur poses of the community are exempted
Claused makes it abundantly clear that the exemption will not be extended to properties belonging to the Central Government and State Government if the same are used for purposes of profit and not a public purpose
The user for the purposes of the community is the rationale of the thread of principle which runs through all these three clauses viz clauses a b and d for granting exemption
So far as clausec which has given rise to the present controversy is concerned a different principle is at the bottom different but no less rational
The philosophy underlying the exemption is rooted in pragmatism
In so far as buildings and lands which are the properties of the Corporation and are used for its own purposes it would be an exercise in futility to collect taxes from itself in order to augment its own resources
Surely the resources would not stand augmented when the Municipal Corporation collects the taxes from itself
111D 112A F 3
Section 2041 which is a part of the packet of sections relating to this subject matter clinches the issue in favour of the Municipal Corporation of Hyderabad
It in terms provides that property taxes shall be leviable pri marily from the actual occupier of the premises upon which the said taxes are assessed if such occupier holds the said premises immediately from the Government or from the Corpo ration
If the property taxes were not to be levied in respect of the property belonging to the Corporation which is used and occupied by allottees or other occupiers there would be no point or purpose in making the provision in the aforesaid manner
The provision in terms applies to a situa tion where the buildings or the premises are in actual occupation of 109 a person or body other than the Municipal Corporation it self
In such an event the property taxes would be leviable primarily from the said occupier as if the said occupier holds the property from the Corporation itself
This leaves no room for doubt that the Corporation is entitled to impose taxes on the buildings which may be owned by itself but which may be in occupation of others
Otherwise the provi sion contained in section 2041 would be rendered aimless and otiose
113B F