Case: Electronics Corporation Of India Ltd Vs. Secretary,Revenue Deptt.Govt.Of A.P.&amp;Ors

liable to pay non-agricultural assessment thereon.17. A clear distinction must be drawn between a company and its shareholder, even though that shareholder may be only one and that the Central or a State Government. In the eye of the law, a company registered under the Companies Act is a distinct legal entity other than the legal entity or entities that hold its shares. 18. In Western Coalfields Limited v. Special Area Development Authority, Korba & anr., 1982(1) SCC 125, this Court reviewed earlier judgments on the point. It held that even though the entire share capital of the appellant before it had been subscribed by the Government of India, it could not be predicated that the appellant itself was owned by the Government of India. Companies, it was said, which are incorporated under the Companies Act, have a corporate personality of their own, distinct from that of the Government of India. The lands and the buildings in question in that matter were vested in an owned by the appellant. The Government of India only owned the share capital. Â?3>Â?3 Å 19. In Rustom Cavasjee Cooper v. Union of India, 1970(1) SCC 248, it was held, "A company registered under the Companies Act is a legal person, separate and distinct from its individual members. Property of the company is not the property of the shareholders. A shareholder has merely an interest in the company arising under its Articles of Association, measured by a sum of money for the purpose of liability, and by a share in the distributed profit." 20. In Heavy Engineering Mazdoor Union v. State of Bihar, 1969(1) SCC 765, this Court held that an incorporated company has a separate existence and the law recognises it as a juristic person, separate and distinct from its members. 21. We are, in the premises, left in do doubt that the State Government was entitled to levy non-agricultural assessment upon the said land and recover it from the appellant company. 22. Learned counsel then submitted that, in any event, the recovery of non agricultural assessment in respect of the said land could not have been effected from the appellant company by reason of the application of the principle of promissory estoppel. In this behalf he referred to a letter dated 7th February, 1967 addressed by the Under Secretary to the Government of India to the Secretary of the Government of Andhra Pradesh, Industries Department, in regard to the "transfer of land to the Department of Atomic Energy for the location of the Electronics Plant and other plants." The letter stated that it had been agreed by the State Government that this land would be exempt from the levy of tax under the Act "irrespective of whether the plants are managed departmentally or through a Public Section Undertaking". The letter requested that "notifications exempting the lands already handed over to the Department of Atomic Energy or to be handed over in future from levy of tax under Andhra Pradesh Act 14 of 1963, while vesting in the Department of Atomic Energy or in public sector projects would also require to be issued." The issuance of the same was, therefore, requested. In reply, the Deputy Secretary of the Government of Andhra Pradesh, Industries Department, stated on 17th October, 1967 that "no separate notification is required exempting the land given to the Atomic Energy Department for establishment of Atomic Energy Complex at Hyderabad from payment of non-agricultural assessment under the A.P. Non-Agricultural Assessment Act so long as the units are run by the Goverment of India in Public Sector." It was contended by learned counsel that the appellant company had acted upon this promise. Accordingly, the State Government was bound by its promise and was estopped from going back upon it. 23. There are two short answers to this contention. In the first place, there can be no estoppel against a statute. In the second place, the letter dated 17th October, 1967 needs to be carefully read. It says that no notification was required for exempting the land from payment of non-agricultural assessment "so long as the units are run by the Government of India in Public Sector". The appellant company is a separate and distinct legal entity that runs its own industry. The letter dated 17th October, 1967 cannot be read as promising exemption to companies, though their shares be held wholly by the Union of India. 24. Mr. Dholakia, learned counsel for M/s. Parel Investment and Trading Co. Limited (appellant in Civil Appeal Nos. 3937-38 of 1990), adopted the submissions aforementioned. He submitted that Article 285 was intended to protect public revenues; the shares of the appellant companies being fully owned by the Central Government, their funds were public revenues. It was, therefore, necessary to read down the provisions of Section 2(j) and Section 12 of the Act to exclude therefrom all but private owners and lesses of land. The question of reading down comes in if it is found that these provisions are ultra vires as the they stand. We have held that these provisions are not ultra vires because Article 285 does not apply when the property this to be taxed is not of the Union of India but of a distinct and separate legal entity. Each of the appellants being companies registered under Companies Act, they are entitles other than the Union of India. The question of reading down does not, therefore, arise. 25. The discussion so far relates to demands for non-agricultural assessment subsequent to 12th July, 1974, when the amendments made by Act 28 of 1974 in the Act came into effect. The defence to the writ petition filed by the appellant company was, as we have already stated, exclusively based upon the amendments made by Act 28 of 1974 in the Act. These amendments have no retrospective effect. No demand for non-agricultural assessment could, therefore, have been made upon the appellant companies for any period prior to 12th July, 1974. To this extent, the demands are quashed.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]14. In our view, neither has Article 285 any application to these appeals nor are we concerned with whether or not the appellants are controlled by or under the authority of the Central Government.It is the case of the appellant company in its writ petition that it is the lessee of the Department of Atomic Energy of the Union of India in respect of the said land. The said land, therefore, is of the ownership of the Central Government and, being leased out to the appellant company for an industrial and commercial purpose, is land to which the Act applies. But virtue of the amended definition of "owner" under Section 2(j) of the Act, the appellant company is the owner of the said land and, by virtue of Section 3, is liable to pay non-agricultural assessment thereon.17. A clear distinction must be drawn between a company and its shareholder, even though that shareholder may be only one and that the Central or a State Government. In the eye of the law, a company registered under the Companies Act is a distinct legal entity other than the legal entity or entities that hold its shares.We are, in the premises, left in do doubt that the State Government was entitled to levy non-agricultural assessment upon the said land and recover it from the appellant company.The discussion so far relates to demands for non-agricultural assessment subsequent to 12th July, 1974, when the amendments made by Act 28 of 1974 in the Act came into effect. The defence to the writ petition filed by the appellant company was, as we have already stated, exclusively based upon the amendments made by Act 28 of 1974 in the Act. These amendments have no retrospective effect. No demand for non-agricultural assessment could, therefore, have been made upon the appellant companies for any period prior to 12th July, 1974. To this extent, the demands are quashed.