MUNICIPAL CORPORATION OF DELHI versus NORTH DELHI POWER LTD. (NOW TATA POWER DELHI  DISTRIBUTION LTD.) AND ANR.
[2016] 9 S.C.R. 633, Supreme Court of India, 2016
Outcome: Disposed off
Segment: Ratio
[2016] 9 S.C.R. 633 
MUNICIPAL CORPORATION OF DELHI 
v. 
NORTH DELHI POWER LTD. (NOW TATA POWER DELHI 
DISTRIBUTION LTD.) AND ANR. 
(Civil Appeal No. 5653 of2014) 
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 
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 
A 
B 
c 
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 
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 
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 
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SUPREME COURT REPORTS 
(2016] 9 S.C.R. 
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 
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 '. 
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 
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 
POWER LTD. 
Disposing of the appeals, the Court 
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 
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 
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 
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
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. 
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 
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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SUPREME COURT REPORTS 
[2016) 9 S.C.R. 
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 
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 
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 
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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] 
E 
F 
3. Another issue that calls for consideration relates to the 
scope of Rule 12(1) of the Transfer Scheme Rules. 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 
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 
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 
POWER LTD. 
licensee and not a lessee cannot be accepted. Section 120 (1) (c) 
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 
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 
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 
: 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; 
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 
2001 (3) Suppl.
SCR 494 
referred to 
referred to 
Para 11 
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 
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 
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SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
A 
C. A. No. 7389 of 2016. 
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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. 
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 
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 
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entitled for exemption from payment of property tax in view of Section 
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 
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 
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
MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI 
POWER LTD. [L. NAGESWARA RAO, J.] 
North Delhi Power Limited from municipal taxation. North Delhi Power 
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 
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 
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 
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 
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 
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. 
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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SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
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 
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:-
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 
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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 
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company or companies. 
(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 
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
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 
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 
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 
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 
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 
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 
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 
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SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
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 
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 
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. 
(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 
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. 
(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 
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
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 
venture companies or other schemes of division, 
amalgamation, 
merger, 
reconstruction 
or 
arrangements; 
B 
(b)define the property, interest in property, rights and 
liabilities to be allocated-
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(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 
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; 
(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 
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 
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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SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
(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 
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 
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 
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. 
(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 
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 
POWER LTD. [L. NAGESWARA RAO, J.] 
and instruments in favour of the holding company as specified in Schedules 
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, 
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:-
"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 
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 
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 
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. 
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 
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SUPREME COURT REPORTS 
[2016] 9 S.C.R. 
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 
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 
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Distribution Ltd. is only a licensee. 
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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 
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 
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 
without reference to the distribution licence are not correct. 
I 0. Ms. A vanish 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 
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
MUNICIPAL CORPORATION OF DELHI v. NORTH DELHI 
POWER LTD. [L. NAGESWARA RAO, J.] 
of the Union from taxation. We entertained a doubt about the properties 
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 
SCR 549; Government of 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. 
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 
·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 
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 
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 
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 
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SUPREME COURT REPORTS 
[20',6] 9 S.C.R. 
A 
Holding Company and land and land rights is one of the entities therein. 
B 
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F 
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 
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 
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. 
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 
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 
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 
POWER LTD. [L. NAGESWARA RAO, J.] 
further recommended that the ownership of the land should be retained 
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 
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 
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 
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 
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. 
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 
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. 
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SUPREME COURT REPORTS 
[2016) 9 S.C.R. 
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, 
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:-
"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; 
(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: 
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 
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 
POWER LTD. [L. NAGESWARA RAO, J.) 
to let would be liable to pay tax for un-let land. Admittedly, this land 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 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 
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 
out un-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 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 
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. 
The appeals are disposed of in terms of the above directions. 
Divya Pandey 
' , 
Appeals disposed of. 
651 
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