(2016] 8 S.C.R. 410

MIS. WELSPUN PROJECTS LTD.

(FORMERLY KNOWN AS M/S. MSK PROJECTS INDIA LTD.)

DIRECTOR, STATE TRANSPORT, PUNJAB AND ANR.

(Civil Appeal Nos. 4944-4945 of2016)

NOVEMBER 08, 2016

[ANIL R. DAVE, R.K. AGRAWAL AND

L. NAGESWARA RAO, JJ.]

Punjab Municipal Corporation Act, 1978 - ss.2(35), 97(2) and 157 - House tax assessment - Notice to appellant-company - Company informed that it was not the owner of the premises in question since it was only handling the project of State Transport Depart111ent on B. 0. T basis (Build, Operate and Transfer basis) - State Transport Authorities informed that the co111pany was liable to D pay the tax - 'Funjab lnjiastructure Regulatory Authority held that State 1lamport Authorities were liable to pay the tax - High Court, in appeal, held that the liability ll'as on the Company - On appeal, held: The rights and obligations between the Transport Authority and the Company are governed by 'Co11cessio11 agreements' between E them and Lease Deeds - As per the Lease Deeds, the Company iras not liable to pay any fees, rent, tax or any other charge in respect of the premises except lease rental of Rs. 1 - Even if the company as a tenant is liable uls. 2(35) rlw s.97(2), yet in view of s. 157(1), the Government is e111powered to exempt such tax - Thus the company not liable to pay any house tax under the Act.

F Allowing the appeals, the Court

HELD: 1. The inter-se relationship between the parties and all the relative rights and obligations are entirely governed by the Concession Agreements and the Lease Deeds. From a perusal of Clauses 6 and 13(e) of the lease deeds, the appellant-Company G was required to pay rent of Re. 1 only as lease rental and further the Government has specifically mentioned that except the lease rental, it shall not levy any fees, rent, tax or any other charge on the lessee for the lease of the demised premises. [Paras 7 and

13)(415-B; 417-B) H 410

MIS. WELSPUN PROJECTS LTD. v. DIRECTOR, STATE 411

TRANSPORT PUNJAB AND ANR.

2. Even though under the provisions of Section 2(35) read A with s.97(2) of the Punjab Municipal Coq>0ration Act, 1976 normally the tenant who has been given land on lease for a term exceeding 1 (one) year is primarily liable to pay taxes on lands and buildings yet in view of the provisions of Section 157(1) of the Act, the Government is empowered to exempt in whole or in 8 part from the payment of any such tax any person or class of persons or any property or description of property which in the present case has been done on behalf of the Government when the lease deeds were executed. [Para 13][417-C-D]

3. Clause 24.l(a) of the Concession Agreement which deals C with the local taxation, states that the concession period shall include all charges towards import license, toll, customs, duties, import duties etc. which is to be payable by the appellant-Company.

In view of the specific exemption given under the lease-deed regarding payment of any taxes on the demised premises, the appellant-Company is not at all required to pay any municipal D taxes on the demised premises. The house tax was being paid by the transport department prior to the signing of the Concession Agreement and if it was intended that this burden should be passed on to the appellant-Company, a clear clause interpreting this point would have certainly been inserted in the Agreement itself. Not only this, the Department continued to pay the house tax for 3 to 4 years even after the date of the signing of the agreement. jPara 1411417-F-H]

4. The appellant-Company is not liable to pay any house tax nnder the Act and the demand and payment of house tax from the appellant-Company was without the authority of law and the appellant-Company is entitled to the refund of the amount of house tax paid by it alongwith rate of interest at the rate of 10% p.a. from the date of cleposit.[Para 15)(418-A-B]

Delhi Golf Club Ltd. and Another v. N.D.M.C., (2001) 2 SCC 633: 2001 (1) SCR 376 - referred to.

2001. (1) SCR 376

Case Law Reference

referred to Paras

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4944-

4945 of2016.

A From the Judgment and Order dated 14.11.2011 of the High Court of Punjab and Haryana at Chandigarh in FAQ No. 3372 of 2011 and FAO No. 3488of2011.

Pravin H. Parekh, Sr. Adv, Vishal Prasad, Aditya Sharma, Ms.

Ritika Sethi, Ms. Rashi Gupta, Ms. Pavitra Singh (For M/s. Parekh & B Co.) Advs. for the Appellant.

S. K. Pabbi, AAO. Ajay K. Singh, Ms. Disha Singh, Shivendu Gaur, (For Kuldeep Singh) Abhay Kumar, Shekhar Kumar, Advs. for the Respondents.

The Judgment of the Court was delivered by

H..K. AGRAWAL, J. I. Challenge in the above said appeals is to the legality of the impugned common judgment and order dated 14.11.2011 rendered by learned single Judge of the High Court for the States of Punjab & Haryana at Chandigarh in F.A.O. Nos. 33 72 and 3488of2011 whereby the High Court allowed the appeals tiled by the respondent- D State.

2. Factual position in a nutshell is as follows:-

( a) On 22.06.2005, a Concession Agreement was entered into between the Government of Punjab (through Director, State Transport, E Punjab) and Mis Welspun Projects Ltd. (formerly known as M/s MSK

Projects India Ltd.)-the appellant-Company to design, finance, construct, operate and maintain the Bus Terminal Project at Jalandhar on Build, Operate and Transfer (8.0.T} basis and to determine, levy, demand, collect and retain the fees for a period of8 years, 5 months and 21 days.

(b) A similar Concession Agreement was entered into between F the paities mentioned above for the Bus Terminal at Ludhiana on the same basis for a period of I 0 years and 3 months.

(c) On 16.08.2005 and 25.10.2005, lease deeds were entered into between the parties for the project sites at Jalandhar and Ludhiana respectively. According to the said lease deeds, the appellant-Company G was required to pay only the annual rent of Re. 1 as lease rental.

(d) On 26.11.2008, the Commissioner, Municipal Corporation, Jalandhar-Respondent No. 2 herein issued a notice under Section 103 of the Punjab Municipal Corporation Act, 1976 (in short 'the Act') stating

that the premises in question was assessed for an annual rental value of A Rs. 3,98,73,600/- for the year 2008-09.

(e) Similarly, on 08.02.2010, the appellant-Company received a notice from the Municipal Corporation, Ludhiana stating the house tax assessment for the year 2008-09 and 2009-10 had been carried out and the said prope11y at Ludhiana was assessed at Rs.64,59,588.80/- for an annual rental value of the premises.

(f) The appellant-Company informed Respondent No. 2 herein that it was handling the project on BOT basis and as such the actual owner is the State Transport Authorities. However, when the contents

of the notices were brought to the knowledge of the State Trnnsport c Authorities, the State Transport Authorities informed that the appellnnt- Company is the actual user, occupant and beneficiary of the properties of the Bus Terminals and as such is liable to pay all taxes including House Tax as per the terms and conditions of the Concession Agreements.

(g) Being aggrieved by the demand notices, the appellant-Company approached the High Court. The High Court, vide order dated 09.02.20 I 0 directed the appellant-Company to approach Punjab Infrastructure Regulatory Authority {PIRA). The appellant-Company preferred Petition Nos. I and 2 of 20 I 0 before the PIRA against the State Transport Authorities of Jalanadhar and Ludhiana respectively.

(h) Vide orders dated 08.09.2010 and 15.12.2010, the PIRA allowed the petitions filed by the appellant-Company. Being aggrieved by the above orders, the State Transport Authorities preferred F.A.O.

Nos. 3372 and 3488 of201 l before the High Com1.

(i) Learned single Judge of the High Court, vide common judgment and order dated 14.11.2011, allowed the appeals tiled by the respondents herein.

O)Aggrieved by the order dated 14.11.2011, the appellant-Company

has preferred these petitions before this Court by way of special leave. a

3. We have heard learned counsel for the parties and perused the records.

4. Concession Agreement was entered into between the Government of Punjab through the Director Transport, Punjab and Mis

MSK Projects Ltd., to design, finance, construct, operate and maintain the Bus Terminal Projects at Jalandhar and Ludhiana on B.O.T. basis and to determine, levy, demand, collect and retain the fees. Lease deeds were also executed between the parties. Municipal Corporation is alleged to have issued notices for recovery of House Tax which led to the issue in question. The appellant-Company filed Petition No. I and Petition No. 2 before the PIRA which was allowed vide orders dated 08.09.20 I 0 and 15.12.2010. Being aggrieved by the above said orders, the State Transport Authorities filed FA 0 Nos. 33 72 and 3488 of 2011 before the High Court. Learned single Judge of the High Court allowed the same vi de common order dated I 4. I 1.20 I I.

5. Learned senior counsel for the appellant-Company contended that fastening the liability on the appellant- Company is manifestly erroneous and is based on without complete and comprehensive appreciation of relevant aspects of the case in proper manner and is liable to be set aside. There is overwhelming material and also the case in De/Iii Golf Club Ltd. am/Anotlter vs. N.D.M.C., (200 I) 2 SCC 633 is squarely applicable to the facts of the present case and, therefore, the impugned order of the High Court is liable to be set aside. Per contra learned Additional Advocate General forthe respondent-State strenuously argued that in view of the various clauses in the Concession Agreement as well as the provisions of the Act, the High Court was justified in fastening liability upon the appellant-Company for payment of the house tax for the period under consideration.

6. Learned senior counsel for the appellant-Company strenuously contended that it does not fall in the category of the "owner" as defined under Section 2(35) of the Act and is neither an owner nor a tenant nor is entitled to receive rent etc. In a special arrangement determined by the Concession Agreements and the Lease Deeds, the appellant-Company is required to pay only Re. 1/- as annual rent to the Director State Transprn1, Punjab and is entitled to collect all the incomes from the Project for a short and limited period so as to enable the appellant-Company to recover the investments made in the Projects. Though the buildings on the Project sites have been raised by the appellant-Company, it has been done for the respondent-State who owns the land as well as the building.

Therefore, under section 97 of the Act, no house tax could be levied on it. On the other hand, such a tax is entirely the liability of the Director, State Transport, Punjab. The appellant-Company further referred to

Clause 13( e) of the Lease Deed which stipulates, "that except the lease rental specified in Clause 6 of the Lease Deed, it (Lessor) shall not levy any fee, rental, tax or any other charge on the lessee for the demised premises". It further stipulates that the appellant-Company will only pay Re. I/- as annual lease rental.

7. Undoubtedly, the inter-se relationship between the pa11ies and all the relative rights and obligations are entirely governed by the Concession Agreements and the Lease Deeds. It is thus to be seen first of all that if these Agreements can provide any conclusive direction to settle the matter in hand.

8. For appreciating the relevant provisions of the Lease Deeds and Concession Agreements referred to above, it is to be mentioned here that house tax is always assessed and paid in accordance with the provisions of the Act. The definition of owner has been described in sub-Section 35 of Section 2 which reads as under:

"2(35) "Owner" includes a person who for the time being is receiving or is entitled to receive, the rent of any land or building whether on his own account or on account ofhimself and others or as an agent, trustee, guardian or receiver for any other person who should so receive the rent or be entitled to receive it ifthe land or building or part thereof were let to a tenant;"

9. Section 97(2) of the Act (as it stood atthe relevant time) provides with the incidence of tax on lands and buildings. It reads as under:-

"97(2) - Incidence of taxes on lands and buildings:-

Jf any land has been let for a term exceeding one year to a tenant and such tenant has built upon the land, the taxes on land and buildings assessed in respect of that land and the building erected thereon shall be primarily leviable upon the said tenant, whether the land and building are in the occupation of such tenant or sub-tenant of such tenant."

10. Clause 6 and Clause 13( e) of the first lease deed dated 16.08.2005 are reproduced below:-

"6. The Lessee shall pay unto the Lessor an annual rent of Re 1/- as lease rental, which shall be paid as an advance lease rental in single lump sum payment of Rs. 15/- (in

A consideration of a possible extension of the Concession

Period) on or prior to the date upon which this deed is executed.

I 3(e). That except the lease rental specified in Section 6 hereof, it shall not levy any fee, rental, tax or any other B charge on the Lessee for the lease of the Demised

Premises."

11. Another lease deed was executed on 25.10.2005. Clause 6 and Clause 13(e) of the said lease deed are reproduced below:-

''6. The Lessee shal I pay unto the Lessor an annual rent of Re 1/- as lease rental, which shall be paid as an advance lease rental in single lump sum payment of Rs. 15/- (in consideration of a possible extension of the Concession Period) on or prior to the date upon which this deed is executed.

13( I)( e ). That except the lease rental specified in Section 3 hereof, it shall not levy any fee, rental, tax or any other charge on the Lessee for the lease of the Demised

Premises."

12. From a perusal of the aforesaid clauses, it is clear that they are identical and no change has been made. The Concession Agreement was executed on 22.06.2005. Clause 24.1 (a) of the Agreement, which is relevant and heavily relied upon by the respondents, is reproduced below:-

"24.1 Local Taxntiou:-

n. The concession period shall include all charges towards impo1t license, toll, customs, duties, import duties, business taxes etc. that may be levied in accordance with the applicable laws as on the proposal acceptance date in India on the concessionaire's equipment, plant and Machinery and Materials (whether pennanent, temporary or consumable) acquired for the purpose of this concession agreement and on the services to be performed under this concession agreement. Nothing in this concession agreement shall relieve the concessionaire from its responsibility to pay any tax that

may be levied in India on profits made by it in respect of A this concession agreement.

13. It may be mentioned here that both the lease deeds were executed by the Director, State Transport, Punjab for and on behalf of the Governor of the State of Punjab. From a perusal of Clauses 6 and 13(e) of the lease deeds reproduced above, we are of the opinion that B the appellant-Company was required to pay rent of Re. I only as lease rental and further the Government has specifically mentioned that except the lease rental, it shall not levy any fees, rent, tax or any other charge on the lessee for the lease of the demised premises. We find that even though under the provisions of Section 2(35) read with 97(2) of the Act, C normally the tenant who has been given land on lease for a term exceeding 1 (one) year is primarily liable to pay taxes on lands and buildings yet in view of the provisions of Section 157(1) of the Act, the Government is empowered to exempt in whole or in part from the payment of any such tax any person or class of persons or any property or description of property which in the present case has been done on behalf of the D government when the lease deeds were executed. For ready reference, Section 157(1) of the Act is reproduced below:-

"157. Powers of Government in regard to taxes-( 1) The Government may by order exempt in whole or in part from the payment of any such tax any person or class of E persons or any property or description of property."

14. A reading of Concession Agreement dated 22.06.2005, more so, Clause 24.1 (a) which deals with the local taxation states that the concession period shall include all charges towards import license, toll, customs, duties, import duties etc. which is to be payable by the appellant- F Company. In view of the specific exemption given under the lease deed regarding payment of any taxes on the demised premises, in our considered opinion, the appellant-Company is not at all required to pay any municipal taxes on the demised premises. We may also mention here that the house tax was being paid by the transport department prior to the signing of the Concession Agreement and if it was intended that G this burden should be passed on to the appellant-Company, a clear clause interpreting this point would have certainly been inserted in the Agreement itself. Not only this, the Department continued to pay the house tax for 3 to 4 years even after the date of the signing of the agreement.

15. In view of the forgoing discussion, we are of the considered opinion that the appellant-Company is not liable to pay any house tax under the Act and the demand and payment of house tax from the appellant-Company was without the authority of law and the appellant- Company is entitled to the refund of the amount of house tax paid by it alongwith rate of interest at the rate of I 0% p.a. from the date of deposit.

16. In view of the above, the impugned judgment and order of the High Court dated 14.11.2011 is set aside and, consequently, the appeals are allowed.

C Kalpana K. Tripathy Appeals allowed.