Summary
Vesting enemy property in the Custodian under the Enemy Property Act gives the Custodian temporary possession and management as trustee; it does not transfer ownership to the Custodian or Union of India. Because the property is not Union property, Article 285 does not exempt it from local taxes. The occupier remained liable under municipal law, subject to the Court’s limits on past and future demands.
Issues
- Whether vesting enemy property in the Custodian transfers ownership to the Custodian or Union of India so that the property becomes exempt from local taxation under Article 285.
- Whether the occupier of the subject property was liable for municipal property, water and other local taxes, and what temporal limits should govern recovery.
Provisions considered
- Sections 2(c), 5, 7 and 8; Rule 15 of the Enemy Property Rules, 2015, Enemy Property Act, 1968The Act’s vesting provisions place enemy property and associated management powers with the Custodian, who holds and administers it for the owner as trustee. They do not transfer ownership to the Custodian or Union. Rule 15 provides for possible divestment by the Central Government. (¶¶ 15, 15.1, 15.2, 15.6, 15.7, 15.8, 16, 22)
- Articles 285 and 300-A, Constitution of IndiaArticle 285’s Union-property tax immunity does not apply because statutory vesting does not make enemy property Union property. Article 300-A informed the Court’s refusal to construe administrative possession and management as a transfer or deprivation of the owner’s title without express authority of law and compensation. (¶¶ 18, 18.1, 18.2, 19, 20, 22)
- Sections 173, 175, 177, 179 and 180, Uttar Pradesh Municipal Corporations Act, 1959Section 177 exempts Union-vested buildings and land subject to Article 285(2); Sections 179 and 180 govern primary liability for property and other local taxes. Since the subject enemy property was not Union property, the High Court erred in holding its occupier exempt from local taxation. (¶¶ 13, 20, 22)
Held
- The meaning of statutory ‘vesting’ depends on the governing Act and context; it does not invariably transfer ownership. Under the Enemy Property Act, the Custodian holds and manages enemy property as trustee for the owner. The property does not become Union property, and the Custodian’s administrative powers do not confer ownership on the Central Government. (¶¶ 14, 15.1, 15.2, 15.7, 15.8, 16, 18.2, 22)
- Because enemy property vested in the Custodian is not Union property, the exemption in Article 285(1) does not apply; clause (2) is an exception to clause (1) and does not independently exempt the property. The occupier of the subject property was therefore not exempt from property and other local taxes under the municipal law. (¶¶ 19, 20, 22)
- Previously deposited taxes were not refundable. If no demand notice had been issued by the date of judgment, no such past demand could be issued. The Municipal Corporation could levy and collect property tax, water tax, sewerage charges and other local taxes from fiscal year 2024–25 onward, in accordance with law. (¶ 22)
Result
Appeal allowed; the High Court’s order was set aside. Amounts already deposited were not refundable, no new demand could be made for periods for which no notice had been issued, and lawful local taxation could resume from fiscal year 2024–25. Parties were to bear their own costs.