Delhi Transco Limited And Anr. vs M.C.D. And Ors.
2006 Latest Caselaw 526 Del

JUDGMENT

Pradeep Nandrajog, J.

Page 1576

1. On 20.03.2006, it was indicated to the parties that if possible, writ petition itself would be taken up for disposal.

2. Since there was adequate time available today, matter was finally heard. It is accordingly held that all interim applications have become infructuous and stand disposed of.

3. According to the petitioners, first petitioner Delhi Transco Ltd. is a distribution company. Petitioner No.2 Delhi Power Co.Ltd. is the holding company. According to the petitioners, under Delhi Electricity Reforms Act,2000, Delhi Vidyut Board was unbundled into successors companies. A transfer scheme was framed and notified under the Delhi Electricity Reform (Transfer Scheme) Rule, 2001. As per Rule 3, all assets and liabilities of DVB were vested in the Government. Such properties which have come to the petitioners are on land owned by the Government of NCT of Delhi. Petitioners are licensees of the land and, therefore, cannot be burdened with liability to pay the property tax qua the lands and buildings which are possessed by the petitioners.

4. Petitioners impugn the warrants of distress dated 1.02.2006 issued to the petitioners demanding arrears of property tax in the sum of Rs.21,98,60,996/-.

5. Issue as otherwise raised by the petitioners was a subject matter of WP(C) 3913/2004, MCD v. NDPL. A learned Single Judge of this Court, after analysing the provisions of Delhi Municipal Corporation Act, 1957 Page 1577 and the provisions of Transfer Scheme concluded that the lands being licensed to NDPL was a misnomer. Nature of interest created in favor of NDPL was that of a tenant. Analysing various decisions and Section 120 of DMC Act,1957, which deals with the person primarily liable to pay property tax in respect of a property, it was held that NDPL was liable to pay property tax for the properties which were possessed of by NDPL.

6. Said decision of the learned Single Judge is a subject matter of an appeal. Operation of the decision of the learned Single Judge has been granted by the Division Bench.

7. I would, therefore, not deal with the issues which have been decided by the learned Single Judge, brother S.R.Bhatt, J, but would be dealing with an altogether different issue for the issue this was not projected before S.R.Bhatt, J. The said issue is relavant and material. It would conclude the liability of petitioner No.2.

8. The unbundling of DVB conceived of by the Delhi Electricity Reforms Act,2000 was as per the Transfer Scheme. This transfer scheme was notified under the Delhi Electricity Reforms (Transfer Scheme) Rules,2001.

9. Rule 3 of the Rules stipulate as under :

3. Transfer of assets etc. of the Board to the Government.- (1) On and from the date of transfer to be notified for the purpose, all the assets, liabilities and proceedings of the Board shall stand transferred to and vest in the Government absolutely and consideration thereof the loans, subventions and obligations of the Board to the Government shall stand extinguished and cancelled, which shall be in full and final settlement of all claims whatsoever of the Board.

(2) Nothing in sub-rule (1) shall apply to rights, responsibilities and obligations in respect of the personnel and personnel related matters, which have been dealt in the manner provided under Rule 6.

10. Apparent from a bare perusal of Rule 3 is the position that on and from the date of transfer to be notified, all assets of DVB vested in the Government.

11. However, this vesting was for a fleeting moment inasmuch as under Rule 4, following was stipulated :

4. Classification of undertakings.-

(1) The assets, liabilities and proceedings transferred to the Government under sub-rule (1) of Rule 3 shall stand classified as under :

(a) Rights and interests in Pragati Power Project as set out in Schedule 'A'.

(b) Generation Undertaking as set out in Schedule 'B'.

(c) Transmission Undertaking as set out in Schedule 'C'

(d) Distribution Undertaking as set out in Schedule 'D'.

(e) Distribution Undertaking as set out in Schedule 'E'.

(f) Distribution Undertaking as set out in Schedule 'F'.

(g) Holding Company with assets and liabilities as set out in Schedule 'G'.

Page 1578

(2) If the assets classified are subject to security documents or arrangements in favor of third parties for any financial assistance or obligation taken by the Board and the liabilities in respect thereof b are to be classified in different transferees, the Government may, by order to be issued for the purpose, provide for the apportionment of the liabilities secured by such assets between the different transferees and upon such apportionment, the security shall be applicable to the apportioned liability only.?

12. A perusal of Rule 4 shows that all assets and liabilities transferred to the Government under Rule 3 stood classified as per Schedule 'A' to Schedule 'G' to the Rules.

13. Assets and liabilities under Schedule 'A' vested in Pragati Power Project. Assets and liabilities in Schedule 'B' vested in GENCO (Indraprastha Power Generation) Ltd. Assets and liabilities in Schedule 'C' vested in TRANSCO i.e. Petitioner No.1. Assets in Schedule 'D', 'E' and 'F' vested in the 3 distribution companies being DISCOM 1, 2 and 3. Assets in Schedule 'G' vested in the holding company, petitioner No.2, Delhi Power Company Ltd.

14. Schedule 'G' reads as under :-

SCHEDULE 'G' ASSETS AND LIABILITIES TRANSFERRED TO THE HOLDING CO. PART-I

1. Assets :

Value of shares held in DISCOM 1         -      Rs. 116 Crores
Value of shares held in DISCOM 2         -      Rs. 460 Crores
Value of shares held in DISCOM 3         -      Rs. 368 Crores
Value of shares held in TRANSCO          -      Rs. 180 Crores
Value of shares held in GENCO            -      Rs. 140 Crores
Secured Loan payable by DISCOM 1         -      Rs. 174 crores
Current Receivables from DISCOM 1        -      Rs.  15 crores
Secured Loan payable by DISCOM 2         -      Rs. 690 crores
Current Receivables from DISCOM 2        -      Rs.  15 crores

Secured Loan payable by DISCOM 3         -      Rs. 552 crores
Current Receivables from DISCOM 3        -      Rs.  12 crores
Secured Loan payable by TRANSCO          -      Rs. 270 crores
Current Receivables from TRANSCO         -      Rs.  42 crores
Secured Loan payable by GENCO            -      Rs. 210 crores
Current Receivables from GENCO           -      Rs.  49 crores

 

Land and Land Rights :
 

Receivables from sale of power to consumers of the erstwhile Board other than to the extent specifically included in Schedule D, E and F.

Any other miscellaneous assets of the Board.

2. LIABILITIES :

All liabilities of the erstwhile Board including all contingent liabilities other than those specifically included in Schedule B, C, D, E and F.

Page 1579

Notes to Accounts :

All the receivables from sale of power to consumers of the erstwhile Board other than to the extent specifically in Schedule D, E and F shall be to the account of Holding Company. The DISCOMS will be authorised to realise the receivables of the Holding Company in their respective area of supply. Upon realisation of such receivables of the Holding Company the same shall be shared between the Holding Company and the DISCOMS in the ratio of 80:20.

PART-II

1. In lieu of the transfer of undertaking as provided in Part 1 of this schedule, the entire share capital of Holding Company as on the date of transfer shall stand allocated to Government.?

15. Description of Schedule G is very unhappily worded. This has been conceded by learned counsel for the petitioners. Under the caption Land and Land Rights, any other misc. assets of the board have been listed. However, learned counsel for the petitioners urges that the admitted position is that the land has been licensed to the three DISCOMS and TRANSCO i.e. Petitioner No.1 and the license is by the Government of NCT of Delhi. Counsel states that notwithstanding Schedule 'G' which records that all miscellaneous assets of the Board stand transferred to the holding company i.e. Petitioner No.2, evidenced by the fact that DISCOMS 1, 2 and 3 and TRANSCO are licensees of the land, inevitable conclusion is that the Government of NCT of Delhi owes the land.

16. To a pointed question as to whether the balance sheet of petitioner No.2 i.e. Delhi Power Company Ltd. lists the land as an asset taken over from DVB, learned counsel for the petitioners replies in the affirmative. However, counsel states that statutory auditors have objected to the same.

17. A perusal of Rule 3 and 4 would reveal that on and from the date of transfer to be notified, all assets and liabilities of DVB vested in the Government of NCT of Delhi as per Rule 3 and immediately thereafter, as per Rule 4; stood transferred to the seven companies referred to in Rule 4, asset distribution being as per Schedule 'A' to 'G'.

18. Residual clause under the caption Land and Land Rights in Schedule 'G', vests all miscellaneous assets of the Board in petitioner No.2.

19. The transfer scheme leaves nothing in the hands of the Government of NCT of Delhi. Obviously, for this reason, in the Balance Sheet of petitioner No.2 all lands belonging to DVB are shown as its asset. If this be the position, license by the Government of NCT of Delhi is a mere myth. Since the Government of NCT of Delhi does not own the land, it cannot be the licensor. Reference in the transfer scheme that the DISCOMS, GENCO and TRANSCO shall be licensees of the land under the Government is therefore an incorrect statement of law and facts.

20. Aforesaid legal position was not projected when writ petition filed by NDPL was urged.

21. I accordingly hold that if not recoverable from petitioner no.1, the impugned demand is recoverable from petitioner No.2. Needless to state, petitioner No.2 is a company registered under the Companies Act and is an Page 1580 entity distinct from the Government. Properties owned by petitioner No.2 cannot be equated as Government properties.

22. However, I cannot but close my eyes to one fact.

23. Transfer Scheme stipulates that dues recoverable till 31.3.2002 from MCD and other departments controlled by the Government of NCT of Delhi would be eligible to be waived by petitioner No.2. Meaning thereby that electricity dues of MCD can be set of. Following is stipulated. ?Provided however in respect of receivable due for the period till 31st March, 2002 from Municipal Corporation of Delhi and the Departments, Body Corporates and Institutions owned and/or controlled by the Government of National Capital Territory of Delhi the Holding Company shall be entitled to waive or notify that it will enter into any other arrangement for recovery of dues, instead of the arrangement of recovery through DISCOM 2.?

24. Learned counsel for the petitioners states that at least over Rs.100 crores are due from MCD towards electricity consumed by various offices of MCD. They have not been waived by petitioner No.2. Counsel states that in that view of the matter, MCD cannot recover any property tax from petitioner No.2 or for that matter from any of the seven companies constituted under the Transfer Scheme.

25. There is merit in the submission made by counsel for the petitioners. It is a sad reflection of Government working that a simple issue of debit and credit entries being adjusted in the books of accounts is not being ensured by the Government.

26. The three DISCOMS have a major share holding of the Government. I am informed that the share holding is 49%. Shares of the holding company i.e. Petitioner No.2 are entirely held by the government. MCD receives budgetary as well as non-budgetary grant from the Delhi Government. The source of the resources and finance is virtually the same.

27. Government of NCT of Delhi would be better advised to sort out the inter-se liabilities. I cannot permit MCD to recover the property tax dues which legally are recoverable, till MCD does not clear the electricity dues or till the Government sort out the issue of waiver.

28. It is settled law that where a person owes money to another person and in turn for another transaction has to recover money from the said person, adjustment can be effected.

29. Declaring the law as afore-noted and holding that MCD is entitled to levy and recover property tax from, if not petitioner No.1, then in any case from petitioner No.2, I do not permit MCD to recover any property tax till the issue of electricity dues payable by MCD to various electricity supply companies is resolved.

30. Needless to state, property tax dues in favor of the Corporation are much less than the electricity dues payable by MCD.

31. I hope and expect that Chief Secretary of Government of NCT of Delhi sorts out the issue so that unnecessary litigation in Courts is avoided.

32. Copy of this order be transmitted by the Registry to the Chief Secretary, Government of NCT of Delhi.

33. No costs.