Bharat Sanchar Nigam Limited v. State of Kerala and Thrissur Corporation

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **FRIDAY, THE 13TH DAY OF APRIL 2018 / 23RD CHAITHRA, 1940** **WA.No. 2620 of 2017 IN WPC. 10972/2007** **--------------------------------------** **AGAINST THE ORDER/JUDGMENT IN WP(C) 10972/2007 of HIGH COURT OF KERALA DATED 01-06-2007** **APPELLANT(S)/PETITIONER:** **-----------------------** **BHARATH SANCHAR NIGAM LIMITED REPRESENTED BY ITS ASST.GENERAL MANAGER PLANNING, THRISSUR.** **BY ADV.SMT.S.K.DEVI,SC, BSNL** ## **RESPONDENT(S)/RESPONDENTS:** **-------------------------** ## **1. STATE OF KERALA** **REPRESENTED BY THE SECRETARY TO GOVERNMENT, LOCAL SELF GOVERNMENT, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM-695001.** ## **2. THE SECRETARY** **THRISSUR CORPORATION, THRISSUR-680001.** **R1 BY SR.GOVERNMENT PLEADER MOHAMMED RAFIQ.** **R2 BY ADV. SRI. SANTHOSH P.PODUVAL, SC, THRISSUR CORPORATION** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 14-03-2018, THE COURT ON 13-04-2018 DELIVERED THE FOLLOWING:** ## K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- W.A.No. 2620 of 2017 ------------------------------------------Dated this the 13[th] day of April, 2018 ## J U D G M E N T ## Ashok Menon, J. M/s.Bharat Sanchar Nigam Limited ('BSNL' for short) is the appellant before us, aggrieved with the dismissal of WP(C) No.10972/2007 by the learned Single Judge. 2. The appellant is a Company incorporated under the Companies Act, 1956 on 15.9.2000. Prior to its incorporation as a Company, the telecommunication services were being provided by Government of India, Ministry of Telecommunication through its Departments namely, Department of Telecommunication Services and the Department of Telecommunication Operations. Pursuant to the Government of India Policy for providing telecom services, the Company was constituted as a fully owned Government of India Enterprises by taking over the businesses provided by the above mentioned two Departments. The Company started functioning with effect from 1.10.2000. BSNL has a Telephone Exchange situated and also staff quarters at Poothole, Thrissur. _WA 2620/17_ 2 3. The Local Self Government Department of Government of Kerala issued circular No.43657/D4/204 dated 9.12.2004 by which all Self Government Institutions were directed to levy property tax in respect of all buildings/properties belonging to the erstwhile Telecom Department, Government of India, with effect from the date of incorporation of the appellant Company. 4. Pursuant to this circular, the Secretary of Thrissur Corporation, the 2[nd] respondent herein, issued Ext.P1 notice on 9.9.2006 demanding a sum of Rs.3,86,268/- and another notice as Ext.P2 dated 22.9.2006 demanding a sum of Rs.9,03,174/- towards property tax due from the appellant Company for the Telephone Exchange and the staff quarters, respectively, for the period from 2000-01 to 2006-07. On receipt of the said demand notices, the appellant Company issued a letter as Ext.P3 dated 14.10.2006 contending that the ownership and title of the said buildings continue with the Department of Telecommunication, Government of India and as such, those buildings are exempted from taxation under Article 285 of the Constitution of India. Apprehending that the Corporation would proceed against them, the Company _WA 2620/17_ 3 approached this Court with the Writ Petition seeking a writ of certiorari to quash Exts.P1 and P2 demand notices as well as a writ of mandamus forbearing the 2[nd] respondent for enforcing payment of the amount demanded as per Exts.P1 and P2 as those buildings belong to Government of India and are exempted from payment of tax. 5. The learned Single Judge relied on the decisions in Western Coalfields Ltd. v. Special Area Development Authority (1982 (1) SCC 125), Electronics Corporation of India Ltd. v. Secretary, Revenue Department, Govt. of A.P. (1999 (4) SCC 458) and Food Corporation of India v. Municipal Committee, Jalalabad (1999 (6) SCC 74) to come to the conclusion that the appellant Company consequent to its incorporation under the Companies Act has a legal entity distinct and separate from the Central Government. It has a corporate personality of its own and in that context, the properties/buildings in respect of which property tax has been levied by the 2[nd] respondent under the Kerala Municipalities Act, 1994 are owned by the said Company and not by Government of India. Hence, the appellant cannot claim exemption from tax under Article 285 of the Constitution of India in respect of _WA 2620/17_ 4 its properties. The demand made as per Exts.P1 and P2 is found perfectly legal, warranting no interference and the Writ Petition was therefore dismissed. As to the term BSNL, being a distinct entity as distinguished from as distinguished from Union of India, and the inapplicability of Article 285 needs no reiteration and we need just refer to Municipal Commissioner of Dum Dum Municipality v. Indian Tourism Development Corporation, (1995) 5 SCC 251 . 6. The appellant is aggrieved by the aforesaid judgment of the learned Single Judge and questions its validity. The only ground under which the impugned judgment stands challenged is that the learned Single Judge ought to have found that though the appellant is a company incorporated under the Companies Act and is a legal entity distinct from the Central Government, the ownership of the property on which the demands were raised under Exts.P1 and P2 continues to remain with the Government of India and are therefore exempted from levy of tax under Article 285 of the Constitution of India. 7. During the course of argument, the learned Senior Govt. Pleader produced the annual report for the year 2015-2016 _WA 2620/17_ 5 and the same was marked as Ext.C1. Annexure I(i)(c) of Ext.C1 provides as follows:- “(c) 1 circle does not hold any immovable property (in the nature of 'fixed assets') and accordingly, the provisions of clause 3(i)(c) of the Order are not applicable in respect of this circle. In case of 8 circles, the title deeds of all the immovable properties (which are included under the head 'fixed assets') are held in the name of the Company. In case of 15 circles, the title deeds of all the immovable properties (which are included under the head 'fixed assets') are held in the name of the Company except for certain properties, which were acquired or taken over from the Department of Telecommunication (DoT), Government of India, in which case the transfer of title deeds in the name of the Company are still pending. Out of which, 6 circles have provided details of the immovable properties which are not held in the name of the Company as detailed in Appendix I. Further, in case of 10 circles, the title deeds of all the immovable properties (which are included under the head 'fixed assets') are held in the name of the Company except in case of certain properties. In case of 3 circles, the title deeds of all the immovable properties (which are included under the head 'fixed assets') are not held in the name of the Company. Further, in case of 10 circles, in the absence of availability of proper details and title deeds, the auditors are unable to comment upon this clause of the Order.” This would only indicate that transfer of title deeds of certain properties, which are previously held in the name of Department of Telecommunications, in the name of the Company is still pending. _WA 2620/17_ 6 In the Official Memorandum of the Government of India, Ministry of Communications, Department of Telecommunication Services dated 30.9.2000 produced as Annexure III also states that the Government of India has decided to approve the business of providing communications and also states that the assets and liabilities of the Department of Telecommunications and the Department of Telecom Operations will stand transferred to the Government with effect from 01.10.2000. In the letter addressed from the Ministry of Communications & IT Department of Telecommunications dated 29.10.2012 addressed to the CMD, BSNL it is stated that with regard to transfer of land from DoT to BSNL in the Kerala circle, DoT has initiated the process for formal transfer (mutation of title) of land/building to BSNL in respect of circles where digitization has been completed as per the report given by the joint committee of DoT/BNSL officers. 8. The learned Counsel for the appellant has also produced the annual report for the year 2006-07, in which it is stated thus:- ## “NOTES TO ACCOUNTS ## (Schedule-U) 1. In pursuance of Telecom Policy 1999, the Government of India formed a Company name “Bharat _WA 2620/17_ 7 Sanchar Nigam limited” (BSNL) on 15[th] September 2000. BSNL took over the ongoing business of Department of Telecom Services (“DTS”) and Department of Telecom Operations (“DTO”) on 01[st] October 2000. ## 2. Assets and Liabilities taken over from DoT 2.1 In pursuance of the Memorandum of Understanding dated 30[th] September 2000 executed between the Government of India and BSNL, all assets and liabilities in respect of business carried on by DTS and DTO were transferred to the Company with effect from 01[st] October 2000 at a provisional value of Rs.6,300,000 lakh and up to previous financial year BSNL has identified net assets of Rs.6,377,480 lakh against it.” 9. There is nothing on record to indicate which properties were transferred to the Company by the Department of Telecommunications. But as on 30.9.2000 in the Memorandum of Understanding executed between the Government of India and BSNL, all assets and liabilities in respect of the business carried on by the Department of Telecom Services and Department of Telecom Operations were transferred to the Company with effect from 1.10.2000 and the value of all those assets were also fixed. The mere fact that formal conveyance was yet to be effected, will not absolve the BSNL from the liability to pay tax to the local authorities, taking refuge under Article 285 of the Constitution of India. The BSNL for all intents and purposes is the owner of the buildings and _WA 2620/17_ 8 the Union of India or the Department of Telecommunications cannot lay any claim on it. 10. What remains to be done is only that the details of the assets will have to be worked out with records available. Just because the Company has not worked out the details, they cannot be absolved. The petitioner also has a contention that in the staff quarters, there are still employees of the Department of Telecommunications residing. If the petitioner has extended such facility that alone cannot detract from the fact that the ownership is absolutely vested with the BSNL and the tax liability is a natural, consequential incidence. Hence, we are of the considered opinion that no interference especially is required to upset the finding of the learned Single Judge in the impugned order. The appeal would therefore stand dismissed. No costs. Sd/K.VINOD CHANDRAN JUDGE Sd/ASHOK MENON JUDGE dkr