Statutory vesting in airport authority divests Union ownership, permitting municipal property tax under Article 285.

Properties vested in the International Airports Authority of India under the 1971 Act were held to belong to the Authority as a distinct statutory corporation, not to the Union of India. The Act created a separate legal entity with powers to acquire, hold and dispose of property, contract, maintain its own fund and bear tax liability on its income. Section 12 transferred airport properties to the Authority without limitation, and the scheme of the Act showed a divestment of Union ownership rather than a mere agency arrangement. As a result, the properties did not enjoy immunity under Article 285, and municipal property tax could validly be imposed.

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Issues: Whether the properties transferred to and vested in the International Airports Authority of India under the International Airports Authority of India Act, 1971 continued to be properties of the Union of India and therefore enjoyed immunity from State or municipal taxation under Article 285 of the Constitution of India.

Analysis: The Authority was created as a separate statutory corporation with perpetual succession, power to acquire, hold and dispose of property, power to contract, its own fund, borrowing powers, accounts, employees and tax liability on its income. Section 12 transferred to it all properties and other assets vested in the Central Government for airport purposes without any words of limitation, and the surrounding scheme of the Act showed that the vesting was intended to create a distinct legal entity to manage airports efficiently, not a mere agency holding the Union's property on behalf of the Union. The regulatory powers in Sections 33 and 34 did not alter that character, and Section 31, which made the Authority liable to income-tax, reinforced that the properties and the income arising from them were treated as belonging to the Authority. The Court also treated the post-1994 legislative scheme and the reasoning in analogous corporation cases as confirming that such vesting divested the Union of ownership for the purpose of Article 285.

Conclusion: The properties vested in the Authority under Section 12 were not the properties of the Union of India for the purpose of Article 285, and municipal property tax could validly be levied on them.

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