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of <h1>Enemy properties under Enemy Property Act 1968 vest in Custodian as trustee not Union ownership, municipal taxes applicable</h1> <h3>LUCKNOW NAGAR NIGAM & OTHERS Versus KOHLI BROTHERS COLOUR LAB. PVT. LTD. & OTHERS</h3> LUCKNOW NAGAR NIGAM & OTHERS Versus KOHLI BROTHERS COLOUR LAB. PVT. LTD. & OTHERS - TMI Issues Involved:1. Whether statutory vesting of enemy property in the Custodian amounts to expropriation and transfer of ownership to the Custodian.2. Whether such property becomes Union property within the meaning of Article 285 of the Constitution and thus exempt from local taxes.3. Whether clause (2) of Article 285 enables the Municipal Corporation to impose property or local taxes on the lessee of the enemy property.4. Whether the High Court was right in holding in favor of the respondent.Summary:1. Statutory Vesting and Ownership Transfer:The Supreme Court examined whether the statutory vesting of enemy property in the Custodian under the Enemy Property Act, 1968, amounts to expropriation and transfer of ownership to the Custodian. The Court concluded that the Custodian acts as a trustee and not as the owner of the enemy property. The ownership remains with the enemy, and the Custodian only manages and protects the property. The vesting is for temporary management and does not transfer ownership to the Custodian or the Union.2. Enemy Property as Union Property:The Court analyzed whether enemy property vested in the Custodian becomes Union property under Article 285 of the Constitution, which exempts Union property from State taxation. It held that enemy property does not become Union property merely by vesting in the Custodian. The Custodian, appointed by the Central Government, manages the property but does not own it. Therefore, enemy property is not exempt from State taxation under Article 285.3. Imposition of Local Taxes on Lessee:The Court considered whether clause (2) of Article 285 allows the Municipal Corporation to impose property or local taxes on the lessee of the enemy property. It concluded that since enemy property is not Union property, Article 285 does not apply. The Custodian, acting as a trustee, is authorized to pay local taxes, including property tax, water tax, and sewerage charges, as per Section 8(2)(vi) of the Enemy Property Act.4. High Court's Judgment:The High Court had quashed the recovery notice for house tax and water tax, holding that the property in question is enemy property and thus exempt from local taxes. The Supreme Court set aside the High Court's judgment, stating that the enemy property is liable to local taxes. The Court directed that any taxes already paid by the respondent shall not be refunded, and from the fiscal year 2024-2025 onwards, the Municipal Corporation is entitled to levy and collect property tax and other local taxes on the enemy property.Conclusion:The Supreme Court held that the Custodian of Enemy Property does not acquire ownership of the enemy property, and such property does not become Union property. Therefore, enemy property is subject to local taxes, and the High Court's judgment exempting the property from such taxes was set aside. The Municipal Corporation can levy and collect local taxes from the fiscal year 2024-2025 onwards.
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