1975 (0) GLHEL 201885

GUJARAT HIGH COURT

Hon'ble Judges:S.H.Sheth, J.

Board Of Trustees, Kandla Port Trust Versus State Of Gujarat

SPECIAL CIVIL APPLICATION No. 748 of 1974 ; *J.Date :-

AUGUST 5, 1975

• MAJOR PORT TRUSTS ACT, 1963 Section - 29(1) • CONSTITUTION OF INDIA Article - 285

Major Port Trusts Act, 1963 - S. 29(1) - Constitution of India - Art. 285 - petitioner challenged levy of non-agricultural assessment on lands belonging to them - petitioner is Board of Trustees which was constituted for port of Kandla - purpose of vesting of property in trustees - consideration as to ownership of Central Government over land in question - entitlement to exemption from State taxation with respect to lands in question - held, lands in question were vested in petitioner in Board of Trustees only for purpose of administration - lands in question continue to be property of Union of India and are exempt from State taxation - petition allowed.

Cases Referred to :

1. The Fruit & Vegetable Merchants Union V. The Delhi Improvement Trust, AIR 1957 SC 344

2. Village Panchayat Jaspur V. State Of Gujarat And Others, 11 GLR 695 : 1969 GLHEL 213742

Equivalent Citation(s):

1976 GLR 812 : 1975 GLHEL 201885

JUDGEMENT :- S.H.SHETH, J.

1 The Board of Trustees for the Port of Kandla have filed this petition in which they challenge the levy of non-agricultural assessment on the lands belonging to them.

2 The facts of the case briefly stated are as under: In 1931 A. D. Kandla port was constructed by the then princely State of Kutch. On 15th August 1947 when Indian Independence Act, 1947 came into force Kutch became a sovereign State. On 1st August

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1948 the Ruler of Kutch executed an instrument of accession ceding his State to the Dominion of India. On 26th January 1950 when the Constitution came into force Kutch became a Part-C State On 1st April 1950 the Indian Ports Act, 1908 was applied to Kandla port by a notification which was issued on 31st January 1950 that notification also laid down the limits of Kandla port. On 27th February 1952 the Central Government granted a perpetual lease in respect of some lands to the Sindhu Resettlement Corporation Limited for developing a township outside the limits of Kandla port. On 9th February 1953 Union of India instructed the Chief Commissioner of Kutch to hand over 346. 5 square miles of land to the port authorities. In 1955 the Sindhu Resettlement Corporation surrendered the lease for land to the Union of India and the Union of India granted a fresh lease to the Sindhu Resettlement Corporation for a period of 99 years. On 29th March 1955 the Central Government declared Kandla port as a major port with effect from 8th April 1955 On 1st November 1956 Kutch which was a part C State merged with the then State of Bombay in the wake of States Reorganisation Act, 1956 With effect from 1st May 1960 it became a part of the State of Gujarat. On 29th February 1964 the Major Port Trusts Act, 1963 came into force and in pursuance thereof the Central Government constituted a Board of Trustees for administering Kandla port. On 24th December 1970 the Mamlatdar of Anjar demanded of the port trust authorities a sum of Rs. 56,06,400.00 account of non-agricultural assessment of the lands under its control for the period from 1963-64 to 1970-71. On 16th June 1971 the port authorities made a representation to the State Government. On 24th April 1974 the port authorities were informed that the State Government had rejected their representation and directed that the non-agricultural assessment demanded of them by the Mamlatdar of Anjar should be recovered.

3 It is this demand of non-agricultural assessment by the State of Gujarat which is challenged by the petitioner-the port trust authorities of Kandla.

4 Mr. Nanavati who appears for the petitioner has on merits firstly contended before me that by virtue of the provisions of Art. 285 of the Constitution the lands in respect of which the non-agricultural assessment has been demanded by the State of Gujarat are not liable to pay it. In order to appreciate the contention which Mr. Nanavati had raised it is necessary to turn to Art. 285 of the Constitution. Clause (1) of Art. 285 upon which reliance has been placed by Mr. Nanavati provides as under :

The property of the Union shall save ill so far as Parliament may by law otherwise provide be exempt from all taxes imposed by a State or by any authority within a State.

I do not reproduce clause (2) of Art. 285 because it has not been pressed into service by any of the parties to this case. It is clear from clause (1) of Art. 285 that the State of Gujarat is not competent to levy any taxes on the property of the Union. Art. 289 of the Constitution correspondingly exempts the property and income of a State from Union taxation. The question which Mr. Nanavati has argued before me is whether the lands in respect of which the non-agricultural assessment has been demanded by the State of Gujarat are the properly of the Union within the meaning of clause (1) of Art. 285. Before I proceed to examine

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the contention which Mr. Nanavati has raised before me I may incidentally note that the exception carved Out by the expression save in so far as Parliament may by law otherwise provide used in clause (1) of Art. 285 does not come into play in the present case. None of the parties has pressed that exception into service before me. Provisions of the Indian Ports Act, 1908 and the Major Port Trusts Act, 1963 have been canvassed by Mr. Nanavati on one hand and by the learned Government Pleader and Mr. Shall on the other hand in support of their rival contentions. However in order to examine whether the lands in respect of which the non-agricultural assessment has been demanded are the property of the Union it is necessary to turn to the averments made in that behalf. In paragraph 7 of the petition the petitioner has averred that sometime in 1953 the Ministry of Home Affairs Government of India instructed the Chief Commissioner of Kutch to hand over 346.5 square miles of land to the Kandla Port Trust authorities. That land was submerged in the seawater. The said instructions were given by the Central Government by its memo dated 9th February 1953 Thereafter it has been averred by the petitioner that those lands became a part of the area which was included within the port limits and that a part of those sub-merged lands was reclaimed from the sea and the present port of Kandla was constructed on the said lands. In paragraph 19 of the affidavit made by C. M. Parikh Under Secretary to the Government of Gujarat Revenue Department on behalf of the state of Gujarat it has been stated that before the lands in question were handed over by the Central Government to the Kandla Port Trust authorities they vested in the Central Government and that therefore no question of recovery of Land revenue in respect of those lands arose. However with effect from the date on which they were handed over to the Kandla Port Trust authorities they vested in the Board of Trustees for the Port of Kandla and that they no longer remained the property of the Central Government. It is therefore contended by the State of Gujarat that they became subject to the payment of land revenue under the Bombay Land Revenue Code 1879 It is therefore an admitted position that the lands in question belonged to and had vested in the Central Government prior to their transfer by the Central Government to the Kandla Port Trust authorities. On the averments as they are this position cannot be controverted. In paragraph 3(B) of the same affidavit in reply filed on behalf of the State of Gujarat it has been averred that the lands in question were acquired for the Kandla Port Organisation in the year 1950-1952. It may be noted at this stage that admittedly in 1950-1952 Kandla Port was managed directly by the Central Government. It came under the administration control and management of the port trust authorities after the Board of Trustees was constituted in pursuance of the provisions of the Major Port Trusts Act which was constituted in 1963. In that paragraph it has been further stated on behalf of the State of Gujarat that Kandla port was managed in 1950-52 departmentally by the Ministry of Transport Government of India and that it continued to be so managed and administered until 1963. With the enactment of the Major Port Trusts Act, 1963 the lands in question were passed on to the Board of Trustees which was constituted for the port of Kandla. Thereafter by virtue of the provisions of sub-sec. (1) of sec. 29 of the Major Port Trusts Act, 1963 the lands in question vested in the Kandla Port Trust authorities. It has next been averred in that paragraph on

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behalf of the State of Gujarat that Kandla Port Trust is an independent legal entity and is distinct and separate from the Central Government. It is pertinent to note that in paragraph 8 of the said affidavit-in-reply it has been averred on behalf of the State of Gujarat that in order to determine to whom the lands in Question belong reference to the legislative power of the Union of India and its executive power is not relevant. This averment made on behalf of the State of Gujarat is broadly speaking very correct and yet the learned advocates appearing on both the sides have made copious reference to the legislative and executive power of the Union in support of their rival contentions. It has next been averred in that paragraph of the said affidavit-in-reply on behalf of the State of Gujarat that with effect from the date of coming into force of the Major Port Trusts Act, 1963 all properties assets and funds of a major port which had earlier vested in the Central Government came to be vested in the port authorities. The inference which the State of Gujarat has drawn therefrom is that with effect from that date there was a complete divestiture of the Central Government in respect of all such properties and there was a corresponding vesting of all such properties in the Port Trust authorities. Similar averments have also been made in other paragraphs of that affidavit-in-reply. These averments which have been made on behalf of the State of Gujarat clearly show that prior to the date of coming into force of the Major Port Trusts Act, 1963 the lands in question belonged to the Central Government or the Union of India. In other words they had been the property of the Union of India. The averments made on behalf of the State of Gujarat are incapable of leading to any conclusion other than the one which I have stated. As a result of their acquisition in 1950-1952 they vested in the Central Government because the Central Government had acquired them for the purpose of development of Kandla port. They continued to so vest in the Central Government until the Board of Trustees for the part of Kandla was constituted and the lands in question were directed to be handed over by the Central Government to them.

5 The narrow question which I have therefore to examine is this: What was the nature of transfer of the lands in question by the Central Government to the Kandla Port Trust authorities? Mr. Nanavati has invited my attention to some of the sections of the Major Port Trusts Act-sec. 29 in particular. Before I deal with sec. 29 of the Major Port Trusts Act, 1963 I would like to note that the Memo which has been referred to in the affidavit-in-reply filed on behalf of the State of Gujarat and under which the lands in question were transferred by the Central Government to the Kandla Port authorities has not been produced on record. If it was produced it would have certainly thrown some light on the question as to whether the Central Government had completely divested themselves of those lands or whether they had transferred the lands in question to the Kandla Port Trust authorities for the purpose of carrying on the administration and management of Kandla port. Clause (a) of sub-sec. (1) of sec. 29 of the Major Port Trusts Act, 1963 is material for the present purpose. It provides as follows. As from the appointed day in relation to any port

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(a) all property assets and funds vested in the Central Government or as the case may be any other authority for the purposes of the port immediately before such day shall vest in the Board

Clause (b) of sec. 2 defines Board in relation to a port so as to mean the Board of Trustees constituted under the said Act for that port. The effect of the aforesaid provision contained in sec. 29 is to vest inter alia all property which earlier vested in the Central Government for the purpose of Kandla port in the Board of Trustees for the port of Kandla. Mr. Nanavati has tried to argue that this vesting was not absolute in the sense of vesting full and exclusive title to the lands in question in the Board of Trustees for the port of Kandla but it was vesting in the limited sense of transferring possession for the purpose of administration management and control of Kandla Port. He has in support of his proposition relied upon some of the provisions of the said Act and also on the preamble. The preamble to the Major Port Trusts Act, 1963 inter alia states that it was enacted in order to provide for the constitution of port authorities for certain major ports in India and to vest the administration control and management of such ports in such authorities and for matters connected therewith. It is some times risky and unwise to construe a statutory provision with reference to the object which has been stated in its preamble but it is not always so. In my opinion looking to the scheme of the Major Port Trusts Act, 1963 there is no difficulty in construing clause (a) of sub-sec. (1) of sec. 29 in light of what has been stated in its preamble. In my opinion the lands were vested in the Board of Trustees for the port of Kandla by the Central Government only for the purpose of administration control and management of Kandla port. They were not vested in them in the sense that the Central Government had divested itself completely of the lands in question.

6 In order to fortify the conclusion which I have recorded a brief reference to some of the provisions of the Act may be usefully made. Sec. 3 provides for the constitution of the Board of the Trustees. Sec. 4 provides for the constitution of the first Board of Trustees. Sec. 93 lays down that no new work or appliance the estimated cost of which exceeds such amount as may be fixed by the Central Government in that behalf shall be commenced or provided by a Board nor shall any contract be entered into by a Board in respect of any such new work or appliance until a plan of and estimate for such work or appliance has been submitted to and approved by the Board: and in case the estimated cost of any such new work or appliance exceeds such amount as may from time to time be fixed by the Central Government in that behalf the sanction of the Central Government to the plan and estimate has been obtained before such work is commenced or appliance provided. Sec. 94 empowers the Chairman of the Board of Trustees to direct the execution of any work the cost of which does not exceed such maximum limit as may be fixed by the Central Government in that behalf and may enter into contracts for the execution of such works. Sec. 109 confers upon the Central Government power to restore or complete works at the cost of the Board. Sec. 110 empowers the Central Government to supersede a Board of Trustees under the circumstances specified therein. Sec. 111 empowers the Central Government to issue directions to the Board of Trustees. I have referred to only a few sections of the Major Port Trusts Act, 1963 in order to bring into

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bold relief the fact that the Board of Trustees which is the statutory body appointed under the said Act functions and discharges its duties under the control and supervision of the Central Government.

7 Mr. Nanavati has invited my attention to the meaning of vest given in Corpus Juris Secundum volume 92 page 1002. It states that the expression vest does not denote any particular meaning. It may denote a vesting in interest. It may denote a vesting in possession. It may denote the fixation of a present right to the immediate or future enjoyment of property. It may denote a legal or equitable seizing. It has also been defined so as to confer ownership of a property upon a person or to invest a person with the full title to property but it is said that it does not necessarily mean absolute ownership.

8 In THE FRUIT & VEGETABLE MERCHANTS UNION V. THE DELHI IMPROVEMENT TRUST AIR 1957 SUPREME COURT 344 the expression vest used in the U.P. Town Improvement Act 1819 came up for construction before the Supreme Court. The Supreme Court has observed as a matter of general principle that the expression vest has not got fixed connotation. It therefore does not necessarily mean in all cases that the property which is vested in an individual or a body of individuals is owned by him or them. Where the expression vest is used it may connote vesting in title it may connote vesting in possession or it may connote vesting in a limited sense. Having construed secs. 45 to 49 and 54 and 54A of the U. P. Town Improvement Act the Supreme Court has observed that the vesting of property in a trust within the meaning of the said Act is only for the purpose of executing any improvement scheme which it has undertaken and not with a view to clothing it with complete title. The Supreme Court has in that context examined the use of the expression vest in other statutes such as the provincial Insolvency Act, 1920 and the Land Acquisition Act 1894

9 In VILLAGE PANCHAYAT JASPUR V. STATE OF GUJARAT AND OTHERS 11 GUJARAT LAW REPORTER 695 a Division Bench of this Court has taken the view that the expression vest has a variety of significations depending upon the context in which it is used It may mean transfer of proprietary interest in the land or it may mean transfer of the right to possession of the land or the right to obtain and deal with the land

10 It is clear from these decisions that the expression vest does not necessarily connote vesting of absolute title but it may connote depending upon the context in which it has been used a vesting of a limited interest or vesting of possession. The question which therefore arises for my consideration is: In what context the expression vest has been used sec. 29(1)(a) of the Major Port Trusts Act, 1963 ? Firstly taking into account its object as stated in the preamble and taking into account the scheme of the Act as disclosed by some of the sections to which I have already made a reference it is clear that the lands in question which had been acquired by the Central Government and in respect of which absolute title vested in the Central Government were transferred by the Central Government to the Board of Trustees for the port of Kandla for the limited purpose of administering managing and controlling the Kandla port. What has therefore vested in the Board of Trustees for the port of Kandla is possession of the land in question for the purposes of administration control and management of the port of Kandla.

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11 Support is lent to this conclusion of mine by some of the provisions in the Constitution. In that context it will be apposite to make a reference to Entries 27 and 28 in the Union List. Entry 27 reads thus :-

Ports declared by or under law made by Parliament or existing law to be major ports including their delimitation and the constitution and powers of port authorities therein.

Entry 28 reads thus :-

Port quarantine including hospitals connected therewith seamen's and marine hospitals.

These two entries make it clear beyond any doubt that the establishment maintenance administration management and control of ports is within the legislative competence of the Union of India. Art. 73 of the Constitution provides that subject to the provisions of the Constitution the executive power of the Union shall extend to the matters with respect to which Parliament has power to make laws. It is therefore clear that so far as the ports are concerned it is the Union of India which exercises legislative and executive powers in relation thereto. It is therefore one of the constitutional functions which the Union of India has to discharge. The Union of India itself discharged that constitutional function until 1963 until which date Kandla port was administered managed and controlled by the Central Government departmentally. It was only for the purpose of better and more efficient administration management and control of the port of Kandla and other major ports that Parliament enacted the Major Port Trusts Act, 1963 and constituted for a limited purpose a separate statutory body Board of Trustees. Merely because the Union of India has enacted the Major Port Trusts Act, 1963 and created thereunder a separate statutory body assigning to it the character of an independent legal entity it does not mean that the Union of India has been divested completely of its constitutional duty to maintain administer manage and control the major ports in general and to maintain administer and control Kandla port in particular. Taking into account the scheme of the Constitution in that behalf and the scheme of the Major Port Trusts Act, 1963 I have no doubt in my mind that basically and fundamentally it is the Central Government which bears all responsibilities in respect of Kandla Port It exercises its control and discharges its duties through the Board of Trustees. It is difficult under these circumstances to say that all properties attached to and forming part of Kandla port which prior to 1963 belonged to the Union of India ceased to belong to the Union of India completely and they came to be owned by the Board of Trustees absolutely as against the Union of India In my opinion the lands in question even after 1963 have continued to belong to and are the properties of the Union of India which the Board of Trustees for the port of Kandla have been administering within the limits laid down in that behalf in the Major Port Trusts Act enacted by the Parliament.

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12 In the result this petition must succeed. I therefore allow the petition and declare that the lands in question continue to be the property of the Union of India and are exempt from State taxation by virtue of the provisions of clause (a) of Art. 285 of the Constitution. Therefore the impugned demand made of the petitioner on behalf of the State of Gujarat for payment of the non-agricultural assessment in respect thereof is contrary to clause (a) of Art. 285 of the Constitution and therefore null and void. I therefore issue a writ of mandamus directing the respondents Nos. 1 2 and 3 to desist and forbear from giving effect to the impugned notice of demand and from enforcing it.

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