In a landmark decision today, the Supreme Court ruled that properties designated as ‘enemy property,’ under the Enemy Property Act of 1968, do not qualify for exemption from municipal taxes. The ruling, delivered by a bench comprising Justices B.V. Nagarathna and Ujjal Bhuyan, clarified that such properties, even when managed by government-appointed custodians, cannot be considered as owned by the Union Government.
The case in question involved a property owned by the Raja of Mahmudabad, who migrated to Pakistan in 1947. Currently, a portion of this property is being utilized for commercial purposes.
The crux of the matter revolved around whether the Union Government, by virtue of appointing custodians to manage enemy properties, gains ownership rights over them. The Court emphatically answered in the negative, asserting that custodians act merely as trustees, not owners, of enemy properties.
Furthermore, the Court emphasized that the ownership of enemy properties remains with the enemy itself, and the custodian’s role is solely to protect and manage these properties on behalf of the true owners.
The judgment highlighted that Article 285(1) of the Constitution, which exempts Union properties from state taxes, does not apply to enemy properties. Therefore, the properties in question are liable to municipal taxes unless specifically exempted by Parliament.
Addressing concerns about property rights, the Court underscored Article 300-A of the Constitution, which protects the property rights of all individuals, including non-citizens. It cautioned against interpreting the custodian’s role as a transfer of ownership from the true owner to the Union Government, as this would contravene constitutional principles.
In conclusion, the Supreme Court overturned a previous High Court decision, ruling that the custodian of the subject property is indeed liable to pay property taxes and other local charges to the Lucknow Municipal Corporation.
This ruling sets a precedent regarding the taxation of enemy properties, ensuring clarity and consistency in their treatment across the country.
