The Cantonment Board, Ambala Cantt vs Dipak Parkash and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 538 of 1960

Decision Date: 3 April 1962

Coram: K.C. Das Gupta, J.L. Kapur, Raghubar Dayal

In the matter titled The Cantonment Board, Ambala Cantt. versus Dipak Parkash and Others, decided on 3 April 1962, the Supreme Court of India heard an appeal filed by the Cantonment Board, Ambala Cantonment, against a decision of the Punjab High Court. The bench for the Supreme Court comprised Justice K C Das Gupta, Justice J L Kapur and Justice Raghubar Dayal. The petitioner was the Cantonment Board, Ambala Cantt., and the respondents were Dipak Parkash and others. The citation for the judgment is 1963 AIR 963 and 1963 SCR Supl. (1) 196. The case involved the interpretation of several provisions of the Cantonments Act, 1924 (Act 20 of 1924), specifically sections 65, 84(2) and 99(2), as well as sections 5, 6, 7, 11 and 12 of the Cantonments (House Accommodation) Act, 1923 (Act 6 of 1923).

According to the facts, one half of bungalow No. 127‑B situated on Bank Road in Ambala Cantonment had been leased by the Central Government and was being occupied as a residence by a military officer. The Assessment Committee of the Cantonment Board had prepared an assessment of house tax on the property. The assessment list was initially signed by three of the four members of the committee, and the fourth member signed it a few days later. The officer handling the assessment entertained a reasonable doubt regarding the liability of the occupant and consequently referred three questions to the High Court under section 84(2) of the Cantonments Act, 1924. The questions were: (1) whether the occupation of the property by the military officer constituted use of the premises for public purposes; (2) whether the occupation of the portion of the bungalow appropriated under the 1923 Act amounted to occupation by the Central Government within the meaning of section 99(2)(f) of the 1924 Act; and (3) whether the authentication of the assessment list in its present form complied with the requirements of section 96 of the 1924 Act.

The Punjab High Court answered the first two questions in the affirmative, holding that the military officer’s occupation was indeed for a public purpose and that it amounted to occupation by the Central Government. The Court, however, answered the third question negatively, concluding that the authentication of the assessment list was not valid as required by section 96. The High Court’s opinion was that the occupation by the military officer qualified as use for a public purpose, that it was occupation by the Central Government, and that the authentication of the assessment list was proper. Dissatisfied with the High Court’s answer to the second question, the Cantonment Board obtained a certificate from the High Court and filed an appeal before the Supreme Court, designated as Civil Appeal No. 538 of 1960, which arose from the judgment and order dated 3 September 1958 of the Punjab High Court in Civil Reference No. 2 of 1956. Counsel appeared for the appellant, while the respondents did not appear. The Supreme Court ultimately held that the building was occupied by the Central Government through the military officer who had been permitted to reside there, and that where a person entitled to occupy a premises permits another person to stay in it, the occupier is deemed to be in actual occupation through that other person.

The judgment of the Court was delivered by Justice D. A. S. Gupta, who examined an appeal against the house‑tax assessment of bungalow No 127‑B situated on Bank Road in Ambala Cantonment and imposed by the assessment committee of the Cantonment Board, Ambala. Three questions concerning the liability of the assessee arose, and the officer handling the appeal entertained reasonable doubt, consequently referring the matters to the Punjab High Court under section 84(2) of the Cantonments Act, 1924, for authoritative determination. It was conceded that one half of the bungalow had been appropriated under the provisions of the Cantonments (House Accommodation) Act, No VI of 1923, on a lease granted by the Central Government, and at the relevant time it was being occupied as a residence by a military officer. It was also admitted that the assessment list had originally been signed by three of the four members of the assessment committee, while the fourth member appended his signature only a few days later. The appellate officer outlined these circumstances in his statement and then framed the three questions for consideration: first, whether the occupation of the property by a military officer under the aforementioned circumstances amounted to use of the premises for a public purpose; second, whether the occupation of the portion of the bungalow appropriated under Act No VI of 1923 constituted occupation by the Central Government within the meaning of section 99(2)(f) of the Cantonments Act, 1924; and third, whether the authentication of the assessment list in the present case satisfied the requirements of section 69 of the Cantonments Act, 1924. In accordance with the duty imposed by section 84(2), the appellate officer expressed his own opinion, holding that the military officer’s occupation did not constitute use for a public purpose, did not represent occupation by the government, and that the authentication of the assessment list was valid. The High Court, however, answered the first two questions affirmatively and the third negatively, thereby holding that the military officer’s occupation amounted to use for a public purpose and also constituted occupation by the Central Government as defined by section 99(2)(f), while finding the authentication of the assessment list to be valid. Dissatisfied with the High Court’s decision on the second question, the Cantonment Board filed the present appeal, relying upon the certificate issued by the High Court. The assessee did not appear before this Court, but counsel for the Cantonment Board guided the Court through all the pertinent statutory provisions. For a proper resolution of the matters in dispute, it was necessary first to consider the scheme of house appropriation provided under the Cantonments (House Accommodation) Act, No VI of 1923, which, under section 5, declares that every house situated within a cantonment is liable to be appropriated by the Central Government on a lease, subject to the conditions prescribed in the Act.

The Court explained that a house situated in a cantonment could be leased only in the manner and subject to the conditions laid down in the Cantonments (House Accommodation) Act. Section 6 of that Act provided two situations in which the Officer Commanding could intervene. First, if a military officer stationed in the cantonment or the President of a military mess wrote to the Officer Commanding stating that he could not obtain suitable accommodation by private agreement and that no government property was available, and if the Officer Commanding was satisfied that the statements were true, he could act. Second, if the Officer Commanding, after making inquiries, was convinced that the cantonment did not have a sufficient assured supply of houses at reasonable private rents, he could also act. In either case the Officer Commanding was authorised to serve a notice on the owner of any house that appeared suitable, requiring the owner to permit the house to be inspected, measured and surveyed.

Section 7 then required the Officer Commanding, once satisfied that the house was suitable for occupation by a military officer or a military mess, to issue a notice directing the owner to execute a lease of the house to the Central Government. The notice could also require any existing occupier to vacate the house and could require the owner to carry out necessary repairs. The provision further stipulated that when the lease expired, the house had to be returned to the owner in a condition of reasonable repair.

Section 11 dealt with possession. If the house was unoccupied, a notice under Section 7 could compel the owner to deliver possession to the Officer Commanding within twenty‑one days of the notice. If the house was occupied, the notice could not require vacation in less than thirty days from the date of service.

Section 12 provided that if the owner failed to give possession as directed, or if an existing occupier failed to vacate, the District Magistrate was empowered to enter the premises and enforce the surrender of the house.

The Court observed that this summary of the Act showed that once appropriation was made under Section 6, the house passed into the possession of the Officer Commanding on behalf of the Central Government, but the Act said nothing about what could be done with the house thereafter. Turning to the Cantonments Act, 1924, the Court then examined Section 65, which read as follows: “Save as otherwise expressly provided in the notification imposing the tax, every tax assessed on the annual value of buildings or lands or of both shall be leviable primarily upon the actual occupier of the property on which the said tax is assessed, if he is …”

Section 65 of the Cantonments Act, 1924, provides that the tax on the annual value of buildings or lands shall be primarily levied on the actual occupier of the property, except where the owner holds the property under a lease granted by or on behalf of the Government or the Board, or holds it under a building lease from any other person. In situations where the property is let, the primary liability for the tax falls on the lessor; if the property is sub‑let, the liability rests on the superior lessor; and where the property is unlet, the liability is on the person who possesses the right to let the property. Should the tax authorities be unable to recover any amount due from the person primarily liable, the tax may be recovered from the occupier of any portion of the buildings or lands for which the tax is due. The portion recoverable from the occupier shall be calculated in proportion to the rent annually payable by that occupier compared with the total rent payable for the entire premises, or, if a letting value is stated in the authenticated assessment list, in proportion to that aggregate letting value. An occupier who pays any part of the tax for which he is not primarily liable, in the absence of any contrary contract, is entitled to be reimbursed by the person who is primarily liable, and may deduct the amount he has paid from any rent that becomes due from him to that person.

The authority to impose the tax is conferred by the provisions of the Act. Section 99(2) enumerates the categories of buildings and lands that are exempt from any tax on property, except for a tax imposed to cover the cost of specific services rendered by the Board. The exemption applies to (a) places set apart for a public workshop and actually used for that purpose alone; (b) buildings used for educational purposes, public libraries, playgrounds and dharam salas that are open to the public and generate no income; (c) hospitals and dispensaries maintained wholly by charitable contributions; (d) burning and burial grounds, not owned by the Government or the Board, that are controlled under the provisions of the Act; (e) buildings or lands vested in the Board; and (f) any buildings or lands used or acquired for public service or for any public purpose that belong to the State or are occupied by the Central or any State Government. The tax in the present dispute is not one levied to cover the cost of specific services rendered by the Board; therefore, if the property in question falls within any of the categories (a) through (f), it would be entitled to exemption. The present consideration does not involve categories (a) through (e), as the sole claim to exemption advanced by the owner relies on category (f).

In this case the Court examined whether the property claimed to be exempt under clause (f) of the exemption provision truly satisfied the two statutory requirements for such exemption. The first requirement is that the building or land must have been used or acquired for public service or a public purpose. The Court observed that the High Court had already found, without dispute, that at the relevant date the building was being used for a public purpose; therefore this element required no further analysis. The second requirement is that the property must be either owned by the State or be in the occupation of the Central Government or any State Government. The point in dispute was whether, at the material time, the premises were in the occupation of the Central Government.

The appellant, represented by counsel for the Cantonment Board, argued vigorously that the portion of the building under consideration was occupied by a Military Officer and that such occupation could not be described as occupation by the Government. Counsel noted that the Government had obtained the portion of the building by lease under section 7 of the Cantonments (House Accommodation) Act, but contended that the Military Officer was not a sub‑lessee of the Government. The argument was framed on the basis that the Government, as lessee, merely permitted the Military Officer to reside in the building, and that this permission did not amount to the Government’s own occupation.

The Court considered the language of the relevant tax provisions. Section 65(1) refers to “actual occupation” by the owner, thereby making the tax primarily leviable on the actual occupier. In contrast, section 99(2) uses the phrase “in the occupation of the Central or any State Government” without the qualifier “actual”. While counsel for the appellant suggested that “occupation” ordinarily implies actual occupation, the Court found this view untenable in the present context. The Court explained that when a person who has the right to actual occupation—such as the Government under a lease—allows another person to occupy the premises, the original occupier does not lose the factual state of occupation merely because a sub‑occupier is present. If the Government were to lease the premises to a third party, it would no longer be in actual occupation, but it would still be the authority that has placed a sub‑lessee in possession.

The Court further observed that granting a licence to an individual to reside in the premises does not deprive the Government of the ability to withdraw that permission and to retake possession at any time. Consequently, the presence of the Military Officer, even if the Officer were absent for extended periods, could not be interpreted as ending the Government’s occupation of the building. To hold otherwise would lead to absurd consequences, such as the building ceasing to be occupied by the Government simply because the occupant was away. The Court therefore concluded that when a person entitled to occupy a premises permits another to stay, the former remains in actual occupation through the latter.

Applying this principle, the Court held that the building in question was indeed in the occupation of the Central Government, the occupation being effected through the Military Officer who had been allowed to reside there. The Court found that the High Court’s determinations on this point were correct. Accordingly, the appeal was dismissed. Because the opposing side did not appear, no order as to costs was made.

The Court noted that the mere fact that a person who has been given permission to remain in a premises does not, by that circumstance alone, convert the premises into the actual occupation of the Government. It held that if that proposition were accepted, then the situation in which a Military Officer, who is the person entitled to occupy the building, is absent for a period of several months while his family members or his servants continue to reside there would imply that the building no longer remains under the occupation of the Military Officer. The Court found such an inference to be manifestly unreasonable. Accordingly, the Court explained that when a person who possesses the right to occupy a structure authorises another individual to stay in the structure, the occupier continues to be in actual occupation of the premises through the presence of the other individual. Applying that principle, the Court concluded that the building in dispute remained in the occupation of the Central Government, because the Government had permitted the Military Officer to reside there and thereby exercised occupation through him. The Court therefore accepted the findings of the High Court as correct and ordered that the appeal be dismissed. Since no counsel appeared on behalf of the opposite party, the Court observed that no order concerning costs would be made. The appeal was consequently dismissed.