2003 (7) TMI 706 - SC - Indian Laws

Eligibility of Municipal Corporation - Rateable value of the land till the construction of the building by taking the market value of the land - land previously assessed to Municipal lax is demolished for construction of new building - HELD THAT - It is true that Section 11 of the Rent Act provides that even standard rent can be altered and re-fixed if there is any structural alteration or change in the amenities. It is urged by Shri Singhvi that demolition of the building and increasing the building potential of the land is one such change contemplated by Section 11 (a). This contention, we are unable to accept. Section 11 (a) is intended to enable the Court, upon an application n any suit or proceeding, to modify the standard rent as a result of structural alteration or change in the amenities involving further capital investment of I he owner. We do not think that demolition of a building is one such contingency contemplated by Section 11 (a) of the Act. In the result, though we accept the proposition urged by the respondent that in the facts of the present case the standard rent would be the limit of the rateable value, we find that there was no material produced on record at any stage by the respondent to show what the standard rent was either in respect of the vacant land or in respect of the land on which the building was constructed and demolished, or in respect of the building after it was constructed. We accept the contention of the appellant that the hurden of proving this fact, while objecting to the rateable value fixed by the Commissioner, is always on the respondent-assessee. We also accept the contention of the appellant that the respondent was less than fair to the appellant in not disclosing that its property had been occupied by National Stock Exchange of India Ltd. and National Security Depository Ltd. and in not disclosing the amounts paid by them. The respondent ought to have disclosed the fact, fairly and fully, and urged the legal contentions open to it based thereupon. These facts would have justified our allowing the appeal fully and restoring the assessment orders made by the appellant officers. However, we are not inclined to do so for the reason that the attention of the parties has not been focused on the core issue, as a result of which, perhaps, there was failure to produce relevant material before the assessor to show what was the standard rent. The interests of justice would require that the issue be reconsidered after giving an opportunity to the respondent to discharge the burden placed upon it under law. In the result, we allow the appeals and set aside the judgments of the High Court and Small Causes Court. The concerned proceedings are restored before the Assessor and Collector who shall hear and dispose the complaints after giving an opportunity to the respondent to produce such material as they may desired in support of their objections to the assessments made by the appellant. Thus, the appeals are thus allowed with costs quantified at ₹ 50,000.

Summary

Issues Involved:
1. Whether the Municipal Corporation can assess the rateable value of land based on its market value after the demolition of a building.
2. Whether the rateable value of the premises is limited by the standard rent under the Bombay Rent Act.

Summary:

Issue 1: Assessment of Rateable Value Post-Demolition
The central issue in these appeals is whether the Municipal Corporation can assess the rateable value of land based on its market value after the demolition of a building. The respondent company demolished old structures on its land and began constructing a new building complex. The appellant Corporation proposed revising the rateable value of the land, treating it as a "buildable vacant plot" and adopting a rate of Rs. 3,300 per sq. mtr. The respondent objected, suggesting a rate of Rs. 2,500 per sq. mtr. The Small Causes Court and the High Court ruled against the Corporation, holding that the rateable value should be limited to the standard rent and not based on the market value.

Issue 2: Limitation by Standard Rent
The respondent argued that the rateable value of land and buildings is limited by the standard rent under the Bombay Rent Act. The appellant contended that the rateable value should be based on the market value of the land, especially after the demolition of the structures, which increased the land's building potential. The Court examined various judgments and concluded that the rateable value is indeed limited by the standard rent determined or determinable under the Rent Restriction Legislation. The Court rejected the appellant's argument that the Bombay Municipal Corporation Act is a complete code for determining rateable value and not subject to the Bombay Rent Act.

Conclusion:
The Supreme Court allowed the appeals, set aside the judgments of the High Court and Small Causes Court, and remanded the matter to the Assessor and Collector for reconsideration. The respondent was given an opportunity to produce material to support their objections to the assessments. The appeals were allowed with costs quantified at Rs. 50,000.