1990 (12) TMI 332 - SC - Indian Laws

Summary

Issues Involved:
1. Determination of rateable value under Sub-section (1) or Sub-section (3) of Section 154 of the Bombay Municipal Corporation Act, 1888.
2. Applicability of the "Government Subsidised Scheme for Industrial Workers" and its recognition.
3. Mandatory nature of consultation with the Corporation as per the statutory requirement.

Detailed Analysis:

1. Determination of Rateable Value:
The core issue in this case is whether the rateable value of the respondent's building, constructed under the "Government Subsidised Scheme for Industrial Workers," should be determined under Sub-section (1) or Sub-section (3) of Section 154 of the Bombay Municipal Corporation Act, 1888. The Corporation initially fixed the rateable value under Sub-section (1), which considers the annual rent the property might reasonably be expected to let from year to year, minus a 10% deduction for repairs. The respondent argued that the rateable value should be determined under Sub-section (3), which limits the rateable value to a maximum of Rs. 32.50 per tenement if the building is part of a recognised subsidised housing scheme.

2. Applicability of the "Government Subsidised Scheme for Industrial Workers":
The building in question was constructed under a scheme that provided a subsidy and a loan from the Government, as per an agreement dated 12 November 1959. Clause 8 of the agreement restricted the respondent from charging more than Rs. 26.50 per month per tenement, inclusive of municipal rates and taxes. The High Court directed the Corporation to reassess the rateable value based on the actual rentals recoverable, i.e., Rs. 26.50 per month, which would be the standard rent for each block, under Sub-section (3) of Section 154.

3. Mandatory Nature of Consultation:
A significant issue was whether the consultation with the Corporation, as required under the Explanation to Sub-section (3) of Section 154, was mandatory. The High Court found that the Government did not consult the Corporation before sanctioning the scheme and deemed this omission as non-critical, considering the consultation directive rather than mandatory. However, the Supreme Court held that the consultation requirement is mandatory because it safeguards the Corporation's financial interests. The failure to consult the Corporation before implementing the scheme means the Corporation cannot be compelled to fix the rateable value under Sub-section (3).

The Supreme Court emphasized that procedural safeguards, especially those affecting financial interests, are generally mandatory. The Corporation's obligatory functions, funded primarily through property taxes, necessitate that any scheme potentially impacting its revenue must involve its consultation. The absence of such consultation invalidates the application of Sub-section (3) for rateable value determination.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the decision of the Chief Judge of the Small Causes Court, Bombay. The Court underscored the necessity of mandatory consultation with the Corporation before any subsidised housing scheme could be recognised under Sub-section (3) of Section 154, thereby affecting the rateable value determination. No order as to costs was made.