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TMI Blog2003 (7) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be utilized for paying off the dues of the textile employees. Taking advantage of this liberalised industrial policy, the respondent company demolished some of the old structures standing on a part of its land in or about June, 1995 and got plans approved for construction of a new building complex thereupon consisting of three wings A. B and C. On 31st January, 19%, the Investigating Officer of the appellant - Corporation made a Tabulated Ward Report (TWR) No. 441 proposing a revision of the assessable value of the respondent's property. The appellant was of the view that the land under the demolished structures forms a suitable buildable plot of land whereupon construction work of the building in phases had been started, and considering the building potential of the land which had become available, the appellant bifurcated the entire plot of land falling within Ward No. G/S 1955 (1) into two plots. By another Tabulated Ward Report No. 442 of 31.1.1996 it was proposed that the land under the demolished structures formed from June, 1995 a buildable vacant plot of 15014 sq. mtr. on which construction had commenced. It was proposed to treat the whole plot of land admeasuring 150 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74] 2 SCC 198, that the rate adopted by the Investigating Officer was excessive and exorbitant, and that the proper rate of assessment should be ₹ 654 per sq. mtr. After setting aside the order of the Investigating Officer dated 11.3 1998, the Small Causes Court determined the rateable value of wing 'A' at ₹ 26,96,355 w.e.f. 1.10.1996, and for wing'B' 'C'(as vacant land) at ₹ 89,396, w.e.f. the same date. The appellants were directed to issue fresh bills accordingly with a direction to refund the excess amount paid alter adjusting against taxes due. The appellant - Corporation challenged the judgments of the Small Causes Court before the High Court by filing two appeals. First Appeal No. 660/99 against the judgment in Municipal Appeal No. 370/98 was summarily rejected on the ground that no interference was called for. First Appeal No. 659/99 directed against the judgment of the Small Causes Court in Municipal Appeal No. 367/98 was also rejected by taking the view that in Dewan Daulat Raj Kapoor v. New Delhi Municipality, AIR (1980) SC 541 this Court has laid down that the annual value at which the building can reasonably be experted to let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the standard rent, and the assessment of the rateable value has to be done on the said basis, the evidence on record clearly shows that the building was being assessed for the first time and, therefore, the actual letting value of the premises has to be taken as the basis for working out the rateable value irrespective of the fact that it was styled as 'leave and license compensation'. The actual amount paid by the National Stock Exchange India Limited and National Securities Depository Limited must be taken as the basis for working out the rateable value of the land under construction from 1.10.1996 onwards. With regard to the assessment for rating of the vacant land, the learned counsel for the appellant contends that, after demolition of the structures on the land, the character of the land changed inasmuch as its building potential increased tremendously. Since the land as such had not been assessed previously, it had to be assessed for rateable value on the basis of Contractor's Method by taking a suitable percentage of the market value, which was one of the known methods of assessing the rateable value. Hence, from 1.10.1996 the appellant had rightly proposed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acant land for the purpose of rateable value and its rating has to remain frozen at what it was earlier unless there has been additional investment or improvement therein. In the instant case, what was being assessed for rateable value was subject to the limit of standard rent applicable under the Bombay Rent Act and merely because the land had building potential, The Corporation was not entitled to revise the rateable value. Both sides cited a large number of authorities in support of their respective cases which we shall presently notice. Law: Under Section 139 of the Bombay Municipal Corporation Act, the Corporation is inter alia empowered and obligated to impose property taxes. The property taxes comprise general tax, water tax, sewage tax and so on. All these taxes are leviable at such percentage of the rateable value as determined by the Municipal Corporation. The manner of determination of rateable value, therefore, becomes crucial to the debate before us. The material portion of Section 154 of the Mumbai Municipal Corporation Act relevant for our discussion reads as under: Section 154(1) - In order to fix the rateable value of any building or land assessable to a property t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air rent or standard rent. Reading the two Acts together the rateable value cannot be more than the lair or standard rent which can be fixed under the Rent Control Act. I he exception to this rule is that whenever any Municipal Act itself provides the mode of determination of the annual letting value like the Central Bank of India case relating to Ahmedabad or contains a non obstante clause as in Ratnaprabha case then the determination of the annual letting value has to be according to the terms of the Municipal Act. In the present case, Section 168 of the Municipal Act docs not contain any non obstante clause so as to make the Tenancy Act inapplicable and nor does the Act itself provide the method or basis for determining the annual value. This Act has, therefore, to be read along with Tenancy Act of 1956 and it is the fair rent determinate under Section 8 (1) (d) which alone can be the annual value for the purpose of property tax. (Vide paragraph 17). Since that was a case pertaining to the Calcutta Municipal legislation, the reference therein is thus to Section 8(1) (d) of the West Bengal Tenancy Act, 1956. Despite the law having been thus clearly laid down in East India Commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... analysis of the various municipal laws and the judgments of this Court it is held that in cases where the municipal laws exclude the applicability of the Rent Acts by incorporating non obstante clause in the taxing statute, the powers of the authorities under the Municipal Acts are not circumscribed by the limits indicated in Padma Debi case and followed in that group of cases. In cases where the fair rent payable by the tenant has been determined and there is no justification for refusing to accept that fair rent as rental value of the premises, the municipal authorities should generally accept the standard rent fixed, notwithstanding the non- applicability of the Rent Acts because such a view would be a reasonable guideline to determine the rate of rent at which such land or building might, at the time of assessment, be reasonably expected to let from year to year. The rent which the tenant is receiving from his subtenant is also an important statutory consideration for determining the rent at the time of assessment to which the property might reasonably be expected to be let from year to year. Such a consideration is also justified on the principles of reasonableness. We cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable rent which may be offered by the hypothetical tenant could even be less than the standard rent. Mr. Singhvi, learned counsel for the appellant, urged that this contention cannot be accepted for several reasons. First, he urged that such a contention was never raised at any stage of the proceedings either before the Investigating Officer, Small Causes Court, or even before the High Court. He contends that 'standard rent' is a pure question of fact, or, at any nite, a mixed question of law and fact, and ought not to be permitted to raise before this Court first time. He, therefore, urged upon us to decline permission for this ground to be raised. Though, as a normal rule, this Court does nut permit in appeal the raising of a totally new ground, particularly when wider r; mifications may arise, we are inclined to permit raising this ground for more than one reason. First, that the proposition of law that rateable value is limited by the amount of the standard rent, per se does not require actual invesigation. as it appears to be well settled by catena of decisions of this Court Secondly, we find that the High Court and the courts below focused the r attention merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal Corporation Act is a legislation for fixing of the rateable value and imposing of property tax, but it nowhere defines what 'rateable value' is, except in general terms under Section 154 (1). If the statute had defined 'rateable value' in specific terms, then the argument may have been sustainable, as sustained in Griha Yajmanule Samkhya and Ors. (supra). It must be remembered that the principle of 'standard rent' has not been invoked by reason of any requirement or declaration under the Municipal Corporation Act. but by reason of the fact that if the rateable value is the reasonable annual rent at which the property may be expected to be let, then we must consider what a hypothetical tenant would be willing to offer as rent for the oroperty let. As has been pointed earlier, the concept of reasonableness would necessarily include the concept of an owner and a tenant who are both law abiding and do not indulge in black marketing . If there is a rent restriction legislation which imposes a limit on the rent which can be charged, then the concept of reasonableness would include that restriction also. This is the reason why in a series of judgments of this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, this Court refrained from striking down the same in view of the fact that the existing Act was to lapse on 31.3.1998. Hence, this Court made the following directions: We however refrain from striking down the said provisions as the existing Act elapses on 31.3.1998 and we hope that a new Rent Control Act will be enacted with effect from 1.4.1998 keeping in view the observations made in this judgment insofar as fixation of standard rent is concerned. It is, however, made clear that any further extension of the existing provisions without bringing them in line with the views expressed in this judgment, would be invalid as being arbitrary and violative of article 14 of the Constitution and therefore of no consequence. The respondents will pay the costs. This judgment need not detain for another reason. We are concerned with the period prior to 31st March, 1998, at which time, admittedly, the concerned sections were not held to be bad, by this Court despite noticing the infirmity in the sections. For this reason also, we are unable to accept the contention. Shri Singhvi then contended that the appeals must fail for failure to place the requisite evidence on record. He contends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sq. mtr. was perfectly justified for assessing the rateable value. It is next contended by the appellant that even if we assume that the provisions of Bombay Rent Act apply, 'standard rent' is different y defined by the Bombay Rent Act. Section 5(10) (b) defines standard rent as under: Section 5 (10) (b) - When the standard rent is not so fixed - subject to the provisions of Section 11, (i) the rent at which the premises were let on the first day of September, 1940 or (ii) where they were not let on the first day of September, 1940, the rent at which they were last let before that day, or (iii) where they were first let after the first day of September, 1940, the rent at which they were first let, or [(iii-a) notwithstanding anything contained in paragraph (iii) the rent of the premises referred to in sub-section (1-A) of Section 4 shall, on expiry of the period of five years mentioned in that sub-section, not exceed the amount equivalent to the amount of net return of fifteen per cent, on the investment in the land and building and all the outgoings in respect of such premises; or] (iv) on any of the cases specified in section 11, the rent fixed by the court; Section II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contractor's method which has been judicially approved. Under this method the market value of the land has to be ascertained and reasonable return fixed thereupon to determine the standard rent. This is precisely what was done by the assessor and Collector by taking the market value ₹ 3,000 per sq. mtr. as a fair value with a reasonable return of 12% thereupon, in fact, even the respondent suggested only ₹ 2500 per sq. mtr. as the fair market value and did not raise any dispute with regard to the fair return. The Bombay High Court in Harilal Parekh v. Jain Coop. Housing Society, AIR (1957) Bom. 207 and Saipansaheb Wd. Dawoodsaheb v. Laxman Venkatesh Naik, 57 BLR 413, pointed out that under Section 5 (10) (b) (1) the first letting on first September, 1940 becomes the standard rent subject to the provision of Section 11 of the Act and, when the occasion arises, the Court has the jurisdiction to re-determine it under Section 5 (10) (b) (1), where the case falls under Section 11 (1) (e) of the Bombay Rent Act. It was also pointed in Harlal Parekh (supra) that the premises were first let after first September, 1940 and the rent shall be equivalent to 6% on the valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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