Bombay High Court
Municipal Corporation Of Gr.Bombay vs M/S. Dattani Enterprises on 13 March, 2025
2025:BHC-AS:11785
First Appeal No. 481 of 1992 and 482 of 1992 (final).doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO. 481 OF 1992
WITH
FIRST APPEAL NO. 482 OF 1992
The Municipal Corporation of Greater Bombay, a ]
Corporation established under the Bombay ]
Municipal Corporation Act, 1888, having their ]
office at Municipal Head Office Building, ]
Mahapalika Marg, Fort, Bombay - 400 001. ] ...Appellant.
Versus
1. M/s. Dattani Enterprises, a Partnership Firm, ]
registered under the Indian Partnership Act, ]
1932 and carrying on business at Gekaldas ]
Khimji Bungalow, Vasanjee Laljee Lane, ]
Kandivali (West), Bombay - 400 067. ]
2 Shantilal Sanghvi Foundation ]
and K.K. Enterprises, CTS No. 60-B & 60-C, ]
Magatane Village, Borivali (W), Mumbai - 92. ] ...Respondents.
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Mr. Walawalkar, Senior Advocate a/w Ms. Vidya Vyavhare, Ms. Pallavi Khale i/b
Ms. Komal Punjabi for Appellant in both Appeals.
Mr. Aditya Udeshi, Mr. Rahul Sanghavi i/b Mr. Sanjay Udeshi & Co. for
Respondent No.2.
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Coram : Sharmila U. Deshmukh, J.
Reserved on : 24th January, 2025.
Pronounced on : 13th March, 2025.
Judgment :
1. Both these Appeals arise out of common judgment dated 3 rd
December, 1990 passed by the Court of Small Causes, in Appeals under
Section 217 of the Mumbai Municipal Corporation Act, 1888 [for short,
"MMC Act"] challenging the rateable value fixed by the Corporation
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vide order dated 19th March, 1988. With consent, both Appeals were
heard together, common submissions were advanced and both
Appeals are being disposed of by this common judgment.
FACTUAL MATRIX :
2. Municipal Appeal No. 148 of 1988 was filed challenging the
rateable value fixed by the Investigating Officer of the Corporation in
respect of the portion of C.T.S. No. 61 admeasuring 3,650 square
metres reserved for playground situated at Magathane, Borivali,
Bombay. The rateable value was fixed at Rs. 27,070/- N.P.A with effect
from 1st April, 1979. The Respondent No. 1 filed a complaint
challenging the rateable value with the Corporation's Assessor and
Collector which was decided by order of 25 th July, 1985 confirming the
rateable value which was continued up to Assessment year 1988-89. In
pursuance of a general public notice issued by Commissioner of
Corporation, Respondent No. 1 filed general complaint with Assessor
and Collector in the year 1988-89 and by order dated 19 th March, 1988,
the rateable value of Rs 27,070/- N.P.A was confirmed by adopting the
rate of Rs. 103/- per sq. metre being the rate at which the property was
purchased by Respondent No. 1.
3. In the second Appeal being Municipal Appeal No. 149 of 1988,
the portion of land involved admeasured about 6044.20 sq. metres
which was reserved for municipal school. In this case, the rateable
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value was fixed at Rs. 44,825/- with effect from 1 st April, 1979. Upon
complaint being filed, the Assessor and Collector confirmed the
rateable value which continued up to the year 1988-89. The general
complaint came to be filed which was decided by order dated 19 th
March, 1988 confirming the rateable value at Rs.44,825/- N.P.A by
adopting the rate at which the property was purchased by Respondent
No 1.
4. In Municipal Appeal No. 148 of 1988, the Appellant-Corporation
filed its written statement contending that the Corporation's Officer
proposed to assess the plot of land i.e. the Municipal School and D. P.
Road area by adopting reasonable rate of Rs. 103/- per sq. metre and
rateable value was proposed to be fixed for the said portion at Rs.
27,070/- N.P.A. Cost of plot of the land reserved for playground area
was worked out at Rs. 3,75,950/- and 8% returns thereon was applied
and further 10% deduction was given, and rateable value was worked
out at Rs 27,070/- N.P.A. It was contended that the hypothetical rent
had been taken at Rs. 103/- per square metre. It was contended that
the Respondents had failed to produce any documentary evidence to
show that the land was reserved for school and playground. The
Officer therefore, arrived at the conclusion that as the possession of
the said plots was still with Respondent No. 1 who had purchased the
entire land at the rate of Rs. 103/- per square metre, the property was
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assessed by adopting the rate at which it was purchased.
5. The Written Statement filed in Municipal Appeal No. 148 of 1988
was adopted as Written Statement in Municipal Appeal No. 149 of
1988.
6. On behalf of Respondent No. 1, its Legal Assistant was examined
who deposed that C.T.S. No. 61 admeasuring 23,300 sq. yards is an
open plot of land with no structure and the rateable value determined
is excessive as portion of land is reserved for Municipal School and
playground. He has deposed that Corporation ought to have adopted
rate of Rs. 10/- per sq. metre because similar properties in the vicinity
are assessed at the rate of Rs. 12/- per sq. metre. The Respondent-
Assessee owns many other properties bearing C.T.S. Nos. 44, 45, 47, 48
and 101 situated at Village Mandapeshwar, Taluka - Borivali. The
Special Notice issued by the Assistant Assessor and Collector fixed the
rateable value at Rs. 3,210/- in respect of the said property, the
challenge to which was decided by order dated 24 th October, 1988. The
rateable value fixed was in respect of portion of plot reserved for
municipal school. The Corporation has also separately assessed
portion of land out of these survey numbers reserved for playground
and special notice was served upon the Assessee for the year 1988-89,
fixing rateable value at Rs.1,275/- in respect of the playground. The
complaint was lodged challenging the rateable value which was
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disposed of confirming the rateable value.
7. In the cross-examination, the witness admitted that that he is
not aware of the purchase price of the property. He has admitted that
the portion of the land was already reserved in development plan by
the Corporation for playground and school and while purchasing the
land, reservation was taken into consideration. The Respondent No. 1
had already constructed four buildings on the said land bearing City
Survey No. 61, which has been sanctioned by the Corporation. The
witness further deposed that the Respondent had applied for vacancy
benefit and are getting the said benefit. He has further admitted that
the Application for vacancy benefit is to be made half yearly and the
property tax for that half year is already received by the Respondent
No. 1 and that the property tax for the full assessment year under the
Appeal has been refunded by the Corporation in pursuance to the said
Application. The witness produced Special Notice issued by the
Assistant Assessor and Collector in respect of other properties which
were marked as Exhibit-C and order passed by Officer in a challenge to
the rateable value of the property dated 24 th October, 1988 which was
marked by consent as Exhibit-D and Special Notice under Section 167
of MMC Act which was marked as Exhibit-E.
8. The Appellant-Corporation did not lead any evidence and
produced the Tabulated Ward Report, extract of complaints for year
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1979-80 and 1988-89, which came to be marked as Exhibits '2' to '7'.
9. The Small Causes Court observed that the Deed of Conveyance is
not on record and therefore, it is difficult to ascertain whether
purchase price was lesser than market value because of reservation. It
noted Section 154 of MMC Act and held that it has to be considered as
to what hypothetical tenant would pay to the hypothetical landlord as
and by way of rent for the property if let out year to year and in the
present case, there is no question of letting the property, as the
property is in possession of the Respondent. The Small Causes Court
observed that if any property is reserved in Development Plan, no
tenant would be ready to pay reasonable rent for such property as he
would not be in a position to enjoy the same for longer period or at
will.
10. The Small Causes Court thereafter, considered that the portion
of land involved in two appeals are reserved for playground and school
and that the letting value would be much less than the letting value in
the open market. Thereafter, it examined the rate at which the
property should be assessed, and after considering the evidence of the
Respondent No. 1 that similar properties in the vicinity have been
assessed by the Corporation at Rs. 12/- per square metre, which
evidence has not been challenged by the Corporation, fixed the
rateable value at Rs. 12/- per sq. metre.
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SUBMISSIONS:
11. Mr. Walawalkar, learned Senior Advocate appearing for the
Appellant-Corporation would submit that the finding of the Small
Causes Court that as the property is in possession of the Assessee, it
cannot be let out is erroneous. He submits that what is required to be
considered under Section 154 of MMC Act is the hypothetical rent
which the property would fetch if let out from year to year. He submits
that Assessee had applied for vacancy benefit, which was given. He
would further submit that on earlier occasions, the rateable value was
challenged which was dismissed and principles analogous to principle
of res judicata would apply. He submits that the burden of proof was
upon the Assessee and pointing out the issues framed by Small Causes
Court, he submits that there is no issue framed as to whether the
rateable value is inadequate. He submits that based on purchase price
of the property, the rateable value was fixed. He points out to the
evidence of the Assessee and would submit that elaborate evidence
was required to be adduced by the Assessee regarding relevancy of
those properties which has not been done and therefore, matter
should be remanded. In support, he relies upon the following
judgments:-
The Municipal Corporation of Greater Bombay vs.
M/s. L.K. Builders1
1 [1995] 4 BomCR 606.
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Filmistan Private Limited vs. Municipal
Commissioner for Greater Bombay
Municipal Corporation of Greater Mumbai vs.
Kamla Mills Ltd.3
Municipal Corporation of Greater Bombay vs. Royal
Western India Turf Club Ltd.4
12. Per contra, Mr. Udeshi, learned counsel appearing for
Respondent No. 1 would submit that the issue was as regards fixing of
rateable value at Rs. 103/- or Rs. 12/- per square metre. He submits
that the evidence adduced by the Respondent No. 1 as regards the
rateable value fixed in respect of similar property has remained
uncontroverted. He submits that it is the Corporation's own case that
the rateable value has been fixed on the basis of purchase
consideration and at the relevant time, capital value method was not
the acceptable mode, which was introduced in the year 2009. He points
out that the Small Causes Court has further gone ahead and fixed the
rateable value at Rs. 12/- per sq. metre by taking into consideration the
evidence produced. He submits that the documentary evidence
produced by the Respondent is the Corporation's own notice and
order, which has been rightly accepted. He submits that in fact, the
decision in the case of Royal Western India Turf Club (supra) supports
2 1970 Mh.L.J. 866.
3 2003 AIR SCW 3399.
4 AIR 1968 SC 425.
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the case of Respondent No. 1 as the illustration mentioned therein did
not include purchase consideration which was subsequently introduced
in the year 2009. He would further distinguish the judgment in the case
of L. K. Builders (supra) and would submit that the same was rendered
in a different factual scenario.
13. The following point arise for consideration:-
(i) Whether the Court of Small Causes has rightly fixed the rateable
value of the subject property at Rs. 12/- per sq. metre?
As to Point No. (i):
14. The admitted position is that the Corporation has fixed the
rateable value on the basis of purchase price of the property and by
applying return of 8% and allowing deduction of 10%. Section 154 of
the MMC Act, 1888 prior to its amendment of 2009, read as under:-
"154. Rateable value how to be determined :- (1) In order to
fix the rateable value of any building or land assessable to a
property-tax, there shall be deducted from the amount of the
annual rent for which such land or building might reasonably
be expected to let from year to year a sum equal to ten per
centum of the said annual rent and the said deduction shall be
in lieu of all allowances for repairs or on any other account
whatever.
(2) The value of any machinery contained or situate in or upon
any building or land shall not be included in the rateable value
of such building or land.
(3) ..............
Section 154 came to be amended by Amending Act 11 of 2009 and sub-
section (1A) was introduced in Section 154, which read as under:-
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"154. Rateable value or capital value how to be determined -
(1) ....
"(1A) In order to fix the capital value of any building or land
assessable to a property tax the Commissioner shall have
regard to the value of any building or land as indicated in the
Stamp Duty Ready Reckoner for the time being in force as
prepared under the Bombay Stamp (Determination of True
Market Value of Property) Rules, 1995, framed under the
provisions of the Bombay Stamp Act, 1958, as base value or
where the Stamp Duty Ready Reckoner does not indicate
value of any properties in any particular area wherein a
building or land in respect of which capital value is required to
be determined is situate, or in case such Stamp Duty Ready
Reckoner does not exist, then the Commissioner may fix the
capital value of any building or land taking into consideration
the market value of such building or land, as a base value. The
Commissioner, while fixing the capital value as aforesaid, shall
also have regard to the following factors, namely :--
(a) the nature and type of the land and structure of
the building,
(b) area of land or carpet area of building,
(c) user category, that is to say, (i) residential, (ii)
commercial (shops, or the like), (iii) offices, (iv)
hotels (upto 4 stars), (v) hotels (more than 4 stars),
(vi) banks, (vii) industries and factories, (viii) school
and college building or building used for educational
purposes and (ix) malls and (x) any other building or
land not covered by any of the above categories,
(d) age of the building, or
(e) such other factors as may be specified by rules
made under sub-section (1B)."
15. It is thus, clear that it is only by an amendment of the year 2009
that capital value method was introduced for levying property taxes.
At the relevant time, the unamended provisions governed the fixing of
rateable value which was to be considered on the basis of rent which a
hypothetical tenant will be willing to pay to a hypothetical landlord
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having regard to all advantages and disadvantages and after deducting
10% therefrom. Instead of conducting this exercise, the Corporation
has fixed the rateable value by adopting rate of Rs 103/- per square
metre at which the property was purchased calculating a return of 8%
on the purchase price. It is settled by Hon'ble Apex Court in the case
of Royal Western India Turf Club Limited (supra) that Section 154
provides for determination of annual rent which such land or building
may reasonably be expected to let from year to year and that annual
rent has to be worked out on the basis of what a hypothetical tenant
would be willing to pay as rent of the premises to a hypothetical
landlord having regard to all the advantages and disadvantages
relating to such premises. The Hon'ble Apex Court further held that the
section does not provide for any particular method of rating out of the
several well-known methods usually followed in such assessments,
such as the comparative method, the contractor's method, the unit
method and the profit basis method. Pertinently, the Apex Court did
not illustrate purchase consideration as one of the methods for fixing
the rateable value of the property. Even the profit basis method which
was adopted in the facts of that case was held to indicate the rent at
which premises might reasonably be expected to let particularly, where
profit is the motive of the hypothetical tenant in taking the
hereditament. The submission of Mr. Udeshi, that the purchase
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consideration could not have formed the basis for fixing the rateable
value is thus liable to be accepted.
16. It cannot be disputed that the burden was upon the Respondent
No. 1 to prove that the rateable value is not properly fixed. Irrespective
of the issues framed, the parties were well aware of the case they had
to meet and has accordingly led evidence to prove the correct rateable
value. To establish its case, the Respondent No. 1 has led evidence of
Legal Assistant who has specifically deposed that similar properties in
the vicinity owned by the Respondents have been assessed by the
Corporation at Rs 12/- per square metre. He has produced the Special
Notice issued by the Assistant Assessor and Collector fixing the
rateable value of plot reserved for Municipal School at Rs 3,210/- and
playground at Rs 1,275/- which are marked at Exhibit-C and Exhibit-E.
He has also produced the order of 24 th October, 1988 at Exhibit-D
confirming the rateable value.
17. In the cross-examination, the evidence of the Respondent No. 1's
witness on the rateable value fixed for similarly placed property
remained uncontroverted. Having failed to even suggest in the cross-
examination that order at Exhibit-D is not in respect of similarly placed
properties, the Small Causes Court has rightly fixed the rateable value
on basis of said evidence. Though it was sought to be contended by Mr.
Walawalkar that there cannot be nil or notional assessment in respect
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of reservation, it is not even the case of the Corporation that the
properties assessed at Exhibit-D were notionally assessed. The order at
Exhibit-D was the Corporation's own order and it could easily have
been demonstrated that the rateable value fixed was a notional
assessment. In any event, there cannot be inconsistent yardstick
applied to similarly placed properties.
18. Perusal of the documentary evidence produced by the
Respondent No. 1 would indicate that the notice issued by the
Assistant Assessor and Collector under Section 167 of the Bombay
Municipal Corporation Act determined the rateable value at Rs. 3,210/-
in respect of the property bearing C.T.S. Nos. 44, 45, 47, 48, 101
reserved for Municipal School and in respect of the playground, fixed
the rateable value at Rs. 1275/-, by order dated 24 th October, 1988,
marked as Exhibit-D.
19. Before this Court also, it is not demonstrated that the order at
Exhibit-D was not in respect of the similarly situated properties and the
only contention is that elaborate evidence ought to have been led. The
Respondent No. 1 has placed on record the Corporation's own order in
respect of similarly placed properties, which stood uncontroverted and
there was no requirement for elaborate evidence. In event, the witness
would have been cross examined on that aspect, the Respondent No. 1
could have elaborated by adducing additional evidence. However, as
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the Corporation accepted the evidence, there was no need for
Respondent No. 1 to lead further evidence. For this reason, there is no
question of remanding the matter for additional evidence. The burden
stood discharged by Respondent No. 1 by placing on record the
Corporation's own orders in respect of similarly situated properties,
which has remained uncontroverted.
20. The Trial Court has rightly disregarded the rateable value fixed
at Rs 103/- per square metre and thereafter, considered the evidence
to fix the rateable value. The Trial court has considered the evidence
produced on record fixing the rateable value of similar properties at
the rate of Rs. 12/- per sq. metre and had fixed the rateable value at Rs.
12/- per sq. metre. Although the finding of Trial Court is assailed for
the reason that it observes that there is no question of letting the
property as the property is in possession of the Appellant, further
observations of the Trial Court makes it clear that the Trial Court has
rightly applied the provisions of Section 154 of MMC Act to consider
what hypothetical tenant would pay to the hypothetical landlord as
and by way of rent. The Trial Court has taken into consideration
different contingencies where property is available for letting out for
shorter period or longer period and the need, urgency of that tenant
which has to be considered.
21. The Trial Court while fixing the rateable value has considered
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that by reason of reservations, the letting value would be much than
the letting value in open market and it is open for the Corporation to
revise the rateable value if reservation is vacated. Though provisions of
Section 154 mandated determination of hypothetical rent which the
property would fetch, it cannot be disputed that portion of the larger
property was reserved for municipal school and playground and
therefore the Trial Court has rightly held that the letting value of
properties partly under reservation would fetch lesser price than
reservation free property. It was not necessary for any evidence to be
brought on record to support this finding. The finding of Trial Court
that Appellant has not produced any documentary evidence from
which they have taken the rate of Rs. 103/- per sq. metre would not
mean that the burden was cast upon the Appellant as the Trial Court
has not rested its finding on absence of evidence on part of the
Appellant. On the contrary, the documentary evidence produced by
the Respondent was considered and the rateable value was fixed at Rs.
12/- per sq. metre.
22. The submission that Respondent has applied for vacancy benefit
has been rightly rejected by the Trial Court as the same does not have
any bearing on fixing the rateable value.
23. Considering the evidence on record, the Respondents have
proved that the rateable value was Rs. 12/- per square metre.
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24. Coming to the submission raised of applying principles
analagous to res judicata, the issue is well-settled. The Hon'ble
Supreme Court in the case of Mathura Prasad Bajoo Jaiswal vs.
Dossibai N.B. Jeejeebhoy5 has reaffirmed the legal principle in
Paragraph No. 8 by observing:
"8. In a case relating to the levy of tax, a decision valuing
property or determining liability to tax in a different taxable
period or event is binding only in that period or event and is
not binding in the subsequent years, and therefore the rule of
res judicata has no application: See Broken Hill Proprietory
Company Ltd. v. Municipal Council of Broken Hill [1926 AC 94]."
25. Resultantly, Point No. (i) is answered against the Appellant.
26. Coming to the decisions relied upon by Mr. Walawalkar in the
case of M/s. L.K. Builders (supra), the finding of the 1st Appeal Court
was that the reserved plot had no rateable value and could not be
notionally valued. In that case, the plots were reserved for various
purposes and there was a sanctioned development plan, and
considerable development work was carried out on various plots. It was
in the context of the finding of 1st Appeal Court that reserved plots had
no rateable value and had to be assessed at nominal or nil rate which
was under challenge. Whereas in the present case, the Small Causes
Court has taken into consideration the documentary evidence in
respect of similarly situated properties and had fixed the rateable
value at the rate of Rs. 12/- per sq. metre and therefore, this is not the
5 (1970) 1 SCC 613.
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case of notional or nominal rateable value being fixed.
27. The decision in the case of Filmistan Private Limited (supra) was
pressed into service to substantiate the plea that the burden is on the
Assessee to establish that the rateable value has not been properly
fixed by the Corporation. In the present case, the said position is not
disputed and in fact, the evidence has been led by the Assessee to
demonstrate that the rateable value fixed by the Corporation is
excessive as in case of similarly situated properties, the rateable value
was assessed at lesser rate and thus, the burden stood discharged.
28. The decision in the case of Kamla Mills Limited (supra) was
pressed in context of burden of proof, and to assail the finding of Trial
Court that there is no question of letting the property as the property
was in possession of Appellant. It cannot be disputed that the property
tax is liable to be paid and in fact, the Trial Court has proceeded to fix
the rateable value and has not disregarded the fixation of rateable
value on the ground that the property was self-owned property.
Fundamentally Section 154 of MMC Act does not create any distinction
between self-occupied property and leased property.
29. In light of the above, both the First Appeals fail and stands
dismissed.
30. In view of dismissal of First Appeal, nothing survives for
consideration in pending Interim/Civil Applications, if any, and the
same stand disposed of.
[Sharmila U. Deshmukh, J.]
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