[Cites 4, Cited by 0]
Bombay High Court
M/S. Liberty Manufacturing Co. vs Brihanmumbai Mahanagar Palika And Anr. on 11 March, 2026
2026:BHC-AS:12183
ppn 1 41.fa-97.15(j).doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally signed
PRACHI
by PRACHI
PRANESH
CIVIL APPELLATE JURISDICTION
PRANESH NANDIWADEKAR
NANDIWADEKAR
Date: 2026.03.12
16:12:24 +0530 FIRST APPEAL NO.97 OF 2015
M/s. Liberty Manufacturing Company, )
Having its office at 65, Government )
Industrila Estate, Charkop, Kandivali (W) )
Mumbai - 400 067. ) ....Appellant
(orig. Appellant)
V/s.
1. Brihanmumbai Mahanagar Palika, )
Mumbai. )
2. Municipal Commissioner of )
Greater Mumbai. )
Both having their office at Municipal, )
Corporation, Head Office, Mahapalika )
Marg, Mumbai-400 001. ) ....Respondents
(orig. Respondents)
----
Mr. R. M. Nakhwa a/w Mr. Sanket Dhawan i/by Mr. Vasant D. Dhawan for
the appellant.
Mr. Pradeep M. Patil for the respondents.
----
CORAM : JITENDRA JAIN, J.
DATED : 11 March 2026
Judgment :
1. This appeal is filed by the appellant-company challenging an order
dated 14 February 2014 passed by the Small Causes Court at Mumbai
whereby the rateable value determined by the respondent-Corporation was
confirmed. Being aggrieved, the present appeal is filed.
2. The appellant is the owner of a structure on a land belonging to the
government. The said structure was being used as a factory. However in the
ppn 2 41.fa-97.15(j).doc
year 2004, ground plus 1st floor was let out to Bank of India for the
purposes of storing the records. The 2 nd floor was retained by the appellant.
Bank of India paid compensation of Rs.5 lakhs to the appellant towards not
only the use of the premises, but also for various services.
3. On account of above, the Corporation issued a notice for revising the
rateable value to Rs.14,41,835/- with respect to ground and 1 st floor. The
said figure of Rs.14,41,835/- was arrived at based on the compensation of
Rs. 5 lakhs and after giving deduction of 60% towards the services.
4. On a complaint being filed by the appellant, the Corporation re-
determined the rateable value from Rs.14,41,835/- to Rs.10,81,475/- with
effect from 1st April 2004 by giving deduction of 70% towards the service
element.
5. Being aggrieved by the said re-determination, the appellant
challenged the same by filing an appeal before the Small Causes Court and
the Small Causes Court, by order dated 14 February 2014, has confirmed
the same. It is on this backdrop that the present appeal came to be filed,
which was admitted on 3 June 2019.
6. Mr. Nakhwa, learned counsel for the appellant submitted that the
respondent-Corporation should have considered not only the actual
compensation received by the appellant for determining the rateable value
but as held by the decision of this Court in the case of Municipal
Corporation of Greater Mumbai & Ors. versus Dalamal Tower Premises
Society & Anr.1, should have also considered other relevant facts and
circumstances while applying the standard of reasonableness under Section
154(1) of the Mumbai Municipal Corporation Act, 1888 (MMC) including
prevalent rate of rents of land and buildings in the vicinity, advantages and
1 2012 (6) Mh.L.J. 856
ppn 3 41.fa-97.15(j).doc
disadvantages relating to the premises such as situation, nature of property,
obligation etc., which have an effect on the rental. He also submitted that
merely relying on the actual compensation for determining the rateable
value is contrary to the following decisions :-
(i) India Automobiles Vs. Calcutta Municipal Corporation & Anr.2;
(ii) The Corporation of Calcutta Vs. Padma Debi & Ors.3;
(iii) Gopal Chandra Saha & Ors. Vs. Municipal Corporation of Gr.
Mumbai & Ors.4.
7. He further submitted that the Corporation has not led any evidence
to the effect of the guidelines issued by the decision in the case of Dalamal
Tower Premises Society (supra) and therefore, the rateable value
determination should be quashed. He further submitted that the order
determining the rateable value is a non-speaking order and therefore, even
on this ground, the Small Causes Court ought to have allowed the appeal.
8. Per contra, Mr. Patil, learned counsel for the Corporation submitted
that the Corporation has taken only 30% of the compensation as a
reasonable rent after giving deduction of 70%. He further submitted that
the instance of renting by the appellant himself would constitute a
reasonable rent. He further submitted that if the appellant wanted further
reduction or re-determination of the reasonable rent, then the onus was on
them to prove by leading various evidence, which has not been done. He
further submits that the order determining the amount of Rs.10,81,475/-
should be read alongwith the original proposal, whereby the rateable value
was determined at Rs.14,41,835/- which came to be reduced after
considering the objection of the appellant. He therefore, submits that this is
2 2002 (3) S. C. C. 388
3 AIR 1962 SC 151
4 2004 (2) All MR 181
ppn 4 41.fa-97.15(j).doc
not a case of a non-speaking order. He therefore, prayed for dismissal of the
appeal.
9. I have heard learned counsel for the appellant and the respondent-
Corporation.
10. There is no dispute that the full compensation of Rs.5 lakhs cannot be
considered as reasonable rent and therefore, the Corporation has given
deduction of 70% as compensation towards the services and has taken the
balance 30% as reasonable rent based on the actual agreement of the
appellant with Bank of India. The Corporation, in addition to the said
agreement between the appellant and Bank of India, could have led
independent evidence in terms of paragraph 43 of the decision in the case
of Dalamal Tower Premises Society (supra) and arrived at a rateable value
which could have been either equal to 30% of the compensation or lesser
than 30%. However, this exercise has not been done by the Corporation.
The Hon'ble Supreme Court in the case of India Automobiles (supra) has
observed that in all cases, actual rent need not be treated as a reasonable
rent, but all other factors also have to be considered. This exercise
admittedly was not done by the Corporation.
11. In my view, even the appellant could have led independent evidence
in the light of the decision in the case of India Automobiles (supra) and
Dalamal Tower Premises Society (supra) for pleading their case that 30% of
the compensation is on the higher side. The contention of the appellant that
till 2004, Rs.8 to Rs.10 per sq. mtr. was taken and therefore, that could be
the basis for reasonable rent also cannot be accepted in the light of the fact
that from 2004 on actual letting more amount was received. Therefore,
even the appellant has failed to discharge the onus in support of their plea.
12. The present appeal relates to the year 2004 onwards. Both the parties
ppn 5 41.fa-97.15(j).doc
have not discharged their onus to the extent required by the decisions
referred to above. Remanding the matter back after so many years would
only lead to multiplicity of proceedings and would not serve any purpose
and it will delay the recovery by the Corporation.
13. Keeping in mind all these factors, the rateable value could be
determined by applying 20% of the compensation i.e., 20% of Rs. 5 lakhs
equal to Rs.1 lakh as a reasonable rent for which the property can be let out
on year to year basis. It goes without saying that after this, the appellant
would be entitled to deduction of 10% of the rateable value towards repairs
as per Section 154(1) of the MMC Act. After giving deduction of 10% from
Rs.1 lakh, the balance 90 % i.e. Rs.90,000/- p.m. will be the rent on which
the property tax can be levied.
14. The argument that the order of Rs.10,81,475/- is not a speaking
order, has some force, but same has to be read alongwith the original
proposal which was sanctioned on 6 October 2004 where the rateable value
was determined at Rs.14,41,835/- and reasons were given for the same.
Pursuant to the said proposal, the appellant filed its objection and
thereafter, the original order determining rateable value of Rs.10,81,475/-
was arrived at. The investigating officer ought to have given reasons on the
objections raised by the appellant in its order determining Rs.10,81,475/-.
Therefore, to that extent there is some force in the argument of the learned
counsel for the appellant, but since the matter is very old and for the
reasons stated above, no purpose would be served by remanding the matter,
the Court feels it fit that in the interest of justice and to balance the equity
of both the parties, the rateable value is determined in above terms. That is
20% of Rs.5 lakhs equal to Rs.1 lakh, less 10% towards statutory deduction
equal to Rs.90,000/-.
ppn 6 41.fa-97.15(j).doc
15. The Corporation is directed to levy property tax on Rs.90,000/- p.m.
for the period under dispute.
16. The Corporation is directed to determine the property tax in terms of
the above order and thereafter adjust the same against the deposit made
by the appellant with the Small Causes Court. If any surplus amount is
remaining, same should be refunded to the appellant and if any amount
becomes payable by the appellant, then the same should be paid by the
appellant.
17. Appeal is disposed of in above terms.
(JITENDRA JAIN, J.)
