Madras High Court
Pollachi Municipality By Its ... vs Vedan Chetty on 29 October, 2001
Author: M. Chockalingam
Bench: M. Chockalingam
JUDGMENT M. Chockalingam, J.
1. This second appeal has arisen from the judgment and decree of the learned Subordinate Judge, Udumalpet made in A.S.No. 23 of 1989, dated 9.9.1989 confirming the judgment and decree of the learned District Munsif, Pollachi made in O.S.No. 191 of 1985, dated 11.1.1985.
2. The respondent herein filed a suit seeking for a declaration that the assessment made by the appellant- Pollachi Municipality in respect of his house property situated in door No. 29, New Alagappa Layout, Pollachi was illegal and consequential injunction to restrain the appellant from collecting the tax with the following averments. The respondent purchased the house site in the layout formed in T.S.No. 7 within Pollachi Town and constructed a house in plot No. 29. The said lay out was only a new one, in which there was no water tap connection. Only a few houses have been constructed and it is not a fully developed area. In the house construed by the respondent, the entire work is not completed. The appellant Municipality sent a special notice in notice No. 256540, dated 3.12.1984 fixing an imaginary annual rent for the building in plot No. 29. The annual rental value fixed in the notice has no relevance to the prevalent rental value. The appellant on fixing the annual rental value at Rs. 4,800 has demanded Rs. 612.50 as property tax. The appellant has not given any particulars as to how the rental value was arrived at. The respondent filed a petition before the appellant objecting the proposed assessment. The appellant Municipality sent an order dated 17.1.1985 by which the respondent was informed that the rental value for the second half year of 1984-85 has been reduced to Rs. 4,200 and demanded a half yearly tax at Rs. 536 for the half year of 1984-85. The order did not spell out how the rental value was determined. Hence the respondent sent a revision petitioner to the appellant on 29.1.1985 bringing out the necessary facts and informing the appellant that the annual rental value determined for the similar houses and even bigger houses situated in the said layout was very much low than the rental value fixed for the respondent's house. The appellant Municipality sent an order on the petitioner filed by the respondent on 12.3.1985 stating that the tax levied has been confirmed and without saying any reason for dismissing the petition. The tax levied by the appellant was arbitrary, capricious and against the provisions of the District Municipalities Act. The appellant has not given any details as to how the rental value of the building was arrived at. Though the respondent has brought out to the notice of the appellant about the quantum of the tax levied on the newly built up houses in the vicinity, the appellant had failed to consider, but dismissed the revision petition of the respondent without adducing any reason. The Municipality has not adopted any procedure contemplated in law to arrive at the annual rental value of the building or did not take into account of the taxes levied for the similar building situated in the same layout. Thus the tax levied by the appellant Municipality was illegal and arbitrary and the suit has been filed for the above relief of declaration.
3. The appellant Municipality contested the suit by alleging that the respondent had constructed a dwelling house in the New Alagappa Layout; that on the date of inspection, the construction of the houses in the two portions was completed; that the house constructed by the respondent was for dwelling purposes; that the building has been assessed to property tax as per Section 82(2) of the Tamil Nadu District Municipalities Act, 1920 which empowers the Executive Authority to assess the buildings on gross annual rents at which they may reasonably to expected to let from month to month or from year to year; that in the instant case, the rent assessed was a reasonable one, as the two portions one for the owner occupation and the other for letting out, could fetch a reasonable rent of Rs. 400 per month; that the respondent sent a revision petition and on hearing his statement and considering the situation of the building in a new layout which was now only being provided with amenities, the annual rental value was reduced to Rs. 4,200 and thus the annual rental value fixed in the revision was reasonable' that there were so many new houses constructed in the layout area; that all the buildings were assessed on an annual rental value according to the nature of construction; that one building just in the east of the building was occupied by the Regional Transport Officer's Office which would likely to be assessed on an annual rental value of Rs. 12,000 and as such the area was though situated in an undeveloped layout, the rent fetching capacity was so high as to fetch higher rent for buildings; that the respondent filed an appeal against the order of the Executive Authority reducing the tax on revision; that as per rules, an appeal petition has to be filed after paying the reduced tax; that the respondent failed to remit the reduced tax and hence the appeal filed by him was rejected by the Special Officer in Council; that the tax levied to the building in question so stated above was reasonable and the rental value was arrived at as stated in Section 82(2) of the Tamil Nadu District Municipalities Act, 1920; that the contention of the respondent that the tax levied was against the provisions of the said Act was not correct, since the tax was not fixed by the appellant Municipality arbitrarily, but only on the rental value; that the annual rental value was arrived at as per the provisions of the Tamil Nadu District Municipalities Act, 1920; that there was no cause of action for the suit and the alleged cause of action was false and hence the suit has got to be dismissed.
4. The trial Court framed the necessary issues, tried the suit and decreed the same as prayed for. The aggrieved defendant Municipality preferred an appeal which was also dismissed by the first appellate Court. Hence this second appeal has been preferred by the defendant Municipality. At the time of admission, the following substantial question of law was formulated by this Court for consideration.
Whether the judgments of the Courts below are vitiated by their failure to apply the relevant principles of law in deciding the case?
5. This second appeal has been filed by the appellant Municipality on confirmation of the decree granted in favour of the respondent by the first appellate Court. The respondent challenged the assessment made by the appellant Municipality in respect of his house stating that the said assessment was illegal, arbitrary and capricious and not in accordance with the mandatory provisions of law. Both the Courts below disagreeing with the pleas put forth by the appellant Municipality have set aside the property tax assessment in question.
6. The learned Counsel appearing for the appellant Municipality would submit that the lower Courts should have dismissed the suit as one not maintainable, since the respondent has not prosecuted the appeal provided under the District Municipalities Act; that the burden of proof was on the respondent to show that the appellant Municipality has not followed the procedure envisaged under the District Municipalities Act and the annual fair rent that would have been fixed under Section 4 of the Tamil Nadu Buildings (Lease and Rent) Control Act has been exceeded; that there was no pleading by the respondent that the rental value was in excess of the fair rent as envisaged under the Tamil Nadu Buildings (Lease and Rent) Control Act and hence the lower Court should have rejected the case of the plaintiff; that in the instant case the appellant Municipality has strictly followed the provisions of the District Municipalities Act, 1970 in the matter of assessment; hence the suit itself was barred under Section 354 of the District Municipalities Act; that the lower Courts have committed in error in comparing a smaller house of 493 sq.ft. assessed for Rs. 100 in April, 1982 with the larger house of 881 sq.ft. house of the respondent assessed at Rs. 400 in October, 1984; that the lower Courts should not have granted the declaration since there was nothing to find that the valuation made by the Municipality was in excess or illegal; that it is pertinent to note that the respondent's house was in two portions and was adjacent to a building wherein the Regional Transport Office was being run; with an assessment at Rs. 12,000 annual value and under the circumstances, the lower Courts should have upheld the annual value in respect of the respondent's house; that under the Rent Control Act even the neighbouring houses of the same size could be valued differently; that the year of assessment and location are all relevant under Section 4 of the Rent Control Act for arriving at the rental value of the buildings; that the lower Courts have not considered the decision reported in The Salem Municipal Council by its Commissioner v. Karupanna Pillai ; that the lower Courts without considering the documentary evidence adduced by the appellant Municipality have decreed the suit; that both the Courts below without proper interpretation of the statutory provisions and appreciation of evidence adduced have come to the wrong conclusion that the assessment made by the appellant Municipality was illegal and have granted the relief asked for by the respondent and hence the judgments of the lower Courts have got to be set aside.
7. The learned Counsel appearing for the respondent would urge that the trial Court after careful consideration of the evidence adduced has arrived at the correct conclusion that the assessment made by the appellant Municipality in respect of the respondent's house was arbitrary and against the mandatory provisions of the District Municipalities Act and the first appellate Court has also rightly confirmed the same; that the appellant Municipality has neither pleaded nor proved that the annual rental value in respect of the respondent's property was fixed in accordance with the provisions of the Tamil Nadu Buildings (Lease and Rent) Control Act but it has been repeatedly held by the Courts and the Hon'ble Apex Court that when the property in respect of which assessment is made is situated out of the municipal limits, in making the assessment the Municipality should strictly follow the provisions of the Tamil Nadu Buildings (Lease and Rent) Control Act for fixing the annual rental value; that in the instant case, the Municipality without following the same has fixed the annual rental value arbitrarily; that the respondent adduced sufficient evidence to show that the annual rental value in respect of the other properties of similar size and nature were fixed very low and the assessment made by the Municipality in respect of the respondent's property was highly discriminatory and thus both the Courts below have correctly found that the assessment made by the appellant Municipality was not in accordance with law and hence they have rightly set aside the same and this second appeal has got to be dismissed.
8. The appellant Municipality has preferred this second appeal from the judgment of the sub Court confirming the judgment of the trial Court wherein a declaration that the assessment made by the appellant Municipality in respect of the respondent's house situate in door No. 29, New Alagappa Layout, Pollachi, pursuant to a special notice under Ex.A-1, dated 3.12.1985 was void and illegal was granted in favour of the respondent. What was contended by the respondent herein before the Courts below and equally here also is that his building referred to above was a new construction; that the appellant Municipality has assessed the property tax in respect of the building by fixing the annual rental value at Rs. 4,800 and subsequently reduced to Rs. 4,200 and the pursuant demand of property tax from the second half year 1984-85 was arbitrary and illegal since the annual rental value of the said building was not arrived at in accordance with the provisions of the District Municipalities Act and also in accordance with the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act and hence it has got to be set aside. The only defence that was put forth by the appellant Municipality was that the construction of the respondent's building was of two portions, one for the owner's occupation and the other for letting out which would fetch a reasonable rent of Rs. 400 per month and thus the assessed rental value was reasonable and has been assessed to property tax as per Section 82(2) of the District Municipalities Act, 1920; and that the respondent without filing an appeal petition after paying the tax levied, has filed the suit and hence the suit should have been dismissed.
9. After careful consideration of the rival submissions and scrutiny of the available materials this Court has to necessarily concur with the Courts below. Admittedly the building of the respondent was a new construction. The appellant Municipality have served on the respondent-house owner, a special notice in notice No. 256540, dated 3.12.1984 marked as Ex.A-1, wherein it is found that annual rental value was fixed at Rs. 4,800 and the amount of tax payable for the second half 1984-85 was Rs. 612.50. It is pertinent to note that Ex.A-1 notice did not contain any other particulars informing the respondent how this annual rental value of Rs. 4,800 was arrived at. The contention of the appellant that the respondent has rushed to Court even before exhausting the procedural formalities under the Act cannot be countenanced for the simple reason that the respondent before filing the instant suit has raised his objection by filing a petition. The appellant by an order dated 17.1.1985 informed the respondent that the rental value for the second half 1984-85 was reduced to Rs. 4,200 and a demand of Rs. 536 towards the half yearly tax for the second half year 1984-85 was made. It is not the case of the Municipality that when the objections were raised by the respondent against the said demand, an opportunity of being heard was given to him. The said order marked as Ex.A-2, dated 17.1.1985 did not speak how the rental value was determined at Rs. 4,200. Not satisfied with the said order, the respondent has preferred a revision petition under Ex.A-3, dated 29.1.1985 and the same was rejected by the Special Officer in council by an order dated 12.3.1985 as found under Ex.A-4.
10. It is not the case of the appellant Municipality that an opportunity of being heard was given to the respondent at any point of time, after the objections were raised by him. But the appellant Municipality without doing so has confirmed its original assessment. As rightly contended by the respondent in both the Courts below, the appellant has fixed the annual rental value without strictly adhering to the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act to arrive the annual rental value of the building. The plaintiff has specifically averred that the defendant Municipality has not adopted any procedure contemplated in law to arrive at the annual rental value of the building. A reading of the written statement would clearly indicate that the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act was not followed while fixing the annual rental value of the building in question. Following the decision of the Hon'ble Apex Court reported in The Guntur Municipal Council v. The Guntur Town Rate Payers' Association , this Court in a case reported in K. Govindarajan v. Madurai Corporation , has held as follows:
In fixing the annual rental value of the building situated within Municipality the provisions of the Rent Control Act must be followed.
Nowhere in the pleading of the appellant Municipality it is stated nor has the witness examined on the side of the Municipality has deposed that in fixing the annual rental value of the building in question the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act was followed. In view of the aforestated decisions, without any hesitation it can be held that the assessment made by the appellant Municipality in respect of the building of the respondent in question was not in accordance with the procedures contemplated in law to arrive at the annual rental value. On the contrary, the available evidence would indicate that the fixation of the annual rental value by the appellant Municipality was only arbitrary and hence it has go to be necessarily set aside. Thus both the Courts below were perfectly correct in setting aside the property tax assessment under challenge holding that the said assessment is not in accordance with law. The Court is unable to appreciate or agree with any one of the contentions put forth by the appellant's side since they do not carry any merit.
11. In the result, this second appeal fails and the same is dismissed with costs. Judgment and decree of the first appellate Court as well as the trial Court are confirmed.