Bombay High Court
Municipal Corporation Of Greater ... vs Maker Bhavan No. Ii, Commercial ... on 23 October, 1991
Equivalent citations: 1991(4)BOMCR56
JUDGMENT D.J. Moharir, J.
1. This appeal challenges the order of Additional Chief Judge of the Small Causes Court passed in Municipal Appeal No. M/307 of 1974 under section 217 of the Bombay Municipal Corporation Act. The respondent Maker Bhavan No. 11 Commercial Premises Co-operative Society Limited (hereinafter referred to as the Society) is the owners of building abutting New Marine Lines. This building consists of, in all 24 commercial units and these units are in possession of different members of the Society being the share holders thereof. In the beginning all these 24 units were self-occupied in the sense that they were occupied and used by the respective members to whom these had been allotted by the respondent Society as the owner of the said building. After sometime, seven out of these 24 unit holders transferred possession of their respective units to certain other persons on a leave and licence basis, charging different considerations by way of licence fees. Unit this transfer of possession of the seven units, by the respective members of different persons, the Municipal Corporation had fixed the rateable value of the building at Rs. 135/- per 10 sq. meters. That, therefore, was the uniform application to all the units for determination of the rental value and the annual letting value. However, having probably come to know of these transactions the Municipal Corporation served the respondent Society with a notice for assessment of the rateable value which was proposed to be fixed at Rs. 5,02,555/-. The Society then filed a complaint on 11-1-1974, which was investigated to fix the rateable value at the sum of Rs. 5,02,555/- as aforesaid. This was challenged as being excessive by the Society and, therefore, an appeal was preferred to the Additional Chief Judge of the Small Causes Court. The rateable value as fixed was sought to be set aside and it was contended before the learned Additional Chief Judge that it could not exceed Rs. 1,50,000/-.
2. It appears that it was till the 1st April, 1972 that the building was being partly occupied and the rateable value as fixed till then was Rs. 1,01,285/-. After 1st April, 1972 revision of the rateable value was effected by reason of certain additions which were made in the units. The revision was, therefore, an upward one. Then, the unit Nos. 27, 17, 24, 7, 10, 8, 21 and 22 in the said building were given on a leave and licence basis by the respective allottee members to different commercial undertakings. The licence fee charged in each case was different, ranging as it appears from Rs. 4, 128.75 to Rs. 4,605/-. In support of its contention that the rateable value as fixed at Rs. 5,02,555/- was excessive, evidence was also led by the parties. According to the learned Additional Chief Judge, after consideration of the evidence as adduced, the point which still remained for consideration was whether the Municipal Corporation was right in taking the actual licence fee recovered for the purposes of fixing the rateable value in respect of the seven aforementioned units which had been given out on leave and licence basis. He observed that in respect of the other owner occupied 17 units the rental was taken at Rs. 135/- per 10 sq. meters which was not seriously challenged. As for the other seven units, however, the learned Judge found it entirely doubtful whether the consideration paid by the seven respective licenses in respect of the seven units could any way impinge upon the fixation and a further upward revision of the rateable value. The learned Judge held upon a consideration of the various authorities which were also cited before him that the licence fee charged to the seven different licensee, of the seven different units in the building could not legally be taken into consideration at all and the two different standards for fixation of rateable value could not be adopted by the Municipal Corporation in respect of different units of the very same building. In a co-operative society, as the learned Judge observed, the ownership vested in the society and the possession and interest therein in the members not as the tenants of the society but as the direct incident of their share holding in the society or their membership there. The right to recover rent or licence fee was of the individual member or members in the society only so far as the creation of a licence or tenancy was concerned and in that behalf the society could never lay any claim on a right for itself recovering rent or licence fee from the transferee fee or a licensee fee from its members. The rent recoverable by a member from his licensee could not, therefore, be taken into consideration for fixing rental value against the society which was the landlord and the society was not at all concerned with the enhanced amounts of consideration charged by the members by way of licence fees and could not apply such enhanced licence fees as a mode of consideration to differently treat some of the units in the building. It being the premise that in respect of the 17 other tenants or for that matter in respect of the entire 24 units in the building the rateable value had been fixed on the basis of Rs. 135/- per 10 sq. meters area, the learned Judge after taking into consideration the area of each of the seven units-in view of the facts of changes brought about in the tenements an increase therein, fixed the rateable value in respect of each of these units, at the rate of Rs. 13 per 10 sq. meters. Thereby, from the rateable value of Rs. 5,02,555/- as was fixed by the Municipal Corporation's assessor after hearing the complainant, the learned Judge came to the conclusion that the rateable value of the whole of the building would come to Rs. 3,90,163/- for the year in question, namely 1974-75. It is this reduction, no doubt not an unsubstantial one, which comes to be challenged by this First Appeal.
3. The point for decision, after hearing learned Counsel for the appellant Municipal Counsel as also the Society, lies, therefore and upon considering, with due circumspection, the appreciation by the learned trial Judge also-within a fairly narrow compass. The question for decision is whether it was open to the Municipal Corporation to at all take into consideration the substantial licence fees which the different occupants of the seven units in the building charged to their licenses, in the year in question. The question is whether it was open to the Municipal Corporation, for the purpose of determination of the rateable value of the building, to apply the rate of Rs. 135/- per 10 sq. meters only to 17 out of the total 24 units and then proceeding to consider the rateable value, on the basis of the amount of licence fees charged by the members, in respect of their respective seven units. Whether this was permissible in law. Having heard learned Counsel, I am satisfied that such a differential treatment could not have been meted out in the matter of fixation of the rateable value and that the amount of licence fees charged by the seven different members to their respective licensees could not have constituted the norm for arriving separately at the rental value of the said seven units.
4. In this behalf, it would be useful to refer to the reasoning adopted by the learned Judge, of the lower appellate Court. It was contended that the society had been recovering the excess tax from the members of seven units and suggestively therefore these seven units were bound and legitimately enough assessed separately for their rental value. The learned Judge therefore, observed :
"The question is not whether the Society is entitled to recover the excess tax, but it is whether the Corporation has taken the fair rent for 7 units for assessment. There cannot be two different rates for taxation and even though the 7 unit-holders are recovering excess rent or compensation, the Corporation would not be entitled to share the illegal profits obtained by those members. The fair rent in respect of the building should be at the rate of Rs. 135/- per 10 sq. metros for all units irrespective of the facts whether they are owner occupied or given on licence."
5. Learned Counsel Shri Walawalkar for the appellant has however contended that there must be found nothing impermissible, incorrect or illegal for the Municipal Corporation becoming alive to the fact that the rental value of the seven units of the building in question ought to be much more than Rs. 135/- per 10 sq. metres when it was a fact undisputable that these so called owners or allottees of the seven units were reaping a rich harvest by giving those seven units to different persons on heavy leave licence fees, much more than Rs. 135/- 10 sq. metres as the rental value of the 17 other units in the building. In my opinion, the question as to whether such two different rates and norms for arriving at the rental value can be adopted has been fully set at rest by an earlier decision of this Court which, learned Counsel Shri Shetye argues, is almost on par with the totality of the fact in the present case.
6. The decision is in Biswa Bandhu Sen v. Municipal Corporation of Greater Bombay and others, reported in 1981 Bom.C.R. 1006. In that case also it appears that the petitioner was a member of the co-operative housing society and was in occupation of one of the flats in the middle as allottee. The society owned the building and the petitioner as a share holder and member was entitled to possess and occupy the said flat.
7. The rental value of the entire building has been fixed by the Municipal Corporation and on fixation of such amount, the society used to recover the amount of tax from each of the members.
8. There was a revision of the amount of the rateable value in August 1975. A notice was given to the Secretary of the Society to appear before the authorities and the rateable value of the property as a whole was revised. While arriving at such a rateable value the authorities took into consideration the fact that some of the flats had been given by the members to the licenses on receipt of an amount of compensation. That amount was taken into consideration and after permitting the necessary deduction of 20%, the balance amount was considered as rateable value. The petitioner had given his flat on a licence fee of Rs. 450/- per month. The rental value of the flat in question was determined at Rs. 352/- and the annual letting value at Rs. 3670/-. On the strength of such valuation the rateable value of the entire property was fixed and the taxes were levied. The Society in its turn called upon petitioner to pay the taxes on the revised rateable value which the petitioner challenged. Before the Court the argument advanced was that the practice as adopted by the Corporation in taking into consideration the amount of the licence fee charged by the petitioner to his licensee and basing thereupon the annual letting value of the building was entirely irregular and the submission was accepted, in the light of a decision of the Division Bench of this Court in First Appeal No. 393 of 1975. Before the Division Bench also the question which come up for consideration was an identical one. The Corporation revised the rateable value by taking into consideration the fact that certain flats in a housing society had been let out by the members on receipt of compensation. The rateable value was determined with reference to the amount of compensation and in an appeal preferred by the society, revision of the rateable value was struck down on the ground that the procedure adopted in arriving at the rateable value was irregular. The Municipal Corporation approached the High Court but the appeal was dismissed holding that the Corporation had no right to take into account the amount of compensation received by the members for the purpose of fixation. In as much as in the case before the High Court the said petitioner Biswa Bhandhu Sen had been called upon to pay the taxes on the revised rateable value, the High Court directed that the petitioner would not be liable to pay the increased charges of the strength of the revision of the rateable value.
9. As would thus be seen, the fact which appear in the present case are almost identical and the premises that two different norms could be adopted one in respect the 17 units which were self-occupied by the members of the Society and the seven others in which the unit holders had transferred possession to their licensees on leave, licence fees, would not found as justifiable. The letting value irrespective of the facts of howsoever high their earnings were, was required to be adopted by the Municipal Corporation and it must be noted that the learned Judge while dealing with the present Municipal Appeal has very categorically observed that in a co-operative society, the ownership vested in the society and what passed on to the member was merely a possessory interest, not as the tenant of the society but as the members thereof, as a direct incident of the shareholding or memberships. The right to recover rent or licence fee was of the member only as the creator of licence or tenancy and the society could never claim the right to recover the licence fee from its members' licensee or tenants whatever character he filled in. It was rightly, therefore, that the learned Judge came to the conclusion that the rent recovered or the licence fees charged by the occupants of the seven units of the building in question could not be taken into consideration for fixing the rateable value against the society, the society being the landlord. The society being the landlord, would not, upon an extension of the same line of reasoning, be taken as concerned with the higher amount earned by the individual members. In that view the reasoning as was adopted by the learned Additional Chief Judge must be found and held to be entirely unexceptionable.
10. The appeal in the circumstances, deserves to be dismissed. However, in view of the interesting nature of a question raised and crossed, the parties would do well to bear their own costs.
11. Certified copy to be expedited.