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 Sairaj 1 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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 Sairaj 2 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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 Sairaj 3 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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 Sairaj 4 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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 Sairaj 5 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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.
Sairaj 6 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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.
Sairaj 7 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc Filmistan Private Limited vs. Municipal 2 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.
Sairaj 8 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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:-
Sairaj 9 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc "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 Sairaj 10 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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 Sairaj 11 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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 Sairaj 12 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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 Sairaj 13 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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 Sairaj 14 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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.
Sairaj 16 of 17 ::: Uploaded on - 13/03/2025 ::: Downloaded on - 15/03/2025 10:22:39 ::: First Appeal No. 481 of 1992 and 482 of 1992 (final).doc 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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