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1. This is an appeal from a judgment of the High Court of Judicature at Fort William in West Bengal. The material facts are these.

2. Premises No. 4, Diamond Harbour Road, which is within the municipal limits of Calcutta, comprise 69 bighas, 10 cottas, 8 chittacks and 18 square feet of land with buildings thereon. The respondents who are the Governors of St. Thomas' School are the owners of the land and of the buildings which were constructed thereon before April 1942. Those premises have been assessed to consolidated rates under Section 127(6) of the Calcutta Municipal Act. An assessment at the general six yearly re-valuation was made in 1938-39. Unless re-valued in the interval that would remain in operation till December 31, 1944.

The owners shall meet and pay the revenue, rent, Municipal taxes and all other outgoings relating to the said property whether payable by the owners or the occupier thereof.

4. The schedule was in these terms:

Premises No. 4, Diamond Harbour Road, St. Thomas' Girls' School situated in the city of Calcutta.

5. Thereafter the Central Government erected several buildings on the premises at a cost of about Rs. 3 lakhs. In the last quarter of 1944-45 there was an intermediate re-valuation under Section 131(c) and (d) of the Municipal Act and an enhanced amount was imposed on the premises by the appellants from the first quarter of 1944-45 up to the third quarter of that year. This intermediate assessment is not the subject of the proceedings in this appeal.

6. After this intermediate re-valuation, the Central Government put up further structures at an additional cost of about Rs. 50,000. At the general re-valuation made under Section 131(1) of the Municipal Act in the last quarter of 1944-45, the cost of all the additional structures erected by the Central Government, of the total value Rs. 3,50,000, was taken into account and the annual value under Section 127(b) of the Municipal Act was determined at Rs. 93,370. The respondents objected to this assessment before the Chief Executive Officer of the appellants. The Deputy Executive Officer reduced the valuation of the land, with the result that the annual value was reduced to Rs. 77,873. He rejected the respondents' contention that the value of the buildings put up by the Government should be excluded in the re-valuation. From that decision an appeal was riled in the Court of the Small Causes under Article 144(1) of the Municipal Act. That Court accepted the contention of the respondents and held that the structures put up by the Government were exempt from Municipal taxes and therefore should not be included in the valuation. The Court thus reduced the annual value to Rs. 60,374. The Court rejected the contention of the respondents that the whole assessment should be set aside. From that judgment an appeal was preferred by the Corporation to the High Court. Pending that appeal, in Gov.-Gen. of India v. Corporation of Cal. (1947) 52 C.W.N. 173 a Division Bench of the Calcutta High Court decided that Section 154 of the Government of India Act applied to buildings constructed under similar circumstances in that case and the proviso was not applicable. Treating that decision as binding, the Division Bench, which decided the appeal in the present case, dismissed the appellants' appeal. As the case involved an interpretation of Section 151 of the Government of" India Act, 1935, the High Court however granted a certificate under Section 205(2) of that Act. The appellants have therefore brought this appeal to this Court.

9. The main arguments of the appellants is that the buildings put up by the Government cannot be separately assessed because the land on which the buildings stand is not vested in the Government. It was therefore argued that as the valuation is of the whole area, as one unit, the exemption given to the Crown lands under Section 154 of the Government of India Act cannot exclude the new structures from assessment. It was argued that the order of requisition legalised what would otherwise have been a trespass and there was no lease in favour of Government so as to give to the Government any interest in the land on which the new structures were put up. It was therefore contended that Section 154 of the Government of India Act was not applicable. In the alternative it was contended that the proviso would be applicable because the unit of re-valuation and assessment was the whole area, and as that unit was already taxed before April 1937, the additional structures should be included in the re-valuation.