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The Municipal Commissioner for the City of Bombay Vs. Maneklal A. Mehta - Court Judgment

LegalCrystal Citation
SubjectMunicipal Tax
CourtMumbai High Court
Decided On
Case Number First Appeal No. 902 of 1959
Judge
Reported in(1962)64BOMLR107
AppellantThe Municipal Commissioner for the City of Bombay
RespondentManeklal A. Mehta
DispositionAppeal allowed
Excerpt:
.....road lighted by electric lights installed by landlord--charges for electricity borne by landlord-municipal commissioner determining rateable value on basis of actual rent received by landlord--whether landlord entitled to deduction of electricity charges paid by him in fixing rateable value of premises.;a landlord owned some chawls which were situated a little away from the main road and he had laid out a private road which connected the chawls to the main road. this connecting road was of his ownership and it lay along the chawls and was lighted by the landlord by electric lights installed at a certain distance from one another. the cost of maintenance and electricity charges for these lights was borne by the landlord. for one of these chawls the municipal commissioner..........let out to several tenants and the landlord recovers rent from them. these nine chawls bear different municipal ward and street numbers and are assessable to '' property taxes'' under the provisions of the bombay municipal corporation act, 1888.2. the taxes payable by the respondent in respect of his nine chawls for the period between april 1, 1955, and september p, 1955, were assessed on the basis of the rateable .values which had been determined by the municipal commissioner in accordance with the provisions of section 154 of the bombay municipal corporation act.3. under section 163, the respondent made a complaint against the amounts of rateable value as severally fixed by the commissioner on the nine chawls. his complaint was, however, disallowed by the commissioner on september.....
Judgment:

Datar, J.

1. The respondent Maneklal A. Mehta is a landlord owning nine Chawls on the Bombay Agra Road at Ghatkopar, Greater Bombay. It seems that these Chawls are let out to several tenants and the landlord recovers rent from them. These nine Chawls bear different municipal ward and street numbers and are assessable to '' property taxes'' under the provisions of the Bombay Municipal Corporation Act, 1888.

2. The taxes payable by the respondent in respect of his nine Chawls for the period between April 1, 1955, and September P, 1955, were assessed on the basis of the rateable .values which had been determined by the Municipal Commissioner in accordance with the provisions of Section 154 of the Bombay Municipal Corporation Act.

3. Under Section 163, the respondent made a complaint against the amounts of rateable value as severally fixed by the Commissioner on the nine Chawls. His complaint was, however, disallowed by the Commissioner on September 14, 1955.

4. Thereafter, under Section 217, the respondent preferred nine appeals before the Chief Judge of the Court of Small Causes at Bombay against the rateable values fixed by the Commissioner in respect of the nine Chawls. In these appeals the respondent stated that all his nine Chawls were situated in the interior, .1 little away from the Bombay Agra Road and that he had laid out a private road which connected the Chawls to the main Bombay Agra Road. This connecting road was of his ownership and it lay along the nine Chawls right from the junction of the Bombay Agra Road to street No. 661. This road was lighted by the respondent by electric lights by installing 30 points at a distance of about 100 feet from one another, along the road. The costs of the maintenance of these thirty lights were borne by the respondent himself. The bills of electricity charges for the thirty lights fixed on this private road for the year ending on August 31, 1955, came to Rs. 1,702-1-6, which was more or less the annual average amount of such charges. The respondent contended that in fixing the rateable value of the Chawls under Section 154(1) of the Bombay Municipal Corporation Act, the Commissioner, besides giving the statutory deduction of ten per centum of the annual rents, ought to have also deducted therefrom the actual annual electricity charges borne by him for lighting the said private road and made a further allowance for the cost incurred by him in installing the thirty electric poles. However, at the time of the hearing of the appeals, it appears that the contention that the Commissioner ought to have made an allowance for the cost incurred in installing the thirty poles was not pressed. The only point argued was: whether in fixing the rateable value under Section 154(1) of the Bombay Municipal Corporation Act, apart from the statutory deduction of ten per centum, the respondent was entitled to the deduction of electricity charges borne by him in respect of the thirty lamp posts installed along the private road for the benefit of the occupants of the nine Chawls.

5. The learned Chief Judge was of the view that the thirty lamp posts were 'extraneous to the nine chawls' and that the electric charges incurred by the respondent were 'for something other than the occupation of the premises'. He, however, found that apart from the nine Chawls some other buildings of the respondent were also receiving the benefit of the thirty electric lights and that accordingly the full amount of the electric charges could not be deducted as claimed by the respondent. He, therefore, directed that in fixing the rateable value under Section 154 of the Act only four-fifth of Us. 1,702 should be proportionately deducted on account of electric charges from the annual rents of the nine chawls. Rateable values were accordingly worked out in all the nine appeals.

6. The present appeal is preferred to this Court by the Municipal Commissioner under Section 218D of the Bombay Municipal Corporation Act only against the decision in Municipal Appeal No. M/161/D of 1955, which had been filed by the respondent with respect to the rateable value of one of his chawls, i.e., the building bearing ward No. 7063 and street No. 659. The Municipal Commissioner had fixed the rateable value of this building at Rs. 1,915. The learned Chief Judge in conformity with his findings has now reduced the same to Rs. 1,745. It is only this rateable value that is challenged in the present appeal. The Municipal Commissioner has not preferred appeals against the rateable values as fixed by the learned Chief Judge in the other eight appeals, which had been filed before him.

7. In allowing deduction on account of electric consumption charges borne by the respondent, the learned Chief Judge relied upon certain previous decisions of his own Court. In Municipal Appeal No. M/31 of 1940 (Messrs. Muljee Sioka and Co., a, firm v. The Municipal Commissioner for the City of Bombay) the petitioners claimed deductions in respect of the value of lifts and pumps, costs of their maintenance, repair, supervision services, liftman's wages and costs of electric energy consumed, from the value; the Municipal Commissioner refused to give those deductions. The Chief Judge of the Small Cause Court held that lifts and water pumps were amenities attached to the building for the convenience of the occupants, that the repair charges of the lift were necessarily covered by and included in the statutory deduction of 10 per cent, provided in Section 154(1) and the same could not be allowed as deduction in fixing rateable value, but that costs in respect of managing and supervising the services provided by the lift and pump were in the nature of recurring expenses extraneous to the premises themselves and a further 25 per cent, on these costs for making it worth while for the landlord to continue and maintain the necessary services should be allowed as deductions.

8. In Municipal Appeal No. M/22 of 1941 (N. B. Wadia v. 'Municipal Commissioner for the City of Bombay) the landlord used to recover from the tenants Rs. 20 each, for the expenses of the lift which he had installed in his building. The expenses included wages of liftman, upkeep charges, electric consumption charges and general repair charges. The Municipal Commissioner added these expenses received by the landlord from his tenants to the rents realised and fixed (the rateable value accordingly. The same learned Chief Judge held that the upkeep charges of the lift, the electric consumption and wages of liftman were nothing but the costs of extra services rendered by the landlord to the tenants and hence could not be included in or added to the rents actually received.

9. In Municipal Appeal No. M/46 of 1936 (Messrs. Mulji Sicka v. The Municipal Commissioner for the City of Bombay) the landlords claimed that the lift and the water pump which he had installed in his building were machinery and therefore their value should not be included in the rateable value of the building in view of Sub-section (2) of Section 154. The learned Chief Judge of the Small Cause Court held that the electric lights, fans, bath tubs, wash basins and W.C.s being all placed inside the tenement were part and parcel and were necessary for the user of the premises and were not machinery; whereas the electric dynamo and the water pump being outside the tenement of any particular tenant were machinery within the meaning of Section 154(2) and their present value had to be excluded from the rateable value of the building.

10. In Municipal Appeal No. M/59 of 1945 (Ahmed Usuf Botawala v. The Municipal Commissioner for the City of Bombay) it was common ground that the rent realised by the landlord from his tenants was Rs. 1,693 per mensem. The landlord had provided for lights for the common use of the tenants on the stair cases and the W.Cs. and bath-room. He claimed that such provision of lights was a service rendered by him to the tenants for which an allowance should be made in calculating the gross letting value of the premises. The learned Chief Judge was of the view that such service was not covered by the ten per cent, deduction permissible to the owner of the premises under Section 154(1) and that the money value of such service (which was found to be Rs. 11 per month) must be deducted from the rents (Rs. 1,693) realised from the building in arriving at the gross letting value of the premises.

11. In Municipal Appeal No. M/76 of 1926 (Mangalbhai Hirachand v. The Municipal Commissioner for the City of Bombay) it was held by the learned Chief Judge that the electric charges were for something other than the occupation of the hereditament by the tenant and must, therefore, he deducted in the calculation of the rateable value of the premises.

12. The learned Chief Judge in the present case was of the view that the thirty lamp posts were extraneous to the nine Chawls and the electric charges incurred by the landlord in that behalf were for something other than the occupation of premises and relying upon the aforesaid decisions held that a further deduction on account of the said charges from the annual rents should be allowed to the landlord in fixing the rateable value.

13. It is not possible to accept this view on the facts proved in the present case. In the first place, it is necessary to know what exactly was the dispute raised by the landlord before the learned Chief Judge in regard to the rateable value. In his evidence this is what the landlord has said:

From the rateable value fixed by the Municipality in respect of nine Chawls we claim proportionate reduction in the amounts which were actually paid for electric consumption in respect of the lamp posts. This is the only dispute.

This only means, as noted by the learned Judge, that apart from the statutory deduction of ten per cent., the landlord claims a further deduction on this account from the total annual rents received by him from his nine Chawls. Section 154 (1) provides for the determination of the rateable value; it says that the rateable value shall be arrived at in the following manner:-

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.

Thus, as observed by Mr. Justice Bavdekar in Gulam Ahmed Rogay v. Bombay Municipality (1950) 58 Bom. L.R. 14, the rateable value is nine-tenths of the amount of annual rent for which such land or building might reasonably be expected to let from year to year. The section assumes that the property to be valued is to be let out and the tenant is, therefore, described as a hypothetical tenant. The rent which such a hypothetical tenant is reasonably expected to pay may or may not be the same that is actually received by a landlord, In the instant case, however, it appears that there was no dispute between the parties that the actual rent received by the landlord represented the rent that the hypothetical tenant was reasonably expected to pay in the circumstances mentioned in the section. It appears that the amount of rent actually received by the landlord in respect of his Chawls was taken by the Municipal Commissioner as the imaginary or assumed rent (or the annual letting value) for the purpose of Section 154(1). The manner in which this letting value was arrived at or its quantum were not disputed in the memorandum of appeal filed before the learned Chief Judge. The learned Chief Judge also formulated the question raised by the landlord as follows:-

On these facts it is submitted that apart from the statutory deduction of 10 per cent, the electric consumption charges of these 30 lamp posts should also be proportionately deducted from the rents received by the petitioner (landlord) from the said nine chawls in fixing the rateable value thereof.

Thus, on the basis of actual rent received from the Chawl-Ward No. 7068 and Street No. 659, with which the present appeal is concerned, its annual letting value was fixed by the Municipal Commissioner at Rs. 2,122-8-0.

14. It is, however, by no means clear from the present record how and on what basis the landlord had fixed the rents in respect of his nine Chawls and whether, in fixing the rents, he had included and taken into account the expenses which he was bearing for the electric lamp poles installed on his private road. There is no reason to suppose that such expenses were not included and taken into account in fixing the rent for the nine Chawls. It seems to me that such expenses must have been reflected in the rents charged from the tenants. It must be noted that the electric lamp posts had been installed on a private road which had been purposely laid out for connecting the Chawls to the main road. It was an approach road for the use and convenience of the occupants of the Chawls. The thirty lamps on this road were meant for the general and common use of all the tenants. They constituted a necessary amenity without which the premises would not have been ordinarily let at the present rent. These lamp posts must be deemed to be part of the hereditaments demised to the tenants. In my view, the annual letting value for the purpose of Section 154(1) must be ascertained by estimating the rent which would be given for the built-up tenements and also for the thirty electric lamp posts provided by the landlord at his own expense, on the assumption that the hypothetical tenant pays him a rent for all that he has provided. Indeed, the hypothetical tenant would be staying his rent for the combination of building and all other necessary amenities provided by the landlord. The tenants must be assumed to have taken into account his liability and to have agreed to pay a higher rent when the landlord had provided amenities for his convenience and for the proper enjoyment of his hereditament. It is on such principles that the actual rents payable by the several tenants must have been fixed by the landlord; and, as stated above, it is these rents actually recovered by the landlord that formed the basis for the determination of the annual letting value for the purpose of Section 154(1). The annual letting value or the amount of annual rent was thus arrived at by rightly taking into account and including in it the electric charges in question. This, of course, resulted in the amount to such annual rent being a little higher than it would have been otherwise, if there had been no inclusion of such electric charges; but this also gave a proportionately higher amount for the statutory deduction. If the annual amount of rent was properly arrived at for the purpose of Section 154(1), then. I do not think that the landlord is entitled to any other or further deduction than the statutory deduction of 10 per cent, in fixing the rateable value. It should be noted that the statute provides for the 10 per cent, deduction in lieu of all allowances for repairs or on any Other account whatever.

15. I do not agree with the opinion of the learned Chief Judge that the electric charges were incurred by the landlord for some thing other than the occupation of the premises and that the extra amenity provided by him in fixing thirty lamp posts was totally unconnected with the occupation of the premises. As I have already stated, this was an amenity which formed part of the hereditaments themselves.

16. Assuming, however, that the electric charges could not be taken into account in ascertaining the rent for the reason stated by the learned Chief Judge, it only means that the annual letting value as determined by the Municipal Commissioner did not and could not include these charges. Even then, the figure of Rs. 2,122-8-0 shown as the annual letting value in the present case must be taken to be the annual amount of rent for the purpose of Section 154(1) and apart from the deduction of 10 per centum of such rent no other deduction can be legally claimed under the said section, whatever the expenses the landlord might have incurred for 'something other than the occupation of the premises'. Such expenses are either irrelevant for the purpose of determining the rateable value under Section 154(1) or must be deemed to have been included in the statutory deduction of 10 per cent.

17. Mr. Singhvi referred me to a passage on page 384 of Halsbury, Vol. 27 (Second edn., Lord Hailsham) where it is stated

but in estimating the rent no account is to be taken of the value to the tenant of any services which the landlord renders or procures to be rendered to the tenant (either alone or in common with other tenants of that landlord) other than the provision of, or repairs to or maintenance of, the hereditament.

The amenity of lighting the private road in the present case is not in the nature of services contemplated in the above statement of law. I have already held that this amenity is a part of the hereditament itself and is necessary to maintain the hereditament in a state to command the rent it fetches at present.

18. My attention was called to an English decision reported in Bell Pty. Trust v. Hampstead Ass. Com. [1940] 3 All E.R. 640. In that case the tenant paid a gross sum which included the rent for the occupation of the flat and the payment for enjoying the services and amenities provided. The question for consideration before the Court was what portion of the gross sums payable by the tenants was actually for rents and what portion was a remuneration for services or consideration for services and amenities, provided for the tenants by the landlord. It was held that the cost of providing the services and amenities and a sum representing the profits thereon would properly be deducible from the gross rents for the purpose of determining the gross rateable value. In this case, the amenities, such as they were, were not considered to be parts of the hereditaments. On the other hand, they were regarded as in no way forming part of the rateable premises. Besides, the question whether the landlord was entitled to additional deductions apart from the statutory deduction did not arise in that case.

19. For the reasons which I have stated above, I allow this appeal, set aside the decision of the learned Chief Judge of the Small Cause Court recorded in Municipal Appeal No. M/161D of 1955 and dismiss the said appeal with costs throughout.


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