T. Ramaprasada Rao, J.
1. The Municipal Council, Madurai, the plaintiff before the Subordinate Judge, Madurai, is the appellant before us. The suits were filed against the defendant Sree Meenakshi Mills Limited, Madurai, for recovery of a sum of Rs. 41,232-29 representing the property tax which still remained due and payable by the Mills for the first and second half years of 1958-59, 1959-60 1960-61, 196 -62, 1962-63, 1963-64 and the first half year of 1964-65. In the plaint it is seen that the municipality has given credit to the taxes paid by the Mills. In the written statement the case of the Mills was that as regards B schedule properties, which are the properties in which the Mills and its precincts are situate, the levy is not based on any reasonable hypothesis, but on the other hand it is the result of caprice and arbitrariness. The other contention of the Mills was that the value of the land in which the factory precincts are situate ought not to be valued at 75 paise per square foot but at the rate of Rs. 100 per cent. which was the value fixed by this Court in an earlier but an ancillary proceeding relating to the period 1946-1960. They would also state that the valuation of the land was not based on any data perused by the statutory authorities, when they made the assessment and on that ground defended the suit. The Mills also contended that the depreciation over the buildings and its properties are to be calculated at 1 2/3 per cent, which was the rate per cent fixed by this Court in Exhibit B-2 and that not having been done, the assessment is illegal and unsustainable. The further contention of the Mills was that in arriving at the annual value of the properties which are assessable to property tax under the District Municipalities Act, the value of electric installations must be held to fall within the purview of machinery and therefore, ought to be excluded ; but that having been included while arriving at the gross annual value for the purpose of assessment, there is an illegality in it. The last contention of the Mills was that in or about the relevant period when the assessments were made, certain extensions were made in the campus of the Mills whereby two more godowns were constructed on an area which according to the Mills is about 55,000 square feet. The case of the Mills, therefore, is that if any additions to the prevailing or existing annual value is to be made, then such additions should have a bearing or relation to the extended Mills on the area of the site as above, and not to any other larger area belonging to the defendant. To be more specific, prior to the extensions made by the Mills, there were 5.70 acres of agricultural land which formed part of the Mills, but was exclusively used for agricultural purposes. Apparently, the Mills extended their activities by putting up two specific godowns in such lands and the case of the Mills is that it is only that portion of the agricultural land, which was annexed to the Mills for the purpose of serving it better and such extended land being now utilised as godowns could only be the subject-matter of further assessment under the District Municipalities Act and not any other piece or parcel of land in and around it.
2. The learned Subordinate Judge held that as per Exhibit B-2, the judgment of this Court in L. P. A. Nos. 63 and 106 of 1963, the mode of assessment on the A Schedule property (residential houses for the managing director and directors in the campus of the Mill) should be on the capital value basis. As against this finding there is no cross-appeal and, therefore, we are not concerned, in this appeal, with the mode of assessment adopted for the A Schedule property.
3. The learned Subordinate Judge found that the valuation adopted by the Municipality in so far as the B Schedule properties which are the properties in which the mill is situate was not correct and according to him Exhibit B-2 provided a compulsive guideline for the fixation of the annual value of such properties. In this context he fixed the value of the land comprised in schedule B of the plaint at Rs. 100 per cent. Regarding A Schedule properties, though the learned Judge found that they were occupied by the officers working in the Mills and that there were lease deeds evidencing such occupation, yet he would also adopt the same capital method of valuation for purposes of arriving at the annual value of the A Schedule properties as well and ultimately agreed with the Municipality that the capital value method is the correct method of the valuation for purposes of computation of the property tax. He accepted the ratio of depreciation arrived at in Exhibit B-(sic) and held that a depreciation on the buildings and the other properties of the Mills was to be provided at 1 2/3 per cent. He was of the view that the electrical installations in the factory precincts should be excluded for purposes of arriving at the annual valuation. As a matter of fact, the Municipality's case was that the electrical installations which consisted of electric lights, fans etc., and as set out in Exhibit A-8 are to be treated as installations as they are commercially understood and should be added on to the annual value. This was, however, discountenanced by the learned Subordinate Judge.
4. Regarding 5.70 acres of the land which was originally agricultural land and a part of which was annexed to the factory precincts for purposes of expanding its activities, the learned Subordinate Judge accepted the report of the Commissioner, appointed for the purpose, that only 2.08 acres therein was being used as agricultural land and the rest of it is not put to such use but is part and parcel of the factory precincts. Accepting this report the learned Subordinate Judge held that land over and above 2.08 acres has to suffer the same scale of tax as the other properties which are compositely held by the defendant as mill properties and comprised in the Schedules A and B properties.
5. Accordingly the learned Judge valued the tax and ultimately found that, as the taxes paid by the defendant was in excess of the actual tax payable in accordance with his ratio, he dismissed the suits.
6. We may at once mention that these two suits are interconnected and relate to the period already referred to, viz.) first and second half years of 1958-59, 1959 60, 1960-61, 1961-62, 1962-63, 1963-64 and the first half-year of 1964-65.
7. We may at once dispose of the contention of the learned Counsel for the appellant that the electrical installations such as tube lights, bulbs and fans which are valued at about Rs. 1,72,200 are also to be included in the annual valuation of the properties of the defendant. Under Section 3, Sub-section (3) of the Madras District Municipalities Act (V of 1920) an inclusive definition is given of a building, which says that 'building' includes a house, out-house, stable, latrine, shed etc., and any other structure, whether of masonry, bricks, wood, mud, metal or any other material whatsoever. The charging section which enables the Municipality to levy property tax is Section 81. Under Section 81(1), if the Council by resolution determines that a property tax shall be levied, such tax shall be levied on all buildings and lands within municipal limits save those exempted by or under the Act or any other law. Under Section 82 of the Act the method of assessment of property is provided for. Under Section 82(2)(b) machinery and furniture shall be excluded from valuations mentioned in the section. The modus operandi indicated in this section shows that every building shall be assessed together with its site and other adjacent premises occupied as an appurtenance thereto. Under Sub-section (2) of the above section the method by which the annual value of lands and buildings has to be assessed is set out. In a case where any building belongs to a class not ordinarily let, the gross annual rent of which cannot, in the opinion of the executive authority, be estimated the annual value of the premises shall be deemed to be six per cent. of the total of the estimated value of the land and the estimated present cost of erecting the building after deducting for depreciation a reasonable amount which shall in no case be less than ten per centum of such cost. We are not in the instant case concerned with the other illustrative cases in the sub-section as above, which are also included in it and whose gross annual rent or annual value has to be ascertained in accordance with the prescriptions therein. For the purpose of our present discussion the question is whether bulbs, fans, street lighting and tube lighting, could be considered as machinery, as contended by the defendant within the meaning of Sub-section 2 (b) of Section 82 of the Act. Both the words 'machinery' and 'furniture' have a special connotation both in the popular and in the commercial sense. It cannot be said that fans, bulbs, and such other accessories, which are put into the building at the whims and fancy of the owner could ever be characterised as machinery. The details given in Exhibit A-i8, regarding such electrical accessories, have been treated as installations or machinery though they refer to electrical lights, fans etc., and they do not relate to machinery as such. Again the question posed necessarily is that whether, as contended by the plaintiff, such fans and lamps could be said to be part of a building within the meaning of Section 3 (3) of the Act or in its normal connotation. It would be absurd to equate a bulb or fan or a street light in the factory precincts as electrical installation, as if it has become part and parcel of the building itself so as to attract the incidence of taxation under Section 81 or Section 82 of the Act. We are of opinion that the articles described in Exhibit A-18 do not form part of the building as such and they have become so annexed to it as to be always referred to as part and parcel of it. It is also seen that it was never the practice of the Municipality to have included such electrical lights and fans in the annual value of any building whether ordinarily let or not and no acceptable reason has been given before us to sustain the contention of the learned Counsel for the appellant that the electrical installations such as the articles described above should also be evaluated and be added to the annual value of the building for purposes of reckoning the property tax.
8. Exhibit B-2 is a judgment of a Division Bench of this Court which arose also between the same parties and with reference to the same properties. Ramachandra Iyer, C. J., and Venkatadri, J., accepting the view of Venkataraman, J., said:
The learned Judge, after considering the evidence and other materials on record, came to the conclusion that it would be sufficient to proceed on the basis that all buildings could be taken to have a life of sixty years and fixed the depreciation at 1 2/3 per cent, per annum instead of 1 per cent....
The learned Counsel for the appellant is unable to impress us that this finding founded on a decision of a Division Bench of our Court is in any way assailable.
9. The third contention of the learned Counsel for the appellant is that as regards Schedule B properties they ought to have been valued at 75 paise per sq. ft. and not Rs, 100 per cent. as was done by the learned Subordinate Judge. Our attention was again drawn to the basis of calculation of the annual value which was adopted by this Court in Exhibit B-2. In so far as the factory buildings and precincts are concerned, they were valued under what is known as the capital value system which is undoubtedly the only method available for reckoning the annual value of properties which are not capable of being ordinarily let. In fact, there is no dispute about the method of computation of property tax over the Schedule B properties. But the contention of the learned Counsel for the appellant is that a low value of the land was adopted by the trial Court. He has referred to Exhibits A-27 to A-31 and would urge that a value at the rate of 75 paise per sq. ft. would be a reasonable market value of the property in question, and the lower Court not having correctly referred to the documents brought to its notice, there is an error in arriving at the annual value and there is also incidentally a non-observance of the guidelines and principles governing the fixation of such annual value. Contending contra, Mr. M.A. Rajagopalan, learned Counsel for the defendant, would say that there are exhibits filed in the lower Court such as Exhibits 8-17 to B-2O which would not even justify the fixation of the value at Rs. 100 per cent. and that Exhibit B series documents would disclose a market value of only Rs. 50 per cent.
10. In arriving at the annual valuation of a premises, the value of the land and the buildings thereon have also to be evaluated. There are no guidelines struck internally in the Act itself which might provide the necessary hypothesis for either the statutory Tribunals or the civil Courts when they have occasion to evaluate such buildings or lands to adopt. In all such cases a certain amount of guesswork necessarily enters into the computation as mathematical exactitude is not possible. We have also referred to Exhibit B-2 wherein for the period commencing from 1946 and ending with 1950, a Division Bench of this Court has accepted the value of the land of the Schedule B properties at Rs. 100 per cent. The question is, whether the same value should be adopted even for the years commencing from 1958-1959 and ending with 1964-1965. Mr. Rajagopalan fairly concedes that there has been a progressive increase in prices of lands, since 1950. There is internal evidence, as disclosed in the documents cited by the learned Counsel for the appellant, namely, Exhibits A-27 to A-31 that there was such increase between the years 1953-1961. Under Exhibit A-31 the civil Court, on a reference to it under Section 18 of the Land Acquisition Act, awarded a compensation of 75 paise per sq. ft. for a large plot of land in the vicinity of the respondent Mills. Under Exhibit A-27, 17604 sq. ft. of land was the subject matter of acquisition and this was acquired at 93 1/2 paise per sq. ft. The notification under Section 4 (1) of the Land Acquisition Act in relation to this award was on 17th August, 1960. Under Exhibit A-28 which relates to the compulsory acquisition of land in the same vicinity but consequent upon a notification under Section 4 (1) of the Land Acquisition Act on 27th December, 1961 a compensation of 115 paise to 189 paise per sq. ft. was given to an extent of 1.47 acres. Again under Exhibit A-29 under similar circumstances the compensation ranging between 85 paise to 100 paise per sq. ft. was given to a land of an extent of 1.13 acres. We have referred to these documents in detail not for the purpose of re-assessing the value as if this Court is an appellate tribunal but for finding out whether the prescriptions in Section 82 of the District Municipalities Act regarding the evaluation of the buildings and lands were adopted by the Municipality and later on by the civil Court in accordance thereto. No doubt the section deploys the words that the annual value of the premises shall be deemed to be six per cent. of the total of the estimated value of the land and the estimated present cost of erecting the building. What is estimated cost should not be left to a mere caprice or arbitrariness of the Council. Only if the record discloses apparently and with significance that no hypothesis was the basis of the ultimate assessment adopted by the Municipality, then an element of caprice might be assumed in the circumstances. If on the other hand, the annual value adopted by the Municipality could be traced to the prevailing market values of lands in the vicinity and if a fair nexus could be established between the annual value so adopted and arrived at by the Municipality and the value as reflected in the documents filed in a given case, then it cannot be said that such an estimate is still an arbitrary or capricious one. No doubt Mr. Rajagopalan contends that while making an estimate, caution should be had in comparing the! prices fixed for large extents of lands with those of smaller bits of land in the vicinity. This is undoubtedly a salient principle which has to be borne in mind while evaluating the properties by comparison of the market value prevailing in the locality. But under the statute an estimate of the land has to be made and if only the values of lands in the vicinity could form the basis for such a reckoning and if, as already observed by us, an element of guess is a necessary inflex in such a computation, then we have to see whether, while adopting the values of land which are of larger area or extent in the vicinity, the Municipality acted arbitrarily and without any rhyme or reason. We have already demonstrated that in this locality the prices were steadily increasing from time to time and there were sprightly jumps in respect thereof between 1953 and 1961. The learned Counsel for the respondent also does not seriously dispute that such was the trend of the market value of prices of land in and around the defendant mills. If this is borne in mind and when we remember that on 3rd December, 1953, a small extent of land was sold at 75 paise per sq. ft. and when in the same locality in the year 1960, an extent of 17604 sq. ft. was sold at 93 1/2 paise per sq. ft. then the prices adopted by the Municipality at 75 paise per sq. ft. in the year 1958-59 and thereafter till 1964-65 does not seem to be an unreasonable estimate or a capricious estimate of the value of the property. That the value of land adopted is not so unreasonable as contended is also seen when we analyse the document on which reliance is placed by the learned Counsel for the respondent. Exhibit 8-17 is one of the documents on which strong reliance is placed by the Mills to support their case that the price could never be more than Rs. 50 per cent, and in any event cannot be more than Rs. 100 per cent. having regard to the decision of this Court in Exhibit B-2. The land comprised in Exhibit B-17 is a land which has no access excepting through the Mills; it is of an extent of 1 4 acres and it is a low level land as well as swampy. These features necessarily have an impact on the value of the property, and the value of Rs. 50 per cent. as shown in Exhibit B-17, probably might represent the value of such properties. But that cannot be the scale or yardstick with which we can assess the market value of the suit properties which do not suffer from any such infirmity. Having regard to the discussion as above and in the light of the material considered, these considerations should have been in the mind of the Municipality when they arrived at the annual valuation. We are unable to agree with the learned Subordinate Judge that the lands comprised in Schedule B are to be evaluated at Rs. 100 per cent. We bear in mind the trend of the increase in the market rate of properties in the locality. We are of the view that the value fixed by the Municipality at 75 paise per sq. ft. does not appear to be unreasonable and much less capricious.
11. The last contention is about 5 70 acres of land, which was originally classified as agricultural land. During the half years in question it is not in dispute that a portion of it, to wit 3.62 acres, was annexed to the factory precincts and go-downs were erected thereon. The learned Subordinate Judge appointed a Commissioner to find out the extent of the land covered by the quandom agricultural lands actually used by the factory for its factory purposes. The Commissioner reported that 3.62 acres out of 5.70 acres of the quandom agricultural lands were being utilised as factory's site. It is no doubt true that only a portion of it has been built upon. But it is common ground that the rest of this part of the lands are not being utilised for agricultural purposes. We are, therefore, of the view that this area of the land namely, 3 62 acres, has to be treated and classified as land equatable to the other portion of the factory land and valued at 75 paise per sq. ft., the value which we have fixed for the other factory lands which are the subject matter of these suits.
12. As regards the rest of the land, namely, 2.08 acres, the learned Judge fixed the valuation on the basis of Rs. 50 per cent. We are not inclined at this belated stage to interfere with this finding and evaluation, as no acceptable evidence has been placed before us to show that the estimate made by the learned Subordinate Judge under Section 2 of the Act is not correct or is misconceived.
13. Mr. Rajagopalan raised a contention that agricultural lands, if at all they have to be assessed for property tax, have to be assessed in accordance with the provisions of the District Municipalities Act ; that not having been done in the instant case, the tax demanded by the Municipality and referable to 2-08 acres of agricultural lands is not sustainable in the eye of law. Though there is some force in this contention, we are unable to deal with it, as it was not raised in the pleadings ; nor was it brought up before us by way of cross--appeal. Under Section 81, Sub-section (4) (a), the Municipal Council shall in the case of lands used exclusively for agricultural purposes, levy its taxes at such proportions as it may fix, of the annual value of such lands as calculated in accordance with the provisions of Section 79 of the Madras District Boards Act, 1920, provided that the proportion shall not exceed the maximum, if any, fixed by the State Government. We are not here concerned with Clause (a) of Sub-section (4) of Section 81 of the Act. On the technical ground that this was not raised in the pleadings or before us by way of cross-appeal, we are unable to entertain this plea at this belated stage. In so far as the claims in the suits are concerned, it is open to the Municipality and to the Mills to put forward their respective contentions regarding the assessment of 2-08 acres of land at any future time and in relation to any period other than the suit period.
14. In the result, the appeals are partly allowed and the decree is modified accordingly. Before parting with this case, we have to place on record our dissatisfaction over the way in which the appellant, a public body has not even prepared the necessary papers for this Court to peruse. There will be no order as to costs.