1. These three appeals are under Section 142, Calcutta Municipal Act. The Appeal No. 166 of 1940 relates to the valuation of the premises No. 6/1 Wellesley Place constituting the stables attached to the Government House. It consists of 1 bigha 10 cottas and 9 chataks and 33 Sq. Ft. of land and of buildings comprising 54 horse stables 14 syces quarters and 2 quarters used by Police Sergeants. In 1931, the Corporation of Calcutta valued the premises as follows:
Lands at Rs. 10,000 per cotta ... Rs. 306,083Building... ... ... Rs. 113,198--------------Rs. 419,281Annual value ... ... Rs. 20,964
2. This valuation was based on the appellant's own return under Section 136, Municipal Act, (Exs. D, E, la). In this return the Executive Engineer, First Calcutta Division, gave the value of the land as Rs. 306,083 calculating the same at Rs. 10,000 per cotta and returned Rs. 109,802 as the estimated present cost of erecting the building. The present valuation was made in 1937 as follows:
Land at Rs. 10,000 per Cotta ...Rs. 306,083Building ... ... ...Rs. 106,507Electric installation ... ...Rs. 5000-------------Rs. 417,519
3. In this appeal, the contention of the appellant is that the valuation of the land should be reduced to Rs. 3000 per cotta. The Appeal No. 167 of 1940 related to the rating of 3 Churncek place consisting of 2 bighas 11 cottas 5 chataks of land and of an office building with 46,870 Sq. Ft. of office space. In 1931 the Executive Engineer, First Calcutta Division, submitted a return in respect of the premises under Section 136, Calcutta Municipal Act, giving the value of the land as Rs. 949,281 at Rs. 18,500, per cotta and returning Rs. 274,449 as the estimated present oost of erecting the building. On this return, the Corporation of Calcutta made the valuation in 1931 as follows:
Land at Rs. 18,500 per cotta ...Rs. 949,281Building ... ... ...Rs. 282,937-------------Rs. 1,232,218Annual value, Rs. 61,670.
4. The present valuation is of the year 1937. The Corporation valued the land at Rs. 20,000 per cotta. The appellant claims that the land must be valued at Rs. 16,000 per cotta. The Appeal No. 168 of 1940 relates to the assessment of 27, Chowringhee, known as the Indian Museum. The area of the land in the premises is 10 bighas 16 cottas 10 chataks of which 3 bighas 18 oottas 10 chataks are farm lands and the rest is a tank. In 1931 it was assessed on an annual value of Rs. 1,17,408. For the present valuation of 1937 a return was submitted by the Executive Engineer, City Division on 26th September 1936. In it he gave the annual value of the land with the building as Rs. 16,700 and the annual value of the tank as Rs. 1000 and returned rupees 11,33,253 as the estimated present cost of erecting the building. The Corporation determined the annual value to be Rs. 1,18,800. For this purpose the tank and its surrounding lands were valued at Rs. 1200 per cotta. At this rate the value of the land came to Rs. 2,59,930. The contention of the appellant is that the value of the tank should be taken as nil. It is the case of either party that the valuation in all these oases shall have to be made under Section 127(b), Calcutta Municipal Act, 1923, (Bengal Counoil Act 3 of 1923). The section runs as follows:
For the purpose of assessing lands and buildings to the consolidated rates...(b) The annual value of any building not erected for letting purposes and not ordinarily let shall be deemed to be five per cent, on the sum obtained by adding the estimated present cost of erecting the building, less a reasonable amount to be deducted on account of depreciation 'if any' to the estimated present value of the land valued with the building as part of the same premises.
There is no dispute in these appeals as to the estimated present cost of erecting the building or as to the deductions on account of depreciation. The only dispute is about 'the estimated present value of the land valued with the building as part of the same premises.' The only question involved in all these three appeals is what is the meaning of the words 'the estimated present value of the land valued with the building as part of the same premises.' The question is juitris positivi and depends entirely upon the construction of the above words. It is not disputed that the above words mean and refer to the value of the land only and that, whatever be the meaning of the word 'value', the land is to be valued with the building as part of the same premises. The real controversy is (1) about' the meaning of the word 'value' as used here and (2) about the method to be followed in valuing 'the land with the building as part of the same premises.
5. The Legislature does not lay down how 'the present value of the land valued with the building as part of the same premises' is to be estimated and obviously leaves the task to the experts. Experts were called by both the parties in this case to support their respective valuations. On behalf of the Corporation, Mr. C.K. Sarkar (P.W. 2) was one such witness. He says that he is an architect and valuer and surveyor and has been in the profession for over 44 years.' He valued the land and his valuation supports the Corporation valuation. He says:
When I value the land I value the land saddled with the building on it. It may increase the value in certain cases, e.g., an over-developed building. It may also decrease the price.... I have not valued the price of bare land.... I have valued the land with the building.
6. Mr. Sawday is the expert witness on behalf of the Province of Bengal. He says:
In valuing the land.... I have tried to value the land as it stands in value to the owner. In my opinion the best way to do it is to find the value of the property as a whole and then deduct the figure taken by the Corporation for the building.... Valuing the property 'as it stands' mean what any other person would give for this property subject to this restriction that he would occupy in its present methods. Anybody thinking of buying the property as it stands must consider what he will pay for it rather than hire property somewhere else. The property has 47,000 Sq. ft. of office space. If he wants to rent that it will cost him Rs. 4700 at Rs. 10 per 100 sq. ft., i.e. Rs. 5,60,400 a year. Capitalising that at 5 per cent. I get Rs. 11,28,000 from which I have made a small deduction although High Court in some cases approved 40 per cent deduction.... I take Rs. 10 per 100 sq. ft. as the result of my general experience.
7. In cross-examination he says:
In coming to the rateable value at Rs. 16,000 per cotta I have not taken into consideration the sale value. I did not consider the rental value. In approaching the matter I was considering what would be the capital value of the property to Government. What I mean is this that if Government goes to rent a similar property for its present offices they would get in the locality at Rs. 10 per 100 sq. ft. In other words I ascertain the value from the rental level.... I have capitalized the annual value by multiplying it by 20 because that is the standard. It is generally taken as the standard.
8. This witness says that he is a rating expert and valuer and has been an expert in rating law since five or six years. At the hearing before the learned Small Causes Court Judge the method of valuation of the land that was suggested on behalf of the appellant was this : (1) Find out the annual rent that the building would fetch when let out regard being had to the prevailing rent in the locality for similar houses used for similar purposes. (2) Multiply this annual rent by 20 in order to arrive at the capital value. (3) Deduct the present cost of the building from (2). According to the appellant the balance would represent 'the estimated present value of the land valued with the building as part of the same premises,' under Section 127(b) of the Act. If the capital value in (2) does not exceed the present cost in (3) then the land value must be taken to be nil. It need only be pointed out here that the appellant himself contends that Clause (b) of Section 127 was introduced for those cases where determination of the annual rent was not otherwise possible. The result of accepting the method suggested above by the appellant can be visualised as follows:
The annual value of any building under Section127(b) = 5 % of the estimated a reasonablepresent cost ...amount onof erecting account ofthe building depreciation+ 20 (the annual ...the presentrent that the cost of thebuilding building.would fetch)
9. According to the appellant the last item in this valuation (viz., the present cost of the building) is to be obtained from the first two items, (viz., by deducting the depreciation allowance from the estimated present cost of erecting the building). So in the result
the annual value of any buildingunder Section 127(b) = 5 % of 20 x the annual rentthat the buildingwould fetchi. e. = the annual rent
thus ultimately the method suggested by the appellant may lead us to the same annual rent as is contemplated by Clause (a) of the section. The appellant himself contends from the history of the section that Clause (b) was introduced for those cases where determination of the annual rent by the direct method contemplated by Clause (a) was not possible. If that is so, then how it will be possible to start with the same annual rent in valuing the land, and why should all the troubles involved in the process laid down in Clause (b) be undertaken if the result be to arrive at the same starting figure as the final result?
10. In these appeals a somewhat different method has been suggested by the appellant. It has been contended before us that 'the present value of the land valued with the building, etc,' means the value of its present occupation by the owner in its present condition. The method that is suggested for estimating this value is : (1) to find out the character and extent of the present occupation of the premises, (2) to see how much any one will pay for this land who requires it for the purpose of occupying it in its present condition in the same manner and to the same extent as the owner is doing ; or (3) to find out at what rent the present occupier can have similar benefit of occupation of the premises in the locality and then to capitalise this rental value. This according to the appellant will give the present value of the entire premises. In order to allocate a portion of this estimated value to the land the method suggested is to deduct therefrom the present market value of the building.
11. We are thus asked by the appellant to lay down a definite method of estimating the present value of the land required to be estimated by Section 127(b). But the Legislature itself did not do that. The method suggested has been sought to be supported by reference to authorities on the English law of rating and we have been referred to the principles of beneficial occupation, of contractor's basis, of effective capital value and similar other principles discussed by those authorities. But in my opinion the question before us is one juris positivi and we cannot travel beyond the provisions of the statute itself.
12. As has been pointed out above, the section speaks of estimating 'the present value of land valued with the building as part of the same premises.' There may be different methods of making this estimate and it will be for the expert valuers to make the estimate in each particular case. Objections can be taken to this expert valuation and ultimately the matter is allowed by the statute to be taken before a Court and the Judge may thus be called upon to decide whether or not the valuation is correct. Seldom do we see what happens when our judicial system is forced to deal with problems almost unfamiliar to the Judges. The problem before the Judges sometimes becomes like a mathematical problem in which there are too many unknowns. The Judges no doubt enjoy the traditional confidence that they can handle any dispute without assistance. Partisan experts called by the parties are the most familiar present source of technical information imparted indirectly to the Courts. Without condemning this long established practice in toto it may safely be said that it frequently operates to confuse the Judge than to inform. Before a Judge can act intelligently in such a matter he must have an amount of the special knowledge required for the matter and I do not think that such knowledge can be acquired the moment he takes his first lesson from the partisan experts, or, so-called experts, produced by the parties at the trial. He must have a broader, clearer and surer grasp of the subject than he can get from any such unreliable lessons. Whatever that be, as the present judicial machinery stands, the Judge shall have to come to a decision and must decide on the expert opinion before him.
13. Mr. Mukherjee appearing for the appellant contends that Section 127(b) of the Act should not be so construed as to yield a result different from what would be arrived at if Section 127(a) stood alone and for this purpose he takes us to the history of the section. He starts with the Bengal Council Act 4 of 1876 (The Calcutta Municipal Consolidation Act, 1876). Chapter 5, Sections 104 to 120 of this Act provided for the assessment of houses and lands. The relevant portion of Section 104 of that Act ran as follows:
The estimated gross annual rent at which any house or land liable to rate under this Act might reasonably be expected to let from year to year shall, for the purposes of any rate to be imposed under this Act, be held and be deemed to be the annual value of such house or land.
14. That Act made no distinction between buildings erected for letting purposes or ordinarily let and buildings not so erected for letting purposes and not so ordinarily let. For all characters of premises 'annual value' was to be based on the estimated gross 'annual rent' at which such house might reasonably be expected to let from year to year. This was the position in the English system also. This state of things continued up to 1884. Even in the Bengal Council Act 3 of 1884 (the Bengal Municipal Act, 1884) the same principle was adopted : vide its Section 101. In 1885 the case of Nundo Lal Bose v. Corporation of Calcutta ('85) 11 Cal. 275 was decided by this High Court. That case arose out of an assessment made-on a certain house and premises which was a family dwelling house and not likely to be let on rent. The Corporation estimated the gross annual rent on the basis of the costs of the buildings and premises. The Corporation estimated the total expenditure of the building and land at Rs. 180,000 and found the gross annual rent at which the said house and premises might reasonably be expected to let from year to year at 2 3/4 per cent, of the said sum. In setting aside this assessment Garth C.J. observed:
In this it seems to me they acted beyond their powers. They had no right whatever to make the assessment upon any other basis than that which the Act prescribed. The principle upon which they ascertained the annual value of the premises appears to me to have been obviously fallacious; but whether it was so or not it was an arbitrary test and one which the law does not sanction.
15. In course of the judgment the learned Chief Justice observed that some difficulties might certainly arise in assessing joint family property of this nature. But he pointed out that 'the principle of rating upon which the Commissioners were directed to proceed under Act 4 of 1876 was the same which was adopted in England; and similar difficulties would arise there in the case of gentlemen's parks and mansions which were laid out for residential purposes, and not for sale or letting. But such properties were nevertheless constantly rated upon the basis of their annual letting value.'
16. Mr. Mukherjee contends that what the Corporation did in the case of Nundolal Bose1 was really to base the estimate on what was known in England the contractor's basis, and, if in England such properties were being constantly rated upon the basis of their annual letting value, this contractors basis was the method generally used there for such purposes. But, as the High Court disapproved of the application of that method of arriving at the letting value here, the Legislature amended the section in 1888 (Bengal Council Act 2 of 1888, Section 122) by adopting that method as the method of finding out the annual value of such building. Section 122, Calcutta Municipal Consolidation Act, 1888, ran as follows:
For the purpose of assessment under this Act, the annual value of land and the annual value of any house built for letting purposes or ordinarily let shall be the gross annual rent at which such land or house might reasonably be expected to let from year to year less, in the case of a house, an allowance of 10 per cent., for the cost of repairs and for all other expenses necessary to maintain the house in a state to command such gross rent. The annual value of any house not built for letting purposes and not ordinarily let shall be 5 per cent, on the sum obtained by adding the estimated present cost of building the house, less a reasonable amount to be deducted on account of depreciation, if any, to the estimated value of the land valued with the house as part of the same premises.
17. This is substantially the present Section 127 divided into Clauses (a) and (b). No doubt this history helps us to understand the growth of the law in this respect. We know what it was and how it became what it is now. But in interpreting the statute we shall only have to find out 'what it is' though for this purpose it may be helpful to know what it was and how it became so. But beyond this the history will not be of much help to us. Further, if the Legislature wanted to retain the basis of the letting value for all classes of buildings as before, but only intended to clear up the position that a particular method could be adopted for the purposes for ascertaining this letting value of a certain class of buildings, then nothing would have been easier for it than simply to add an explanation to the then existing law to the effect that in determining the letting value of this specified class of buildings that specified method will be legitimate.
18. Assuming that the legislature even after introducing Clause (b) intended to retain and retained the hypothetical annual rent to be the 'annual value' as before even then it cannot be denied that the legislature enacted only one legitimate method for determining this annual value for buildings not erected for letting purpose and not ordinarily let. In introducing Clause (b) the legislature at least recognized the difficulty in determining the annual rent by the direct method contemplated by clause (a) and, therefore laid down a definite method for the determination of the annual value. The process laid down may or may not yield the annual rent; but this is the only way in which the valuation must be made, whether it yields 'the annual rent' or merely its approximate equivalent, or anything else. Then again in applying this process we shall have to estimate 'the present value of the land valued with the building as part of the same premises.' Remembering that the process itself has been given by the Legislature to meet also the cases. where determination of the 'annual rent' by any direct method is impossible, it will be absurd to-suggest that in valuing the land the self-same impossible item was intended by the Legislature to supply the starting point. To ascribe this intention to the Legislature would indeed be a very violent, supposition.
19. Mr. Mookerjee next contends that what is given in Section 127(b) is really the contractor's basis of rating prevailing in the English system. If that is so, it is so. But even then that would not entitle us to give up the positive expressions of the section and haunt for what is the 'contractor's basis' as understood in the English system and then to apply that basis instead of applying the provisions of the section as expressed by the Legislature. In the English system since the Poor Rate Exemption Act, 1840, (3 & 4 Vict., C. 89) the only persons rateable besides parsons and Vicars, are those in occupation of lands etc. This occupation means 'beneficial occupation' or occupation of some value. The more complete way of expressing the fact, usually and compendiously expressed by saying that there is no beneficial occupation, is to say that there is occupation, but it has no value. In that system the legal definitions of value for the purpose of rating are contained in the Bating and Valuation Act, 1925 (15 & 16 Geo. V.C. 90) Section 68(1), the Valuation (Metropolis) Act, 1869, (32 & 38 Vict. C. 67), as amended by the Rating and Valuation Act, 1928 (18 & 19 Geo. V, C. 8) and by Section 7, Rating and Valuation (Apportionment) Act 1928 (18 & 19 Geo. V, a 44). There is (1) a gross value, (2) a rateable value, and (3) an intermediate value known as the net annual value. These expressions are defined in the statutes referred to above and the rating proceeds upon the basis of these statutory definitions. The gross value is defined to mean the rent which a tenant might reasonably be expected to pay for a hereditament from year to year under Certain circumstances : see Section 68 (1), Rating and Valuation Act, 1925 and Section 4, Valuation (Metropolis) Act, 1869. The question in the English system, therefore, always reduces to-finding out the rent which a tenant might reason, ably be expected to pay for a hereditament from year to year. Various methods are suggested according to the character and use of the hereditament to find out this hypothetical annual rent and the so-called Contractors' basis is only one such method.
20. There are also the profits basis and the competitive basis.
21. Where an owner is also the occupier, and especially where it is difficult or impossible to imagine any person other than the owner ki occupation, the task of discovering what a hypothetical tenant would pay becomes very difficult. It was owing to these circumstances that it was found necessary for rating experts and Courts to have recourse to what. Viscount Cave L.C. described as hypotheses of a more or leas violent character in Kingston Union v. Metropolitan Water Board (1926) 1926 A.C. 331 at p. 338. One such hypothesis is the assumption that the rent which would commend itself to a tenant would be based upon an estimate of the profits resulting from the occupation of the hereditament. Another is the contractor's basis, namely, an estimate of the rent by reference to the interest which a contractor would expect for the money which he had expended in buying the land and erecting the buildings of which the hereditament consists. (Vide Faraday on Bating, Edn. 4th, Vol. I, Chap. IV p. 76). The contractor's principle has been explained by Lord Parker thus:
When the owner is also the occupier, then inasmuch as he is by reason of his occupation out of pocket to the extent, at least, of interest on his capital expenditure in acquiring and building on the land he occupies, the amount of such interest is good evidence of what the owner would be willing to pay by the year for the privilege of continuing in occupation:' Metropolitan Water Board v. Chertsey Union Assessment Committee (1916) 1 A.C. 337 at p. 360.
22. The capital expenditure to be taken into consideration again is not that which was incurred in the past, but that which would be incurred at the date of assessment. According to the English authorities the true method of applying this basis would be to ask: (1) what would be the lowest present cost of a structure suitable for the purposes for which this hereditament is now occupied? and (2) how much more would such new structure be worth for its purpose than the existing one because of more efficient and economical working? But all this is only a method of estimating the rent. In the English system we have also the expression 'effective capital value.' This means 'the selling price between a willing seller and a willing purchaser of the property in question, subject to the restriction that it can only be occupied substantially in its present condition.' In considering whether the profits basis or the contractor's basis is to be adopted it has, even in the English system, been found impossible to lay down any definite principle determining the circumstances in which one or other of these methods of assessment shall be applied: (Faraday p. 80).
As has been pointed out above, these are all methods not of determining the value of the land, but of ascertaining the hypothetical annual rent. They may be quite useful for the system where such rent falls to be determined. But our statute requires the determination of the value of the land and not the annual rent. Even if we assume that Clause (b) gives only what is known as the 'contractor's basis' in the English system, that does not in the least solve the difficulty. 'Contractor's basis' only gives a process for determining an approximate equivalent of annual rent where its determination by the direct method is difficult or impossible. It does not give us any method for estimating the present value of the land valued with the building as part of the same premises. This value shall have to be estimated in course of the process laid down by Clause (b). Consequently, whatever name the process be given the difficulty, if any, in estimating the present value of the land still remains and the 'contractor's basis' does not authorise this estimate to be started on the basis of 'annual rent' as suggested by the appellant.
23. The question as to how to determine the value of the land as required by Section 127(b) came up for consideration in this Court between these identical parties on another occasion : see Corporation of Calcutta v. Province of Bengal : AIR1940Cal47 . A Division Bench of this Court declined to lay down any definite method of valuing the land under Section 127(b) and refused to accept the method suggested by the present appellant to be the only one legitimate method. The possible difficulty in making such valuation was also pointed out by my learned-brother Nasim Ali J. in Corporation of Calcutta v. Jardine Skinner and Co. ('37) 24 I.L.R. 1937 Cal. 14. The word 'value' ordinarily means 'the amount of money for which the thing can be exchanged in open market'--means 'the selling price'; and this meaning was accepted for the word as used in this part of the section by this Court in Corporation of Calcutta v. Province of Bengal : AIR1940Cal47 . We do not see any reason why we should differ from the view taken in that case. The value must be the selling price as was pointed out by our learned brother Mitter J. in Corporation of Calcutta v. Province of Bengal : AIR1940Cal47 , and it must be the selling price of the land between a willing seller and a willing purchaser of the property in question, subject to the advantages or disadvantages involved in its present condition. It is no doubt a fundamental principle of rating that the property must be valued as it exists at the time when the rate is made, with all the then existing circumstances. This is also what is required by Section 127(b), Calcutta Municipal Act. There always remains the difficulty in estimating this price. But this difficulty is to be solved by an expert valuer.
24. As has been pointed out above, the value of the land estimated by the Corporation has been stated by its expert witnesses to have been the present value of the land valued with the building as part of the same premises. These experts have given the details of the method adopted in coming to this estimate, and nothing has transpired either from their cross-examination, or from the expert evidence given on the side of the present appellant which would entitle us to say that the method adopted by the Corporation in making this estimate was wrong. In the result therefore these appeals are dismissed with costs.
Nasim Ali, J.
25. I agree that these appeals should be dismissed with costs. The point raised in these appeals was decided by a Division Bench of this Court in Corporation of Calcutta v. Province of Bengal : AIR1940Cal47 . I see no reason to differ from the decision in that case. The hearing-fee in these appeals is assessed at ten gold mohurs.