Case Note & Summary
The appellant, Mangaldas N. Verma Charitable Trust, is a public charitable trust registered under the Bombay Public Trust Act, 1950. It owns a godown in Mumbai which was let out to M/s. I.T.C. and M/s. Chika Limited on lease for store purposes. The godown was first let out in 1978 at a rent of Re. 1.30 per sq. ft. per month inclusive of municipal taxes, and the rent was enhanced to Re. 1.55 per sq. ft. per month by an agreement dated 3.1.1984. The Municipal Corporation of Greater Bombay assessed the property and fixed the Rateable Value at Rs. 1,74,245/- with effect from 1.4.1986. The appellant objected to this assessment and after notice and hearing, the investigating officer confirmed the Rateable Value. The appellant then filed an appeal under Section 2(1)(ix) of the Mumbai Municipal Corporation Act, 1888 before the Additional Chief Judge, Bombay, which was dismissed by order dated 30th July, 1988. The appellant then preferred the present first civil appeal before the High Court. The main legal issue was whether the Rateable Value should be determined based on the actual rent received by the appellant or on a hypothetical market rent. The appellant argued that the actual rent received was the proper measure, while the respondents contended that the rent was low and the Rateable Value should be based on the standard rent or market rent. The court analyzed Section 154 of the Mumbai Municipal Corporation Act, 1888, which provides that the Rateable Value shall be the gross annual rent at which the building may reasonably be expected to let from year to year. The court noted that where a property is actually let out and the rent is not influenced by any special relationship, the actual rent is the best evidence of the reasonable rent. The court found that the appellant, being a charitable trust, had let out the godown to tenants at arm's length, and there was no evidence that the rent was influenced by any special relationship. The court also noted that the respondents had not discharged the burden of showing that the actual rent was not the proper measure. The court held that the Rateable Value should be fixed based on the actual rent received, and set aside the order of the Additional Chief Judge and the investigating officer. The court directed the respondents to re-determine the Rateable Value in accordance with the law, based on the actual rent received by the appellant.
Headnote
A) Municipal Law - Rateable Value - Determination - Section 154 Mumbai Municipal Corporation Act, 1888 - The Rateable Value of a property let out to a tenant must be based on the actual rent received, provided the letting is not influenced by any special relationship. The court held that the appellant, a charitable trust, had let out the godown to tenants at arm's length, and the rent was not influenced by any special relationship. Therefore, the Rateable Value should be fixed at the actual rent received, not at a hypothetical higher rent. (Paras 1-10) B) Municipal Law - Rateable Value - Burden of Proof - Section 154 Mumbai Municipal Corporation Act, 1888 - The burden is on the municipal corporation to show that the actual rent is not the proper measure of Rateable Value. The court held that the respondents failed to discharge this burden, as there was no evidence that the rent was influenced by any special relationship or that the property was not let out in the normal course. (Paras 8-10)
Issue of Consideration
Whether the Rateable Value of a godown owned by a charitable trust and let out to tenants should be determined on the basis of the actual rent received or on the basis of hypothetical market rent.
Final Decision
The appeal is allowed. The order of the Additional Chief Judge, Bombay, dated 30th July, 1988, and the order of the investigating officer dated 31st March, 1986, are set aside. The respondents are directed to re-determine the Rateable Value in accordance with law, based on the actual rent received by the appellant.
Law Points
- Rateable Value
- Actual Rent
- Municipal Tax Assessment
- Section 154 Mumbai Municipal Corporation Act
- 1888
- Charitable Trust
- Bombay Public Trust Act
- 1950
