NADAR MAHAJANA SANGAM BY ITS GENERAL SECRETARY, V.P.R GANGARAM DORAIRAJ Vs. MADURAI MUNICIPALITY REPRESENTED BY ITS EXECUTIVE OFFICER, MUNICIPAL COMMISSIONER

JUDGEMENT

(1.) THE plaintiff, Nadar Mahajana Sangam is the appellant herein. It filed a suit against the defendant, the Madurai Municipality for a declaration that the enhancement of property tax from Rs. 1,426 -50 to Rs. 3,282 -39 per half year made in 1968 was invalid and for a permanent injunction restraining the Municipality from collecting the enhanced tax. Its case was that it was running a boarding and lodging house in East Masi Street, Madurai Town from 1965, that it is collecting a rent of Rs. 1 for a single room and Rs. 2 for a double room per day, that the Municipality originally levied and collected tax at Rs. 1,426 -70 per half year based on the said rentals, that in 1968 the Municipality suddenly enhanced the tax to Rs. 4,416 -08 for a half year, Which was however reduced by the Municipal Council to Rs. 3,282 -39 and that the enhancement in tax from Rs. 1,426 -50 to Rs. 3,282 -39 is illegal and arbitrary. The plaintiff also questioned the validity of the assessment proceedings on the ground that the procedure contemplated under the Madras District Municipalities Act has not been duly followed.

(2.) THE defendant contended that the plaintiff is running a boarding and lodging house with 36 single rooms, 7 double rooms and 2 deluxe rooms apart from three dining -halls, two kitchens and store rooms with a running hotel, that the said lodge situate in the busiest locality in Madurai Town, has got good business, that the actual rents collected by the plaintiff for all the rooms is much more than Rent and Rs. 2 for single and double rooms respectively, that the plaintiff for the purpose of avoiding a higher tax by the municipality has resorted to the device of collecting rents under various heads such as charges for electricity, bedding, hot - -water, service, donation etc and that, therefore, the property tax was raised on the basis of the actual rents, received in accordance with the provisions of the Madras District Municipalities Act and the rules framed thereunder after issuing proper notice to the plaintiff and after hearing his objections. The defendant also contended that the suit is barred under Section 354 of the Madras District Municipalities Act.

(3.) ON appeal, the lower appellate Court considered the following two points (1) whether the enhancement of tax under Rule 4 of Schedule IV of the Madras District Municipalities Act is not valid for the reason that no opportunity was given to the plaintiff to make its representations and (2) whether the basis of calculation of annual income of the lodge is arbitrary as alleged by the plaintiff. The lower appellate Court held that the enhancement of tax has rightly been made under Rule 4 of Schedule IV and that the plaintiff had due and effective opportunity to make its representations, before the enhancement was made. With regard to the basis of the calculation of the annual rental value, it held that the basis adopted by the municipality is both on the hypothetical value as well as profits basis and that it is neither arbitrary nor capricious. In that view the lower appellate Court confirmed the decision of the trial Court.