MUNICIPAL COMMISSIONER Vs. EMPIRE ESTATE

JUDGEMENT

(1.) THIS is an appeal directed against the decision of the Additional Chief Judge, Small Causes Court, Bombay, under section 217 of the Bombay Municipal Corporation Act reducing the rateable value and assessment for tax of the property held by the respondent.

(2.) THE respondent Empire Estate is a private limited firm which was constituted in the year 1967 and of which the three partners initially were Mrs. Ellen Keki Modi, Rustom Keki Modi and one minor Miss Maneck Keki Modi was to join the partnership upon her attaining majority. The business of the partnership was exhibition, distribution and production of cinematorgraph films, buying and selling lands and properties as also development thereof. After the partnership was constituted by a registered deed dated 22nd December, 1966, the partnership entered into agreement for purchase of a property "the Empire Cinema Building" which is the subject matter of the present dispute. A certain trust known as Messrs. Narayanan Investment Limited was the owner of this property. A proper sale deed in favour of the respondent firm came to be executed on 20th October, 1970. Prior to the acquisition of this property, and in particular in respect of the cinema house portion of the property there had been transactions of lease and possibly some kind of a special lease also. The transaction which is the earliest dated one is of the year 1944 was between the Modis and the Western India Theatres Limited. This was an agreement for lease of the Cinema house by Modies to the said Western India Theatres Limited. In 1950 there was a further agreement of lease of the cinema house property and the last one in the line was the agreement of lease dated 29th January, 1954 between The Narayanan Investment Trust Ltd. and Modi. Thereunder the property was to stand leased to Modies from 1st June, 1954 till 31st May, 1961 for a monthly rent of Rs. 5501/- out of which a sum of Rs. 3001/- was to be the rent for the cinema house property and Rs. 2500/- for the furniture, machinery, etc. For the period 1st June 1961 onwards, rent was agreed to be Rs. 12,000/- per month out of which Rs. 6545/- was to be the rent of the cinema house property and Rs. 5455/- for the furniture and the machinery etc.

(3.) FOR the year 1972-73, the Bombay Municipal Corporation served a notice on the respondents in connection with the fixing of the rateable value of the entire Empire Cinema house and thereafter the rateable value of the theatre was refixed at Rs. 1,26,820/- in that year. After receipt of the notice proposing that increase in the rateable value, the respondent lodged a complaint. The grievance raised was that the Corporation authorities had worked out the rateable value on the basis of the annual income from the conduct of the cinema business as such i. e. on the takings and that as the basis ought not to have been accepted in view of the fact that the cinema house or the theatre as such had been actually let out. It is upon the rejection of these contentions that the Municipal Appeal No. M/181 of 1972 came to be filed.