MUNICIPAL CORPORATION OF GREATER BOMBAY Vs. MAKER BHAVAN NO II COMMERCIAL PREMISES CO OPERATIVE SOCIETY LIMITED

JUDGEMENT

(1.) THIS appeal challenges the order of Additional Chief Judge of the Small Causes Court passed in Municipal Appeal No. M/307 of 1974 under section 217 of the Bombay Municipal Corporation Act. The respondent Maker Bhavan No. 11 Commercial Premises Co-operative Society Limited (hereinafter referred to as the Society) is the owners of building abutting New Marine Lines. This building consists of, in all 24 commercial units and these units are in possession of different members of the Society being the share holders thereof. In the beginning all these 24 units were self-occupied in the sense that they were occupied and used by the respective members to whom these had been allotted by the respondent Society as the owner of the said building. After sometime, seven out of these 24 unit holders transferred possession of their respective units to certain other persons on a leave and licence basis, charging different considerations by way of licence fees. Unit this transfer of possession of the seven units, by the respective members of different persons, the Municipal Corporation had fixed the rateable value of the building at Rs. 135/- per 10 sq. meters. That, therefore, was the uniform application to all the units for determination of the rental value and the annual letting value. However, having probably come to know of these transactions the Municipal Corporation served the respondent Society with a notice for assessment of the rateable value which was proposed to be fixed at Rs. 5,02,555/ -. The Society then filed a complaint on 11-1-1974, which was investigated to fix the rateable value at the sum of Rs. 5,02,555/- as aforesaid. This was challenged as being excessive by the Society and, therefore, an appeal was preferred to the Additional Chief Judge of the Small Causes Court. The rateable value as fixed was sought to be set aside and it was contended before the learned Additional Chief Judge that it could not exceed Rs. 1,50,000/ -.

(2.) IT appears that it was till the 1st April, 1972 that the building was being partly occupied and the rateable value as fixed till then was Rs. 1,01,285/ -. After 1st April, 1972 revision of the rateable value was effected by reason of certain additions which were made in the units. The revision was, therefore, an upward one. Then, the unit Nos. 27, 17, 24, 7, 10, 8, 21 and 22 in the said building were given on a leave and licence basis by the respective allottee members to different commercial undertakings. The licence fee charged in each case was different, ranging as it appears from Rs. 4, 128. 75 to Rs. 4,605/ -. In support of its contention that the rateable value as fixed at Rs. 5,02,555/- was excessive, evidence was also led by the parties. According to the learned Additional Chief Judge, after consideration of the evidence as adduced, the point which still remained for consideration was whether the Municipal Corporation was right in taking the actual licence fee recovered for the purposes of fixing the rateable value in respect of the seven aforementioned units which had been given out on leave and licence basis. He observed that in respect of the other owner occupied 17 units the rental was taken at Rs. 135/- per 10 sq. meters which was not seriously challenged. As for the other seven units, however, the learned Judge found it entirely doubtful whether the consideration paid by the seven respective licenses in respect of the seven units could any way impinge upon the fixation and a further upward revision of the rateable value. The learned Judge held upon a consideration of the various authorities which were also cited before him that the licence fee charged to the seven different licensee, of the seven different units in the building could not legally be taken into consideration at all and the two different standards for fixation of rateable value could not be adopted by the Municipal Corporation in respect of different units of the very same building. In a co-operative society, as the learned Judge observed, the ownership vested in the society and the possession and interest therein in the members not as the tenants of the society but as the direct incident of their share holding in the society or their membership there. The right to recover rent or licence fee was of the individual member or members in the society only so far as the creation of a licence or tenancy was concerned and in that behalf the society could never lay any claim on a right for itself recovering rent or licence fee from the transferee fee or a licensee fee from its members. The rent recoverable by a member from his licensee could not, therefore, be taken into consideration for fixing rental value against the society which was the landlord and the society was not at all concerned with the enhanced amounts of consideration charged by the members by way of licence fees and could not apply such enhanced licence fees as a mode of consideration to differently treat some of the units in the building. It being the premise that in respect of the 17 other tenants or for that matter in respect of the entire 24 units in the building the rateable value had been fixed on the basis of Rs. 135/- per 10 sq. meters area, the learned Judge after taking into consideration the area of each of the seven units-in view of the facts of changes brought about in the tenements an increase therein, fixed the rateable value in respect of each of these units, at the rate of Rs. 13 per 10 sq. meters. Thereby, from the rateable value of Rs. 5,02,555/- as was fixed by the Municipal Corporations assessor after hearing the complainant, the learned Judge came to the conclusion that the rateable value of the whole of the building would come to Rs. 3,90,163/- for the year in question, namely 1974-75. It is this reduction, no doubt not an unsubstantial one, which comes to be challenged by this First Appeal.

(3.) THE point for decision, after hearing learned Counsel for the appellant Municipal Counsel as also the Society, lies, therefore and upon considering, with due circumspection, the appreciation by the learned trial Judge also-within a fairly narrow compass. The question for decision is whether it was open to the Municipal Corporation to at all take into consideration the substantial licence fees which the different occupants of the seven units in the building charged to their licenses, in the year in question. The question is whether it was open to the Municipal Corporation, for the purpose of determination of the rateable value of the building, to apply the rate of Rs. 135/- per 10 sq. meters only to 17 out of the total 24 units and then proceeding to consider the rateable value, on the basis of the amount of licence fees charged by the members, in respect of their respective seven units. Whether this was permissible in law. Having heard learned Counsel, I am satisfied that such a differential treatment could not have been meted out in the matter of fixation of the rateable value and that the amount of licence fees charged by the seven different members to their respective licensees could not have constituted the norm for arriving separately at the rental value of the said seven units.