BOMBAY MUNICIPAL CORPORATION Vs. MOTICHAND HIRACHAND

JUDGEMENT

(1.) This is an appeal under Section 217 of the Bombay Municipal Corporation Act III of 1888 which we will hereafter call 'the Act'. The respondents own a building at the corner of what was known as Marine Drive and Sandhurst Bridge. The whole of the building is tenanted and till 1956 -57 the Municipal Corporation was assessing the annual rateable value at the actual rent realised from the tenants for the purposes of municipal taxes. On February 5, 1957, the owners entered into an agreement with the Tata Locomotive and Engineering Co. Ltd. which entitled that company to instal, maintain and display a neon sign on the clock tower of the building and one other sign for the purposes of advertisement in respect of Tata -Mercedes -Benz Automobile trucks and buses. This was done with the sanction of the Bombay Municipal Corporation and also that of the Commissioner of Police. Under this agreement, the owners became entitled to a sum of Rs. 800 for the actual occupation of a portion of the terrace by the neon signs and Rs. 700 for what they called a negative covenant preventing the owners or anyone else in the manner stated from putting up any other advertisement thereon. The Municipal Corporation increased the rateable value from the sum of Rs. 44,320 per annum to Rs. 64,685 per annum taking into account the amount earned by the owners for this advertisement. On appeal to the Assessor and Collector, he reduced the rateable value to Rs. 59,600 per annum. The respondents took an appeal to the Chief Judge of the Small Causes Court as provided under the statute who upheld their contentions and directed that the amount earned by reason of the advertisement should be omitted from consideration in assessing the rateable value. The Municipal Corporation challenges that decision by this appeal.

(2.) THE question is of some importance inasmuch as looking to the present day notions of business advertisements a large number of buildings specially adapted for this purpose are earning by way of returns extra amounts over and above -the rents from the tenants.

(3.) IN the present case it is undoubtedly true that all those tenants who were using the premises as residential premises and also as shops were during the relevant period paying a total rent of Rs. 44,320 per annum. If the Bombay Rent Restriction Act were not applicable to these premises the rents would have perhaps been much higher, but it is now settled by the authority of the Supreme Court in the Corporation of Calcutta v. Sm. Padma Debi : [1962]3SCR49 that while determining the annual letting value the restrictions placed by the Rent Control Act must be taken into account since the Court has to determine the value of the premises to the landlord and not the tenant, unlike under English Acts where the person in actual occupation is rated.