[1] IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO.2120 OF 2004 1. Dalamal Tower Premises Co-operative Society Limited, a Society registered under the Maharashtra Co-operative Societies Act, 1960, having its office at B-11, Basement, Dalamal Towers, Plot No.211, Free Press Journal Marg, Nariman Point, Mumbai-400 021. 2. Ramesh Ramchandani of Mumbai, Indian Inhabitant, Secretary, Dalamal Tower Premises Co-operative Society Limited, having his office at B-11, Basement, Dalamal Towers, Plot No.211, Free Press Journal Marg, Nariman Point, Mumbai-400 021. .... Petitioners - Versus - 1. The Municipal Corporation of Brihan Mumbai, a statutory corporation constituted under the Mumbai Municipal Corpora- tion Act, 1888, having its office at Mahapalika Bhavan, Mahapalika Marg, Fort, Mumbai-400 001. 2. The Municipal Commissioner, The Municipal Corporation of Brihan Mumbai, having his office at Mahapalika Bhavan, Mahapalika Marg, Fort, Mumbai-400 001. 3. The Deputy Assessor and Collector (City) having his office at Municipal Head Office Building, Mahapalika Bhavan, Ground Floor, East Wing, Mahapalika Marg, Fort, Mumbai-400 001. 4. The Asst. Assessor and Collector [2] A/Ward, having his office at A Ward Municipal Office, 134-E, Shahid Bhagatsingh Road, Fort, Mumbai-400 001. 5. The State of Maharashtra .... Respondents Sarvasri Aspi Chinoy with M.S. Doctor i/b M/s. Junnarkar & Associates for the Petitioners. Shri Vinod Mahadik for the Respondent-BMC. Shri Amjad Sayed, Asst. Government Pleader, for the Respondent-State. CORAM: CORAM: CORAM: R.M.S. KHANDEPARKAR, J. DATED: DATED: DATED: OCTOBER 14, 2004 JUDGMENT: JUDGMENT: JUDGMENT: 1. Heard the learned Advocates for the parties. Perused the records. Rule. By consent, the rule is made returnable forthwith. 2. The petitioners challenge the order dated 24-3-2004 passed by the respondent-BMC and the demand for payment made pursuant to the bills - Exhibits R, S-1 to S-8 annexed to the petition being contrary to the provisions of law, illegal, and in excess of the powers conferred upon the authority under the provisions of law comprised under the Municipal Corporation Act, 1888, hereinafter called as "the said Act". 3. The facts of the case are that the petitioners are [3] the owners of the property having therein a building by name "Dalamal Tower", situated in Plot No.211, Backbay Reclamation, Municipal ‘A’ Ward No.1315 (127), Nariman Point, Mumbai. The building comprises of a basement, ground plus fifteen upper floors having two enclosed garages in the basement and 274 units of which 199 are self-occupied by the members of the petitioner-society while 75 units are in occupation of third parties on leave and licence basis and the compound of the building enables parking of 116 cars. In the year 1982, the rateable value of the property was fixed at Rs.22,77,885/- taking into consideration the estimated rent of Rs.125/- per 100 sq.mtr. for the basement and Rs.250/- per 100 sq.mtr. for the ground floor as well as the above floors of the building. The rateable value was increased from time to time and prior to 31-3-2001 it was fixed at Rs.41,32,735/- per annum on the basis of the above quoted unit letting value. On 29-3-2001 two notices bearing Nos.312 and 312-A being in relation to the year 2000-2001 were issued by the respondent No.4 informing about the increase in the rateable value of the said property to Rs.1,74,59,615/- per annum with retrospective effect from 1-4-2000 onwards. The petitioners lodged their objection/complaint in respect of the said two notices and it was registered as Complaint No.ACR/310 of 2000-2001. The Corporation issued a notice dated 15-4-2002 for investigation in [4] relation to the said complaint of the petitioners. Meanwhile, several writ petitions were filed in this Court challenging various circulars which were issued during the period from 2000-2002 by the Corporation including Writ Petition No.1116 of 2002 and 1721 of 2002 and during pendency of those writ petitions, pursuant to investigation of the complaint of the petitioners, the Corporation by its order dated 27-5-2002 reduced the rateable value of the said property to Rs.53,27,085/- per annum with effect from 1-4-2000 onwards. The Writ Petition Nos.1116 and 1721 of 2002 were disposed of by the order dated 23-10-2002 recording the statement on behalf of the Corporation that the impugned circulars were being withdrawn. Consequent to the said statement on behalf of the Corporation, it was ordered by this Court in those Writ Petitions that the action taken or assessment done pursuant to the said circulars also would not stand and the assessment done pursuant to the withdrawn circulars were declared to have been rendered ineffective and further it was observed that it was open to the Corporation to re-assess the properties for the purpose of property tax in accordance with law. 4. The facts further disclose that by Special Notices under Section 167 of the said Act bearing Nos.164 and 164-A, both dated 22-3-2002, the Corporation informed the petitioners about the increase in rateable value of [5] the said property to Rs.5,07,38,165/- with effect from 1-4-2001. The petitioners lodged their objections/complaints which were registered as Complaint Nos.ACR/257/2001-02 and ACR/310/2000-01. By notice dated 20-1-2003 the respondent No.4 informed the petitioner No.1 that the rateable value of the said property was reassessed at Rs.1,74,59,616/- per annum. The petitioners thereupon again lodged their objections/complaints against the reassessment of the rateable value informed to them under the notice dated 20-1-2003 and the same were lodged on 21-1-2003. By notice dated 11-12-2003, the petitioners were informed by the Corporation that the complaints filed by the petitioners would be disposed of on 29-12-2003. The petitioners thereupon submitted detail objection to the reassessment of the rateable value to the Corporation on 29-12-2003. Personal hearing was granted to the petitioners on 30-12-2003 by the respondent No.3. The petitioners lodged their further objections to the reassessment on 8-1-2004. The petitioners thereafter submitted a tabulated statement showing details of the self-occupied premises and other details as were called upon by the Corporation in respect of the said property and the same were submitted to the Corporation on 21-1-2004. The petitioners submitted affidavit dated 27-1-2004 to the Corporation in relation to the objections to the reassessment of the rateable value. [6] The petitioners received notices dated 11-3-2004 from the respondent No.4 regarding the investigation and hearing of the complaints to have been fixed on 17-3-2004. The same was adjourned thereafter to 24-3-2004. While the matter was pending with the Corporation, the petitioners lodged further objections on 23-3-2004 as well as on 24-3-2004 as regards the reassessment of the rateable value. By order dated 24-3-2004 the respondent No.3 upheld the retrospective reassessment of the rateable value of the said property. Further on 29-3-2004 the petitioners were provided with two tabulated statements giving break-ups of the calculation of the rateable value for each individual unit in the petitioner-society. On 2-4-2004 the petitioners filed two Appeals bearing Nos.848 and 849 of 2004 under Section 217 of the said Act before the Small Causes Court, Mumbai, which are pending for hearing. On 26-4-2004 the petitioners received bill dated 1-4-2004 demanding payment of property taxes for the period 1-4-2004 to 31-9-2004 at the reassessed rateable value for an amount of Rs.80,80,591/-. By letter dated 30-4-2004 the petitioners informed the respondent No.4 about the filing of the Appeals and their willingness to pay the property taxes as per the original rateable value. On 29-5-2004 the petitioners received eight supplementary bills all dated 31-3-2004 demanding the payment of the property taxes for the period 1-4-2000 to [7] 31-3-004 at the reassessed rateable value for an amount aggregating to Rs.4,28,51,911/-. Hence, the present petition. 5. While assailing the impugned order and the demand for the property taxes by issuance of the bills in question, the learned Advocate for the petitioners submitted that the impugned order and the bills issued are ab initio bad in law, as having been issued without jurisdiction and in violation of the law laid down by this Court in the matter of Municipal Commissioner of Municipal Commissioner of Municipal Commissioner of Greater Bombay v. Jeevan Jyot Office & Business Greater Bombay v. Jeevan Jyot Office & Business Greater Bombay v. Jeevan Jyot Office & Business Premises Co-operative Society Limited, Bombay, Premises Co-operative Society Limited, Bombay, Premises Co-operative Society Limited, Bombay, delivered on 28-10-1980 in First Appeal No.393 of 1975 as well as in the matter of Dr. Satish Dattatray Shivalkar v. Dr. Satish Dattatray Shivalkar v. Dr. Satish Dattatray Shivalkar v. Pimpri-Chinchwad Municipal Corporation and another, Pimpri-Chinchwad Municipal Corporation and another, Pimpri-Chinchwad Municipal Corporation and another, reported in 2002 Vol.104 (2) Bom.L.R. 25. He further submitted that the respondents have acted contrary to the statutory mandate of Section 167 and several binding judgments of this Court as well as of the Apex Court in seeking to impose the revised rateable value retrospectively for a period prior to the commencement of the current financial year and in that connection reliance is placed in the decisions in the matters of Dr. Satish Dattatray Shivalkar Dr. Satish Dattatray Shivalkar Dr. Satish Dattatray Shivalkar (supra), Municipal Municipal Municipal Corporation of City of Hubli v. Subha Rao Hanumatharao Corporation of City of Hubli v. Subha Rao Hanumatharao Corporation of City of Hubli v. Subha Rao Hanumatharao Prayag and others, Prayag and others, Prayag and others, reported in (1976) 4 SCC 830 = AIR [8] 1976 SC 1398, Kalyan Municipal Council and others v. Kalyan Municipal Council and others v. Kalyan Municipal Council and others v. Usha Paper Products (P) Ltd. and another, Usha Paper Products (P) Ltd. and another, Usha Paper Products (P) Ltd. and another, reported in (1988) 3 SCC 306 and Sholapur Municipal Corporation v. Sholapur Municipal Corporation v. Sholapur Municipal Corporation v. Ramchandra Ramappa Madgundi, Ramchandra Ramappa Madgundi, Ramchandra Ramappa Madgundi, reported in 1972 Vol.LXXIV Bom.L.R. 469 = 1973 Mh.L.J. 128. He has further submitted that the Corporation failed to consider that the assessee for the purpose of property taxes is the society in relation to the building in question and not the occupants of the units in the building independently and in that connection sought to rely upon the decisions in the matter of Corporation of Calcutta v. Life Corporation of Calcutta v. Life Corporation of Calcutta v. Life Insurance Corporation of India, Insurance Corporation of India, Insurance Corporation of India, reported in 1970 (2) SCC 44, India Automobiles (1960) Ltd. v. Calcutta India Automobiles (1960) Ltd. v. Calcutta India Automobiles (1960) Ltd. v. Calcutta Municipal Corporation and another, Municipal Corporation and another, Municipal Corporation and another, reported in (2002) 3 SCC 388 and Municipal Corpn. of Greater Mumbai and Municipal Corpn. of Greater Mumbai and Municipal Corpn. of Greater Mumbai and another v. Kamla Mills Ltd., another v. Kamla Mills Ltd., another v. Kamla Mills Ltd., reported in (2003) 6 SCC 315. It was his further contention that the repeal of the old Rent Act and the applicability of the Maharashtra Rent Control Act, 1999 to the building in question does not change the situation so as to enable the Corporation to assess the self-occupied units separately from the units which are in occupation of third parties on leave and licence basis and in that connection reliance is sought to be placed in the decisions in the matters of Municipal Corporation of Municipal Corporation of Municipal Corporation of Greater Bombay v. Polychem Ltd., Greater Bombay v. Polychem Ltd., Greater Bombay v. Polychem Ltd., reported in AIR 1974 SC 1779 and Biswa Bandhu Sen v. Municipal Corporation Biswa Bandhu Sen v. Municipal Corporation Biswa Bandhu Sen v. Municipal Corporation [9] of Greater Bombay and others, of Greater Bombay and others, of Greater Bombay and others, reported in 1981 Bom.C.R. 1006. Lastly, it was submitted that failure to pass a reasoned order tantamounts to failure to exercise the jurisdiction in the manner it was required to be exercised and thereby denial of lawful exercise of the right of appeal which is statutorily assured to the aggrieved party and in those circumstances the order being rendered without jurisdiction, the same can be challenged in writ jurisdiction irrespective of availability of alternative remedy in the form of appeal and in that connection reliance was sought to be placed in the decision in the matter of Food Corporation of Food Corporation of Food Corporation of India v. State of Punjab and others, India v. State of Punjab and others, India v. State of Punjab and others, reported in (2001) 1 SCC 291 and Lt. Col.P.R. Chaudhary (retd.) v. Lt. Col.P.R. Chaudhary (retd.) v. Lt. Col.P.R. Chaudhary (retd.) v. Municipal Corpn. of Delhi, Municipal Corpn. of Delhi, Municipal Corpn. of Delhi, reported in (2000) 4 SCC 577. 6. The learned Advocate appearing for the respondent-Corporation, on the other hand, has submitted that it is not a case of reassessment retrospectively but it is a case of reassessment pursuant to the liberty granted in that regard by the order of this Court passed on 23-10-2002 in Writ Petition No.1721 of 2002. It was further submitted that in view of the fact that the provisions of the Maharashtra Rent Control Act, 1999 are not applicable to the cases where the premises are occupied by the banks or financial institutions and no [10] fault can be found with the order assessing the rateable value in respect of the units which are in occupation of such financial institutions based on the licence fee quoted by the owners of such units since the law laid down in relation to the standard rent to be the basis for fixation of the rateable value cannot apply to the cases where the Rent Act is not applicable to the buildings. Referring to the order dated 23-10-2002 in Writ Petition No.1721 of 2002, it was submitted by the learned Advocate for the Corporation that the said order clearly empowers the Corporation to reassess the properties for the purpose of property tax in the cases where the earlier assessment was based on the circulars which were withdrawn consequent to the statement to that effect made before this Court on 23-10-2002. Once it is not disputed that the earlier fixation of the rateable value was on the basis of those circulars which were withdrawn, considering the liberty granted by this Court in the said order, no fault can be found with the assessing authority reassessing the rateable value, excluding those circulars and in accordance with the provisions of law. The arguments against the retrospective assessment was also sought to be countered by submitting that consequent to the assessment done on the basis of the circulars being rendered ineffective, the original notices which were issued for assessment with effect from 1-4-2000 stood revived and the present [11] assessment would relate to those notices and therefore it cannot be said to be a retrospective assessment. Since each unit in the building is owned independently by the shareholders, it cannot be said that the owners are not the assessees for the purpose of assessment of the property tax and therefore assessing the rateable value of the self-occupied units different from those which are in occupation of the third parties on leave and licence basis cannot be said to be illegal. 7. The impugned order which is passed reassessing the rateable value in the matter of Complaint Nos.310 and 257 filed by the petitioners clearly records that the reassessment was done consequent to taking note of the order in the Writ Petition No.1721 2002 leaving it open to the Corporation to reassess the properties for the purpose of the property tax strictly in accordance with law. At the same time, it has also been recorded that "In accordance with the provision of Section 167 of MMC Act of 1888 retrospective assessment cannot be done but it is of the Corporation’s privilege to make prospective assessment.". It has been further noted in the impugned order that "Further Section 154 of Mumbai Municipal Corporation Act, fundamentally does not distinguish between self occupied and leased out premises. Further more Section 154 has been interpreted by the Hon. Supreme Court clearly and accordingly, by the standard [12] rent is the only basis on which the rateable value needs to be assessed.". The order further records that "The assessment of the let out premises is made according to the changes in the circumstances like change in the rent control act, change in the occupier which proves the capability of letting value of let out premises, it is also under the rating principles of Rebus-Stic-Stantibus to fix the reasonable rent of the premises under Sec.154 of MMC Act." After making the above notings in the impugned order, it has been held under the impugned order that "As regards assessment of the premises let on lease they are assessed as stated above in Statement No.II by discarding the compensation but adopting the rate of Rs.3250/- per 10 m2 as per the above statement so as to arrive at a reasonable rent as contemplated under the provision of Sec.154 of M.M.C.Act, 1888." 8. The building in question undisputedly belongs to the petitioner No.1-Society which is the registered owner thereof under the said Act and unit holders in the building are its shareholders and the members. Being so, as rightly submitted by the learned Advocate for the petitioners, to arrive at a just and proper decision in the matter on the point in issue sought to be raised, the unreported decision in Jeevan Jyot’s Jeevan Jyot’s Jeevan Jyot’s case (supra), delivered on 28-10-1980, assumes great importance as the facts of the said case were similar to the facts of the [13] case in hand. In the said case the property in relation to which the assessment was done was a building owned by a co-operative society and the occupants of the flats were the shareholders and the members of the said society. Though the said members and the shareholders were entitled to possess the flats, the building as such belonged to the society, as in the case in hand. The Corporation while fixing the rateable value of the building at Rs.86,610/- sought to change the flats in two categories - one category of flats which were occupied by the members themselves and the another by those occupied by the licensees of the members on payment of licence fee or compensation to the members, and on such division it was sought to be contended that the Corporation was entitled to take into account the compensation received by the members from the licensees for the purpose of fixation of the rateable value in relation to such units which are in occupation of the licensees of the members. While rejecting the contention to be fallacious, it was observed that the licence could never be determinative of what ordinarily a building could fetch by way of rent as the licensees were temporary occupants and therefore could be tempted to pay more than the standard rent due to expediency the occupants were required to take the premises to meet their immediate needs and secondly, what members or shareholders receive from the occupants could not be [14] relevant for determining what the owner i.e. the society could reasonably be expected to receive by way of rent at the market rate. Besides, the members of the society could neither claim to be the owners of any part of the building or even of the flats in their respective occupation. It was further held that "the Corporation has no right to take into account for the purpose of fixation of the rateable value the amount of compensation received by the members from their licensees when the tax is assessed on the Society on the hypothesis that the Society is the owner of the property.". The decision in Jeevan Jyot’s case was followed by the learned single Judge in Biswa Bandhu Biswa Bandhu Biswa Bandhu Sen’s Sen’s Sen’s case (supra) while upholding the contention on behalf of the assessee that the system adopted by the Corporation in revising the rateable value of the building by finding out the amount of compensation received by the members/owners of each of the flats separately was totally irregular. 9. Similar matter arose again in the case of Municipal Municipal Municipal Corporation of Greater Bombay and others v. Maker Corporation of Greater Bombay and others v. Maker Corporation of Greater Bombay and others v. Maker Bhavan No.11, Commercial Premises Co-operative Society Bhavan No.11, Commercial Premises Co-operative Society Bhavan No.11, Commercial Premises Co-operative Society Ltd., Ltd., Ltd., reported in 1991 (4) Bom.C.R. 56. Therein till 1-4-1972 the building which was partially occupied had the rateable value fixed at Rs.1,01,285/- was revised by reason of certain additions which were made in the [15] units. The revision was an upward one. Some of the units in the building were in occupation of commercial undertakings on leave and licence basis granted by respective allottee members and the licence fee charged in each case was different. While rejecting the petition of the Corporation, it was held that two different standards for fixation of the rateable value could not have been adopted by the Corporation in respect of different units of the very same building as the ownership of the building vested in the co-operative society and the possession and interest therein of the members was not as the tenants of the society but on account of their share holding in the society and their membership thereof, and that the right to recover rent or licence fee was of the individual member or the members of the society only so far as the creation of a licence or tenancy of the concerned unit and in that behalf the society could not lay any claim or a right for itself to recover the rent or the licence fee from the transferee or the licencee of its members. It was also held that the rent recoverable by a member from his licence could not, therefore, be taken into consideration for fixing rental value against the society 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 [16] differently treat some of the units in the building. 10. The Apex Court in Corporation of Calcutta v. Life Corporation of Calcutta v. Life Corporation of Calcutta v. Life Insurance Corporation of India, Insurance Corporation of India, Insurance Corporation of India, reported in 1970 (2) SCC 44, while dealing with a case wherein Messrs. A. Firpo Ltd., who were the tenants of the premises No.11, Government Place East, Calcutta at a monthly rent of Rs.2,000/- which was later increased to Rs.2,800/- by an agreement, had sub-let a major portion of the premises to different tenants. The Corporation of Calcutta which assessed the annual value of the premises at Rs.32,076/- prior to 1-4-1955 increased the annual value to Rs.62,761/-. The objection to the determination was rejected by the Corporation and in appeal the Small Causes Court and further the High Court assessed the annual value on the footing of the standard rent and fixed the the same at Rs.30,240/-. In appeal to the Apex Court, while rejecting the same and taking note of the fact that it was common ground that the standard rent of the premises was Rs.2,800/- per month, it was held that the quantum of the consolidated rate depends upon the annual value of the land or the building on the gross rent for which the land or the building might reasonably be expected to let and not the gross rent at which the subordinate interest of a tenant may be expected to sub-let. It was ruled that:- [17] "In determining the assessment of annual value, the assessing authority is not concerned with the rent which the tenant may receive from his sub-tenant. It is the gross rent which the owner may realise by letting the land or building under a bargain "uninfluenced by extraneous considerations" which determine the annual value." 11. Considering the law laid down by this Court as well as the Apex Court, it is clear that for the purpose of assessing the rateable value