Case: New Manek Chowk Spinning And Weavingmills Co. Ltd. And O Vs. Municipal Corporation Of The City Ofahmedabad And Ors

demise, ... and practically to direct the rating authority to value the hereditament equipped with machinery and plant as it appears to the eye." 29. The matter is thus put in Witton Booth on Valuations for Rating (Fourth Edition) at p. 575:"The rateability of plant and machinery under the law which applied universally before 1925, and which still applies to hereditament valued by reference to the profits earned therein depends on legal decisions on what is comprehended by the term "land" These decisions were based on principles applicable to fixtures generally, of which rateable plant and machinery were one kind." 30. It will, therefore, be noticed that the rateability of plant and machinery depended on judicial decisions as to the meaning of the word "land" There is no reason why we should accept those decisions as to what was comprehended by the term "land" when we find in our statutes plant and machinery being excluded therefrom. 31. In 1906 AC 43 (supra) Lord Halsbury expressed himself thus at p. 49:?I decline myself to enter into what I may call the original equities which might have guided this matter. It is enough for me that a long series of decisions, for certainly half a century, have established the bald proposition, which is all I am insisting upon, namely, that although the machinery may not be part of the freehold, it yet is to be taken into account, and in saving that, I do not want to muffle it in a phrase, but what I mean by that is, that to increase the amount of the rate which is exacted from the tenant you may enter into that question and form a judgment upon it although, as a matter of fact, the machinery may not be attached to the freehold." There, the Act in question was Parochial Assessment Act, 1836 under which the assessment of hereditaments was regulated on the principle that the rateable value was the rent which might be expected to be given for the hereditament alone. The contention on behalf of the appellant before the House of Lords was that machinery affixed to the soil so as to become a part of the freehold must be taken into account in assessing the rateable value but no other machinery. Delivering judgment, Lord Halsbury pointed out that:"The overseer had a comparatively simple problem to solve, although it is difficult enough sometimes ; he sees the place being conducted as a brewery, or an iron foundry, or what not, he looks at the premises, he looks at the furniture which is necessary for carrying on the business as a brewery or foundry, he does not in his own mind analyse, and to my mind he ought not to analyse, what would be likely to be the initial arrangements between the intended brewer and the owner of the freehold, to see who should provide this or that engine or what not, but he looks at the premises as they are, as they are being occupied, and as they are being used, and he says to himself, "Well, looking at the whole of the place such and such is the rent which would probably be paid by a tenant from year to year for such an establishment as this"." 32. The problem in our case is not quite the same. The hypothetical tenant would certainly take into consideration the machinery in the building if he was going to rent it for the purpose of running a textile factory.But if the State Legislature had power to levy a tax only on land and buildings, we do not see how the same could be levied on machinery contained in or Situate on the building even though the machinery was there for the use of the building for a particular purpose. 33. It, therefore, appears to us that R. 7 (2) of the rules framed under the Bombay Act of 1949 was beyond the legislative competence of the State. The rule also suffers from another defect. namely, that it does not lay down any principle on which machinery is to be specified by public notice by the Commissioner to be deemed to form part of such building for the purpose of fixing the rateable value, to this, Mr. Setalvad argued that if the building was equipped with machinery for the purpose of running a textile mill, whatever machinery was there for the purpose would be valued. According to him the question would be which of the machinery would help in the enjoyment of the property and thereby add to its rateable value. Unfortunately, the specification of the classes is done from time to time by the Commissioner with the approval of the Corporation irrespective of the question as to where they are to be found.It, therefore, depends on the arbitrary will of the Commissioner as to what machinery he would specify and what he would not Moreover, he is the only person who can examine this question. There is no right of appeal from any specification made under sub-r. (3) of R. 7 except that the Commissioner is to act under the directions of the Standing Committee. Rule 7 (2) shows the all plant and. machinery may not be taken into account for the purpose of valuation and any such plant or machinery which is not included in the classification may escape rateability, however, much they may be prized by the tenant who takes the premises on rent. It seems to us, therefore, that R. 7 (2) is beyond the legislative competence of the State Legislature and sub-r. (3) of R. 7 is also invalid on account of excessive delegation of powers by the Legislature. 34. In view of the above, it is not necessary to go into the question as to whether the Deputy Municipal Commissioner could exercise quasi judicial powers of the Commissioner as regards the determination of the rateable value under S. 49 (I) of the Act and we express no opinion thereon. 35.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]There is nothing in the counter affidavit to show that conditions in the City of Ahmedabad with regard to textile mills are such as would make the method laid down at p. 164 of Faradays book applicable. The affidavit does not purport to show that the factories were constructed at or about the same time or in groups or were so similar in their operation that their rental value could be determined at per foot super of floor area applying the contractors basis. There is nothing to show that any textile factory was valued on the contractors basis and that from the figures of valuation so worked out, the rental value per foot super of floor area was determined. On the other hand, the affidavit suggests that because in various cities it was common to let out premises on the basis of floor area, the municipal authorities of Ahmedabad had resorted to this method for fixing the rateable valueWe can take judicial notice of the fact that sometimes godowns or buildings constructed for office purposes are let out on the basis of floor area, but even then, the rate would vary according to the nature of the building and according to the site of the building in the city. It would also depend upon the age of the building and the amenities provided therein. It would be impossible to say that in the City of Ahmedabad a tenant would be willing to pay at the same rate of read for factory accommodation, no matter where the building was situate or when it was put up or how it was constructedWe are, therefore, not satisfied that conditions prerequisite for determination of annual value of textile factories in Ahmedabad on the basis of rental value per foot super of floor area existed at the relevant time nor has it been shown to us that the so-called contractors basis was adopted by the municipal authorities of Ahmedabad. The method is not also one which is generally recognised by authorities on rating. Applied indiscriminately-as it appears to have been done in this case-it is sure to give rise to inequalities as there has been no classification of the factories on any rational basis. Further, there does not seem to be any basis for dividing the factories and the buildings thereof under two general classes as buildings used for processing and buildings for non-processing purposes. What was said by this Court in Lokmanya Mills case, 1962-1 SCR 306  =(AIR 1961 SC 1358  ) (Supra) applies with equal force to what has been done here and we must hold that the municipality did not observe the law and failed in its duty to determine the rateable value of each building and land comprised in each of the textile factories in terms of R. 9 (b) of the rules under the Bombay Provincial Municipal Corporations Act, 1949 so far as the assessment book for the year 1966-67 is concernedIt, therefore, appears to us that R. 7 (2) of the rules framed under the Bombay Act of 1949 was beyond the legislative competence of the State. The rule also suffers from another defect. namely, that it does not lay down any principle on which machinery is to be specified by public notice by the Commissioner to be deemed to form part of such building for the purpose of fixing the rateable value, to this, Mr. Setalvad argued that if the building was equipped with machinery for the purpose of running a textile mill, whatever machinery was there for the purpose would be valued. According to him the question would be which of the machinery would help in the enjoyment of the property and thereby add to its rateable value. Unfortunately, the specification of the classes is done from time to time by the Commissioner with the approval of the Corporation irrespective of the question as to where they are to be found.It, therefore, depends on the arbitrary will of the Commissioner as to what machinery he would specify and what he would not Moreover, he is the only person who can examine this question. There is no right of appeal from any specification made under sub-r. (3) of R. 7 except that the Commissioner is to act under the directions of the Standing Committee. Rule 7 (2) shows the all plant and. machinery may not be taken into account for the purpose of valuation and any such plant or machinery which is not included in the classification may escape rateability, however, much they may be prized by the tenant who takes the premises on rent. It seems to us, therefore, that R. 7 (2) is beyond the legislative competence of the State Legislature and sub-r. (3) of R. 7 is also invalid on account of excessive delegation of powers by the LegislatureIn view of the above, it is not necessary to go into the question as to whether the Deputy Municipal Commissioner could exercise quasi judicial powers of the Commissioner as regards the determination of the rateable value under S. 49 (I) of the Act and we express no opinion thereon.