Case: Municipal Corporation of Greater Bombay Vs. Mafatlal Industries and Others

2. The facts are not in dispute namely the respondents industries had got their guest houses in Bombay and the Municipal Corporation of Bombay treating the premises falling under Category C under the Bombay Electricity Duty Act raised a bill for payment of electricity duty. The respondents being aggrieved by the said billing filed writ petition in the Bombay High Court contending inter alia that the premises having been used as guest houses for the occupation of the employees of the company, the same could not (sic) have been categorised as Category R and the order of the Municipal Corporation is invalid and inoperative. The appellant Municipal Corporation in its return filed before the learned Single Judge took the stand that the tariff under Category R is exclusively meant for premises used as "private residential premises" and tariff under Category C is meant for all non-industrial premises and a guest house maintained by a commercial undertaking even for occupation of its employees cannot come within Category R and therefore rightly they have been charged in accordance with the tariff meant for Category C. The learned Single Judge on consideration of the relevant provisions of the tariff came to the conclusion that Category R is restricted to premises used as private residence and by a fixed category for example a family whose occupation is permanent or at least for a duration dependent on factors such as length of service or posting at a place etc. and it will not apply to cases where flats are provided for transitory periods for outstation officers and directors. The learned Single Judge accordingly held that the placing of the premises under Category C is fully justified and the writ petitions were dismissed. The respondents being aggrieved by the aforesaid judgment of the learned Single Judge preferred appeals to the Division Bench. The Division Bench by the impugned judgment came to the conclusion that since the company is using the premises as a guest house without any intention to make profit and it is not the business of the company to run a guest house, it must be held that the premises is exclusively used for its own purpose and accordingly tariff rate meant for Category R should apply. The Division Bench construed that the word private in the expression "exclusively used as a private residential premises" must be read as opposed to public. It further came to hold that since a guest house maintained by the company is not a business proposition it cannot be held to be for commercial purpose and unless the premises is used for any commercial purpose then the same cannot be categorised as Category C. With this conclusion the judgment of the learned Single Judge has been reversed and the appeals having been allowed, the present appeals by special leave have been filed in this Court.

Reasoning:
Under the aforesaid 1981 tariff, Category R would apply to premises exclusively used as a private residential premises and Category C would apply, as a residuary category to premises which does not come within Category R, S, RC (LV) anda plain literal meaning being given to each of the words in the expression "exclusive used as a private residential premises" it is difficult for us to hold that the guest house maintained by a company or commercial undertaking would come within the aforesaid expression. The aforesaid expression connotes that the premises in question must be exclusively used as a residential premises which in other words would mean where the premises which is used by any person privately for its own residence for a sufficiently continued period and not a premises where a person can come and spend a day or a night and then go back. The guest houses are maintained by company or commercial undertaking on the other hand as a part of its commercial venture and such premises by no stretch of imagination can be held to be meant for exclusive use as private residential premises. The Division Bench of the Bombay High Court in our considered opinion committed serious error in applying the test of profit-making as well as the test of the word private in contradistinction to public, which in our opinion have no relevance for interpreting the expression "exclusively used as a private residential premises". The context in which the aforesaid expression has been used for determining tariff under the Act, can only apply when any premises is used as a private residential premises. The word exclusively also must be given a rational meaning and viewed from that angle, we are of the considered opinion that the guest house maintained by a company or commercial undertaking in the cities cannot be held a premises which is exclusively used as private residential premises. Therefore, Category R of the tariff cannot be held to be applicable.