Case: Vivian Joseh Ferreira &amp; Another Vs. Municipal Corporation of Greater Bombay &amp; Others

, challenge the validity of the Bombay Buildings Repairs and Reconstruction Board Act XLVII of 1969.

Reasoning: The Act, thus, does not take notice of the actualities in the sense that though a building built in 1939 but wherein extensive repairs have been carried out in 1968 would be a better building than another built in 1950 yet the former has to pay the tax at a higher percentage than the latter. The categorisation of the buildings, therefore, was arbitrary and not based on any rational principle. Counsel also attacked the exemptions given to buildings falling under cls. (g), (h), (i) and (j) of S.28 as being irrational and without being founded on any principle. Lastly, he urged that the classification between buildings constructed before the Act and those constructed thereafter was not valid since there was no nexus between the date fixed under the Act and the objects of the Act. Even assuming that the Act were to be found to be valid, those buildings which were sound in condition and were likely to remain so throughout the life of the Act could be separated from the rest and a restraint against tax being enforced in respect of them can be imposed. The attack against the validity of the Act thus falls under two heads: (a) that the cess is not for a public purpose as it results in bounties to owners whose buildings need structural repairs at the expense of those whose buildings are sound and are not likely to need any such repairs, and (b) that it suffers from arbitrariness and is violative of Art.1411. With such a situation it was no wonder that collapses of buildings became almost an annual occurrence particularly during rainy seasons. In 1965, the State Government appointed the Bedekar Committee to examine the problem15. It is well recognised that a Legislature does not have to tax everything in order to tax something. It can pick and choose districts, objects, persons, methods and even rates of taxation as long as it does so reasonably (Willis Constitution Law of the United States, 587). A taxing statute is not invalid on the ground of discrimination merely because other objects could have been but are not taxed by the legislature. (Ravi Varma v. Union of India (1969) 3 SCR 827   = (AIR 1969 SC 1094  ).) When a statute divides the objects of tax into groups or categories, so long as there is equality and uniformity within each group the tax cannot be attacked on the ground of its being discriminatory, although due to fortuitous circumstances or a particular situation some included in a class or group may get some advantage over others, provided of course they are not sought out for special treatment: ((1963) 3 SCR 809   = (AIR 1963 SC 591  ). Likewise the mere fact that a tax falls more heavily on some in the same group or category is by itself not a ground for its invalidity, for then hardly any tax, for instance, sales tax and excise tax, can escape such a charge. (Twyford Tea Co. Ltd. v. State of Kerala (1970) 3 SCR 383   = (AIR 1970 SC 1133  ).)Both the purpose of the cess and its use are without doubt for public purpose. The purpose is to prevent collapses and the suffering they must cause including rendering several persons homeless, a condition accentuated by the demand for accommodation outrunning the supply. The use is for preservation and prolonging the life of the buildings existing at the date of the enactment of the Act by carrying out structural repairs where owners due to diverse reasons refuse or are reluctant to spend their capital on such preservation, jeopardising the life of their properties and due to the peculiar conditions in the property market find it profitable to render buildings into vacant plots. If in implementing the purpose, which, as aforesaid, is demonstrably pubic, some benefit reaches particular individuals, the statute, which does not directly purport so to do, cannot be invalidatedThe division of such existing structures into three categories was evidently made in the light of the survey of buildings by the Corporation and the report of Bedekar Committee and the classification of buildings made therein on the basis of age and the kind of construction in vogue in the respective periods in which they were errected. That being so, it is impossible to say that the aforesaid groupings of buildings was unprincipled, whimsical or arbitraryTo that the answer is two-fold. Firstly, that the tax payable is on the rateable value of each building which differs from building to building, and secondly, it is distributed between owners and the tenants, the former bearing 10% of it only. To make such distribution reasonable and just, the Legislature suspended during the life of the Act some of the obligations of the owners under the Rent Act and revived the obligations of the tenants under Section 108(m) of the Transfer of Property Act, though retaining the powers of the Corporation obviously on the overriding consideration of public health. It is true that even so, some of the owners, whose buildings do not need structural repairs, have to pay the tax, the proceeds of which would be spent for carrying out repairs to buildings whose landlords have been neglectful. The argument, in other words, is reduced to this, namely, that there would be one class of tax-payer who would not get the return and individual benefit while the other would get it at the expense of the former. Such an argument, however, can be urged almost against every tax and every public expenditure and no tax can ever escape such a consure. The grievance that individual tax-payers get more or less return from the tax proceeds has hardly ever been entertained and would not be a sustainable ground for a challenge against its constitutional validity. The decision in Railroad Retirement Board v. Alton Railroad Co., (1934) 79 Law Ed. 1468 learned heavily be counsel, disapproving a provision establishing a compulsory bonus system of employees on all carriers treating them all as a single employer, on the ground that it imposed upon solvent carriers the burden of furnishing money necessary to meet the demands of the system upon insolvent carriers, cannot apply as the decision turned on due process clause, a clause not available in our ConstitutionThe levy of the cess under Section 27 of the Act is not based on the principle of quid pro quo. Its object is not to repair all residential premises, but to preserve and prolong their lives in order to avert the dilemma caused by the acute shortage of residential accommodation on the one hand, and the reluctance and/or inability of the owners to carry out repairs resulting from the Rent Act, on the other, and to establish an agency so that structural repairs to buildings in dangerous or ruinous conditions canbe carried out. The finances for these objects are provided from a fund from the impugned cess and contributions by the State and the CorporationThe objection to the exemptions under Section 28 can be met by the fact that buildings in each of the groups therein set out form a distinct class by themselves. Buildings in Clause (a) to (f) are buildings to which the Rent Act does not apply and therefore, the considerations for which the cess is levied do not apply to them. Buildings used for non-residential purposes do not fall within the scope of the Act, and therefore, had to be excluded from the levy of the cess. Clause (g), (h) and (j) read with the newly inserted Clause (ia) were, however, objected to. Buildings vesting in or leased to co-operative housing societies registered under the Maharashtra Co-operative Societies Act, 1960 form a class by themselves and cannot be equated with buildings built by individuals. A perusal of that Act is sufficient to satisfy that the relations between a society and its members to whom apartments are either allotted or lessed are not the same as those between landlords and tenants. There is besides considerable control of the Registrar, Co-operative Societies, over the administration of the funds of the societies and their expenditure and an overall supervision over their affairs. The Badekar Committee, no doubt, sounded a warning in respect of some of the buildings put up by some of such societies. But these are exceptions and the Legislature could not have carved out a sub-clause in respect of them. The Committee, however had observed that these societies in the present state of the property market were the only real instrumentalities through which an increase in the residential accommodation can at present be achieved, and therefore, should be encouragedLikewise, the relations between the owners and persons occupying their buildings under leave and licence cannot be equated with relations between landlords and tenants. The circumstances which led to the imposition of the cess do not apply to premises in the occupation of licencees because such licensees have no rights such as the tenants have, namely, irremoveability and the freezing of rents, and the consequential reluctance or inability of the landlords to maintain their premises in tenantable repairs. There is no such statutory control over compensation paid by them as there is in the case of standard rent. Considerations applicable to them are, therefore, quite different. The two classes of occupiers, therefore, cannot be equated. The premises occupied by licensees thus form a distinct class by themselves and could not have been lumped together with tenanted premises without the danger of a challenge under Article 14So far as the buildings occupied by owners themselves and falling under Clause (h) are concerned counsel frankly conceded that different considerations would apply and therefore no objection could be taken to their being exempted from the tax. If buildings used for non-residential purposes or on the basis of leave and licence are validly treated differently, buildings, if used partly for one and partly for another such purpose or purposes can also be similarly treated provided that no part or parts thereof are occupied or used for a purpose other than those specified in the three clauses. Since these buildings forming separate classes by themselves from the tenanted residential premises, the provisions for exempting them cannot be held as violative of the equal protection clause.