Case: Basappa Rudrappa Betgeri &amp; Ors Vs. Hubli Dharwar Muncipal Corporation

The respondent, the Hubli Dharwar Municipal Corporation, was originally constituted as a Borough under the Bombay Municipal Boroughs Act. 1925 (hereinafter referred to as "the Act"). At the relevant time, when the disputes leading to the suit arose, it was still a Borough, but it became a Corporation subsequently in the year1962. The Borough owned several buildings in Dharwar. Some of these buildings were given on leases to the appellants. These leases were executed in favour of the appellants by the Borough some time in March and April, 1952. Thereafter, by a General Committee Resolution No. 36 dated 29th June, 1953, the Borough decided to recoverand other municipal taxes from the private individuals who were tenants of the municipal buildings leased out to them. In pursuance of this Resolution, a notice was issued by the President of the Borough that all the citizens in occupation of the buildings owned by the Municipality must pay the taxes assessed on them in respect of the premises under their occupation. On 9th September, 1953, the appellants preferred joint objections against the levy of theand its real realisation from them. On 9th September, 1954, the Government Bombay sanctioned the amendment to the then existingRules framed under the Act in respect of this Borough, and the General Committee passed a Resolution on the 19th February, 1955 sanctioning the levy of taxes on Municipal owned buildings, adopting the sanctioned taxes, and bringing them into force with effect from 1st April, 1956 by giving necessary public notice as required by law. Notice under S. 77 was published on 25th February, 1955 and then the taxes came into force on 1st April, 1955. Thereafter, freshwere executed by the respondent in favour of the appellants on 11th May, 1955. It may be mentioned that, neither in the original leases of 1953, nor in the fresh leases of 1955, was there any mention about liability of the tenants to pay theSubsequent to the execution of these fresh leases, bills were received from the respondent by the appellants calling upon them to pay theimposed in respect of the buildings belonging to the respondent which were on lease with the appellants. The appellants, thereafter, filed the suit arisen out of which the present appeal has, challenging the legality of the imposition of themain ground taken was that the Municipality could not impose aon buildings owned by itself, so that the imposition of thiswas invalid in law. The suit was resisted on the plea that it was a valid taxation. A further defence was taken that the suit was bad for failure on the part of the appellants to give notice to the respondent under sectionof the Act. The trial Court decreed the suit, holding that the respondent was not legally competent to levy from the tenants any sum in excess of the agreed rents, and the bills issued for recovery of excess were not valid and that, in the circumstances of this case, notice under Sectionof the Act was not necessary. On appeal, the IInd Additional District Judge agreed with the trial Court that the levy of the tax was not justified, but held that the suit without a proper notice under sectionof the Act was not maintainable. He, therefore, allowed the appeal and dismissed the suit with costs. On second appeal, the High Court of Mysore upheld the dismissal of the suit, but on both the grounds, viz., that the tax was validly levied, and that the suit was not maintainable for want of proper notice under sectionof the Act. It is against this decision that the appellants have come up to this Court. It may be mentioned that the appellants sued the Borough in a representative capacity as representing all the tenants of buildings belonging to the Borough.

Court's reasoning:
3. We are unable to agree with learned counsel for the appellants that this scheme of the Act contains any indication that buildings belonging to the municipality itself cannot be subjected to thewhich can be imposed under Section 73 of the Act. In fact, the language of Section 85 specifically envisages imposition of such a tax on buildings belonging to the municipality. It clearly lays down that such a tax shall be leviable primarily from the actual occupier of the property on which the tax is assessed, even if he holds it on a lease from the municipality. The fixation of such responsibility primarily on the occupier holding a building on lease from the municipality could only be laid down on the basis that the buildings owned by the municipality can be subjected to the tax. Once the tax is imposed on such a building, it would be payable by the occupier if he holds it as a lessee of the municipality. The same principle applies in the case of buildings held on a lease from the Government. It may be noted that all Government buildings are not exempted from the tax. Only those buildings are exempted which are used solely for public purposes and are not used or intended to be used for purposes ofthis argument loses sight of the fact that the tax is primarily payable by the occupier and not by the owner. The purpose of imposition of tax by a municipality on its own buildings is to ensure that it is paid by the lessees of those buildings. Of course, if the building is not on lease, the imposition of the tax would serve no purpose at all. That, however, will not make the imposition of tax by the municipality on its own buildings invalid which imposition will be really effective whenever that building is given out on lease to any other person. In these circumstances, we fully agree with the High Court that the tax was validly imposed and the suit challenging its realisation from the appellants had to fail.