R.M.S. Khandeparkar, J.
1. Heard the learned Advocates for the parties. Perused the records.
2. The petitioners challenge the Notices dated 16-3-2000 issued under Sections 162 and 167 of the Mumbai Municipal Corporation Act 1888 (hereinafter called as 'the said Act') as well as the Order dated 22-1-2001 in relation to revision of rateable value as well as assessment of tax and the warrant of attachment dated 15-3-2002 issued by the respondents on account of failure to comply with the direction issued under Order dated 22-1-2001. The challenge is sought to be raised on four grounds. Firstly that the revision of the rateable value of the land and consequential assessment of tax has been done in violation of the provisions of law as well as the decision of the Apex Court in Bombay Municipality v. Polychem Ltd., reported in : [1974]3SCR687 . Secondly, that the impugned order having been passed in exercise of quasi-judicial function, the same should have been a speaking order and should have disclosed the reasons and in the absence thereof the order is not in consonance with the law laid down by the Apex Court in the case of Siemens Engg. and Mfg. Co. v. Union of India reported in : AIR1976SC1785 . Thirdly, that the order was passed without giving opportunity of being heard to the petitioners, and fourthly that, considering the original assessment was on the basis of the land being a vacant land and as there was no change in the condition of land except that it was being sought to be utilised for the purpose of construction and that construction was incomplete and was not suitable for occupation, the Corporation was not entitled to revise the rateable value of the land under Section 154 of the said Act.
3. Drawing attention to the various facts specifically pleaded in the petition and supported by the documents, copies of which annexed to the petition and the same having not been controverted in any manner by the Corporation, nor there being any affidavit-in-reply filed by the Corporation, the learned Advocate for the petitioners submitted that for the purpose of finding of the rateable value, the land can be classified only in two categories viz. vacant land and land with the building and that the decision of the Apex Court in Polychem Ltd., is very clear in that regard. He further submitted that the records disclose that the Corporation has revised the rateable value on the ground that a land is a 'plot being built upon' which apparently reveals that the rateable value has been fixed taking into consideration the land is 'land under construction' though the same is not permissible in view of the decision of the Apex Court. He has further submitted that the scheme of the Act does not permit revision of the rateable value of land unless there is change in the condition of the land and mere commencement of construction of a building in the property cannot be considered to be a change in the land. Being so, according to the learned Advocate for the petitioners, the order of revision of rateable value and consequential assessment of the tax need to be quashed and set aside,
4. On the other hand, the learned Advocate for the Corporation has submitted that it is not in dispute that the Corporation has revised the rateable value and there has been revision in the assessment of tax and has sought to place on record a copy of the order dated 22-1-2001 which was passed by the authorities at the time of revision of rateable value and assessment of the tax based thereon and has submitted that the same was passed after hearing the Secretary of the petitioner-trust. According to the learned Advocate for the Corporation, the reference to the land as 'land being built upon' is only for the purpose of identification of the land and therefore, merely because land is identified with the said expression that would not amount to say that the revision has been on the basis of 'land under construction' and therefore, there has been no violation of the decision of the Apex Court. She has further submitted that the order passed apparently discloses the reasons for revision of rateable value and therefore, it cannot be said to be a non-speaking order. Further placing reliance in the unreported decision of the Division Bench in the matter of Naman Developers Pvt. Ltd. and Anr. v. Municipal Corporation of Greater Mumbai and Ors. in Writ Petition No. 2465 of 2001 delivered on 19th August 2002, the learned Advocate for the Corporation has submitted that the said decision clearly explains the law on the point and it has been held that the Corporation is not prohibited from changing the rateable value of the vacant land after taking into consideration the development in the land. According to the learned Advocate for the respondents therefore, there is no case for interference in the impugned order and the notices in exercise of the writ jurisdiction and in case the petitioners have any grievance regarding the assessment, they are entitled for alternative efficacious remedy in the form of an appeal.
5. The production of the copy of the order on record at this stage is objected to by the learned Advocate for the petitioners on the ground that the petitioners had no opportunity to know the same prior to this date as in spite of repeated letters by the petitioners, the said order was not disclosed to the petitioners and even after filing the Writ petition, the Corporation did not bother to place the same on record, prior to this day.
6. Section 154(1) of the said Act provides that-
'In order to fix the rateable value of any building or land assessable to a property-tax, there shall be deducted from the amount of the annual rent for which such land or building might reasonably be expected to let from year to year a sum equal to ten per centum of the said annual rent and the said deduction shall be in lieu of all allowances for repairs or on any other account whatever.'
Sub-section (2) thereof provides that-
'The value of any machinery contained or situate in or upon any building or land shall not be included in the rateable value of such building or land.'
Sub-section (3) provides for specific method of fixation of rateable value in respect of certain buildings specified thereunder.
7. The scope of powers of the Corporation under Section 154 came to be elaborately discussed and decided upon by the Apex Court in the case of Bombay Municipality v. Polychem Ltd. (supra). The Apex Court taking note of the definition of the expression 'the land' under Section 3(r) of the said Act and held thus --
'All that Section 154 seems to contemplate, by mentioning 'land or building', is that land which is vacant or which has not been built upon may be treated, for purposes of valuation, on a different footing from land which has actually been built upon. But, relevant provisions of the Act do not mention and seem to take no account for purposes of rating, of any building which is only in the course of being constructed although Section 3(r) of the Act makes it clear that land which is being built upon is also 'Land'. Hence, so long as a building is not completed or constructed to such an extent that atleast a partial completion notice can be given so that the completed portion can be occupied and let the land can, for purposes of rating, be equated with or treated as vacant land. It is only when the building which is being put up is in such a state that it is actually and legally capable of occupation that the letting value of the building can enter into the computation for rating 'Rebus sic stantibus'. Although, the definition of land, which is rateable, covers three kinds of 'land,' yet, for the purposes of rating Section 154 recognises only two categories. Therefore, all 'Land' must fall in one of these two categories for purposes of rating and not outside.'
8. The Division bench in unreported decision in the matter of Naman Developers (supra) while ascertaining the ratio of the decision in Polychem case held that --
'The Polychem is authority for the proposition that the land upon which the building is under construction should be rated in the same way as vacant land and that is ratio of the case.'
The Division bench further ruled that --
'What has been decided by Apex Court in Polychem to be binding as ratio is that the land which is being built upon (in other words land under construction or under development) for the purpose of rating has to be valued as vacant land in the relevant year. That does not mean necessarily for whole land at the same rate..........................'
9. The decision of the Apex Court in Polychem case was in the facts where the Polychem company was the owner of 6652 sq. yds. of land, out of which 450 sq. yds. were deducted for having fallen within 'the set back line' and out of the remaining area of 6202 Sq. yds., 1060 sq. yds. was being built upon at the relevant time whilst the remaining 5142 sq. yds. was lying vacant during the period under consideration. As the said company did not lead any evidence about the hypothetical rent of any part of land, the Assessor and Collector of Bombay Municipal Corporation determined the market value of the whole land as Rs. 62020/- at Rs. 10 per sq. yd. He then calculated the hypothetical rent by taking a rate of interest of 31/2% per annum as the reasonable return on this value so that the hypothetical annual rental value came to Rs. 2170/-. From 1-1-1962, the Assessor-divided the plot notionally into two parts, one of 1060 sq. yds., which was being built upon, and the other of 5142 sq. yds. which was lying vacant. He then assessed the probable market value of the plot which was being built upon as Rs. 10,600/- at Rs. 10/- per sq. yd., but, as he considered it better-developed, he fixed 5% per annum interest as a reasonable return on it for determining its hypothetical rent which came to Rs. 530/-. For the vacant land, also valued at the same rate, the market value was found to be Rs. 51,420/-, but the annual rate of interest to determine reasonable return was taken as 31/2% only, as was done previously for the whole land, so that its hypothetical annual rent came to Rs. 1800/-. In those facts and circumstances after considering the scope of powers of the Corporation in relation to the fixation of rateable value under the said provision of law in Section 154 of the said Act, the Apex Court ruled as above and held that -
'But under the statute we have before us all 'land' whether vacant or in the process of being built upon, or built upon is rateable according to the well settled principles. All that can be said is that so long as building being constructed on some land is not in a state fit for occupation, its rateable value should not be more or less than that of the land which is vacant.'
Further, the Apex Court clearly ruled that:
'...............the land upon which a building was under construction could and should be rated in the same way as vacant land.'
Apparently the decision of the Apex Court clearly discloses that while fixing the rateable value under Section 154 of the said Act, the authority should not forget that mere commencement of construction activity and until such construction activity is transformed into a structure which is 'fit for occupation' the rateable value of the land cannot be more or less than that of land which is vacant.
10. In Naman Developers Pvt. Ltd. and Anr. the facts revealed from the records were that, Agreement for Sale dated 29-10-1993, Naman Developers Private Limited had purchased the property comprising of land together with bungalow, building and structures standing therein situated at Kandivali (West), Mumbai. The said property was bearing C.T.S. Nos. 403, 404, 405, 409 and 410. The conveyance thereof was executed on 7-3-1996. After relocation, amalgamation and subdivision of the said property, new C.T.S. numbers of the said property are 403A, 403B, 403C, 403D and 403E. After the execution of the Agreement for Sale on 29th October, 1993, the old and dilapidated structures were demolished between the period from 1994 to 1997. The construction work commenced in the month of September-1995. Prior to 31-3-1995, the entire property had a rateable value for the period from 1-4-1995 to 31-3-1996, the assessor divided the plot notionally into two parts, one which was lying vacant and the other which was being built upon. The rateable value was fixed at Rs. 1335/- for land lying vacant and the rateable value of the land which was under construction was fixed at Rs. 2,53,140/-. The Assessee complained against the said assessment and after hearing the parties, the Assessor and the Collector refixed the rateable value of the land under construction to Rs. 10,40,690/- w.e.f. 15-3-1997 while the rateable value of the land which was lying vacant was fixed at Rs. 885/-. The assessment was sought to be challenged. In the reply in defence of the revision of the rateable value was as recorded by the Division Bench in its Judgment as under :--
'................ .while fixing rateable value the construction has not been taken into consideration and the land has been rated as a plot of land. It is stated that the rateable value has been fixed as per the tabulated ward report. According to the respondents, under the principles of rating, once the identity of the plot undergoes change, the rateable value is bound to undergo the change and the respondents are entitled to fix the rateable value as per the current letting rates.'
While considering the said case of the Corporation, it was observed that --
'the land bearing C.T.S. Nos. 403, 404 and 410 purchased by the petitioner company in the said petition consisting of full of trees and was assessed at Rs. 1125/- net per annum (NPA) and the owners of the land had amalgamated two more CTS Nos. i.e. 405 and 409 on which there existed 12 separate structures and the total area of these five CTS numbers became 25645.10 sq. mtrs. There five CTS numbers were brought under one unit vide revised sanctioned plan dated 15-3-1997, the owners demolished the existing structures and they also cut some trees and shifted reservations to the boundary side of the plot and made a buildable plot area of 7292.14 sq. mtrs. and started construction work or RCC building. In view thereof, the respondent No. 2 i.e. the Assessor and Collector notionally subdivided the land into land under construction . from the remaining land comprising of area for playground, area for recreation around and vacant land. The reservation and the amenity spaces (play ground and recreation ground) were nominally assessed at Rs. 10/- per sq. mtrs. The rateable value of land under construction as land was fixed at Rs. 11,98,200/- net per annum while the rateable value of vacant land was fixed at Rs. 885/- p. a. It is submitted that for land under construction i.e. land being built up rateable value has been fixed as land: it is higher because of potentiality and the current letting rates in the area.'
Simultaneously, it was also contended on behalf of the Corporation in the said case that if the petitioner desired to challenge the legality, correctness or otherwise absence of justification for revision of the rateable value, then they could explore alternative and effective remedy of appeal under Section 217 of the said Act. In those circumstances, the Division Bench held that --
'The Apex Court held that so long as building was not completed or constructed to such an extent that at least a partial completion notice could be given, so that the completed portion can be occupied and let, the land can, for the purposes of rating, be only equated with or treated as vacant land. It is only when the building which is being put up is in such a state that it is actually capable of occupation that the letting value of the building can enter into the Corporation for rating. The Apex Court observed that though under the definition of land, three kinds of land namely, land, land under construction and the building are covered yet for the purpose of rating only two categories i.e. (i) land and (ii) building are recognised under law and, therefore, all land must fall in one of these categories for the purposes of rating and not outside. With regard to land under construction, the Apex Court ruled that the land upon which a building was under construction could and should be rated as the same way as vacant land.'
After taking note of the said ruling, and considering the facts of Naman Developers case, the Division Bench further held that --
'That does not mean necessarily for whole land at the same rate. We endeavoured to find out whether the orders passed by the Assessor and Collector impugned herein are without jurisdiction as was sought to be contended by relying on the judgment of the Apex Court in Polychem which must be corrected in writ jurisdiction. We hold that contention of the petitioners cannot be accepted as the land which is being built upon has been assessed as vacant land though at much higher rate than the land which is not being improved upon. Legality, correctness or otherwise jurisdiction of the high rateable value fixed for land under construction as vacant land than the remaining land simpliciter has to be questioned by the aggrieved party in a statutory appeal provided under Section 217 of MMC Act, 1888 which is in the nature of original proceedings.'
11. It is thus clear that while the Apex Court in Polychem case taking into consideration that the revision of rateable value was based solely upon the fact that the land was brought under constriction wherein the construction was not yet complete and fit for occupation, has held that such an exercise under Section 154 of the said Act is not permissible. While the Division Bench taking into consideration that the fixation of the rateable value for a parcel of land which was developed and utilised for the construction activities being carried out therein different from the one fixed for the remaining parcel of land which was admittedly vacant and not developed, and further that the dispute in the case being related to 'legality, correctness or otherwise which is for higher rateable value fixed for land under construction' held that the dispute relating to such legality, correctness or otherwise justification for higher rateable value in relation to the land developed and utilised for construction activity though not complete, can be dealt with effectively in an appeal under Section 217 of the said Act. At the same time the Division Bench clearly observed that the Polychem is an authority for the proposition that the land upon which the building under construction should be rated in the same way as vacant land. Indeed, the Apex Court in Polychem case has ruled and at the cost of repetition to be quoted that --
'All that can be said is that, so long as a building being constructed on some land is not in a state fit for occupation, its rateable value should not be more or less than that of land which is vacant.'
and further that:--
'Therefore, we think that the land upon which a building was under construction could and should be rated in the same way as vacant land.'
Proper reading of both the rulings viz. in Polychem by the Apex Court and in Naman Developers case by the Division Bench leaves no room for doubt that the Corporation in exercise of powers under Section 154 of the said Act cannot apply different rateable value to a land under construction from that one which is applied for the vacant land and the land which is under construction, till the construction is complete and fit for occupation has to be rated in the same way as the vacant land. Law being very clear in that regard, merely because the owner or agent of the owner commences construction activities in the land that would not entitle the Corporation to apply a different rateable value for such land from the vacant land.
12. It is also sought to be contended that mere reference to a plot of land as 'the land under construction' or 'the building land' for the purpose of identification of such plot would not amount to consideration of land as 'the land under construction' for the purpose of revision of the rateable value nor in such circumstances it would be in any manner in violation of the decision of the Apex Court. Undoubtedly, mere reference to a parcel of land as 'the land under construction' used for the purpose of identification of that parcel of land or location of the area in respect of which higher rate is applied as compared to the remaining part of the property of the assessee, may not be in violation of the provisions of law or the order in Polychem case. Though reference to the said expression merely for the purpose of identification of parcel of land may not be in violation of the law and the decision of the Apex Court in Polychem case, yet use of such expression to decide the nature of land in respect of which higher rate is applied, would certainly be in contravention of the law laid down by the Apex Court. In other words, the expressions 'the land under construction' or 'the building land' or 'the buildable land' are used to identify the location of parcel of land subjected to revision of rateable value then it would be perfectly permissible. However, use of any such expression to identify the nature or condition of any such parcel of land would mean that the rateable value has been revised on the basis of the nature of land as described which would be in contravention of the decision of the Apex Court. Merely the land being under construction can not be the basis for revision of rateable value. It is only after the completion of the construction work and on the same being made suitable for occupation, that the change in that regard in the land that can be considered and the land can be classified as the land with building. This however, does not mean that the land which has been developed and the one which is not developed, both should have some rateable value and that is what has been the law explained by the Division Bench in Naman Developers,
13. Before considering the application of the said law to the facts of the case, it would be necessary to refer to the contentions raised on behalf of the petitioners in relation to the non disclosure of the order to the petitioners, the order of revision of rateable value being non speaking one and failure on the part of the respondents to give hearing to the petitioners as well as absence of powers to the Corporation to revise the rateable value unless there is change in the conditions in land.
14. As regards the failure on the part of the Corporation to furnish the copy of the order of change in rateable value, though it has been argued on behalf of the petitioners about the same, the petitioners have not able to point out any letter addressed to the Corporation specifically asking for a copy thereof. Undoubtedly, the petitioners by letter dated 6th September, 2001 were clearly informed about their liability to pay the tax on account of the rateable value fixed by the Corporation under Section 154 of the said Act. Nothing prevented the petitioners from asking the Corporation to furnish a copy of such order. The petition nowhere discloses any such letter having addressed to the Corporation at any time and therefore, contention is devoid of substance.
15. As regards the failure on the part of the Corporation to give opportunity of being heard in the matter, the report of the Investigating officer undoubtedly discloses appearance of Secretary on behalf of the Trust before the authority on 21-1-2001 on which date the order is stated to have been passed. Therefore, the contention of the petitioners at this stage that no hearing was given to the petitioners cannot be entertained. Undoubtedly, the petitioners had made specific allegation in that regard in the Memo of petition and there was no affidavit filed by the respondents disputing the same. However, merely because no affidavit in that regard has been filed, once the records which are maintained in ordinary course of performance of the duties by the respondents having been produced before this Court disclosing appearance of the Secretary of the petitioners-trust before the authority, it cannot be said that the petitioners were not given any opportunity of being heard in the matter.
16. As regards the order of revision of rateable value being non speaking order, indeed, perusal or the order of the rateable value apparently discloses that the revision has been made pursuant to the land having been brought under construction. There is no other reason disclosed in the said order. However, there is no detail analysis regarding the said aspect of the matter. Considering the law laid down by the Apex Court in Siemens Engg. and Mfg. case, the learned Advocate for the petitioners is justified in contending that such an order has to be speaking order disclosing with sufficient reasons and justification for the revision in the rateable value and quantification thereof. However, the view that I am taking in the matter, it is not necessary to deal with this aspect of the matter any further in the case in hand.
17. As regards the contention that the Corporation cannot revise the rateable value unless there is change in the condition, the same is also not required to be dealt with in the matter in issue as in the facts and circumstances of the case the same does not arise for consideration.
18. Reverting to the facts of the case, as already observed above, bare reading of the order relating to revision of the rateable value of the land in question discloses that the same has been done solely on the ground that the land has been brought under construction. It is not in dispute that on the day the revision of the rateable value the construction was incomplete and it was not fit for occupation. The points sought to be raised in the matter are not merely regarding the legality, correctness or otherwise justification for the higher rateable value of the land in question but the jurisdiction of the Corporation to revise the rateable value solely on the basis that the land has been brought under construction. Being so, there is no substance in the contention of the learned Advocate for the respondents that the alternative remedy under Section 217 of the said Act being an efficacious remedy. At the same time, the point raised in the matter relates to the issue of the jurisdiction of the Corporation to revise the rateable value solely on the basis of the land having been brought under construction, certainly, it can be dealt with and decided in the Writ petition. In fact as already observed above, the law on the point is well settled by the decision of the Apex Court and further Division Bench has clearly noted the ratio of the said decision. Applying the same, it is clear that the respondents have revised the rateable value of the land in question solely on the ground that it has been brought under construction. Undisputedly the construction is neither complete nor fit for occupation. The respondents, therefore, have acted without jurisdiction in revising the rateable value of the land in question and therefore, all the consequential actions which followed the said order are also bad in law.
19. In the result, therefore, the petition succeeds. The same is allowed and the order dated 21-1-2001 is hereby quashed and set aside along with all the consequential proceedings including warrant of attachment dated 15-3-2002. Rule is made absolute in above terms with costs. This shall not preclude the Corporation from proceedings to dispose of the Notices dated 16-3-2000 in accordance with the provisions of law and bearing in mind the observation herein above as well as ruling of the Apex Court in Polychem and of the Division Bench of this Court in Naman Developers case, and after hearing the petitioners.