Judgment:
V.M. Kanade, J.
1. Heard the learned Counsel appearing on behalf of appellants and the learned Counsel appearing on behalf of respondents.
2. Appellants are challenging the order passed by the Small Causes Court dated 22/6/1987 whereby the Small Causes Court was pleased to dismiss the appeal which was filed by the original appellant under Section 217 of the Bombay Municipal Corporation Act, confirming the order passed by the assessing authority which increased the rateable value of the premises.
3. Brief facts which are relevant for the purpose of deciding this First Appeal are as under:
4. The building in question was built in 1911 and the rateable value of the building prior to 01/04/1963 was fixed at Rs 24,090/. Respondents, however, after giving notice to appellants increased the said rateable value to Rs 51,915/. Thereafter, certain deductions were given in favour of appellants and, finally, rateable value was fixed at Rs 45,630/with effect from 01/04/1983. Against this order, appellant preferred an appeal as provided under Section 217 of the Bombay Municipal Corporation Act.
5. The original appellant examined himself in support of his contentions and also produced relevant documents. He was also cross examined by respondents. The Lower Appellate Court held that the property being capable of fetching more rent, the Corporation was entitled to increase the rateable value. It further held that the landlord had right to recover higher rent from the tenant if he was assessed at higher level. Before the Lower Appellate Court, the appellant relied on the judgment of the Apex Court in The Corporation of Calcutta v. Sm. Padma Debi and Ors. reported in : [1962]3SCR49 . He also relied upon the judgment of the Apex Court in Motichand Hirachand and Ors. v. B.M.C reported in : [1968]1SCR546 . Further, reliance was placed on the judgment of the Apex court in Devan Daulat Raj Kapoor etc. etc. v. New Delhi Municipal Committee and Anr. etc. etc. reported in : [1980]122ITR700(SC) . The Lower Appellate Court, however, held that the ratio of the said judgment is not applicable to the facts of the present case and relied on the judgment on which reliance was placed by the Corporation viz. in the case of Motichand Hirachand and Ors (supra).
6. Smt. Bhatia, the learned Counsel appearing on behalf of appellants, submitted that the rateable value could not have been increased by the Corporation particularly in view of the fact that the landlord had not received any benefit. She submitted that tenants of shop Nos. 6 & 7 had sublet the premises and, initially, they were paying rent @ Rs 500/per month and, subsequently, they increased it to approximately Rs 700/per month and, as such, there was no substantial increase in the rent. She submitted that the fact that no application for fixation of standard rent was filed, itself was an indication that the rent charged by the landlord was not excessive and, therefore, the said rent ought to have been treated as standard rent. She submitted that though tenants of Shop Nos.6 and 7 had erected the stalls in the premises pursuant to the permission granted by the landlord, the appellant had not received any benefit as a result of stalls which were erected by the tenants and that the landlord continued to receive the same rent which he had received earlier before the alternations were made. She submitted that, in fact, there was no change in the circumstances which would justify increasing the rateable value of the property. She invited my attention to the judgment and order of the Lower Appellate Court and submitted that the Lower Appellate Court had erred in not relying on the ratio of the judgment on which reliance was placed by the appellant. She submitted that the Lower Appellate Court had discarded the said judgment merely because no standard rent application has been filed in the present case and, therefore, the Lower Appellate Court came to the conclusion that the aforesaid judgment would not be of any assistance to the appellant. She submitted that it is a well settled position in law that annual value in respect of property which is to be assessed had to be calculated on the basis of hypothetical rent and in cases where the property was subjected to restrictions which were imposed by the Rent Act then, in that case, standard rent would be the measure on which the said annual value would be calculated. She submitted that, therefore, the finding of the trial court was liable to be set aside. She further submitted that the ratio of the judgment in the case of Motichand Hirachand and Ors (supra) would not be applicable to the facts of the present case since, in the said case, the admitted position was that the building or part of the building in the said case yielded more income over and above the annual rent which was received by the landlord.
7. Shri Walawalkar, the learned Counsel appearing on behalf of the Corporation, on the other hand, submitted that there could not be any dispute regarding the ratio laid down in the decision of the Apex Court on which reliance was placed by the learned Counsel for appellants. He submitted that, however, in the present case, admitted position was that the tenants had made alterations in respect of the shop with the permission of the landlord and, as a result, the premises were sublet to 25 subtenants. He submitted that, therefore, there was change in the circumstances and taking into consideration the rent which was likely to be received by the landlord on account of changed circumstances, the Corporation had marginally increased the rateable value. He submitted that the burden of proving that the assessment made by the Corporation was incorrect was squarely on the assessee. He submitted that the appellant had not discharged this burden in order to establish that there was no change in the circumstances. He relied upon the judgment of the Apex Court in the case of Motichand Hirachand and Ors (supra) as also the judgment given by the learned Single Judge of this Court in First Appeal No. 988 of 1991 dated 3rd April 1998 (Coram: A.B. Palkar, J.), and then of the learned Single Judge of this Court (Coram: D.K. Deshmukh, J.) in First Appeal No. 939 of 1985 dated 25th August, 2000 and the judgment in First Appeal No. 1477 of 1988 delivered by the learned Single Judge of this Court (Coram: A.S. Oka, J.) dated 29th March, 2006. He submitted that ratio of these judgments squarely applies to the facts of the present case.
8. I have given my anxious consideration to the submissions made by the learned Counsel appearing for appellants and respondents. There is no dispute regarding facts of the present case. It is an admitted position that the tenants of the appellants of Shop Nos. 6 and 7 had made alterations in shop and had created 25 stalls. These stalls were of 2 ft. each in length. The permission was granted by the landlord for making the aforesaid alterations. The rent, however, was not increased by the landlord, though a substantial change was made by the tenant and though he had inducted 25 subtenants or licensees.
When this fact was brought to the notice of the Corporation, the rateable value was increased from Rs 24,000/to Rs 45,000/.
The submission made by the learned Counsel for appellants that since no benefit was derived by the landlord as a result of change in Shop Nos. 6 and 7, the rateable value could not have been increased, cannot be accepted. The concept of annual value has been considered by various judgments of the Apex Court and this Court and the manner in which the annual value has to be determined also has been laid down by the Apex Court in several judgments. It is a quite well settled position in law that the standard rent is one of the measures for the purpose of determining annual value, particularly in cases where the Rent Act imposes restrictions on the landlord in charging rent from the tenant. The judgments on which the reliance is placed by the learned Counsel appearing on behalf of the appellants essentially laid down the said principle. There cannot be any dispute regarding the ratio laid down in the said cases. However, in the present case, what has to be seen is that the tenants of the appellants had admittedly made alterations and changes in Shops and had created either subtenancy or licensees. This had been done with the prior approval of the landlord. That being the position, the Corporation was entitled to increase the rateable value after taking into consideration the rent charged by the adjoining owners. Though, in the present case, there is no evidence to indicate that the landlord had received any amount either in the form of rent or as a license fees from the tenant, the fact remains that as a result of the change which was made by tenants, the value of the property had increased and, apart from rent, the property now yielded more income. Therefore, the ratio of the judgment in Motichand Hirachand and Ors (supra), in my view, would squarely apply to the facts of the present case. A same view has been taken by three learned Single Judges of this Court in First Appeal Nos. 988 of 1981, 939 of 1985 and 1477 of 1988. In the said cases also, substantial additions and alterations were made by the tenants and the tenants, in turn, did not pay anything extra to the landlord. In the said judgments, this Court, after relying on the judgment in the case of Motichand Hirachand and Ors (supra), came to the conclusion that the revision of assessment by the Corporation was justified. In the present case also, as a result of alterations and additions made by tenants with the express permission of the landlord, the property was in a position to yield higher income. The burden of establishing that it is not so, squarely rests on the landlord. The landlord in the present case had examined himself and after having perused his evidence, it can be seen that this burden has not been discharged by him.
9. Under the circumstances, I do not see any reason to interfere with the order passed by the Lower Appellate Court. First Appeal is accordingly dismissed.