FILMISTAN PVT. LTD. v. MUNICIPAL COMMISSIONER GREATER BOMBAY
1971-06-15
M.G.CHITALE, S.K.DESAI
body1971
DigiLaw.ai
JUDGMENT S. K. DESAI J.- This is a group of 39 appeals arising from the judgment of the learned Chief Judge of the Court of Small Causes, Bombay, sitting as the persona designata under section 217 of the Bombay Municipal Corporation Act, 1888 (Bombay Act III of 1888) ; the said Act will be hereinafter referred to as the Bombay Municipal Act. 2. The appellants, Messers. Fimlistan Private Limited, are the owners of a property known as Bombay Talkies Studios, situated at Dady Seth Road, Malad, Bombay. Until 1960 the appellants were using the property for their own purposes viz. for the production of cinema films. This property covers an extensive area of slightly over 18 acres. In 1960 the appellants gave the various structures situated on the property on what was said to be leave and licence basis to various small scale industries. The appellants had provided certain amenities to the licenstes such as free use of electricity, water, electricians, sweepers, pumpmen, watchmen, etc. 3. For the year 1960-61 a special notice increasing the rateable value of the property was served on the appellants by the Municipal Commissioner for Greater Bombay, who is the respondent in this group of appeals. The appellants filed a complaint in accordance with the Act protesting against the increase in the rateable value. The objections of the appellants were rejected by the Assessor and Collector of the Corporation, and being aggrieved thereby the appellants filed an appeal to the Chief Judge of the Court of Small Causes under section 217 of the Bombay Municipal Act. 4. The appellants were heard by the Chief Judge initially in March 1964 when preliminary objections raised on behalf of the Corporation were disposed of. The appellants were thereafter heard by the learned Chief Judge on the remaining issues, and by his judgment dated November 23, 1964 tile learned Chief Judge dismissed the appeals before him. The correctness of this decision is questioned in these appeals filed under section 218 (d) of the Bombay Municipal Act which are for disposal before us. 5. These appeals had come up before a Division Bench of this Court consisting of Chandrachud and Wagle JJ., on October 22, 1969. By an interlocutory judgment (1970 Mh.LJ 866=72 Bom. L R 461) the Division Bench sought findings on two issues from the learned Chief Judge of the Court of S mall Causes.
5. These appeals had come up before a Division Bench of this Court consisting of Chandrachud and Wagle JJ., on October 22, 1969. By an interlocutory judgment (1970 Mh.LJ 866=72 Bom. L R 461) the Division Bench sought findings on two issues from the learned Chief Judge of the Court of S mall Causes. The learned Chief Judge was directed to find, firstly, whether the occupants of the structures, though called licensees, were truly tenants; and, secondly, as to what would be the standard rent of the premises. The learned Chief Judge was further directed to give opportunity to both the sides to lead evidence on these issues. 6. Evidence was recorded before the Additional Chief Judge of the Court of Small Causes, Bombay, and by his judgment dated April 16, 1970 the learned Additional chief Judge submitted his findings on the two issues which were remanded to him for determination by the Division Bench as afore stated. 7. On the first issue the learned advocate for the appellants appearing before the learned Chief Judge conceded that for purposes of these appeals the occupants of the structures, though called licensees, were truly tenants of the appellants, and a note to that effect was taken by the learned Additional Chief Judge on March 20, 1970. The answer to the first issue was accordingly record. ed in consonance with this concession. 8. For the purpose of the second issue the appellants had made an attempt to lead evidence before the learned, Additional Chief Judge to prove that the premises in these appeals were not let out for the first time in 1960-61 but had been let out earlier sometime in 1947, and for this purpose the appellants had sought to rely upon a lease alleged to have been executed on August 9 1947 between the executors and trustees of the last will of F. E. Dinshawand the Bombay Talkies Limited. The original lease was not produced and the appellants had during the course of the proceedings tendered a photostate copy of the said lease and had submitted that the same should be admitted as secondary evidence. This submission of the appellants was rejected by the learned Chief Judge who made a separate order in connection therewith.
The original lease was not produced and the appellants had during the course of the proceedings tendered a photostate copy of the said lease and had submitted that the same should be admitted as secondary evidence. This submission of the appellants was rejected by the learned Chief Judge who made a separate order in connection therewith. Having regard to this position the learned advocate who appeared before the learned Additional Chief Judge on behalf of the appellants made a further concession before him that on the evidence as it stood before the learned Additional Chief Judge the premises concerned in these appeals may be taken as having been let out to the occupants for the first time in 1960-61. The learned Additional Chief Judge gave his finding on the second issue on the basis of this concession made before him. A joint statement was tendered by the parties, signed by the respective architects, showing the standard rents of the premises in these appeals worked out on the basis of the agreed data as admitted by both the sides. The learned Additional Chief Judge accordingly submitted his finding on the second issue as per that joint statement, which was put in and marked Exh. L in the proceedings before him. The agreed standard rent in respect of each occupant as determined by the learned Chief Additional Judge in each matter is to be found in para. 5 of his judgment on remand. 9. In order to appreciate the rival contentions it is necessary to set out the relevant provisions pertaining to standard rent in the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947-L VII of 1947 (hereinafter referred to as the Bombay Rent Act).
5 of his judgment on remand. 9. In order to appreciate the rival contentions it is necessary to set out the relevant provisions pertaining to standard rent in the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947-L VII of 1947 (hereinafter referred to as the Bombay Rent Act). The expression standard rent has been defined in sections of the Bombay Rent Act; this definition reads as follows: "5- (10) Standard rent in relation to any premises means- (ii) where the standard rent is fixed by the Court and the Controller respectively under the Bombay Rent Restriction Act, 1939, or the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1944, such standard rent; or (b) where the standard rent is not so fixed subject to the provisions of section 11, (i) the rent at which the premises were let on the first day of September 1940, or (ii) where they were not let on the first day of September 1940, the rent at which they were last let before that day, or (iii) where they were first let after the first day of September 1940, the rent at which they were first let, or (iv) in any of the cases specified in section II, the rent fixed by the Court:- The Bombay Rent Act provides for fixation of standard rent by the Court (special Court as provided by the said Act) in certain case. The relevant portion pertaining to fixation of standard rent is to be found in section 11 and reads as follows: "11.
The relevant portion pertaining to fixation of standard rent is to be found in section 11 and reads as follows: "11. (1) Subject to the provisions of section 11A in any of the following cases the Court may, upon an application made to it for that purpose, or in any suit or proceedings, fix the standard rent at such amount as, having regard to the provisions of this Act and the circumstances of the case, the Court deems just- (a) where any premises are first let after the first day of September 1940, and the rent a; which they are so let is in the opinion of the Court excessive; or (b) where the Court is satisfied that there is no sufficient evidence to ascertain the rent at which the premises were let in anyone of the cases mentioned in sub-clauses (i) to (iii) of clause (b) of sub-section (10) of section 5; or (c) where by reason of the premises having been let at one time as a whole or in parts and at another time in parts or a whole or for any other reasons any difficulty arises in giving effect to this part; or (d) where any premises have been or are let rent free or at a nominal rent or for some consideration in addition to rent; or (e) where there is any dispute between the landlord and the tenant regarding the amount of standard rent." 10. Mr. Chitale appearing on behalf of the appellants in the entire group of these appeals referred us first to sections 146 and 154 of the Bombay Municipal Act. He submitted that for the purposes of fixing the rateable value of any premises the value of the premises which was to be considered was the value thereof to the lessor and not that to the lessee or to the occupant. He further submitted that the rateable value to be fixed must be based on the standard rent of the premises and could not be in excess of such standard rent. According to him, the position has been crystallised in three decisions of the Supreme Court, viz. (i) Oorporation of Calcutta v. Smt. Padma Debi1, (ii) Calcutta Municipality v. L. I. C. India2 and (iii) Guntur Muni. Council v. Rate-Payers Associations, The first of these has been discussed in the interlocutory judgment in these appeals earlier referred to. 11.
According to him, the position has been crystallised in three decisions of the Supreme Court, viz. (i) Oorporation of Calcutta v. Smt. Padma Debi1, (ii) Calcutta Municipality v. L. I. C. India2 and (iii) Guntur Muni. Council v. Rate-Payers Associations, The first of these has been discussed in the interlocutory judgment in these appeals earlier referred to. 11. In Padma Debis case the Supreme Court was considering the rateable value of certain premises at Bowbazar Street, Calcutta. These were owned by the respondents before the Supreme Court. The Corporation of Calcutta had fixed the annual rateable value of the said premises in the sum of Rs 14,093 and it was directed that this was to take effect from the second quarter of 1950-51. In fixing the annual value the Corporation took Rs. 1,450 as the monthly rental value of the said premises. Notice of assessment was served on the respondent who objected to the same. Meanwhile, under the West Bengal Premise Rent Control (Temporary Provisions) Act, 1950, (hereinafter referred to as the West Bengal Rent Control Act for brevitys sake), the standard rent of the premises was fixed by the Rent Controller of Calcutta at Rs. 550 per month with effect from April 1951 and at Rs. 632-8·0 with effect from August 1951, One of the objections raised on behalf of the owners was that the Corporation had no power fix the annual value at a figure higher than the standard rent, The Special officer disallowed the objections, but the owners appeal was allowed by the Court of Small Causes at Calcutta and the High Court by a majority judgment agreed with the findings of the Court of Small Causes and dismissed the Corporations appeal. The Corporation preferred an appeal to the Supreme Court. The Supreme Court considered the provisions of section 127 (a) of the Calcutta Municipal Act 1923 (3 of 1923) and the West Bengal Rent Control Act and dismissed the Corporations appeal. The relevant observations of the Supreme Court are to be found in paras.
The Corporation preferred an appeal to the Supreme Court. The Supreme Court considered the provisions of section 127 (a) of the Calcutta Municipal Act 1923 (3 of 1923) and the West Bengal Rent Control Act and dismissed the Corporations appeal. The relevant observations of the Supreme Court are to be found in paras. 6 and 7 of the judgment and are sumtnarised in part of the head note (a) which reads as follows: "(a)…… A combined reading of the provisions of sections 2 (10) (b), 3 and 33 (a) of the Rent Control Act leaves no room for doubt that a contract for a rent at a rate higher than the standard rent is not only not enforceable but also that the landlord would be committing and offence if he collected a rent above the rate of the standard rent. One may legitimately say under those circumstances that a landlord cannot reasonably be expected to let a building for a rent higher that the standard rent. A law of the land with its penal consequences cannot be ignored in ascertaining the reasonable expectations of a landlord in the matter of rent. It is true that section 127 (a) does not contemplate the actual rent received by a landlord but a hypothetical rent which he can reasonably be expected to receive if the building is let. But hypothetical rent may be described as a. rent which a landlord may reasonably he expected to get in the open market. In that situation, a statutory limitation of rent circumscribes the scope of the bargain in the market. In no circumstances the hypothetical rent can exceed that limit…." In Padma Debis case the standard rent, as we have seen above, had actually been fixed by the Rent Controller. 12. In a subsequent decision, also from Calcutta, the Supreme Court decided that the position was the same whether or not there was actual fixation of standard rent; this was the decision in Calcutta Municipality v. L. I. C. India. In that case the Supreme Court was considering section 168 (1) of the Calcutta Municipal Corporation Act, 1951 (33 of 1951) along with the relevant provision, of the West Bengal Rent Control Act. The relevant observations are to be fuund in paras. 6 and 8 of the judgment of the Supreme Court. It.
In that case the Supreme Court was considering section 168 (1) of the Calcutta Municipal Corporation Act, 1951 (33 of 1951) along with the relevant provision, of the West Bengal Rent Control Act. The relevant observations are to be fuund in paras. 6 and 8 of the judgment of the Supreme Court. It. was observed that even if there is no order of the Controller fixing the standard rent under section 9, the standard rent stands determined by the definition of that expression in section 2 (10) (b) of that Act," 13. The third authority cited by Mr. Chitale is a very recently reported case. viz. Guntur Muni. Council v. Rate-Payers Association. Padma Debis Case was also referred to in this judgment and it was observed by the Supreme Court that there was no distinction between buildings, the fair rent of which has actually been fixed by the Rent Controller, and those in respect of which no such rent has been fixed. The Court went on to say that when the Controller has not fixed the fair rent, the Municipal authorities will have to arrive at their own figure of fair rent in accordance with the principles laid down in the Rent Control Act. 14. In view of these observations it was submitted by Mr. Chitale that the joint statement tendered by the respective architects before the learned Additional Chief Judge of the Court of Small Causes on which was based his finding on the second issue indicated clearly that the rent actually charged by the appellants to their tenants was substantially in excess of what would be the standard rent of the premises. It was submitted by Mr. Chitale that in the light of the observations of the Supreme Court in the three decisions above referred to the rateable value of the premises concerned in the appeals before us had to be fixed on the basis of the notional rent of the various premises as would be fixed on an application under section 11 of the Bombay Rent Act. It was further submitted that in view of the finding on the second issue submitted by the learned Additional Chief Judge, the rateable value aad to be reduced and based on the standard rent as found by the learned Additional Chief Judge. 15. Mr.
It was further submitted that in view of the finding on the second issue submitted by the learned Additional Chief Judge, the rateable value aad to be reduced and based on the standard rent as found by the learned Additional Chief Judge. 15. Mr. Singhvi on behalf of the respondent-Corporation drew our attention to an important distinction between the provisions of the West Bengal Rent Control Act and the Bombay Rent Act. The definition of the expression standard rent in the West Bengal Rent Control Act is to be found in section 2 (10) (b) of the said Act. Under that definition (omitting parts not relevant), standard rent in relation to any premises means: “….Where the rent hail been fixed under section 9 the rent so fixed; or at which it would have been fixed if application were made under the said section." It was submitted that as far as the "Bombay Rent Act was concerned, in view of the express provision of section 5 (10) (b) (iii) of the said Act the agreed rent of the premises would be the standard till such time as an application was made under section 11, and that until such application was made the respondents were entitled to fix the rateable value on the basis of the agreed rent. 16. It becomes necessary, therefore, to consider whether the rents at which there premises were first let in 1960-61 are or can be considered to be rents at which they were first let. There was a clear concession made by the learned advocate who appeared on behalf of the appellants before the learned Additional Chief Judge to the effect that the various premises, which are the subject-matter of these appeals, were first let in 1960~61. This concession is to be found recorded in para. 4 of the finding submitted by the learned Additional Chief Judge. Mr. Chitale was permitted by us, despite such concession, to go through the evidence recorded by the learned Additional Chief Judge, and he sought to establish that the premises had been in fact let earlier in 1917 and that, therefore, the rents at which these premises were let in 1960-6 I could not be the standard rents within the definition of section 5 (10) (b) (iii) of the Bombay Rent Act.
It may be mentioned that the appellants in this connection had sought to prove and produce before the learned Additional Chief Judge a photostat copy of the lease document entered into by the executors and trustees of the estate of F. E. Dinshaw and the Bombay Talkies Limited. It was held by the learned Additional Chief Judge that they had failed to prove that the original was lost or misplaced. It was further held that the copy which was sought 10 be proved and produced as secondary evidence was not a complete copy inasmuch as the plan attached to the document was missing. In our opinion, the learned Additional Chief Judge was fully justified in disallowing such photostat copy to be proved and produced as secondary evidence. We may briefly refer to the evidence led by the appellants in this connection. [His Lordship after referring to this evidence, proceeded.] 17. On the evidence led before the learned Additional Chief Judge it is clearly established that the properties which are the subject-matter of these appeals before us, were first let out in 1960-61. The appellants had sought to urge to the contrary and they must be held to have failed to prove any earlier letting out. 18. Mr. Chitale has, however, equally strenuously urged that the correct position in law was that in fixing the rateable value the agreed rent of these premises in 1960·61 must be ignored and the rateable value must be fixed with reference to the notional or hypothetical standard rent as would be fixed in an inquiry under section 11 of the Bombay Rent Act. 19. In this connection reference maybe made to the observations of Chagla C. J. in Karamsey Kanji v. Velji Virji4 The relevant observations are to be found at pages 624 and 625 of the said judgment. At page 624 the following observations appear: "Now, it is clear that the Act was passed to control rents so that in days of scarcity of houses the landlord should not exact unconscionable rents from the tenant. The Act was also passed in order to give protection to the tenant from being evicted, and it is in the light of these two main objects that the different provisions of the Act should be construed. I do not see any difficulty about giving effect to section 7.
The Act was also passed in order to give protection to the tenant from being evicted, and it is in the light of these two main objects that the different provisions of the Act should be construed. I do not see any difficulty about giving effect to section 7. So long as there is no determination by the Court under section 11 (1)(a) the landlord is perfectly justified in recovering from the tenant or claiming from the tenant the contractual rent, the rent at which the premises were first let after September 1, 1940. Neither his recovery nor his claim is in any sense of the term unlawful. It is only when the standard rent ha~ been altered that the recovery or the claim becomes unlawful." 20. At page 625 the learned Chief Justice goes on to observe: "……What the landlord has charged under section 5 (10) (b) (iii) does not cease to be standard rent by reason of a subsequent determination by the Court that it was excessive. The only liability that is imposed upon the landlord in the liability to refund under section 20 within the period of limitation. In my opinion this is the only way that the different sections of the Rent Act can be reconciled." 21. It was urged by Mr. Chitale that the interlocutory judgment given by the Division Bench of this Court proceeded upon the footing that it was the hypothetical standard rent as on an application under section 11 of the Bombay Rent Act that would be the proper basis for determination of rateable value under section 154 of the Bombay Municipal Act. That does not appear to be the correct position. The learned Chief Judge who dismissed the appeals under section 217 had in his judgment observed that the standard rent of the premises can be fixed only by the Court of exclusive jurisdiction constituted under the Bombay Rent Act, and that, therefore, the contractual rent must be taken as the standard rent and that must form the basis for fixing the annual letting value of the property. It was held by the Division Bench in its interlocutory judgment that the learned Chief Judge was not right in this view.
It was held by the Division Bench in its interlocutory judgment that the learned Chief Judge was not right in this view. The Division Bench, in our opinion, does not lay down that although the agreed rent at the time of letting out in 1960-61 could be the standard rent within the meaning of section 5 (I 0) (b) (iii) of the Bombay Rent Act, the notional or hypothetical standard rent as on an application under section II of that Act must necessarily be the basis for determining the annual letting or rateable value. 22. The proposition of law as laid down by the Supreme Court in Padma Debis case undoubtedly is that in fixing the rateable value under the Calcutta Municipal Act the hypothetical rent which the owner can reasonably be expected to receive if the building is to be let has to be considered. It has also been laid d0wn that such hypothetical rent cannot exceed the standard rent or the statutory rent. In the subsequent case reponed in Calcutta Municipality v. L. I. C. India it has been clarified that this consideration was to apply not only to cases where rent was fixed by the authority which was to determine the standard rent but even otherwise. However, there is, as pointed out, a material difference between the West Bengal Rent Control Act and the Bombay Rent Act. The definition of standard rent in the West Bengal Rent Control Act is, in our opinion, materially and vitally different from that under the Bombay Rent Act. In our opinion, under the Bombay Rent Act, in case of premises first let after the first day of September 1940 the agreed rent at which they were first let is by the statutory definition to be the standard rent. Such standard rent is, however, subject to the provisions of section 11. In this section provision has been made by the Legislature for recalculation or refixation of the standard rent in certain cases. So long as there is no determination by the Court under section II, the landlord is perfectly justified In recovering from the tenant or claiming from the tenant the contractual rent; neither his recovery nor his claim is in any sense of the term unlawful.
So long as there is no determination by the Court under section II, the landlord is perfectly justified In recovering from the tenant or claiming from the tenant the contractual rent; neither his recovery nor his claim is in any sense of the term unlawful. Thus, in such cases, what the landlord can charge under section 5 (10) (b) (iii) is the standard rent until there is subsequent determination by the Court that it is excessive; on such determination the standard rent would be recalculated and refixed at a lower amount. Until such refixing is done, the agreed rent will be the standard rent. The two sections must be read together and when this is done it is clear that in case of premises let out after the first day of September 1940, the rent at which they were let out is the standard rent which may be varied subsequently in case an application is made to the special Court under section II in such proceedings as are indicated therein. Until such an application is made the agreed rent is the standard rent within the meaning and definition of standard rent in the Bombay Rent Act. 23. In the appeals before us it is clear from the evidence (even apart from the specific concession made by the learned advocate for the appellants before the learned Additional Chief Judge) that the premises in respect of which these appeals have come up were let out by the appellants for the first time in 1960-61. Previous thereto these premises were occupied by the appellants themselves. The appellants attempted to show that these premises had been let out earlier, and in such attempt the appellants failed. The rateable value to be fixed by the Municipal Corporation under section 154 of the Bombar Municipal Act undoubtedly cannot exceed the standard rent of the premises in respect of which the rateable value is fixed. As we have indicated above, the standard rent in respect of the premises which are concerned in these appeals before us appears to be, on the evidence led before the learned Additional Chief Judge, the agreed rent-the rent at which they were let out in 1960-61 by the appellants to the various occupants.
As we have indicated above, the standard rent in respect of the premises which are concerned in these appeals before us appears to be, on the evidence led before the learned Additional Chief Judge, the agreed rent-the rent at which they were let out in 1960-61 by the appellants to the various occupants. If that be so, the objection of the appellants must necessarily fail and be rejected inasmuch as the rateable value fixed IS not based on any rent which is in excess of the standard rent. If and when an application is made under the provisions of section II of the Bombay Rent Act in respect of these premises, then it is possible that such rent may cease to be the standard rent. Thereafter the standard rent of each premises would be the rent which the Court may fix on such application. We are unable to accept Mr. Chitales submission that the standard rent which will be the upper limit for the purposes of fixing the annual letting or rateable value must in all cases be such standard rent as would be notionally fixed as on an application under section 11 of the Bombay Rent Act. This does not appear to us to be the scheme under the Bombay Rent Act. Our view in this behalf appears to be in accordance with the observations of Chagla C. J. in Karamsey Kanjis case referred to earlier in the course of this judgment. 24. These were the only points argued on behalf of the appellants before us. 25. In the result, the appeals fail and will stand dismissed with costs. Appeals dismissed.