JUDGMENT D.R. DHANUKA, J.:---The Municipal Corporation of Greater Bombay has preferred this appeal against order dated 30th July, 1979 passed by the Learned Additional Chief Judge of Court of Small Causes at Bombay in Municipal Appeal No. 180 of 1978. The said appeal was filed by the assessee M/s. Hirji Ladhabhai Co. under section 217 of the Bombay Municipal Corporation Act, 1888. The relevant facts having bearing on the subject matter of this appeal are briefly summarised hereinafter. 2. On or about 22nd August, 1957, the respondents herein obtained lease of plot bearing Old R.R. No. 1828 admeasuring 194.26 sq. metres situate at Dmellow Road (Freir Road), Bombay. The godown constructed on the said plot of land is deemed to be subject matter of demise by virtue of the provisions contained in the indenture of lease. The said indenture of lease was for the period of 10 years. The respondents pay a sum of Rs. 213/- per month as and by way of rent/compensation to the Bombay Port Trust. 3. Section 4 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 exempt the premises belonging to the Government or a local authority from the operation of Bombay Rent, Hotel and Lodging House Rates Control Act, 1947. 4. On 26th June, 1972, an agreement was arrived at between respondents and Maharashtra Rajya Wholesales Consumers Co-operative Societies Federation Limited. The said agreement uses the terminology appropriate to the agreement of leave and license. By the said agreement, the respondents allowed the said federation to use the said plot of land as well as godown on payment of Rs. 3,900/- per month. The amount of consideration paid or payable by the said federation under the said agreement is labelled as compensation under the said agreement. It appears that since about the year 1972, the said federation has been in possession of the said godown. 5. It appears that at one stage, the respondents used to charge compensation/rent of Rs. 2,770 per month to the said federation for user of the said godown and the consideration payable for such user was later on increased to Rs. 3,900/- per month as set out in agreement dated 26th June, 1972. 6. Prior to the year 1974-75, the rateable value in respect of the said plot and the said godown was fixed by the municipal authorities at Rs. 5,110/-. 3,900/- per month as set out in agreement dated 26th June, 1972. 6. Prior to the year 1974-75, the rateable value in respect of the said plot and the said godown was fixed by the municipal authorities at Rs. 5,110/-. By special notice bearing B.C.R. No. 105 of 1974-75, it was proposed by the municipal authorities that the rateable value of the said property should be revised from Rs. 5,110/- to Rs. 37,285/- with effect from 1st April, 1974. The respondents filed their complaint against the proposed enhancement of the rateable value. The municipal authorities ultimately fixed the rateable value of the said property in sum of Rs. 10,710/- for the year 1974-75. In this respect, the prescribed authority of the Municipal Corporation passed its order No. 27 of 1974-75. A copy of the said order is not part of record before the trial Court. It is not known to the Court as on what basis the proposed increase in rateable value of the said property was reduced to Rs. 10,710/-. This Court is not directly concerned with the rateable value of the said property having been fixed at Rs. 10,710/- for the year 1974-75. It is well settled law that the Municipal Corporation is not precluded from serving the special notice once again on the assessee and fix appropriate amount of rateable value of the property in question for subsequent years in light of the relevant materials on record of the case. 7. For the year 1976-77, the prescribed authority of the Municipal Corporation served special notice No. 394 of 1976-77 on the respondents proposing increase in rateable value of the said property i.e. godown as well as plot from Rs. 10,710/- to Rs. 37,825/- with effect from 1st April, 1977. Once again, the respondents filed their complaint against proposed increase. By an order dated 26th July, 1978, the Investigating Officer fixed the rateable value of the said property at Rs. 22,995/- for the period commencing from 1st April, 1977. It appears from the order of the Investigating Officer dated 26th July, 1978 that the Investigating Officer proceeded to fix the above referred rateable value on the footing that the compensation fee of Rs. 3,900/- was a clear indication in respect of hypothetical rent which a tenant merely reasonably pays to the landlord for letting of the said godown and the said plot. 3,900/- was a clear indication in respect of hypothetical rent which a tenant merely reasonably pays to the landlord for letting of the said godown and the said plot. The Investigating Officer provided for deduction to the extent of 40 per cent from the amount of gross hypothetical rent computed on the above footing and fixed the rateable value of the said property at Rs. 22,995/- by following the above referred mode of computation. 8. Being aggrieved by order dated 26th July, 1978, the respondents preferred an appeal before the Learned Additional Chief Judge of Court of Small Causes at Bombay being Municipal Appeal No. 180 of 1978. Both parties led their evidences at the trial of the said appeal. After considering the oral and documentary evidence, the learned Additional Chief Judge reached the conclusion that there was no reliable evidence on record in respect of actual rent received by the assessee from the occupant and the proper method for computation of the rateable value of the said property would be comparative rate method. The learned Additional Chief Judge reached the conclusion that in the year 1974-75, the Municipal Corporation had itself fixed the rateable value of the property at Rs. 10,710/-. The learned Additional Chief Judge held that there was no change of circumstances and thus there was no justification for increase in the rateable value of the said property from Rs. 10,710 to Rs. 22, 995/- as done by the Investigating Officer by his order dated 26th July, 1978. The learned trial Judge was not prepared to consider the stipulated amount of licence fee as an indication of hypothecated rent. 9. Mr. N.V. Walavalkar, the learned Counsel for the appellant has submitted at the outset that the burden to establish that the rateable value had not been properly fixed by the Commissioner rested on the assessee. In support of this submission, the learned Counsel relied on the ratio of the Division Bench of this Court in the case of (Filmistan Private Limited v. The Municipal Commissioner for Greater Bombay)1, reported in 72 Bom.L.R. 461. The learned Counsel for the appellants has emphasized the fact that the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 were not applicable to the premises in question as the premises belonged to a local authority i.e. the Trustees of the Port of Bombay. The learned Counsel for the appellants has emphasized the fact that the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 were not applicable to the premises in question as the premises belonged to a local authority i.e. the Trustees of the Port of Bombay. The learned Counsel for the Appellants has submitted that accordingly the question of applicability of provisions concerning fixation of the standard rent under the provisions of the said Act would not be applicable in this case. The learned Counsel relied upon the ratio of the judgment of the Supreme Court in the case of (Municipal Corporation of Greater Bombay v. Royal Western India Turf Club Limited) 2, reported in A.I.R. 1968 S.C. 425. In particular, the learned Counsel for the appellants invited attention of the Court to para 5 of the judgment of Shelat, J., speaking for the Court and submitted that Profit Basis Method was one of the well recognized method of rating. In para 5 of the said judgment, the Apex Court referred to several methods of rating such as the comparative method, contractors method, the Unit Method and the profit basis method, i.e., profit making capacity or valuation by reference to receipts and expenditure. If the profit basis method is to be applied, the assessing authority is required to ascertain the amount of gross receipts of the assessee from the property and then provide for the necessary deduction therefrom. In para 5 of the said judgment, the Apex Court also observed that "the figure so give rating authority a valuable indication as to the rent which the hypothetical tenant would be likely to give for the right to occupy the hereditament in question and therefore would enable them to form an opinion as to the correct amount of the net annual value for the purpose of rating." 10. Section 154 of the Bombay Municipal Corporation Act does not prohibit the municipal authorities from applying the profit basis method for the purpose of fixing the rateable value of the property in an appropriate case and particularly in a case where there is no question of fixing the standard rent and the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 have no application. 11. 11. The learned Counsel for the appellants has also relied on the ratio of the judgment of the Supreme Court in the case of (Motichand Hirachand ors v. Bombay Municipal Corporation)3, A.I.R. 1968 S.C. 441. In this case, in para 4 of the judgment, the Supreme Court observed as under: "Equally irrelevant is the question whether the income arising from such an agreement is rent or licence fee." It must be stated in the passing that the different considerations would apply where the tenant is liable to pay only the amount of standard rent in respect of the premises let i.e. the premises governed by the provisions of the Rent Control legislation. In the cases covered under the Bombay Rent, Hotel Lodging House Rates Control Act, 1947, it shall not be permissible to the municipal authorities to fix the rateable value by applying profits basis method by ignoring the standard rent payable in respect of the premises in question. 12. At this stage, it is appropriate to refer to the ratio of the judgment to the observation of the Supreme Court in the case of (New Delhi Municipal Committee v. M.N. Soi and anr.)4, reported in A.I.R. 1977 S.C. 302 cited by the learned Counsel for the respondents themselves. In my opinion, the ratio of this judgment does not assist the respondents but assists the appellants for the purpose of deciding the controversy which is subject matter of this appeal. In para 10 of the judgment, Beg, J., speaking for the Court observed that the rateable value was liable to be fixed on the basis of hypothetical rent which can reasonably be expected if the building was to be let, in an open market. Both in paras 10 and 11 of its judgment, the Appex Court held that the expression "open market" would not include a black market. In para 11 of the said judgment, the Apex Court specifically dealt with the situation where contractual rent charged by the landlord was in excess of the standard rent. The Court observed that in such a case, it was obvious that the rapacious landlord was indulging in an activity which constituted an offence under law of the land. In para 11 of the said judgment, the Apex Court specifically dealt with the situation where contractual rent charged by the landlord was in excess of the standard rent. The Court observed that in such a case, it was obvious that the rapacious landlord was indulging in an activity which constituted an offence under law of the land. In this said suit, the Court observed as under: "Rating cannot operate as a mode of sharing the benefits of illegal rack-renting indulged in by rapacious landlords for whose activities the law prescribes candign punishment". In matters governed by the Bombay Rent Act, the landlord commits a criminal offence if he charges rent in excess of standard rent. The question to be asked in this case is as to whether the respondents had committed any offence by charging a sum of Rs. 3,900/- per month to the federation concerned. Since Bombay Rent Act, 1947, is not applicable to the premises in question, the answer must necessarily be in negative. It is open to the parties to fix the reasonable amount of licence fee or reasonable amount of rent for letting or use of the premises on the footing of the negotiations between the parties competent to contract in an open market. It is true that sum of Rs. 3,900/- is described in the said agreement dated 26th June, 1972 as a license fee. To may mind, it is immaterial as to whether the amount of consideration for use the said godown is described as a license fee or as rent. It makes no difference to this case as the provisions of the Bombay Rent Act, 1947, are not applicable to the premises in question. The problem can be approached from another point of view as indicated below. The amount charged by the respondents to the said federation is at least an indication of reasonable rent which a tenant is likely to pay in this case. If it was the case of the respondents that the comparable rents prevailing in the locality for similar premises which were not governed by Bombay Rent Act, 1947, were lower, the respondents could have led the necessary evidence before the trial Court to prove their assertion. No such evidence was led by the respondents. If it was the case of the respondents that the comparable rents prevailing in the locality for similar premises which were not governed by Bombay Rent Act, 1947, were lower, the respondents could have led the necessary evidence before the trial Court to prove their assertion. No such evidence was led by the respondents. After going through the relevant evidence of both the witnesses examined at the trial, the following picture emerges:--- There was no evidence on record to indicate as to what were the comparable rent in respect of similar premises situated in the same locality which were not governed by Bombay Rent Act, 1947. In absence of such evidence, the assessing authority proceeded to fix the rateable value of the property by applying the profits basis method and by considering the license fee/rent of Rs. 3,900/- per month as an indication of reasonable rent which the premises in question could fetch in open market. 13. It appears to me that in a situation, the Investigating Officer committed no illegality by adopting the actual receipt of compensation as the basis for fixation of rateable value and granting deduction therefrom to the extent of 40%, I am firmly of the opinion that the fixation of rateable value in respect of premises not governed by Rent Control Legislation depends upon the criteria of prevailing rents in open market unaffected by concept of standard rent applicable only to the premises governed by Rent Control Legislation. 14. The learned Counsel for the respondents has invited attention of the Court to the large number of judgments of the Supreme Court as well as this Court as indicated below. (i) (Corporation of Calcutta v. Life Insurance Corporation of India)5, A.I.R. 1970 Supreme Court 1417. (ii) New Delhi Municipal Committee v. M.N. Soi anr, A.I.R. 1977 S.C. 302. (iii) (Diwan Daulat Rai Kapoor v. New Delhi Municipal Committee and another)6, reported in 1984(II) Municipalities and Corporation Cases, S.C. 293. (iv) (The Municipal Commissioner and another v. Empire Estate)7, reported in 1993 Municipalities and Corporation Cases, (Bombay) 321: 1991(4) Bom.C.R. 60 . This case was decided by the Bombay High Court. 15. In all the above referred cases, the premises in question were covered under the Rent Control Legislation. The said cases are therefore clearly distinguishable. (iv) (The Municipal Commissioner and another v. Empire Estate)7, reported in 1993 Municipalities and Corporation Cases, (Bombay) 321: 1991(4) Bom.C.R. 60 . This case was decided by the Bombay High Court. 15. In all the above referred cases, the premises in question were covered under the Rent Control Legislation. The said cases are therefore clearly distinguishable. The learned Counsel for the respondents submits that the fixation of the rateable value under section 154 of the Bombay Municipal Corporation Act, 1888 cannot be different in respect of the premises governed by the Rent Control Legislation as compared to the premises not so governed. Section 154 of the Bombay Municipal Corporation Act, 1888 merely prescribes that the rateable value should be fixed by the assessing authority on the basis of annual rent for which the assessed land or building might reasonably be expected to let from year to year. It is obvious that in cases covered under the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947 or the case covered any under Rent Control Legislation, the assessed property cannot reasonably be expected to be let at an amount in excess of the standard rent. It is common knowledge that standard rent is lower than the "market rent". In cases, where premises were exempted from the Bombay Rent Act, 1947, or where Rent Control Legislation was not applicable to the premises in question it is always open to the landlord or tenant to let out the premises at a reasonable rent which is expected to be fetched in open market. In such cases, the premises can fetch higher rent or compensation. The two situations are thus not at all comparable. 16. The learned Counsel for the respondents placed reliance on the observations of the Supreme Court in the case of Corporation of Calcutta v. Life Insurance Corporation of India, A.I.R. 1970 S.C. 1417. The learned Counsel for the respondents submitted that in this case it was clearly laid down by the Supreme Court that the rateable value of the premises let or expected to be let should be fixed on the basis of rent which the landlord may receive from his tenant and not on the basis of rent which a tenant may receive from his sub-tenant. The learned Counsel for the respondents submitted that in this case J.C. Shah,J., speaking for the Court has clearly observed as under: "In determining assumption of annual value, the assessing authority is not concerned with the rent which the tenant may receive from his sub-tenant. It is the gross rent which the owner may realise by letting the land or building under considerations which determines the annual value". 17. The learned Counsel for the respondents submitted that the amount of Rs. 3,900/- per month which the respondents had been recovering from the above referred federation under the agreement dated 26th June, 1972 was irrelevant and could not be made the basis for fixation of rateable value of the premises/property in question. I have carefully gone through the submissions of the learned Counsel for the respondents. The above cited case before the Supreme Court was a case where the premises in question were governed by Bombay Rent, Hotel and Lodging House Rates (Control) Act, 1947. In the context, the Court held that the maximum limit of the annual value was the annual standard rent in respect of the premises in question. In this context, the Court has held that the amount which the tenant may recover from his sub-tenant was not relevant for the purpose of fixation of the rateable value. In the case, where the provisions of the Rent Control Legislation are not at all applicable, the assessing authority is entitled to take into consideration as to the rent which the premises in question may fetch on open market. In such a case even the licence fee payable by the licensee may furnish an indication or yardstick for fixation of rateable value. I have already observed in earlier part of my judgment that the amount actually recovered by the assessee is not necessarily a conclusive criteria for fixation of the rateable value even where the open market rate is to be applied for fixation of rateable value. In the case of Municipal Corporation of Greater Bombay v. Royal Western India Turf Club Ltd., A.I.R. 1968 S.C. 425, the Supreme Court observed that it was not surprising that the rateable value as determined by the High Court. It all depends upon the facts of this case. In the case of Municipal Corporation of Greater Bombay v. Royal Western India Turf Club Ltd., A.I.R. 1968 S.C. 425, the Supreme Court observed that it was not surprising that the rateable value as determined by the High Court. It all depends upon the facts of this case. In a given situation, the actual rent recovered by a landlord might be "fancy rent" and much more than the rent which a willing tenant might offer to the willing landlord in an open market. In such a situation, the rateable value fixed by the rating authority may be less than the actual rent paid or payable for the premises in question. It cannot be disputed that the amount actually received by the assessee for allowing the use of the property in question can at least be considered as an indication of the amount which may be reasonable expected as rent payable by hypothetical tenant to the owner. If the assessee places any other material on record of the rating authority or the rating Court so as to prove the comparable rent in the locality in respect of similar premises not governed by Rent Control Legislation, the rating authority or the Court is bound to take such material or evidence into consideration. No such evidence was led in this case by or on behalf of the respondent at any stage. The net income of the respondents from the property is thus taken as prima facie basis for fixation of rateable value and rightly so. 18. In this case, the learned Additional Chief Judge of Court of Small Causes, Bombay has virtually held that the licence fee/rent collected by the respondents from the above referred federation was irrelevant for fixation of the rateable value of the property in question. The learned Additional Chief Judge is in error. The learned Additional Chief Judge has observed in his judgment that the proper method in such cases could alone be comparative rate method. In my opinion, the learned Additional Chief Judge is in error. The assessing authority is required to ascertain the rent which may be reasonably expected to be recovered by the owner from the hypothetical tenant in open market. The quantum of such reasonable rent may be ascertained by applying the profits basis method and/or by applying comparative rent method. In my opinion, the learned Additional Chief Judge is in error. The assessing authority is required to ascertain the rent which may be reasonably expected to be recovered by the owner from the hypothetical tenant in open market. The quantum of such reasonable rent may be ascertained by applying the profits basis method and/or by applying comparative rent method. It was for the respondents to lead evidence before the trial Court as to what were the comparative rent prevailing in the locality at the material time. The respondents did not lead any evidence in this direction. In view of the fact that there was no evidence on record regarding comparative rents prevailing in the locality in respect of similar premises, the learned Additional Chief Judge ought to have confirmed the rateable value of the property in question fixed by the Investigating Officer. In absence of the relevant evidence on the aspect of the comparative rents, the amount actually collected by the respondents from the federation concerned could be taken into consideration as a reliable basis for fixation of rateable value. The Learned Additional Chief Judge erroneously assumed that for the year 1974-75 the rateable value of the property was fixed at Rs. 10,710/- on the basis of comparable rents in the locality. There was no warrant for any such assumption. The municipal authorities are not estopped from revising the rateable value of the property in subsequent years. The Court was required to consider relevant materials on record in respect of the proceedings concerning fixation of the rateable value for the year 1976-77 and apply its mind to the issue under consideration afresh. 19. The learned Counsel for the respondents has submitted that the rateable value of the said property i.e. plot of land and godown should be fixed on the basis of the rent paid by the respondents to the Bombay Port Trust at Rs. 213/- per month. It is not possible to accept this submission. The respondents had never challenged the fixation of the rateable value for the year 1974-75 at Rs. 10,710 for all these years. If the rateable value of the said godown and the said plot of land is to be fixed on the basis of actual rent paid by the respondents to the Bombay Port Trust, the rateable value would work out about Rs. 1,500/- only. 10,710 for all these years. If the rateable value of the said godown and the said plot of land is to be fixed on the basis of actual rent paid by the respondents to the Bombay Port Trust, the rateable value would work out about Rs. 1,500/- only. It must be stated in the passing that the lease granted by the Bombay Port Trust to the respondents had already expired and the litigation is pending in the Bombay City Civil Court for eviction of the respondents and recovery of the compensation at higher rent. In this circumstances, it must be held that the learned Additional Chief Judge committed an error of law while deciding the Municipal Appeal No. 180 of 1978. 20. In the result, the appeal is allowed. The impugned order under appeal being order dated 30th July, 1979 passed by the Learned Additional Chief Judge of Court of Small Causes, Bombay in Municipal Appeal No. 180 of 1978 is set aside. The rateable value of the premises/property in question as fixed by the Investigating Officer of the Municipal Corporation by his order dated 26th July, 1978 at Rs. 22,995/- is confirmed. 21. Having regard to the facts and circumstances of the case, there shall be no order as to costs. 22. Issuance of certified copy is expedited. Appeal allowed. ******