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Judgment
Niyogi, J.—This appeal is by the Calcutta Electric Supply Corporation Ltd., u/s 142(3) of the Calcutta Municipal Act (Bengal Act III of 1923) (heretoafter to be mentioned as the Act) and is directed against the decision of a learned Judge of the Court of Small Causes, Calcutta, in an appeal filed before him by the Assessee, the Appellant, under the provision of Section 141 of the said Act.
The case relates to the assessment of premises No. 5, Chowringhee Square, Calcutta, commonly known as the "Victoria House", made by the Corporation of Calcutta, the Respondent, in course of six-yearly general valuation of the said premises, with effect from April 1, 1948, under Clause (b) of Section 127 of the Calcutta Municipal Act (Bengal Act II Iof 1923).
The disputed premises is owned and possessed, for office purposes, By the Appellant, the Calcutta Electric Supply Corporation Ltd. It appears that the Appellant company purchased plots Nos. 76 and 76/1, C.I.T. Scheme VII(E) comprising in all, 35 kattas, 11 chs. 21 sq. ft. of land in 1929-30. The big six-storeyed building with a tower, known as the "Victoria House" was built on the said land by the Calcutta Electric Supply Corporation Ltd., the Appellant, in 1940-41. The main block of the building, on the south, houses various departmental offices, while garage, servants'' quarters, privies, urinals, etc., are situated in the rear block on the north. The Corporation of Calcutta, the Respondent, assessed the annual value of the said premises u/s 127(b) of the Calcutta Municipal Act, 1923, with effect from April 1, 1942 as follows:
Rs.
Land at Rs. 14,250 per katta Buildings gross 5,08,961
Capital value-Rs. 12,72,000.
Less depreciation-Rs.38,160 12,33,840
Total 17,42,801
Annual value at 5 per cent. 87,140
Less allowance for repairs-to attendance maintenance of lifts on and 875
86,265
This valuation was not challenged by the Calcutta Electric Supply Corporation Ltd. So the accepted assessment for the sexennial period emimencing from April 1, 1942, is Rs. 86,265.
In course of the next six-yearly general revaluation operation commencing from April 1, 1948, the Corporation of Calcutta departmental^ assessed the annual value of the said premises u/s 127(b) of the Act and served the Appellant-company with a notice u/s 138 of the Act, dated February 25, 1948, announcing the increase in the annual valuation from Rs. 86,265 to Rs. 1,48,943, as having been made due to the grounds as follows:
Valuation of the new buildings at an estimated cost of construction "and value of the land. Revaluation estimated cost of construction "less depreciation and value of the land at Rs. 25,000 per katta.
The E''eetric Supply Corporation duly filed an objection to the said wluation u/s 139 of the Act. The said objection was heard and disposed of by the Deputy Commissioner No. I of the Corporation of Calcutta u/s 140 of the Act. The Deputy Commissioner ffe. I determined the valuation as follows:
Rs.
Land at Rs. 21,000 per katta 7,50,050
Buildings gross capital value Rs. 17,35,690 -
Less depreciation at 6 per cent. Rs. 1,04,142 16,31,548
Total capital value 23,81,598
Annual value at 5 per cent. Rs. 1,19,079
Less allowance made for 2 lifts Rs. 3,000
Nett annual value Rs. 1,16,079
The Calcutta Electric Supply Corporation Ltd., appealed against the said decision of the Deputy Commissioner No. I of the Corporation of Calcutta, to the Court of Small Causes, Calcutta, u/s 141 and it was contended there that the assessment of the annual value of the premises in question at Rs. 1,16,079 had been quite unfair and not based upon legal evidence or data. The value of the land assessed at Rs. 21,000 per cottah was also challenged as illegal and excessive. It was further urged that deduction should have been given for the six lifts installed and operating in the building, instead of only two lifts as done by the Deputy Commissioner. The Appellant put the figure Rs. 90,966 as the nett annual value of the aforementioned premises. The learned Small Cause Court Judge accepted the valuation of the building as in April 1948, less depreciation of Rs. 16,31,548, as assessed by the Deputy Commissioner No. I, Corporation of Calcutta. The learned Judge also accepted the estimated present value of the land valued with the building as part of the same premises, as in April, 1948, at the rate of Rs. 21,000 per cottah, amounting in all to Rs. 7,50,050, as fixed by the Deputy Commissioner of the Corporation of'' Calcutta. On this basis the learned Judge arrived at the figure of Rs. l,19,079 as the annual value of the premises at Rs. 5 per cent. He, however, further reduced this sum by giving allowance for six lifts operated by the Appellant-company in the building. The learned Judge, therefore, assessed the annual value of the said premises at Rs. l, 10,079.
It is the case of either party that the valuation in this case shall have to be made u/s 127(b) of the Calcutta Municipal Act, 1923 (Act III of 1923). Clauses (a) and (b) of the section run as follows: "(a) Annual valuation of land and the annual valuation of "any building erected for letting purposes or ordinarily let, shall be "deemed to be the gross annual rent at which the land or the building "might, at the time of assessment, reasonably be expected to let from "year to year, less, in the case of a building, an allowance of 10 per "cent, for the cost of repairs and for all other expenses necessary to "maintain the building in a state to command such gross rent, and "(b) the annual value of any building not erected for letting purposes "and not ordinarily, let shall be deemed to be 5 per cent, on the sum "obtained by adding the estimated present cost of erecting the "building, less a reasonable amount to be deducted on account of "depreciation (if any) to the estimated present value of the land ''Valued with the building as part of the same premises". There is no terious dispute in this appeal as to the estimated present cost of erecting the building or as to the percentage of deduction on account of depreciation. The Respondent, the Corporation of Calcutta, has given a deduction of 6 per cent, on the gross capital value of the building on account of depreciation. The Appellant also claimed depreciation at the same rate (see pp. 8 and 9 of the Paper Book). The Deputy Commissioner No. I estimated Rs. 17,35,690 as the gross capital value of the building as in April, 1948, and after allowing depreciation of 6 per cent, on the said figure amounting to Rs. 1,04,142 the capital value of the buildings stood at the figure of Rs. 16,31,548. On the side of the Appellant, the Calcutta Electric Supply Corporation Ltd., Shri K.C. Banerjee (P.W. 1) was examined as an expert witness. He is a consulting Engineer and a valuer by profession for a period of more than 25 years and has no doubt acquired a considerable experience in this line. He inspected the premises On May 31, 1954 and on June 1, 1954 and submitted a report of his inspection, to the Appellant-company, which has been marked Ext. 1 in this case. He has valued the entire buildings as in April, 1948, at Rs. 13,95,326. This is even less than the figure given by the Appellant-company in the plaint filed hi the Court of the Small Causes (see p, 11 of the Paper Book). Therein the gross capital value of the buildings was estimated to be Rs. 15,00,000 from which a deduction of Rs. 90,000 (at the rate of 6 per cent.) was given on account of depreciation. The learned Judge rightly refused to place absolute reliance upon the expert''s estimate of the valuation without the same being tested by airy other reliable data or materials. Such data or materials were not forthcoming in this case. The learned Judge has also pointed out, after comparison of the rate per sq. ft. as given by the Engineer in his report (Ext. 1) and as assessed by the Calcutta Corporation (vide docket Ext. D) that there was not much difference in the rates per sq. ft. in respect of different floors of the buildings except in the case of the 6th and 7th storeys (tower only) which has been assessed at Rs. 20 per sq. ft. by the Engineer (P.W. 1) Mr. Banerjee, for the Appellant-company, also did not pursue their objection in this regard at the time of hearing of the appeal before us.
Mr. Banerjee has, however, complained that the Corporation had not separately assessed the lighting area of 570 sq. ft. It has been urged that this lighting area should be separately assessed at Rs. 8 per sq. ft. inasmuch as, no solid construction has been made on this area. On the side of the Respondent, the Corporation of Calcutta, an Assistant Inspector of the Corporation was examined as a witness. He is O.P.W. 2 Nripendra Lai Kar. Mr. Banerjee for the Appellant has pointed out that this witness has stated in his evidence that the built-up area which has been mentioned in the objection docket, has been taken with reference to outside walls of the structures (see p. 27 of the Paper Book).
It has, on the other hand, been contended on the side of the Corporation of Calcutta that this lighting area and all other factors were duly taken into consideration by the Corporation in estimating the gross capital value of the buildings as in April, 1948. The. learned Judge accepted this contention made on the side of the Respondent.
In the absence of any materials to the contrary we also do not see any reason to disagree with the findings of the learned Judge in this regard. We have seen above that the Corporation of Calcutta estimated the gross capital value of the buildings as in April, 1942 to be Rs. 12,72,000. This valuation was also not challenged by the Appellant-company. The gross capital value of the buildings in question as in April, 1948, was estimated by the Deputy Commissioner I of the Corporation of Calcutta to be Rs. 17,35,690. So the estimated gross capital value of the buildings as in April, 1948, works out to be about 40 per cent, over the gross capital value of the buildings as in April, 1942. As pointed out by the learned Judge, the Engineer and rsluer examined by the Corporation of Calcutta, namely, Shri K.C. Banerjee (P.W. 1) stated in his evidence that the cost of construction, rose by 80 per cent, in 1948 over the cost of construction as in 1942. In his re-examination P.W. 1, however, said that the cost of construction rose by 35 to 40 per cent, from 1942 to 1948 if materials were purchased at controlled rates. It is not contended that the lighting space as such was not taken into consideration by the Corporation of Calcutta in calculating the estimated gross capital value of the buildings as in April, 1942. This valuation was also accepted by the Appellant-company. There, therefore, remains very little scope, in the facts and circumstances of this case, for the contention that the Corporation of Calcutta did not take into consideration the lighting space in calculating the gross estimated cost of the building as in April, 1948. This contention of the Appellant was, therefore, rightly rejected by the learned Judge, Small Causes Court, Calcutta.
The learned Judge also gave an allowance of Rs. 9,000 for repairs to, attendance on and maintenance of six lifts in the Victoria House. Both the parties accepted this decision of the learned court below.
The main dispute is about "the estimated present value of the "land valued with the building as part of the same premises". Controversy has been raised as to the real meaning of the above expression and the method to be followed in valuing the land on which the building stands.
The principal grounds urged before us by Mr. Banerjee are relating to the method which should be adopted for valuing the land under Clause (b) to Section 127 of the Calcutta Municipal Act. It has bees strenuously argued by Mr. Banerjee that beneficial occupation determined in terms of letting value is the principle that should- be adopted in estimating present value of the land valued with the building as part of the same premises. The learned Advocate has quoted chapters and verses from the English law in support of his such contention. According to the statutory enactments, the fundamental and the only basis of rating in England in respect of all classes of property is the yearly rent which a hypothetical tenant would reasonably pay. It was at one time held that, in order to create liability to poor rate, there must be an occupier and his occupation was "beneficial" and this word was used as equivalent to "profitable", but later on it has been held that "beneficial occupation" does not connote pecuniary profit. But in order to create liability to rates "beneficial occupation" is necessary, if by that term is meant an occupation which is of value to the occupier, and for which a tenant will give a rent which is greater than the necessary outgoings for the maintenance of the property (see Ryde on Rating-10th ed., pp. 210-211).
In R. v. The School Board for London (1386) 17 Q.B.D. 738 Lord Esher, M.R. said, "the real question is how the value is to be ascertained. The "enquiry is not as to how rent is paid by the actual occupier. The "mode of finding out the value is laid down in the Act [The Valuation "(Metropolis) Act, 1869] and it is to ascertain the rent at which a "tenant (not the tenant) taking one year with another, might reasonably "be expected to pay. It is also implied that where the owner occupies "he is to be considered as if he were a tenant.
We may also quote here Section 68 of the Rating and Valuation Act, "1925, where the term ''gross value'' has been defined to mean, the "rent at which a hereditament may reasonably be expected to let from "year to year, if the tenant undertook to pay all usual tenant''s rates "and taxes and if the landlord undertook to bear the cost of repairs "and insurance and the other expenses, if any, nceessary to maintain "the hereditament in a state to command rent.
Thus the fundamental and the only basis of rating in England, according to the statutory enactments, in respect of all classes of property is the yearly rent which a hypothetical tenant would reasonably pay. The statute requires an assumption that the property to be valued is to be let and, therefore, the fact that it is occupied by the owner is immaterial. All possible occupiers including the actual occupier must be taken into account as possible tenants from year to year (see Ryde on Rating-10th ed., p. 252). As observed by Pal, J. in Province of Bengal v. Corporation of Calcutta (1942) 46 C.W.N. 496 (503) "the question in the English system, therefore, always "reduces to find out the rent which a tenant may reasonably be "expected to pay for a hereditament from year to year. Various "methods are suggested according to the character and use of the "hereditament to find out this hypothetical annual rent and the so "called contractor''s basis is only one such method. There are also " ''profit basis'' and the ''competitive basis'' ".
The "Contractor''s method" was explained by Mitter, J. in The Corporation of Calcutta v. the Province of Bengal (1939) 44 C.W.N. 165 (168) as follows:
By this method the total cost, that is, the price of laud and the cost of construction is determined and certain percentage thereof, usually 5 per cent, is taken and the figure thus arrived at is taken as the hypothetical yearly rent.
Recourse is also sometimes had to interest on capital value or on the actual costs of the land and the buildings, as a guide to the ascertainment of annual value where the property is of a kind that is rarely let from year to year. The rule was thus stated by Cave, J. in R. v. The School Board for London (supra) "Interest on "costs is a rough test undoubtedly.... If the place "is occupied by a tenant it is not a good test at all, because the rent "which he really pays is a far better one. If the place is unlet it is "not at all a good test, because it may be that no tenant would give "aything approaching to the interest on the cost. Bat if the place "is occupied by the owner himself, then it is in some sense, a test, "a rough test no doubt, and only a prima facie evidence, but still "some evidence to show what the value of the occupation is...." (see Ryde on Rating-10th ed., p. 329). One hypothesis is the assumption that "rent which would command itself to a tenant would "be based upon the estimate of the profits resulting from the occupation "of the hereditament".
It has been urged by Mr, Banerjee that even u/s 127(b) the annual value would be the annual letting value and that the only conception is beneficial user. To decide this point it is necessary, in the first place, to turn to the relevant provisions of the Calcutta Municipal Act, 1923. Section 124 of the Act empowers the Corporation of Calcutta to impose consolidated rates on land and buildings on the basis of annual value as determined under Chapter X of the Act. Sections 127 and 128 lay down the mode of determining the annual value. For our present purpose we may leave out Section 128 altogether. This section deals with the cases where the property to be assessed belongs to the Board of Trustees for the Improvement of Calcutta. In Section 127, we find that two distinct methods have been provided for the purpose of determination of the annual value. In case of bare land or building erected for letting purposes or ordinarily let, the annual value u/s 127(a) shall be deemed to be the grow annual rent at which the land or building might, at the time of assessment be reasonably expected to let from year to year, less 10 per cent, deduction, in case of a building for the costs of repairs and for all other expenses necessary to maintain the building, in a state to command such gross rent. In other words, the annual value in such cases is to be what a hypothetical tenant would pay as rent from year to year less a certain deduction. A different method is provided in Section 127(b) for determination of the annual valuation of a building which is not erected for letting purposes and not ordinarily let and is used ordinarily by the owner for purposes of residence. The annual value in such a case is deemed to be 5 per cent, of the sum obtained by adding the estimated present cost of construction of the building and deducting a certain amount as depreciation allowance, to the estimated present value of the land valued with the building as part of the same premises. Therefore, u/s 127(b) the owner in occupation is not to be considered as a tenant for the purpose of determining the rateable value. This is the fundamental difference with the basis of rating in England where the only basis according to the statutory enactments in respect of all classes of property, is the yearly rent which a hypothetical tenant would reasonably pay.
The principle of rating as embodied in Section 127(a), barring certain matters of detail, is substantially the same as in England. But in England the owner of a land or a house who does not use it in any way, is not rateable. "Legal possession is not enough to make the "''Appellant occupier assessable to the poor rate". Thus the owner of a vacant house so long as he leaves it vacant, is not rateable (see Hyde on Rating-10th ed., pp. 17-18). But under the Calcutta Municipal Act, 1923, an owner is rateable even if the land remains vacant and unoccupied. The owner gets certain vacancy remissions as provided in Section 151 of the Act.
It has been vehemently argued by Mr. Banerjee that Section 127(b) of the Act should not be so construed as yielding a result different from what would be arrived at u/s 127(a). True, as has been urged by Mr. Banerjee, we have in the main followed here the system of rating law in England, but we are unable to agree with Mr. Banerjee that even u/s 127(b) of the Act, it is the beneficial occupier who is to be considered and the value'' of his occupation.
The case of Nundolal Bose v. the Corporation for the town of Calcutta ILR (1885) Cal. 275 relied on by Mr. Banerjee, was under the provision of Section 88 read with Section 104 of the Calcutta Municipal Consolidation Act, 1876. The relevant portion of Section 104 of that Act runs as follows:
The estimated gross annual rent at which any hoii-.o lrid lieMe tr, rate-tinder this Act, may reasonably be expected to let from year to year, shall, for the purpose of any rating to be imposed under this Act, be held and deemed to b* the annual value of such house or land.
So, it will at once appear that the said Act made no distinction between buildings erected for letting purposes or ordinarily let and buildings erected for residential purposes. The above case arose out of an assessment made on a family dwelling house of which Nundolal Bose and Pasupati Nath Bose were the owners. The Corporation estimated the gross annual rent on the basis of the cost of the building and premises by following what is known as "Contractor''s method". This was disapproved and the assessment set aside by their Lordships in that case. Garth, C.J., observed in this connection,
In this it seems to me that they acted beyond their powers. They had no right whatever to make assessment upon any other basis than that: which the Act prescribes. The principle upon which they ascertained the annual value of the premises appears to me to have been obviously fallacious, but whether it was so or not, it was au arbitrary''test and one which law does not sanction.
According to his Lordship, the Commissioners were bound by law to adopt as the basis of their, assessment, the gross annual rent at which the house may be expected to let from year to year. Mr. Banerjee submitted that the said observation of the Calcutta High Court was not correct and that all the methods of rating mentioned above, were available for determination of the annual value of the premises in question. For our present purpose it is not necessary for us to pronounce any opinion on the above submission made by Mr. Banerjee. Mr. Banerjee, however, laid stress on the further observations of the Calcutta High Court in that case, namely, that "annual value" has always been held to mean "annual letting value". But as wev have mentioned above, the said case was decided long before the present Calcutta Municipal Act, 1923, came into operation. It is therefore, of no real assistance to us in interpreting Clause (b) to Section 127 of the Act.
The next case to which our attention has been drawn is the case of the Corporation of the town of Calcutta v. Ashutosh Dey (1927) 31 C.W.N. 864 . That case related to the assessment of annual value u/s 127(a) of the Act. The appeal to the High Court originally came up for hearing before Mookerjee and Ray, JJ., who having differed on point of law, the appeal was, in consequence of this difference of opinion, heard by a Letters Patent Bench consisting of Rankin, C.J., Buckland, and Cammiade. Mr. Banerjee has referred to the following observations made by Ray, J., in that case,
The object of the whole system of rating law in Kngland, which we have followed in India, is to asseo) occupiers of rateable property equally in proportion to tho Value of their occupation. The value is stated by statute in the form of hypothetical annual rent payable by the occupier for the right to u"e aucl enjoy the property occupied. It is the beneficial occupier who has to be considered and the value of hii occupation.
We must respectfully express our dissent from the above observation of Ray, J., if it was meant to be a general proposition applicable to the cases of rating both under Clause (a) and (b) to Section 127. However, this reference to beneficial occupation is clearly on the footing that the premises were one governed by Clause (a) to Section 127 of the Calcutta Municipal Act. In that case the Court was not called upon to interpret the provisions of Clause (b) to Section 127.
In the case of The Bengal Nagpur Railway Company v. The Corporation of Calcutta (1942) 40 C.W.N. 637 the annual value was required to be determined u/s 127(a) of the Act. It was held by the Higtt Court in that case that in case of land which was not covered by any building and in case of a building erected for letting purposes, annual value was the rent which would be worth to a hypothetical tenant who took it from year to year. Their Lordships, however, recognised that Section 127(b) provided a somewhat different method for determining the annual valuation of a building, which was not erected for letting purposes and was used ordinarily by the owner for purposes of residence.
The expression "the estimated present value of the land valued "with the building as part of the same premises" occurring in Section 127(b) has been judicially interpreted by this Court in several cases [The Corporation of Calcutta v. Messrs Jardine Skinner and Co. (1936) 41 C.W.N. 200 , The Corporation of Calcutta v. the Province of Bengal (Supra), The Province of Bengal v. The Corporation of Calcutta (Supra), Lalchand and Sons Vs. Corporation of Calcutta, , and General Electric Co. of India Ltd. and Another Vs. Corporation of Calcutta and Another, ]
In the case of the Corporation of Calcutta v. Messrs Jardine Skinner and Co. (Supra), Guha, J., observed thus:
It, is to be noticed that for the purpose of meeting the requi reman ta of Section 127(a) of the Calcutta Municipal Act, the value of the land apjjertaiong to the premises to bo assessed, had to be separated and kept distinct from the value of the building standing on the land, the law required thai valuation was to be on a basis other than rental basis a indicated in Section 137(a).
Nasim Ali, J., was also of the opinion that the annual letting value is to be taken as a basis of rating only in cases coming under Clause (a) to the section.
The case of the Corporation of Calcutta v. the Province of Bengal (supra) related to the assessment of premises No. 16, Dalhousie Square (North), commonly known as "the Writers'' Buildings" made by the Corporation of Calcutta in 1934 u/s 127(b) of the said Act. It was contended in that case by the Respondent, the Province of Bengal, that in view of the language employed in Section 127(b), there was only one legitimate method, and that was, that the annual rent of the whole premises must be assessed and capitalised in the first instance, then from the capitalised amount the present cost of erecting the building, after allowing a reasonable depreciation, was to be deducted. According to the learned Counsel for the Respondent the balance was the estimated "present value of the land valued with the building as part "of the same premises". It was observed by the court in that case that,
The Calcutta Municipal Act, in our judgment, provides u/s 127(b) an independent method, a method independent of the method prescribed under clause (a) of that section, for if the Legislature had intended the beneficial occupation determined in. terms of letting value to be the sole criterion for deter-minirg the annual value, no distinction would have been made by it between classes of rateable properties based on user by the owner and user by a tenant. We........hold that beneficial occupation determined in terms of letting value is not the principle adopted by the Legislature in Clause (b).
Their Lordships pointed out that the principle that assessibility depends upon whether occupation is of value or not, as formulated by Lord Birkenhead, L.C., in Port of London Authority v. Assessment Committee of Orsett Union, is no doubt, a basic principle, but it is not the only basic principle underlying the provision of Chapter X of the Calcutta Municipal Act. In Calcutta bare ownership would sustain the liability to be rated.
In the case of Province of Bengal v. the Corporation of Calcutta (supra) their Lordships also refused to accept the method suggested by the applicant in. that case that the only legitimate method was-to find out the rent which a tenant might reasonably pay for the-hereditament from year to year. It was held in that case that Clause (6) to Section 127 being applicable to cases where determination of the annual rent was not possible, no method of determining the "value'''' of land under Clause (b) could be legitimate which started with annual rent.
In the case of Messrs Lalchand and Sons v. the Corporation of Calcutta (Supra) all the previous cases were noticed and discussed. It was held by this- court in that case that Clause (b) to Section 127 of the Calcutta Municipal Act, dealt with residential buildings not meant to be let and the State Legislature had definitely adopted a quite distinctly different method in such a case. It was further held that the method of assessment to be followed under Clause (b) to Section 127 of the Act did not justify the importation of rental value. A similar view was also expressed by this Court in the General Electric Company of India. Ltd. v. the Corporation of Calcutta (Supra).
It is the fundamental principle of rating that the property must be valued as it exists at the time assessment is made, with all the then existing circumstances, that is "Rebus sic stantibus". Future possibilities cannot be taken into account by the rating authority. It was stated by Mitter, J., in the Corporation of Calcutta v. the Province of Bengal (Supra):
We think that the legislature intended to give effect to this principle only -vrhert it used the phrase "land valued with the building". u/s 127(b) land is not to be regarded as bare land. It s to be" taken in its present disposition and value.
We respectfully agree with the above observation of Mitter, J.
It has been argued by Mr. Banerjee that the rental concept is the only legitimate concept even u/s 127(b) and that, what should be found out is the annual rent that the building would fetch if let to a hypothetical tenant, then capitalise this amount by multiplying the same by 20 and thereafter deduct the present cost of erecting the building from the above amount and the balance would represent the "estimated present value of the land valued with the building as "part of the same premises". This would evidently lead to an absurd result. u/s 127(b) the annual value shall be deemed to be 5 per cent, on the sum obtained by adding the estimated present value of the land to the estimated present cost of erecting the building less a certain deduction. So the method suggested by Mr. Banerjee would ultimately lead to the same annual rent as is contemplated u/s 127(a). In that case it was not at all necessary for the legislature to lay down a circuitous method. The cost of construction of the building in that eventuality would be quite illusive.
No definite method could or should be laid down as to how to determine value of the land as required u/s 127(b). The matter is not free from difficulty and it should be left to an expert valuer. The court is ultimately to determine the proper value of the building on the materials placed before it.
Besides, the evidence on the record is not such as can enable us to estimate what should be the reasonable rent of the entire premises. In fact, the Appellant made no attempt to lead evidence on that point. In the report submitted by the expert witness for the Appellant (P.W. 1) the value of the land on the front block consisting of 26 cottahs of land has been stated to be Rs. 4,94,000 at the rate of Rs. 19,000 per cottah and the value of the back land consisting of 9 cottahs 11 chs. 21 sq. ft. land has been stated to be Rs. 92,309 at the rate of Rs. 9,500 per cottah. The value of the entire land of 35 cottahs and odd is thus stated to be Rs. 5,86,309. But P.W. 1, in his evidence, does not throw any light as to how he arrived at the said result. Here again, the question of onus assumes some importance.
The consistent view held by this Court in different cases, is that the onus initially lies with the Assessee and it is up to him to show that the annual value as determined by the Corporation was not a proper one [Corporation of Calcutta v. Sk. Keamuddin (1927) 31 C.W.N. 1040 , Corporation of Calcutta v. Sm. Jalajhasini Devi (1927) 32 C.W.N. 378 , Corporation of Calcutta Vs. On the death of Sm. Rajlakshmi Debi her heirs Nani Gopal Mukhopadhyay and Another, , Messrs. Lal Chand and Sons v. Corporation of Calcutta (Supra) and the General Electric Company of India Limited v. Corporation of Calcutta (Supra).] In the Corporation of Calcutta v. Sk. Keamuddin (Supra) the question of onus was specifically raised and it was held that the burden was with the Assessee to satisfy the court that the valuation at which the executive officer had arrived was either excessive or wrong.
In Lalchand''s case (Supra) Mukherjee, J., observed at p. 264,
The real position, therefore, is that when an appeal is preferred by the assesses-under Section 141 of the Calcutta Municipal Act before the Court of Small Causes, it is up to the Assessee to show that the annual value which was fixed by the Corporation was not a proper one. But if the annual value has been raised by the Corporation on the ground that there had been since the last general revaluation, vise in the rental value,of the premises or of land value, the Corporation is to lead evidence to show that there had really been such increase from what was ruling at the time previous to the general revaluation. The court ia not to proeeed merely upon the abstract rule of onus. But once it is shown that there had been inoreage in the valuation from which it was previously, it is up to the Court again to decide, on the materials plaoed before it, as to whether the valuation as fixed by the Chief Executive Officer, is a proper one or not.
In the Corporation of Calcutta v. Nam Gogol Mukhopadhyay (Supra), Guha Roy, J., gointed out that in Lalchand''s case Mukherjee, J., did riot really express aay dissent the previous decisions and that appeal, therefore, was actually decided on the evidence on the record and not on any question of onus. It was thus observed by Guha Roy, J., in that case,
Corporation made-an assessment which was final," subject of csursa to the result of the objection taken by the Assessee u/s 139 and of the appoals under Sections 141(2) and 142(3).
The right of filing an objection and that of filing appeals are.evidently intended to provide opportunities to the "Assessee of provjog the esBessinout to ibe wrong OT excessive and on the rules Laid-derwnsnnder the Evidence Act to regulate the question of onus as well as on the authorities, it is abundantly clear that if the Assessee fails to show that the assessmant is prima faeie wrong, the Corporation is really under no obligation to prove that it is justified, for the, Assessee is bound to fail in his objection and his appeals if the fails to make out his point.
In a recent decision [General Electric Company of India Limited v. the Corporation of Calcutta (Supra)], P.N. Mookerjee and P.K. Sarkar, JJ., broadly agreed with the. above view of law.
Premises No. 5, Ghowringhee Square, known as the Victoria House, comprises in all, 35 cottahs 11 chattaclcs, 21 sq. ft. of land. The land faces Chowringhee Square on the south, Bentinck Street (84 ft. wide) on the west and Chittaranjan Avenue (100 ft. wide) on the east and has got an open Vista on the south up to the Maidan. The land is blocked on the north by other holdings. The land was purchased by the Calcutta Electric Supply Corporation Limited (Appellant) in 1929-30 from the Calcutta Improvement Trust at an average price of Rs. l5,248-14 per cottah. The present large building, known as the "Victoria House" was erected upon the land in 1940-41. The accepted valuation of the land for the sixennial period commencing from April 1, 1942, was Rs. 5,08,961, that is, at the rate of Rs. 14,250 per cottah. The Deputy Commissioner No. I of the Corporation of Calcutta estimated the present value of the land for the sixennial period commencing from April 1, 1948, to be Rs. 7,50,050 that is, at the rate of Rs. 21,000 per cottah. Thus there was a rise of about 47 per cent, frorn the previous assessed value of the land in 1942. The learned Judge of the Calcutta Small Cause Court also accepted this valuation of the land as correct. This assessment was made on the footing that the value of the land had, in the meantime, substantially increased since the last assessment. It has, therefore, been argued by Mr. Banerjee on the authority of (8) that it was for the Corporation to justify this assessment.
It has in this connection, been contended by Mr. Banerjee that there is no evidence of any sale of land between 1942 and 1948, that there has been no additional construction since 1942 and that the user also remains the same and, therefore, the capital value should also remain the same. Mr. Banerjee has in this behalf made reference to the evidence of (O.P.W. 2 Nripendra Lal Kar who is an Assessing Inspector of the Corporation of Calcutta for the last 11 years. He has stated.
Between 1942 and 1948 there was no intermediary revaluation nor any construction of properties and user of the building in suit in 1942 and in 1948 was the same. The Appellants have been using the building for their office purposes (vide p. 26 of the Paper Bcok, Part I).
It has, however, been conceded by the Expert witness (P.W. 1) examined on the side of the Appellant, that there has been rise in the value of land by at least about 15 per cent, since 1942. Shri T.N. Dasgupta, another witness for the Appellant, would, however, go further and put the rise in the price of bare land in 1947-48 by about 60 to 80 per cent, since 1942. So, on the admission of the Appellant''s own witnesses the value of the land and had substantially increased since 1942. Mr. Banerjee next contends that adverse presumption should be drawn against the Corporation of Calcutta for non-production of the various documents called for from the Corporation of Calcutta, by the Calcutta Electric Supply Corporation Ltd. It will, however, appear from Exts. 24 and 24a that Shri B.K. Mukherji, Advocate for the Calcutta Electric Supply Corporation Ltd. by letters, wanted production of certain documents from the Commissioners of the Corporation of Calcutta and warned the latter that on failure to produce those documents, secondary evidence of such documents would be adduced by the Appellant. The documents were not thus properly called for from the Corporation of Calcutta. The Appellant also did not offer to give any secondary evidence of any of the documents. There cannot, as such, be any question of drawing any adverse presumption in this case.
To support its case about the va''ue of the land, the Respondent, the Corporation of Calcutta, has adduced evidence of accepted assessments of some comparable lands in the locality. We do not consider that the evidence afforded by the accepted assessment of the neighbouring premises is inadmissible in evidence as contended by Mr. Banerjee. In the Corporation of Calcutta v. the Province of Bengal (Supra) evidence was led regarding valuation of the neighbouring premises both from returns submitted by the parties as also from certain accepted assessments. It was held that evidence as to the value of the land of similar premises in the vicinity was admissible u/s 9 of the Evidence Act. Similar opinion was also expressed by this Court in Lalchand''s case (Supra). [See also General Electric Company of India Limited v. Corporation of Calcutta (Supra).]
In the present case, there is no reliable direct evidence as to the rise of the land value in the locality where the "Victoria House" is situated. But there are the accepted assessments of comparable neighbouring, premises, namely, the "Statesman House" as also the "Hindusthan Buildings". Scott, L.J., said in Robinson Bros. (Brewers) Ltd. v. Houghton and Chester-Le-Street Assessment Committee [1937] 2 K.B. 445 (469):
Where direet evidence test is not available, no fact which would in all the actual circumstances of the case, tend to raise or lower the amount of rent likely to be given by probable competitors, can be either irrelevant or inadmissible.
It has been held that in the absence of any better evidence assessment put upon comparable properties may be looked at as evidence... (see Ryde on Rating-10th ed., p. 272).
The learned Judge has looked into the accepted assessments of two comparable buildings, namely, those of the "Statesman House" and of the "Hindusthan Buildings", to arrive at the conclusion about the general rise in the land value in the locality. From the map (Ext. 2) it will appear that the "Statesman House" and the "Hindusthan Buildings" are both situated on the Chittaranjan Avenue not far off from the "Victoria House". The learned Judge has elaborately discussed in his judgment, about the respective positions of these two buildings as compared with that of the Victoria House, and in his opinion, the plot in suit was better situated than the other buildings referred to by him. We have also closely looked into the evidence in this respect on the record and we see no reason to express a different view.
Mr. Banerjee takes a strong exception to the comparison of the sale values of the different lands as obtained in 1929-30 with the assessed values of these in 1948 as has been done by the learned Judge. We agree with Mr. Banerjee that clear site value is not the same as assessed value of the land. But the difference between the clear site value and the assessed value is also hot likely to be very great. In Lalchand''s case (Supra), Mukherjee, J., has stated:
It will be noticed that according to this Exnert (Mr. Parka) the difference between clear site value and the value of the land valued with the building, is not a very material difference. What that slight difference would be must depend on the circumstances of each case.
We may, however, leave out this basis of comparison. There is evidence that the accepted assessed value of the land of the "Statesman House" was Rs. 7,200 per cottah and this particular land was assessed at Rs. l1,500 per cottah in 1948. No appeal was preferred against this assessment. There was thus an increase of 60 per cent, in the land value of the "Statesman House" from 1942 to 1948. Relevant evidence in this respect has been given by O.P.W. 2 Nripendra Lai Kar. No objection was raised on the Appellant''s side to this evidence given by O.P.W. 2 Nripendra Lai Kar, nor was his evidence in this regard challenged in cross-examination.
It will at once appear from Ext. 2 that the "Statesman House" is nearest to the "Victoria House" and is most suitable for the purpose of comparison. This building is also occupied by the owner for office purposes. It has been stated by Mr. Banerjee that some of the upper flats of this building are used for the purposes of residence. It has therefrom been contended by Mr. Banerjee that the manner of user of the "Statesman House" is not the same as the manner of user of the "Victoria House", inasmuch as, the latter house is used wholly for office purposes. We have already discarded beneficial user theory for the purposes of determining annual value of any ouilding not erected for letting purposes and not ordinarily let, under Clause (b) of Section 127. Accordingly, the manner of user of such a building is of no importance for our purpose.
The "Hindusthan Building" is situated at a greater distance than the "Statesman House" from the "Victoria House". Besides, it appears that the "Hindusthan Building" was let out to tenants during the war period. So, the building was assessed u/s 127(a) on a rental basis for the sixennial period commencing from April 1, 1942. Therefore, the assessed value of the "Hinduusthan Building" in 1942 does not afford a basis for comparison for our present purpose.
Therefore, having regard to the evidence of rateable value of similar premises in the neighbourhood, namely, that of the "Victoria House" and the "Statesman House" and also considering the closeness with which the two sets of premises resemble one another, we are of opinion that there is cogent evidence on which assessment of the "Victoria House" can be made on a comparison with the assessment of the "Statesman House". In view of the unchallenged evidence of O.P.W. 2 in this behalf we consider that the fact that the relevant returns were not proved in this case, should not be any ground for overthrowing the conclusion arrived at by the learned Judge in this respect. The learned Judge has observed:
Thus on a careful consideration of the matter in all its aspects, I do hold that the Respondent, Corporation of Calcutta has correctly valued the land in suit, valued with the building as part of the sami premises, and that this valuation has been quite, fair, legal and not discriminatory or excessive as compared with sela vohieof uimlarlaoci* in the locality.
In the facts and circumstances of the case, we agree with the above finding of the learned Judge.
All the grounds urged in this appeal, therefore, fail and this appeal is dismissed with costs.
P.N. Mookerjee, J.
I have had the advantage of reading the judgment of my learned brother which has Just been delivered by him. I agree with his conclusion that the appeal should be dismissed with costs. I also agree generally with his reasons. As however, the main question raised is of considerable importance on a matter of public interest, which in spite of several decisions, dealing with its diverse aspects, is still sought to be argued from one or other apparently new standpoint, I would briefly indicate why I am in entire agreement with the view, expressed on the point in the several previous decisions of this Court, namely, in the cases of the Corporation of Calcutta v. Jardine Skinner and Co. (Supra), the Corporation of Calcutta v. the Province of Bengal (Supra), Province of Bengal v. the Corporation of Calcutta (Supra), Lal Chand and Sons v. the Corporation of Calcutta (Supra) to which inter alia, reference has been made by my learned brother and to which due reference will be made by me too in the course of this judgment. I would not, however, repeat the facts which are all fully stated in the judgment of my learned brother, but I would only express myself broadly, though briefly, on the three questions of law,, argued before us.
The instant case is one of municipal assessment u/s 127(b) of the Calcutta Municipal Act. This is admitted. But, argues Mr. Sudhir Ranjan Banerjee, who appears for the Appellant-Assessee company, the value of land, contemplated even under this Sub-section has to be found by applying the same method as in the case of the other Sub-section, namely, (a) of Section 127 of the Act, that is, by determining the rent, the hypothetical rent, and applying the rental method. To this argument, I am unable to accede and I shall state my reasons presently.
The argument apparently overlooks the statute itself and ignores the patent difference and the fundamental distinction in and between the two methods of approach, embodied in the two Sub-sections. It is plainly against express statutory language and it tends to offend the basic principle of statutory construction which imp ies a necessity for the two Sub-sections for effectuating the underlying legislative intent.
The common aim of the two Sub-sections is, no doubt to find out the annual value of the premises for rating purposes but, while under Sub-section (a) such rating value is to be equated roughly to the gross annual rent subject to certain deductions, under Sub-section (b) it is to be 5 per cent, of the total of the present cost of the building (less depreciation) and the present estimated value of the land, valued with the building as part of the premises. The distinction is important as, for purposes of the statute, it arises on and from the nature of the proprfies, sought to be rated For rating purposes, or more precisely, for determiiraiflg the annual value in thaf connection, the statute in is two relevant sections, Sections 127 and 128, deals with properties under several categories, based on (1) ownership and (2) nature of the property. The ownership classification puts properties belonging to the Board of Trustees for the Improvement of Calcutta, u/s 128, all others being placed u/s 127. That section (Section 127) as its opening words show, purports to assess land and buildings to consolidated rates. For that purpose, it classifies properties under 4 heads in its two Sub-sections, namely, (1) land, (2) building (with of course, appertaining land) erected for letting purposes or ordinarily let, (3) building (here also with appurtenant land) not erected for letting purposes and not ordinarily let, and (4) "Bustees" as defined in Section 3(10) of the Act. The first two items are dealt with and included under Sub-section (a) which adopts roughly gross annual rent as the annual value. For the third item, the other Sub-section [Section 127(b)] prescribss such annual value as 5 per cent, of the total of the present cost of the building (less depreciation deduction) and the estimated present value of the land, valued with the building as part of the premises, and for Bustees, the proviso lays down as the annual value the gross annual rent of the land and the huts after certain deductions. It is thus clear that the statute, in this section or rather, in its two Sub-sections, incorporates two distinct and different methods for reaching or determining the annual value. Under the one, the gross annual rental has to be found and, without it, the annual value cannot be determined. Under the other subsection, the gross annual rental need not be determined but the estimated present cost of the building and the estimated present valu? of the land, valued with the building as part of the premises, will supply the basic figure for the purpose, of which 5 per cent, wil form-the required annual value. It is thus clear that, so far as Sub-section (b) is concerned the method to be applied or employed for determining the annual value has and need have no reference to the gross annual rent, while under Sub-section (a) it is wholly dependent upon the same. It may be that, for finding out the gross annual rent under Sub-section (a) the value of the property may in particular cases or particular circumstance, well be relevant, but the manner of calculation or determination of cost or value, laid down in Sub-section (b) will hardly be appropriate for that purpose, that being, obviously not one of the recognised mode,s or methods of valuation. In any event, for Sub-section (b), determination of the gross annual rent is neither necessary nor relevant. This sufficiently answers Mr. Banerjee''s argument on the point but I would also briefly refer to the decision of this Court in Nundo Laf Bose and Anr. v. the Corporation for the Town of Calcutta (Supra) and the legislative changes, which followed in its wake, as they, too, to my mind, support the above point of view.
The case cited was decided under the 1876 Act [The Calcutta Municipal Consolidation Act, 1876 (Bengal Act IV of 1876] in which the relevant section was Section 104 which, to quote only its material part, ran in these terms:
The estimated gross annual rent at which any house or land liable to rate under this Act might reasonably be expected to let from year to year shall, for the purposes of any rate to be imposed under this Act, be held and be deemed to be the annual Talue of such house or land.
The value of land so estimated shall not include the value of any machinery thereupon.
That was the only section in the statute which dealt with the question of determination of the annual value of properties for rating purposes. It prescribed the gross annual rent as the sole guide or criterion for the purpose irrespective of the nature of the property. The learned Judges pointing out the difficulty of applying the said method to properties, not let or intended to be let, and although they apparently, ignored the contractor''s method or the contractor''s basis, which was usually employed or could have been employed for the purpose, the difficulty was undoubtedly there, and the legislature intervened to overcome the same. In fulfilling that mission, however, the legislature did not rest content with merely sanctioning inter alia, the contractor''s method for ascertaining the gross annual rent but effected a more drastic change by classifying the properties under different heads and prescribed different tests and measures of annual value for the several different classes. I entirely agree with Pal, J., as he then was, in his very partinent observations on the point that, otherwise, a new Sub-section on a property classification basis would not have been enacted, but only an explanation would have been appended to the existing section (Section 104). The remodelled provision, which was introduced as Section 122 of the 1888 Act [The Calcutta Municipal Consolidation Act, 1888 (Bengal Act II of 1888)] and which ran as follows:
For the purpose of assessment under this Act the annual value of land and the annual value of any house built for letting purposes er ordinarily let shall be the gross annual rent at which such land or house might reasonably be expected to let from year to year less, in the ease of a house, an allowance of 10 per cent, for the cost of repairs, and for all other expenses necessary to maintain the house in a state to command such gross rent. The annual value of any house not built for letting purposes and not ordinarily let, shall be 5 per cent, on the sum obtained by adding the estimated present cost of building the house less a reasonable amount to be deducted on account of depreciation, if any, to the estimated value of the land valued with the house as part of the same premises.
When a house is occupied by the owner under such exceptional cireumstanoes as rendera a vaulation of 5 per cent, of the cost of building, less depreciation excessive a lower percentage may be taken.
The value of land so estimated shall not inolude the value of any machinery thereon.
was in its material terms, substantially the same as the corresponding section (Section 127) of the 1923 Act, covering both its Sub-sections (a) and (b), which directly concerns us in this case and it (Section 127) plainly embody a classification of properties for rating purposes with different, distinct and independent modes of approach.
In the premises, I entirely agree with my learned brother that this point should be answered against the Appellant and the view of law, taken in the four decided cases, namely, the Corporation of Calcutta v. Messrs Jardine Skinner and Co. (supra), the Corporation of Calcutta v. the Province of Bengal (Supra), Province of Bengal v. the Corporation of Calcutta (Supra), and Lai Chand and Sons v. the Corporation of Calcutta (Supra) should be respectfully reaffirmed.
As pointed out by my learned brother, again, the question of onus is not very material in the instant case as the actual evidence would aid the Respondent Corporation. I would therefore, on this part of the case, content myself by merely saying that I still adhere to the tentative opinion expressed by us in General Electric Company of India Ltd. and Anr. v. Corporation of Calcutta and Anr. (Supra), and as at present advised, I see no reason to differ from the Bench decisions of this Court in the cases of Corporation of Calcutta v. Sheikh Keamuddin (Supra), Corporation of Calcutta v. Sm. Jalajbasini Devi (Supra) and Corporation of Calcutta v. Nani Gopal Mukhopadhaya and Anr. (Supra).
On the remaining question, namely, the question of admissibility of the accepted or finalised assessments of other comparable premises, nothing can or need be added to the elaborate discussion in the case of the Corporation of Calcutta v. the Province of Bengal (Supra), where the true rule has been carefully stated with particular and all necessary emphasis on the very pertinent distinction between admissibility and value or weight of evidence. That, in my opinion, is amply supported by principle and authority and the result of the application of the rule, bearing the above distinction in mind, has been neatly and correctly stated by my Lord. I accordingly agree that this appeal should be dismissed, as proposed by my learned brother.