ORDER
R.M. Lodha, J
1. Rialto Co-operative Housing Society Limited, the petitioner herein, seeks to impugn the legality and correctness of the order passed by the Asstt. Assessor & Collector, “D” Ward, Municipal Corporation of Greater Bombay on 7-12-1994 to the extent the said authority has held that the land under construction cannot be treated as vacant plot of land.
2. The said question arises in the facts narrated briefly hereunder.
3. The petitioner is a registered co-operative housing society which owns a plot
of land currently bearing Ward No. D-3310(1), 3309(1) and 3310(1-A). According to
the petitioner society, these three ward numbers constitute a single holding which has
been bifurcated by the respondents for their own purpose. The entire plot admeasures
approximately 2334 sq. yds. (1951.50 sq. metres). It comprised of a main building of
ground and three upper floors together with an outhouse and three garages. In or
about 1986-87, the main building was demolished though the outhouse and three
garages continued as it is. The building plans were got sanctioned by the petitioner
from the respondents and the commencement certificate originally was dated 22-7-
1987 for construction upto plinth. However, no construction took place except for
excavation of trial pits after which work was abandoned. On 25-2-1988, the respondents issued four notices under section 162(2) and 167 of the Bombay Municipal
Corporation Act, 1888 (for short “BMC Act”) seeking to create a new Ward No. 3310
(1-A) and identifying the same as land under construction. The rest of the area being
Ward Nos. 3309(1) and 3310(1) was described as garage with shed. The respondents
sought to reduce the rateable value with regard to the area of the garage with shed
to an amount of Rs. 1,210/- net per annum with effect from 9-12-1987 and to increase
the rateable value of the newly created Ward No. 3310 (1-A) (land under construction)
to Rs. 3,56,180/- from the said date. It appears that the petitioner society was
aggrieved by the said notices and, therefore, lodged their complaint with the respondents protesting against the increase of the rateable value. It appears that during the pendency of the complaint with the respondents, the property tax bills with regard to the newly created Ward No. 3310 (1-A) (land under construction) continued to issue based on the rateable value at Rs. 3,56,160/-. On or about 27-7-1992 the respondents addressed a letter to the petitioners’ Architects stating therein that the work was at a stand still and the open pits may create hazards which should be looked into by the petitioner society. The case of the petitioner society is that on or about 27-2-1993, the respondents issued an I.O.D. and on 23-3-1993 commencement certificate was granted for work upto the plinth area. On 27-1-1994, the respondents fixed their rateable value of the garage with shed at Rs. 1,210/- net per annum relating to Ward No. 3309(1) and 3310(1) and as regards newly created Ward No. 3310(1-A), the respondents fixed the rateable value at Rs. 1,75,725/- net per annum treating the said land as land under construction, The petitioner society appears to have addressed a letter dated 4-2-1994 to the respondents stating therein that the site described as land under construction Ward No. 3310(1-A) was an abandoned building site between January 1988 and March 1993 and the same should, therefore, be treated as vacant land and the vacancy allowance as provided under the B.M.C. Act be given to the petitioner society. The petitioner society also filed an appeal against the order passed by the respondents on 27-1-1994 fixing the rateable value of Ward No. 3310(1-A) (land under construction) at Rs. 1,75,725/- before the Small Causes Court under section 217 of the B.M.C. Act. The said appeal is still pending. The petitioner submits that the respondents sought to raise 11 bills dated 14-2-1994 based on the order dated 27-1-1994 with regard to the newly created Ward No. 3310(1-A) (land under construction). The petitioner agreed to pay the net amount of Rs. 2,43,746/- pending the appeal. The said proposal was based on the request of the petitioner society for vacancy allowance. The petitioner society also filed a writ petition before this Court which was registered as Writ Petition No. 912 of 1994 challenging the action of the respondents in fixing the rateable value of the newly created Ward No. 3310(1-A) on the basis of the land under construction. The said writ petition was dismissed by this Court as withdrawn with liberty to file fresh petition. Fresh Writ Petition No. 1399 of 1994 was also dismissed by this Court on 1-8-1994. The petitioner society dissatisfied by the order passed by the learned Single Judge of this Court on 1-8-1994 dismissing its writ petition, filed an appeal before the Division Bench. The Division Bench on 6-9-1994 allowed the appeal and directed the Bombay Municipal Corporation to consider the application filed by the petitioners on 4-4-1994 for vacancy after giving the petitioners opportunity of being heard. The said application filed by the petitioners on 4-2-1994 has been disposed of by the Asstt. Assessor and Collector “D” Ward by the impugned order dated 7-12-1994.
4. It would be seen that the Division Bench while allowing the appeal filed by the petitioner directed the Bombay Municipal Corporation to consider the application filed by the petitioner dated 4-2-1994 for vacancy allowance, however, the concerned authority also went into the question whether the land under construction could be treated as vacant land. The crux of the dispute between the petitioner and the respondents is whether the land under construction would be vacant land within the meaning of section 154 of the B.M.C. Act and therefore the learned Counsel for the petitioner urged that in light of the fact that the said issue is a pure issue of law which has to be decided on the basis of section 154 of the B.M.C. Act, 1888 and the judgment of the Apex Court in The Municipal Corporation of Greater Bombay v. M/s.
Polychem Ltd., , the same be examined by this Court in the writ petition to avoid multiplicity of proceedings and the petitioner will withdraw the appeal filed by it before the Small Causes Court under section 217 of the B.M.C. Act. Mr. Milind Sathe, the learned Counsel for the petitioner urged that the controversy is squarely covered by the decision of the Apex Court in M/s. Polychem Ltd. (supra) and the order passed by the Asstt. Assessor & Collector, “D” Ward that the land under construction cannot be treated as vacant plot of land is inconsistent and contradictory to the judgment of the Apex Court.
5. On the other hand, the learned Counsel appearing for the respondents urged that after getting the plans sanctioned if the petitioner society did not commence the construction, the assessing officer did not commit any error in holding that the land under construction cannot be treated as vacant plot of land.
6. I may at the outset observe that the Division Bench of this Court while setting aside the order passed by the learned Single Judge observed that the attention of the learned Single Judge was not sufficiently drawn to the fact that the vacancy application filed by the petitioner society was not duly considered by the respondents and in this back ground with reference to section 176 of the B.M.C. Act, sent the matter back to the respondents with a direction to dispose of the vacancy application within the time granted by this Court after giving opportunity to the petitioner society of being heard in the matter. After remand of the matter to the concerned authority, the petitioner society raised the question again which was a moot question that the land under construction cannot be treated as vacant land in addition to its claim for vacancy allowance. The assessing authority held that land under construction cannot be treated as vacant land. Though the issue whether the land under construction can be treated as vacant land is subject matter of appeal pending before the Small Causes Court and ordinarily I would not have gone into the question but since the said question is pure question of law and goes to the root of the matter and further it has been examined by the concerned authority in the impugned order, I think it would be in the interest of justice if the said question is considered and decided in the present writ petition instead of leaving it to be decided by Small Causes Court in appeal and then further appeal before this Court. The sole question, therefore, before me is whether the Asstt. Assessor & Collector, “D” Ward was justified in holding that the land under construction cannot be treated as vacant plot of land within the meaning of section 154 of the B.M.C. Act.
7. Since this question can be clearly and squarely answered on the basis of the
judgment of the Apex Court in Polychem Ltd. case, I straightaway come to the facts
of that case and the ratio laid down by the Apex Court. In Polychem’s case the said
company namely, M/s Polychem Ltd, was owner of a plot of land admeasuring 6652
sq. yds. Out of the said land 450 sq. yds. were deducted for having fallen within the
set back line. Out of the remaining area of 6202 sq. yds., 1060 sq. yds. was being built
upon at the relevant time whilst the remaining 5142 sq. yds. was lying vacant during
the period under consideration. The Assessor & Collector of Bombay Municipal
Corporation determined the market value of the whole land as Rs. 62,020/- at Rs. 10/
– per sq. yd. The Assessor then calculated the hypothetical rent by taking a rate of
interest of 3 1/2% per annum as the reasonable return on the said value. The
hypothetical annual rental value came to Rs. 2,170/-. From 1-1-1962, the Assessor
divided the plot notionally into two parts, namely, (i) one of 1060 sq. yds. which was
being built upon, and (ii) the other of 5142 sq. yds. which was lying vacant. The
Assessor then assessed the probable market value of the plot which was being built
upon as Rs. 10,600/- at Rs. 10/- per sq. yd., but, as he considered it better developed and fixed 5% per annum interest as a reasonable return on it for determining its hypothetical rent. On that basis the rent was arrived at Rs. 530/-. The vacant land was also valued at the same rate. The market value was found to be Rs. 51,420/-, but the annual rate of interest to determine reasonable return was taken at 3 1/2% as was done previously for the whole land. Accordingly, its hypothetical annual rent came to Rs. 1,800/-. The company aggrieved by the Assessor’s fixation of rateable value appealed to Small Causes Court at Bombay which was dismissed. The matter was taken then to this Court in appeal before the learned Single Judge which too was rejected. On further appeal, the Division Bench held that the part of the land which was being built upon, namely 1060 sq. yds. was not rateable at all as no tenant could or would take the property in that condition. The Division Bench of this Court applied the doctrine of sterility. It was the turn of the Bombay Municipal Corporation to challenge the order of the Division Bench before the Apex Court. The Apex Court alter taking into consideration the definition of land as defined in section 3(r) of the Act and the specific provision of section 154 of the Act alongwith other provisions of the B.M.C. Act held thus:
“21. The abovementioned authorities of this Court, which were cited before us, enable us to hold that the mode of assessment in every case must be directed towards finding out the annual letting value of land which is the basis of rating, of land and by definition, “land” includes land which is either built upon or has been built upon. Nevertheless, a reference to the provisions of the Act shows that, after a building has been completed, the letting value of the building, which becomes part of land, will be the primary or determining factor in fixing the annual rent for which the land which has been built upon “might reasonably be expected to be let from year to year”. All that section 154 seems to contemplate, by mentioning “land or building”, is that land which is vacant or which has not been built upon may be treated for purposes of valuation on a different footing from land which has actually been built upon. But, relevant provisions of the Act do not mention and seem to take no account, for purposes of rating, of any building which is only in the course of being constructed although section 3(r) of the Act makes it clear that land which is being built upon is also “land”. Hence, so long as a building is not completed or constructed to such an extent that at least a partial completion notice can be given so that the completed portion can be occupied and let, the land can, for purposes of rating, be equated with or treated as vacant land. It is only when the building which is being put up is in such a state that it is actually and legally capable of occupation that the letting value of the building can enter into the computation for rating “Rebus sic stantibus”. Although, the definition of land, which is rateable, covers three kinds of “land”, yet. for the purposes of rating section 154 recognises only two categories. Therefore, all “land” must fall in one of these two categories for purposes of rating and not outside.”
8. The Supreme Court thus has held in unequivocal terms that the land which is being built upon is also land so long as building is not completed or constructed to such an extent that at least a partial completion notice can be given so that the
completed portion can be occupied and let. In other words the land which is being built upon continues to be land for the purposes of section 154 and has to be treated as vacant land. It is only when the building which is being put up is in such a state that it is actually and legally capable of occupation that the letting value of the building can enter into the computation for rating as building. Though in terms of the definition of land it covers three kinds of land, namely, land, land under construction and the building. For the purposes of rating under section 154 only two categories are recognised viz. land and building and, therefore, all land must fall in one of these categories for the purposes of rating and not outside. On the face of the ratio laid down by the Apex Court in Polychem Ltd., it is clear that the land under construction held by the Assessing Officer as not vacant plot of land cannot be sustained. There is no dispute and rather it is admitted by the learned Counsel for the respondents that for the disputed period, the building was not Completed or constructed though sanctioned plans were issued. It is also common case of the parties that after digging the pits not much progress of construction has taken place during the disputed period. Obviously, therefore, the case in hand does not fall in the category of the land which is being built upon and though building is not completed or constructed yet it has been constructed to such an extent that at least a partial completion notice can be given or that the completed portion can be occupied and let. In this fact situation and the legal position as aforestated the part of the impugned order dated 7-12-1994 wherein it has been held that the land under construction cannot be treated as vacant plot of land cannot be sustained and has to be set aside.
9. The learned Counsel for the petitioners rightly did not dispute that the Assessor and Collector of the Bombay Municipal Corporation would be free to assess the land comprising of Ward No. 3310(1-A) as vacant land for the disputed period.
10. The learned Counsel for the petitioners did not assail the part of the order refusing to register the claim of the petitioner for vacancy and a consequential rejection of the application dated 4-2-1994 made by the petitioner to the concerned authority for grant of vacancy benefits under section 176 of the B.M.C. Act.
11. The writ petition is consequently allowed in part. The order dated 7-12-1994 passed by the Asstt. Assessor & Collector, “D” Ward. Municipal Corporation of Greater Bombay to the extent it has been held that the land under construction cannot be held as vacant plot of land is set aside. The matter is sent back to the concerned Assessor and Collector of Bombay Municipal Corporation with the direction that the land under construction for the disputed period shall be valued for the purposes of rating for the relevant period as vacant land. It is expected of the concerned Assessor and Collector, Bombay Municipal Corporation to decide the matter as expeditiously as possible and preferably within three months from the date of the receipt of the order of this Court. The parties are directed to bear their own costs. Rule is made absolute in the aforesaid terms.
12. There is no dispute that the petitioner has already paid a sum of Rs. 2,43,746/ – towards 11 bills raised by the respondents on the petitioner for the period 1-10-1987 to 31-3-1993. In this view of the matter, the Bank guarantee given by the petitioners pursuant to the order dated 6-3-1995 is discharged.
13. Certified copy expedited.
14. Petition partly allowed.