LexMOTICHAND HIRACHAND & ORS. versus BOMBAY MUNICIPAL CORPORATION
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846 MOTICHAND BIRACBAND & ORS. v. BOMBAY MUNICIPAL CORPORATION September 15, 1967 A [J.C. SHAH, S. M. Suau AND J.M. SHELAT, 11.) B Bombay Municipal Corporation Act (Bom. 3 of 1888), S. 154(i}- lncome from display of advertisement-If can be included in rate- able va!ue. The respondent-Municipal Corporation Increased the rateable value of a building, .. eased at the actual rent recovered by the appellant-owner, by adding the Income derived by the owner under an agreement entitling a Company to display an advertisement on c the roof of the building. The owner succeslfully filed a complaint aeainst the 1ncrea1e which was upheld by the Small Ca1!84! Court. Against this order, the corporation filed an• appeal to the High Court, and it confirmed the enhancement. In appeal, this Court: HEin: The High Court was right in confirming the enhancement of the annual rent. If a building or a part of it yields an extra Income over and D above the actual rent derived from it, such income OI> the terms of s. 154 (i) of the Bombay Municipal Corporation Act, can legitimately be taken Into consideration by the assessing authority while deter- mining the annual rent on the ground that a hypothetical tenant would take such extra income into account while considering what rent he can afford to offer for such building. [553B] The hypothetical tenant includes all persons who might possibly E take the property including the persons actually in occupation, even though he happens to be the owner of the property. The rent is that which he will pay in the "higgling of the market", taking Into account all existing circumstances and any relevant future trends. Therefore. the mere fact that the income from the agreement is . not rent but licence fee does not justify on any principle of rating or any construction of s. 154 of the Act. disregard of it, while estimat- F ing the rent which the property would be experted to fetch. [549B; C; 550G-H] Though the owner of the building could not charge rent over and above that which was permissible under the provisions of the Rent Act, there was nothing in that Act which prohibited him from charging an amount from an advertiser in consideration of display- ing his advertisement. [551D] - Mahad Municipality v. Bombay S.R.T. Corporation, LXITI Born- G bay Law Reporter, 174; Cartwright v. Scu!oates Union, [1900] A.C. 150; Robinson Bros. v. Houghton and Chester-le-Street Assessment Committee. [1937] 2 K.B. 445, Tay!or v. Overseers of Pand!etcm, (1887) 19 Q.B.D. 239, Wilson v. Tavender (1901) 1 Ch. 578 Corporation of Calcutta v. Ani! Prakash Basu, A.I.R. 1958 Cal. 423, referred to. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 378 of 1%~ B Appeal from the judgment and decree dated April 9, 1%3 of the Bombay High Court in First Appeal No. 616 of 1961. Raj Bahadur and B. R. Agarwala, for the appellants. S. T. Desai, 0. P. Malhotra and 0. c. Mathur, for the res- pondent. M0'11CIU~"D V. llUNIC. CORP. (Sheiat, J.) 647 A The Judgment of the Court was delivered by Sbelat, J. Whether in determining the rateable value of a building the assessing authtirity under s. 154(1) of the Bombay, Municipal Corporation Act, III of 1888 can take into considera- tion income derived by the owner under ail1 agreement entitling an advertisement hoarding to be put up on the roof of such B building is the question arising in this appeal. 'For consideration of this question a few relevant facts may first be recited. The appellants are the owners of "Fulchand Nivas", a building situate at the corner of what was known at the relevant time as Marine Drive and Sandhurst Road opposite Chowpatty Sea Face, Bombay. The building consists of ground and five upper 0 floors and a terrace. The ground floor and five upper floors of the building were and are let out. For the last few years the Muni- cipal Corporation has been assessing the rateable value of the building as equivalent to the actual rents recovered by the owners. After the rateable value for the year 1956-57 was assessed it was found that the terrace of the building was used for advertising D Tata Mercedes-Benz Automobile Trucks and Buses by means of a neon-sign. This was done under an agreement dated February 5, 1957 entered into by the appellants under which the Tata Locomotive and Engineering Co. Ltd., had agreed to pay to the appellants Rs. 800 per month in consideration of their being allowed to display the said
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