MUNICIPAL CORPORATION OF HYDERABAD versus HYDERABAD RACE CLUB

Citation: [1987] 1 S.C.R. 195 · Decided: 11-11-1986 · Supreme Court of India · Bench: M.P. THAKKAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

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MUNICIPAL CORPORATION OF HYDERABAD 
A 
v. 
. 
HYDERABAD RACE CLUB 
NOVEMBER 11, 1986 
[M.P. THAKKAR AND B.c;. RAY, JJ.J 
B 
.>: 
Hyderabad Municipal Corporation Act 1955-Section 202(1) 
j~ 
! 
(b)-'Charitable purpose'-Meaning of-User of premises for Race 
Course Club--Whether exemption to general tax available. 
The appellant-Corpora~ion sought to assess the land and build-
ings of the respondent club to general tax under s. 202 of the Hyderabad 
Municipal Corporation Act, 1955. The respondent claimed exemption· 
on the ground that occupation and user of the property for running 
horse races and training the horses etc. constituted occupation and user 
of the property for a 'charitable purpose' within the meaning of s. 
202(I)(b), which was refused. The respondent approached the High 
Court and succeeded. 
Partly allowing the appeal by the Corporation, 
HELD: I. For determining whether exemption under s. 202(1) 
(b) of the Hyderabad Municipal Corporation Act, 1955, was available, 
the test to apply is to seek answer to the question: to what use is the 
property put or for what purpose is the property put and to ascertain 
whether such occupation or user is for 'charitable purpose'. [I 97F] 
c 
D 
E 
2. The expression 'charitable' in the context of s. 202(I)(b) means 
a benevolent activity calculated to· benefit the poor or, the deprived.· F 
Horse racing is surely not such a benevolent activity, however charit-
able a view is taken. It must be the very activity which is carried on on 
the property which must be charitable and not the application of the 
income of such activity. [197H-I 98A] 
.3. The High Court has completely failed to realize that the 'ocrn-
G 
pation' of the land and buildings or the 'user' must be for 'charitable 
purpose' and that it is altogether irrelevant as to the manner in which 
the income of the club is utilised. Section 202( I)(b) makes no reference 
to the question as regards the employment of the incon(e -of the club or 
the purpose for which the income is so employed. Exemp_tion is granted H 
195 
196 
SUPREME COURT REPORTS 
[ 1987] 1 S.C.R .. 
A only in respect of buildings wbicb are 'solely' aud exclusively used for 
;\:·• 
charitable purpose. [l98B] 
4. In' the instant case, tbe user of the premises for the Race 
Course Club will uot constitute occupation or user for a 'charitable 
purpose' within the meaning of s. 202(1)(b) and of Race Course Club 
B 
will not be entitled to claim exemption from levy of the general tax. [ l98F] 
5. The High Court has rightly taken a view adverse to the appel-
lant as regards the levy for the assessment year 1966-67, on an appre-
ciation _of evidence and there is no warrant to disturb the said finding. · -'"f 
There is also no reason to interfere with the valuation of the property as made 
c hy the Small Causes Court and confirmed by the High Court. [198G-H] 
D 
E 
F 
6. The order passed by the High Court in so far as it is held that 
~ 
the property is exempt from levy of general tax under s. 202( l)(b) is set 
aside. The appellant would be entitled to levy general tax from 1967-68 
onwards in >;1ccordance with law. [J99B] 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 395 
and 1346 (N) of 1973 
From the Judgment.and Order dated 13. 12. 1971 of the Andhra 
Pradesh High Court in A.A.O. No. 279 and 216 of 1970. 
r· 
Vepa P. Sa~thy, B. ~arthasarthi and G.N. Rao for the Appel-
!ant. 
V.S. Desai, Naunit Lal and Kailash Vasdev for the Respondent. 
The Judgment of the Court was delivered by 
THAKKAR, J. Believe it or not, the most incongruous argu-
ments can sometimes find a suiter. Were it not so, the High Court of 
Andhra Pradesh could not have taken the view that occupation or user 
of lands and buildings for the purpose of running horse races, and for 
G 
training the horses etc. constitutes occupation or user of the property 
for a 'charitable'. purpose. 
The High Court has taken the said view, an impossible view in 
our opinion, in the context of the exemption from levy of municipal 
H 
taxes claimed by the Race Course Club (respondent herein) in respect 
of 127 acres, 14 goonthas and 95 sq. yards of land alongwith structures 
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MUNICIPAL CORP. v. HYDERABAD RACE CLUB [THAKKAR, J.] 
197 
standing thereon, which were sought to be assessed to· general tax A 
under Section 202 of the Hyderabad Municipal <;orporation Act (Act 
in short). The respondent boldly contended, and strangely enough 
succeeded in convincing the High Court, that Section 202( l}

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