LexNATIONAL & GRINDLAYS BANK LTD. versus THE MUNICIPAL CORPORATION OF GREATER BOMBAY
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NATIONAL & GRINDLAYS BANK LTD.
v.
THE MUNICIPAL CORPORATION OF GREATER
BOMBAY
February 5, 1969
· [V. RAMASWAMI AND. A. N. GROVER, JJ.)
Bombay Muaisipa/ Corparation Act 3 of 1888, S. 14&-Landlord leas-
i11g land to tenant who constructs thereon-Whether se~ti?n conte1nplates
conzposite assess.men! of property tax on land ·and bulldlng-If prin1ary
liability to tax that of landlord.
The appellant had leased a plot of land situated in the Malad Area in
Greater Bombay at a rental on a monthly basis.
The lessee had cons-
tructed a house on the plot of land at his own cost. Prior to the merger
of the Malad Area into Greater Bombay in February, 1947, the Malad
District Municipality assessed and levied taxes on the land and the struc-
tures separately and recovered the same from the landlo:-d and the tenant.
After the merger, the respondent Bombay Municipal Corporation issued
a notice to the appellant upcter section 167 of the Bombay Municipal
Corporation Act No. 3 of 1883, informing him that there would be a
composite assessment on him.
An appeal against the order to the Chief
Judge, Small Causes Court. Bombay, under section 217 of the Act was
dismissed.
A single bench of the High Court dismissed a further appeal
on the view that it was bound by the decision in Rcmji Keshavji v .
. \fonicipal Corporation of Bombay 56 B.L.R. 1132.
A Letters Patent
appeal \Vas also dismissed.
In the appeal to this Court it was contended on behalf of the appellant
that on a prope'r construction of section 146 (2) of th::: Act there should
have been a separate assessment in respect of the building and the land;
alternatively even if section 146(2) contemplates a composite assessment
of the building and the land, a preliminary liability should be imposed
upon the owner of the building in whom the right to let the building
vests and not on the owner of the land; the appellant c;ou~d not be treated
as a lessor under section 146(2) because it did not let the land with the
building thereon as one unit to the lessee.
HELD : (I) The scheme under section 146 is that when the land is
let a:id the tenant has built upon the land, there should be a composite
assessment of tax: upon the land and the building taken together. In the
case of such a composite unit the p'rimary liability of assessment of tax
is intended to be on the lessor of the land under section 146 (2) (a) of
the Act. [57 J F]
In .section 146(1) and (2) the word "premises" is used in contrast
to section 146( 3) where the words "la!!d and building" are separately
mentioned.
Section 146(3) which is admittedly not applicable in the
present c'.ascs. furnishes a key to the interpretation of ~~ction 146(2) (a) .
. In the. cont~xt of section 146(3) the lessor of the premises, as mentioned
n1 -;ectio:i 146('.!)(a) must be construed to mean the lessor Of the land on
"hich the building has been constructed by the tenant. [571 DJ
Section 147 ptQvides for an apportionment of responsibility to pro-
perty t~x when the 'premises are let or sub-let; it is clear the intention of
the legislature was to 'impose the primary liability for payment of property
tax upon the kssor of'the land to facilitate its collection and to give him
the right to recoupment under section 147. [571 Fl
566
SUPREME COURT REPORTS
[1969) 3 S.C.R.
Rt11njl Keshavji
v.
Muncicipal Corporation for Gr<'ater Bo111hay,
56
A
B&m. L.R. 1132. approved.
(2) Even assuming that the meaning of section 146(2) is obscure and
that it is possible to interpret it as throwing the primary liability for pa)'·
meat of property tax upon the lessee who has constructed a buildini on
the laod, this was not a case where the law expressed by the High
Court
in Ra111ji Kt!shavji's case, should be interfered with.
That is the con-
struction which the authorities have put upon it by· their usage and con-
B
duct for a long period of time. and the Court may. the'refore resort tL1
contemporary construction by applying the principle "'optilnr. fegz1111 in-
1erpres est cons11et11do". [572 E]
Oh/son's case, [1891) I Q.B. 485, 489: Clyde Navigation Tm.Wes \'.
Laird, 8 A.C. 658, 670, referred to.
CIVIL APP ELLA TE JuRISDICTION :
Civil Appeal No. 46.2 of
1966.
Appeal by special leave from the order dated March 25, 1964
-Of the Bombay High Court in Letters Patent Appeal No. 28 of
1964.
S. V. Gupte, P. P. Khambatta, D. P. 'Mehta, Bhuvnesh Kumari
and O. C. Mathur, for the appellaExcerpt shown. Read the full judgment & AI analysis in Lexace.