# MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS v. PROPERTY OWNERS' ASSOCIATION & ORS

- **Citation:** [2022] 14 S.C.R. 679
- **Court:** Supreme Court of India
- **Decided:** 2022-11-07
- **Case number:** Civil Appeal No.8239 of 2022
- **Bench:** Uday Umesh Lalit, Ajay Rastogi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/municipal-corporation-of-greater-mumbai-ors-v-property-owners-association-ors-35747
- **Pages:** 68

## Headnote

Mumbai Municipal Corporation Act, 1888 - s.154(1A)(a)-
(e), (1B) - Factors and Categories of Users of Buildings or Lands
(Assignment of Weightages by Multiplication) Fixation of Capital
Value Rules, 2010 - Factors and Categories of Users of Buildings
or Lands (Assignment of Weightage by Multiplication) Fixation of
Capital Value Rules, 2015 - High Court rejected the challenge as
to the validity of various provisions of the MMC Act however, held
rr.20, 21 and 22 of the Capital Value Rules 2010 and 2015 to be
ultra vires the provisions of the MMC Act - On appeal, held:Width
of clauses (a) to (e) read with sub-Section (1B) do not by any stretch
of imagination contemplate taking into account the future prospects
of the land in question - The empowerment in terms of clauses (a)
to (e) r/w with sub-Section (1B) or the conferral of rule-making
power would not permit the Corporation to determine the capital
value beyond the scope of said clauses (a) to (e) - Thus, for the
purpose of determining capital value, only the present physical
attributes and status of the land and building can be considered
and not the future prospects of the land - Conclusion arrived at by
the High Court are correct - Also, the High Court was right in
concluding that r.20 of the Capital Value Rules of 2010 and the
Capital Value Rules of 2015 would be ultra vires the provisions of
sub-Sections (1A) and (1B) of s.154 of the MMC Act - Further, the
Rules having come into force on 20.3.2012, the levy and
computation of property tax on capital value would be available
and possible on and with effect from 20.3.2012 and not with any
retrospective operation - Challenge raised by the Corporation fails
- Challenges raised by the original writ petitioners on various
grounds including the grounds of legislative competence; validity
of certain provisions and basis of alleged violation of Article 14 of
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[2022] 14 S.C.R.
the Constitution, were considered by the High Court in extenso - No
reason to take a different view - Therefore, the said view is affirmed.
Constitution of India - Article 243Y, 243X - Mumbai
Municipal Corporation Act, 1888 - Plea that any proposal for
change or modification in the methodology adopted for levy of
property tax ought to have been initiated through the Finance
Commission alone - Held: It is the Legislature of the State which
will ultimately take an appropriate action with respect to the
recommendations made by the Finance Commission and the papers
placed before it - If the Legislature itself has taken into account
certain prevailing situation, which according to the Legislature is
causing some prejudice to the financial health and condition of the
municipalities and, therefore, the method of imposition of property
tax ought to be changed, then it cannot be said that the matter must
necessarily and ought to have emanated from the Finance
Commission or that in the absence of such recommendations by the
Finance Commission, no steps could have been taken by the
Legislature - In the instant case, the exercise undertaken by the
Legislature is completely consistent with the empowerment relatable
to Article 243X and does not in any way go counter to said
empowerment.
Dismissing the appeals, the Court
HELD: 1.1 Article 243Y of the Constitution deals with
constitution of Finance Commission whose principal duty is to
review the financial position of the municipalities and to make
recommendations to the Governor as to the relevant principles
which should govern distribution of the net proceeds of the taxes
and the measures needed to improve the financial position of the
municipalities. It is true that certain functions are entrusted to
the Finance Commission and the recommendations made by the
Finance Commission must carry great weightage. However, the
matter has to be seen from the perspective: whether any
"measures needed to improve the financial position of the
municipalities" must necessarily emanate from the
re

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 [2022] 14 S.C.R. 679
679
MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS.
v.
PROPERTY OWNERS' ASSOCIATION & ORS.
(Civil Appeal No 8239 of 2022)
(SLP (C) No. 17009 of 2019)
NOVEMBER 07, 2022
[UDAY UMESH LALIT, CJI AND AJAY RASTOGI, J.]
Mumbai Municipal Corporation Act, 1888 - s.154(1A)(a)-
(e), (1B) - Factors and Categories of Users of Buildings or Lands
(Assignment of Weightages by Multiplication) Fixation of Capital
Value Rules, 2010 - Factors and Categories of Users of Buildings
or Lands (Assignment of Weightage by Multiplication) Fixation of
Capital Value Rules, 2015 - High Court rejected the challenge as
to the validity of various provisions of the MMC Act however, held
rr.20, 21 and 22 of the Capital Value Rules 2010 and 2015 to be
ultra vires the provisions of the MMC Act - On appeal, held:Width
of clauses (a) to (e) read with sub-Section (1B) do not by any stretch
of imagination contemplate taking into account the future prospects
of the land in question - The empowerment in terms of clauses (a)
to (e) r/w with sub-Section (1B) or the conferral of rule-making
power would not permit the Corporation to determine the capital
value beyond the scope of said clauses (a) to (e) - Thus, for the
purpose of determining capital value, only the present physical
attributes and status of the land and building can be considered
and not the future prospects of the land - Conclusion arrived at by
the High Court are correct - Also, the High Court was right in
concluding that r.20 of the Capital Value Rules of 2010 and the
Capital Value Rules of 2015 would be ultra vires the provisions of
sub-Sections (1A) and (1B) of s.154 of the MMC Act - Further, the
Rules having come into force on 20.3.2012, the levy and
computation of property tax on capital value would be available
and possible on and with effect from 20.3.2012 and not with any
retrospective operation - Challenge raised by the Corporation fails
- Challenges raised by the original writ petitioners on various
grounds including the grounds of legislative competence; validity
of certain provisions and basis of alleged violation of Article 14 of
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[2022] 14 S.C.R.
the Constitution, were considered by the High Court in extenso - No
reason to take a different view - Therefore, the said view is affirmed.
Constitution of India - Article 243Y, 243X - Mumbai
Municipal Corporation Act, 1888 - Plea that any proposal for
change or modification in the methodology adopted for levy of
property tax ought to have been initiated through the Finance
Commission alone - Held: It is the Legislature of the State which
will ultimately take an appropriate action with respect to the
recommendations made by the Finance Commission and the papers
placed before it - If the Legislature itself has taken into account
certain prevailing situation, which according to the Legislature is
causing some prejudice to the financial health and condition of the
municipalities and, therefore, the method of imposition of property
tax ought to be changed, then it cannot be said that the matter must
necessarily and ought to have emanated from the Finance
Commission or that in the absence of such recommendations by the
Finance Commission, no steps could have been taken by the
Legislature - In the instant case, the exercise undertaken by the
Legislature is completely consistent with the empowerment relatable
to Article 243X and does not in any way go counter to said
empowerment.
Dismissing the appeals, the Court
HELD: 1.1 Article 243Y of the Constitution deals with
constitution of Finance Commission whose principal duty is to
review the financial position of the municipalities and to make
recommendations to the Governor as to the relevant principles
which should govern distribution of the net proceeds of the taxes
and the measures needed to improve the financial position of the
municipalities. It is true that certain functions are entrusted to
the Finance Commission and the recommendations made by the
Finance Commission must carry great weightage. However, the
matter has to be seen from the perspective: whether any
"measures needed to improve the financial position of the
municipalities" must necessarily emanate from the
recommendations of the Finance Commission. Sub-Article (2)
contemplates that the recommendations made by the Finance
Commission along with the explanatory memorandum as to the
action taken thereon must be laid before the Legislature of the
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State. Thus, it is the Legislature of the State which will ultimately
take an appropriate action with respect to the recommendations
made by the Finance Commission and the papers placed before
it. If the Legislature itself has taken into account certain prevailing
situation, which according to the Legislature is causing some
prejudice to the financial health and condition of the municipalities
and, therefore, the method of imposition of property tax ought to
be changed, it cannot then be said that the matter must necessarily
and ought to have emanated from the Finance Commission or
that in the absence of such recommendations by the Finance
Commission, no steps could have been taken by the Legislature.
Article 243X of the Constitution states that the Legislature of a
State may by law authorize a municipality to levy, collect and
appropriate such taxes etc. in accordance with such procedure
and subject to such limits as may be specified in law. The exercise
undertaken by the Legislature in the instant case is completely
consistent with the empowerment relatable to Article 243X of
the Constitution and does not in any way go counter to said
empowerment. [Paras 25-27][738-H; 739-A-B, E-H; 740-A-B]
1.2 Coming to the effect and scope of the statutory
provisions, it must be stated that Sections 123 to 128 of the MMC
Act deal with accounts and annual budget estimates. With the
fixed parameters and scope of taxation, as well as, the elements
that can be covered by levy of such taxes, depending upon the
annual budget estimates, the rates of municipal taxes, fares and
charges can certainly be fixed in terms of Section 128 of the MMC
Act. In such cases, the width of the tax regime is already decided
and the rates of taxes would be dependent upon the annual
estimates. What the present amendments seek to achieve is to
change the methodology on the basis of which property tax can
be levied. Instead of rateable value, the property tax can now be
levied going by the capital value. Such exercise could not have
been undertaken through the process of annual estimates and in
terms of Sections 120, 123, 125 and 128 of the MMC Act. All
that could be done under these provisions would be to vary or
change the rates and not the very basis of taxation. The
submission in that behalf, therefore, does not merit acceptance.
[Para 28][740-C-E]
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1.3 Section 154(1A) of the MMC Act is the crucial provision
for the present discussion. The opening part of subsection (1A)
states that in order to fix the capital value of any building or land
assessable to property tax, regard shall be had to the value of
any building or land as indicated in the SDRR for the time being
in force. The value so indicated in SDRR is to be the base value
to which certain factors delineated in clauses (a) to (e) of
subsection (1A) are to be applied while fixing the capital value.
Clauses (a) to (d) are physical features or attributes of the land
or building which are in existence when the value is to be
reckoned. In essence these attributes are situations "in
praesenti". The buildable potential of the land in future is not an
attribute "in praesenti" but is in the nature of likelihood of user
or exploitation of the asset "in futuro". The crucial question is:
whether such potential of the land or the likelihood of exploitation
in future can also be taken into consideration while fixing the
capital value in terms of sub- Section (1A), especially when none
of the factors delineated in clauses (a), (b), (c) and (d) speaks of
future prospects or such likelihood? [Para 30, 31][741-C-F]
1.4 Both the decisions in Patel Gordhandas and Polychem
Ltd. were rendered in the regime when the property tax could be
levied on rateable value. In the first decision, it was found that
fixing of the rate at a percentage of the capital value was not a
modality permitted by the Act and, therefore, Rules 350-A read
with Rule 243, which permitted such exercise, were struck down.
Therefore, to the extent the rules went beyond the statutory
import and extent, the transgression was not accepted by this
Court. In the second decision, it was held that so long as the
building was not completed and ready for occupation, the land in
question for the purposes of rating must be equated with and
treated as "vacant land". In the second decision, the construction
was actually going on but the building was not ready. The
conclusion from the second decision is quite clear that unless
and until the building was ready to be occupied, the land must be
treated as vacant land. Notably, the second decision was premised
on the methodology where the rateable value was the determining
criteria. Therefore, so long as the building could not be let out in
open market, the land would continue to be treated as "vacant
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land". However, after the amendments, the emphasis has now
changed and the basis for taxation is now to be capital value of
land and building. Capital value again can have two dimensions.
First, the value of land or building as it stands today or secondly,
the value as may be in future as per anticipated development.
However, the legislative intent, as is clear from clauses (a) to
(d), is about actual status and user as on the date the capital value
is to be reckoned or considered. These clauses clearly show that
the features contemplated therein must be in existence as on
such date and not what would be the projection in future. There
are two ways in which sub-clause (e) of sub-Section (1A) of Section
154 can be construed. In the first case, said clause can be read
ejusdem generis along with sub-clauses (a) to (d), in which event
the scope of any rules to be made in terms of power granted by
sub-clause (e) read with sub-Section (1B), would be relatable to
the factors actually in existence and not as something
contemplated in future. On the other hand, if the clause is read
independently, there is nothing in clause (e) or in the language of
sub-Section (1B) that the future prospects of the land in question
could be reckoned or noted for arriving at the capital value. The
conclusion is thus quite clear that the width of clauses (a) to (e)
read with sub-Section (1B) do not by any stretch of imagination
contemplate taking into account the future prospects of the land
in question. Therefore, the empowerment in terms of clauses (a)
to (e) read with subsection (1B) or the conferral of rule making
power would not permit the Corporation to determine the capital
value beyond the scope of said clauses (a) to (e). Thus, for the
purpose of determining capital value, only the present physical
attributes and status of the land and building can be considered
and not the future prospects of the land. [Paras 33-36][743-H;
744-A-H; 745-A]
Patel Gordhandas Hargovindas & Ors. v. Municipal
Commissioner, Ahmedabad & Anr. AIR 1963 SC 1742
: [ 1964] 2 SCR 608; The Municipal Corporation of
Greater Bombay v. Polychem Ltd. (1974) 2 SCC 198 :
[1974] 3 SCR 687 - referred to.
1.5 To the extent Rule 20 of the Capital Value Rules of
2010 and the Capital Value Rules of 2015 empower the
Commissioner to consider the capability of the open land of
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY
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utilizing more than 1 floor space index (FSI) or any transfer of
development right (TDR), would go well beyond the permissible
scope delineated by the provisions of Section 154 of the MMC
Act. The High Court, was, therefore, right in concluding that Rule
20 of the Capital Value Rules of 2010 and the Capital Value Rules
of 2015 would be ultra vires the provisions of subsections (1A)
and (1B) of Section 154 of the MMC Act. [Para 38][745-D-F]
1.6 In regard to the issue of retrospectivity of the Capital
Value Rules of 2010. The factual narration relied upon by the
learned counsel for the Corporation does show that the
preparatory steps were being undertaken since 2010 with the
appointment of an expert committee and publication of draft rules.
It appears that the Corporation had to collect voluminous data.
But in order to enable the Corporation to compute or levy
property tax based on capital value, the concerned rules had to
be in force. There being no empowerment to compute and/or
levy property tax with retrospective effect by the statute itself,
the rule making power, in any view of the matter, could not have
created a liability pertaining to the period well before the Rules
came into effect. The first ground as set out in paragraph 15 was,
therefore, rightly answered by the High Court against the
Corporation. Logically, the Rules having come into force on
20.3.2012, the levy and computation of property tax on capital
value would be available and possible on and with effect from
20.3.2012 and not with any retrospective operation. [Para
39][745-F-H; 746-A]
1.7 The question then arises as to what would be the scope
and extent of the present property tax regime. It is quite clear
that with the amendment to Section 154 and other provisions, the
property tax can be levied on the basis of capital value of the land
or building. To that extent, there would be departure from the
regime which was in existence when Patel Gordhandas and
Polychem Ltd. were decided by this Court. Now, the statute
certainly empowers and contemplates imposition of property tax
on the capital value. However, the capital value must be one which
answers the postulates in sub-clauses (a) to (e) of sub-Section
(1A) read with sub-Section (1B) of Section 154. Since the statutory
provisions do not contemplate any likelihood of exploitation of
capacity in future, the capital value of the land and building must
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be based on situation "in presenti". It must be clarified here that
in projects which are in progress, the value addition to the
property would be ongoing feature. However, considering clauses
(a) to (d), it would mean that the governing principle must be the
actual use and not the intended use in future. The challenge raised
by the Corporation must fail and the appeal preferred by the
Corporation is dismissed. Challenges raised by the original writ
petitioners on various grounds as detailed hereinabove including
the grounds of legislative competence; validity of certain
provisions and basis of alleged violation of Article 14 of the
Constitution, were considered by the High Court in extenso. No
reason or room to take a different view. Therefore, the view is
affirmed and the challenge is dismissed. [Paras 40, 41][746-B-F]
Marathwada University v. Seshrao Balwant Rao
Chavan (1989) 3 SCC 132 : [1989] 2 SCR 454; Delhi
Race Club Limited v. Union of India & Ors. (2012) 8
SCC 680 : [2012] 8 SCR 1; Devi Das Gopal Krishnan
etc. v. State of Punjab & Ors. AIR 1967 SC 1895 :
[1967] 3 SCR 557; Avinder Singh &Ors. v. State of
Punjab & Ors. (1979) 1 SCC 137 : [1979] 1 SCR 845;
State of Uttar Pradesh & Ors. v. Systematic Conscom
Ltd. (2014) 13 SCC 627; State of Himachal Pradesh &
Ors. v. Nurpur Private Bus Operators' Union & Ors.
(1999) 9 SCC 559 : [1999] 3 Suppl. SCR 430 -
referred to.
Campaign for People Participation in Development
Planning v. Lieutenant Governor of NCT of Delhi &
Ors. (2016) SCC Online Del 80 - referred to.
Case Law Reference
[1964] 2 SCR 608
referred to
Para 23
[1989] 2 SCR 454
referred to
Para 23
[2012] 8 SCR 1
referred to
Para 23
[1967] 3 SCR 557
referred to
Para 23
[1979] 1 SCR 845
referred to
Para 23
[1974] 3 SCR 687
referred to
Para 23
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY
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(2014) 13 SCC 627
referred to
Para 23
[1999] 3 Suppl. SCR 430
referred to
Para 23
(2016) SCC Online Del 80
relied on
Para 25
CIVIL APPELLATE JURISDICTION : Civil Appeal No.8239
of 2022.
From the Judgment and Order dated 24.04.2019 of the High Court
of Judicature at Bombay in Writ Petition No.2592 of 2013.
With
Civil Appeal Nos.8240, 8241, 8242, 8243, 8244 of 2022 And
Contempt Petition (C) No.38 Of 2021 In Special Leave Petition (C)
No.17009 of 2019.
Neeraj Kishan Kaul, Huzefa Ahmadi, Sreedharan, Dr. Milind
Sathe, Shekhar Naphade, H.L. Tiku, Sr. Advs., Akshay Arora, Praval
Arora, Ms. Chesta Mehta Arora, Jappanpreet Hora, A. Karthik, Y.P.
Dandiwala, R.K. Satpalkar, Dhruv V. Sharma, Toshiv Goyal, Ms.
Delnavaz Patel, Saswat Pattnaik, Ms. Shaheen Moghul, Hasan Murtaza,
Abhishek Bharti, Ms. Aarti Mahto, Balaji Srinivasan, Sameer Parekh,
Sumit Goel, Abhiram Naik, Ms. Tanya Chaudhary, Paritosh Arora, M/s.
Parekh & Co., H . Devrajan, P. N. Gupta, Mrs. Bharti Gupta, Jayom
Mahesh Shah, Ashish Wad, Ms. Tamali Wad, Ms. Aruna Savla, Pimple
Sharad, Sidharth Mahajan, Ms. Sukriti Jaggi, Ajeyo Sharma, M/s. J S
Wad & Co, Kunal Vajani, Sanjay Kadam, Chirag M. Shroff, Mahesh
Agarwal, Ankur Saigal, Anshuman Srivastava, Shaishir Divatia, Sunil
Mittal, Digit Saikia, Suneet Tyagi, Ms. Reshma Kalsekar, E.C. Agrawala,
Vikas Kumar, Manish Paliwal, Yashmeet Kaur, Mayank Grover, M/s.
Corporate Legal Partners, Rahul Chitnis, Sachin Patil, Aaditya A. Pande,
Geo Joseph, Shikhil Suri, Ms. Madhu Suri, T. R. B. Sivakumar, Aman
Raj Gandhi, Abhishek Sharma, Udayaditya Banerjee, Adbhut Pathak,
Advs. for the appearing parties.
The Judgment of the Court was delivered by
UDAY UMESH LALIT, CJI
1. Leave granted in all Special Leave Petitions.
2. These appeals are challenging the common judgment and order
dated 24.4.2019 passed by the Division Bench of the High Court of
Judicature at Bombay in Writ Petition No. 2592/2013 and connected
matters. Contempt Petition (Civil) No. 38/2021has been filed against the
alleged contemnor for disobedience of orders dated 29.7.2019,
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21.10.2019 and 22.11.2019 passed by this Court in the appeal arising out
of said SLP(C) No. 17009 of 2019. For the present purposes, said
Contempt Petition is segregated with a direction to list the same before
an appropriate Court after six weeks.
3. The Mumbai Municipal Corporation Act, 18881 has been enacted
by the State Government to consolidate and amend various Municipal
Acts which were in force relating to the Municipal administration of the
city of Mumbai. The Municipal Corporation of Greater Mumbai ("the
Corporation" for short)has been established and discharging its duties
under the MMC Act.
4. The MMC Act authorizes the Corporation to impose property
tax on lands and buildings. Importantly, property tax is one of the main
sources of revenue for the Corporation, specifically after abolition of
Octroi. The MMC Act earlier provided for levy of property tax on the
basis of certain percentage of rateable value of the buildings or lands.
The basis of determination of rateable value as provided in the MMC
Act was the annual rent for which such buildings or lands might reasonably
be expected to be let from year to year.
5. The Corporation appointed Tata Institute of Social Sciences
(for short "TISS") and University of Mumbai to study the system of
levy of property tax and to suggest alternative system for such levy.
TISS submitted a detailed report recommending that capital value-based
system of assessment be adopted in place of annual rental system. After
detailed discussions with stake holders and based on the recommendations
of TISS, the MMC Act was amended by the Maharashtra Act No. XI
of 2009. The amendment incorporated an option and empowered the
Corporation to levy property tax on the basis of capital value as an
alternative to the earlier method of levying property tax on the basis of
rateable value.
6. The Statement of Objects forming part of the Bill which led to
the passing of the Maharashtra Act No. XI of 2009 was as under: -
"STATEMENT OF OBJECTS AND REASONS
Section 139 of the Mumbai Municipal Corporation Act (Bom.III
of 1888) provides for imposition of taxes by the Municipal
Corporation of Brihan Mumbai. The taxes to be so imposed provide
1 "MMC Act", for short
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY
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[2022] 14 S.C.R.
inter alia property taxes on buildings or lands. The property taxes
include water tax, water benefit tax, sewerage tax, sewerage
benefit tax, general tax, education cess and street tax, which are
leviable on the basis of certain percentage of rateable value of
the buildings or lands.
2. Section 154 of the Act provides the method of fixing rateable
value of any buildings or lands assessable to property tax. The
basis to determine the rateable value is the annual rent for which
such buildings or lands might reasonably be expected to let from
year to year, less 10 per centum of the said annual rent and the
said deduction is in lieu of all allowances for repairs or on any
other account whatever.
3. The determination or fixation of the rateable value under
different Municipal Acts or Municipal Corporation Acts throughout
India for the purpose of levy of property taxes under these Acts
has resulted in ceaseless dispute. There has been a catena of
decisions rendered by various High Courts and the Supreme Court
in respect of the matter of fixation of rateable value particularly
because of the provisions of Rent Control Legislation in various
States including the State of Maharashtra. On account of these
decisions the annual rent to be taken into account for fixation of
rateable value of any buildings or lands has been pegged down to
the standard rent of any buildings or lands according to the
provisions of the Rent Control Acts. In so far as the area of the
Municipal Corporation of Brihan Mumbai is concerned, the Rent
Control Act, which provided for standard rent for the first time,
was the Bombay Rent Restriction Act. 1939 (Bom. XVI of 1939).
This Act was repealed by the Bombay Rents, Hotel Rates and
Lodging House Rates (Control) Act, 1944 (Bom.VII of 1944),
which had been replaced by the Bombay Rents, Hotel and Lodging
House Rates Control Act, 1947 (Bom. LVII of 1947), which has
also been now repealed by the Maharashtra Rent Control Act,
1999 (Mah. XVIII of 2000) which came into force on the 31st day
of March 2000 and is at present in operation. Thus the Rent Control
Act has been in operation in the Mumbai Municipal Corporation
area for over 65 years. In effect, therefore, the property tax has
to be determined on the basis of rateable value fixed considering
the annual rent, being the fair rent (standard rent) alone, regardless
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of the actual rent received. Fair rent very often means the rent
prevailing prior for the year 1940 with some marginal modifications
and additions. Because of the limitations or restrictions brought
into play by the provisions of the Maharashtra Rent Control Act,
1999 and the various judgements of the Court in respect of fixation
of rateable value for the purpose of levy of property taxes a lot of
subjectivity has crept into the system by which the rent of buildings
or lands is determined. Apart from this, it has also resulted in lack
of transparency, equity and rationality in the system of assessment
of property taxes. Property tax is one of the main sources of
revenue to the Corporation. Due to such restrictions or limitations
the income of the Corporation from property tax has remained
static. To continue to compel the Corporation to levy and collect
the property tax on the basis of fair rent or standard rent alone,
while at the same time under Section 61 in Chapter III and other
provisions of the Mumbai Municipal Corporation Act making it
incumbent on the Corporation to make adequate provisions to
perform all its obligatory and discretionary functions laid down by
the Act may be to ask for the impossible. The cost of maintaining
and laying roads, drains, water supply lines and providing other
essential civic services and amenities, the salaries of staff and
wages of employee and all other types of expenditure have gone
up steeply over the last more than 65 years.
4. With a view to exploring the possibility of reforming the
property tax system, so as to augment the revenue of the
Corporation, the Tata Institute of Social Sciences (TISS), Mumbai
were entrusted by the Corporation with the job to study the present
system of levy of property taxes and to suggest any alternative
system for such levy. After studying various systems available
for assessment of property taxes within and without India, they
have recommended that Capital Value Based System of
Assessment in place of the Annual Rental System may be adopted,
as according to them the trend in property tax practices in
developing countries is to move away from the Annual Rental
Value base to Capital Value base. The capital value based system
of assessment has the following merits:-
(1) Formula based assessment is possible with simplicity,
(2) Self-assessment is possible,
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(3) Greater flexibility in tax administration which provides control
over revenue,
(4) Subjectivity is eliminated to the extent possible,
(5) There is transparency and easy to understand,
(6) Tax revenue can keep pace with inflation and cost of living.
5.The highlights of the system recommended by the Tata
Institute of Social Sciences is the shift from Annual Rental Value
to Capital Value as the base for the purpose of levy of property
taxes at a certain rate which may be determined by the Corporation
and such value is proposed to be adopted as the value of any
buildings or lands as is indicated in the Stamp Duty Ready
Reckoner for the time being in force as prepared under the Bombay
Stamp (Determination of True Market Value of Property) Rules,
1995 and the capital value of the property could then be computed
by applying thereto factors such as location, carpet area, type of
construction, age of property and user thereof. In this system
properties which are old or of semi-permanent structures including
chawls, will be given due consideration and concession. Care is
also taken to provide for an appropriate cap on the increase on
property tax on account of switching over to the capital value
base of levy.
6. It is a modest attempt to enable the Corporation to augment
its revenue so as to meet the ever-rising expenditure in providing
appropriate an adequate infrastructure for rendering civic services
in the City like Mumbai and its suburbs. Having regard to the
status thereof as a financial capital of India, the Mumbai City
requires a special attention.
7. The amendments to the Mumbai Municipal Corporation Act
(Bom. III of 1888) proposed in this Bill are intended to achieve
the above-mentioned objectives."
7. The MMC Act was, thereafter, amended by successive
amendments as a result of which newly introduced Section 154(1A) and
(1B) MMC Act now authorizes Municipal Commissioner to fix the Capital
Value of land and building with the approval of the Standing Committee.
Accordingly, the Commissioner formulated Factors and Categories of
Users of Buildings or Lands (Assignment of Weightages by Multiplication)
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Fixation of Capital Value Rules, 2010 ('the Capital Value Rules of 2010',
for short) which came into force on and with effect from 20.03.2012,and
Factors and Categories of Users of Buildings or Lands (Assignment of
Weightage by Multiplication) Fixation of Capital Value Rules, 2015 ('the
Capital Values Rules of 2015', for short), which came into force on
01.04.2015.
8. It must be stated here that on 20.01.2010 a resolution was
passed appointing an expert committee comprising of Dr. D.M.
Sukthankar, Dr. D.N. Choudhary and Dr. Roshan Namavati to make
recommendations on the Capital Value System. The draft rules prepared
by the Committee were published in various newspapers on 18.10.2010
inviting objections. The last date for submissions and objections after
due extension expired on 30.11.2010, whereafter final report was
submitted. After obtaining the sanction of the Standing Committee, the
Capital Value Rules, of 2010 were published on 20.03.2012. Subsequently,
the Capital Value Rules of 2015 were also framed.
9. The relevant provisions of the MMC Act dealing with the matters
in issue are extracted here for ready reference:
"120.Constitution of Fines Fund. Fines collected under section
83 shall be credited to a separate fund to be called "the Fines
Fund" the proceeds of which shall be expended in promoting the
well-being of municipal officers and servants other than those
appointed under the provisions of Chapter XVIA of this Act, and
for the payment of compassionate allowances to the widows of
such officers and servants who die while in municipal service and
to such other relation of the officers and servants as the corporation
may from time to time determine.
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123.Accounts to be kept in forms prescribed by Standing
Committee. Subject to the provisions of Chapter XVI-A of this
Act accounts of the receipts and expenditure of the corporation
shall be kept in such manner and in such forms as the Standing
Committee shall from time to time prescribe:
Provided that, the accounts of the Water and Sewage Fund and
the Consolidated Water Supply and Sewage Disposal Loan Fund
shall be maintained on the accrual basis, unless otherwise
prescribed by the Standing Committee.
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125. Estimates of expenditure and income to be prepared
annually by Commissioner.
The Commissioner shall on or before eachfifth day of February,
have prepared and lay before the Standing Committee, in such
form as the said Committee shall from time to time approve, -
(1) (a) an estimate of the expenditure which must or should, in his
opinion be incurred by the corporation in the next ensuing Official
Year, other than-
*****
(ii) expenditure to be incurred by reason of the obligations
imposed on the corporation arising out of the transfer to the
corporation of the powers, duties, assets and liabilities of
the Board of Trustees for the improvement of the City of
Bombay constituted under the City of Bombay Improvement
Trust Transfer Act, 1925 13or for any of the purposes of
Chapter XII-A; and
(iii) expenditure to be incurred on account of the Brihan
Mumbai Electric Supply and Transport Undertaking;
(iv) expenditure to be incurred for the purposes of clause
(q) of section 61;
(v) expenditure to be incurred for the purposes of Chapters
IX and X;
(b) an estimate of the balances, if any (other than balances) shown
in the accounts maintained under sections 123A and 123C which
will be available for re-appropriation or expenditure at the
commencement of the next ensuing official year;
(c) an estimate of the corporation's receipts and income for the
next ensuing official year other than from taxation and from the
Brihan Mumbai Electric Supply and Transport Undertaking and
other than that referred to in clause (c) of sub-section (2) and in
clause (d) of section 126C and in section 126E;
(cc) an estimate of the amount due to be transferred during the
next ensuing official year to the municipal fund under the provisions
of sections 460KK and 460LL;
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(d)a statement of proposals as to the taxation which it will, in his
opinion, be necessary or expedient to impose under the provisions
of this Act in the next ensuing official year;
(2) (a) an estimate of the expenditure which must or should, in his
opinion, be incurred by the corporation in the next ensuing official
year by reason of the obligations imposed upon the corporation
arising out of the transfer to the corporation of the powers, duties,
assets and liabilities of the Board of Trustees for the Improvement
of the City of Bombay constituted under the City of Bombay
Improvement Trust Transfer Act, 1925 or for any of the purposes
of Chapter XII-A;
(b)an estimate of all balances, if any in the account maintained
under section 122A, which will be available for re-appropriation
or expenditure at the commencement of the next ensuing official
year;
(c) an estimate of the corporation's receipts and income for the
next ensuing official year-
(i) arising from sales, leases and otherdispositions of
immovable property vesting in the corporation by reason of
the enactment of the City of Bombay Municipal
(Amendment) Act, 1933 or acquired by the Corporation for
any of the purposes of Chapter XII-A; and
(ii) being payments of interest on and repayments in whole
or part of the capital of loans granted by the corporation
and secured on the aforesaid immovable property;
(d) an estimate of three times the amount of the net estimated
realisations of the corporation in the then current financial year
under the head of general tax (including arrears and payments in
advance) divided by the rate fixed for general tax for the then
current financial year;
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Provided further that, with effect from the financial year 197475, this subclause shall have effect as if for the words "threetimes" the word "twice" were substituted;
(e) an estimate of the Corporation's receipts and income, other
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section arising from or relating to, transaction connected with the
obligations imposed upon the Corporation by the transfer to the
Corporation of the powers, duties, assets and liabilities of the said
Board of Trustees or with the exercise of the powers and duties
conferred or imposed upon the Corporation by Chapter XII-A
including grants from the State Government.
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128. Fixing rates, of municipal taxes and of fares and charges
of "Brihan Mumbai Electric Supply and Transport
Undertaking"
(1) The Corporation shall, on or before the twentieth day of
March after considering the Standing Committee's proposals
in this behalf,-
(a) determine, subject to the limitations and conditions
prescribed in Chapter VIII, the rates at which municipal
taxes shall be levied, and the articles on which octroi shall
be levied, in the next ensuing official year:
Provided that, the Corporation may determine different rates
of property taxes for different categories of users of a
building or land or part thereof; and
(b) approve, subject to the limitations and conditions which
may have been prescribed by or under any of the enactments
or any licence referred to in clause (i-a) of sub-section (2)
of section 126B, the rates at which the fares and charges
in respect of the Brihan Mumbai Electric Supply and
Transport Undertaking shall be levied.
(2) Except under sections 134,196, 460H and 460I, the rates
so fixed and the articles so appointed shall not be subsequently
altered for the year for which they have been fixed.
(3) Notwithstanding anything contained in sub-sections (1) and
(2), the Corporation may, at any time during the official years
2010-2011, 2011-2012 and 2012-2013 determine, separately for
each of the said three years, the rates of property taxes for
different categories of users of a building or land or part thereof.
The rates of property taxes so determined shall be effective
and shall be deemed to have been effective from the 1st of
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April of those three years and the taxes for the said three
years shall be leviable and payable at the rates so determined.
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139.Taxes to be imposed under this Act. For the purpose of
this Act, taxations shall be imposed as follows, namely:-
(1) property taxes;
(2) a tax on dogs: and
(3) a theatre tax;
139A. Property taxes what to consist.
(1) Property taxes leviable on buildings and lands in Brihan Mumbai
under this Act shall include water tax, water benefit tax, sewerage
tax, sewerage benefit tax, general tax, education cess, street tax
and betterment charges.
(2) For the purposes of levy of property taxes, the expression
"Building" includes -a flat, a gala, a unit or any portion of the
building.
(3) All or any of the property taxes may be imposed on agraduated
scale.
(4) Save as otherwise provided in this Act, it shall be lawful - for
the Corporation to levy all property taxes on the rateable value of
buildings and lands until the Corporation adopts levy of any or all
the property taxes on such buildings and lands on the capital value
thereof under section 140A.
140. Property taxes leviable on rateable value, or capital
value as the case may be, and at what rate. (1) The following
property taxes shall be levied on building and lands in Brihan
Mumbai, namely: -
(a) (i) the water tax of so many per centum of their rateable
value, or their capital value, as the case may be, as the Standing
Committee may consider necessary for providing water supply;
(ii) an additional water tax which shall be called 'the water benefit
tax' of so many per centum of their rateable value, or their capital
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