1. Both the writ petitions are taken up analogously lor hearing and disposed of by this judgment.
2. The writ petitioners have moved this Court against the arbitrary assessment of annual valuation in respect of Holding No. 10-B/I, Sreebas Angan Road in Nabadwip in the district of Nadia. The case of the petitioners is that by an Agreement dated 11th April, 1983 the petitioners borrowed a sum of Rs. 3.50 lakhs from the State Bank of India, Nabadwip, by depositing title deeds by creating a mortgage to construct a building according to the plan proposed by the Bank. The building plan was duly sanctioned by the Nabadwip Municipality and the three storied building was completed in March 1984. The loan carries an interest of 15 per cent per annum which comes to monthly instalment of Rs. 6,716/-. According to the terms and conditions of the said agreement the petitioners had to pay the premium of insurance of the building in case of accidental damage, to bear the cost and expenditure of repairs, white-washing, painting, any other additional works of masonry nature, sanitation, etc.
3. The petitioners' case is that the petitioner No. 2 after filing objection to the assessment appeared before respondent No. 2 on the appointed day and pleaded that no enquiry was held by the assessing authority according to the Rules of the Bengal Municipal Act, 1932. The State Bank of India sent a Memo to the petitioners to the effect that Rs. 5,000/- per month is deposited in the loan amount of the petitioners on ad-hoc basis and the said Memo was also forwarded to the Municipality. If this amount is taken as the basis for, ascertaining annual valuation then the total gross amount would come to Rs. 60,000/- and ultimately according to the provisions of Section 128(1) of the said Act it would be reduced by Rs. 6,000/- plus a further remission of 71/2 per cent of the gross annual return as provided in Section 128(4) of the Act. It is seriously contended by the petitioners that Section 149 of the Act was not complied with for hearing and determination of the valuation. The petitioners stated that even if the value of the building is taken at the annual valuation of Rs. 31,500/-, under no circumstances it would be Rs. 70,000/- which has been arbitrary and exhorbitantly fixed as valuation. It is further stated that the place where the building in question is situated is only 8-feet wide and it cannot fetch more than Rs. 2,500/ - per month as rent. By a notice of demand dated 17th September, 1985 the Nabadwip Municipality directed the petitioners to pay Rs. 7,000/- as lax for the first quarter 1985-86 upon an annual valuation of Rs. 70,000/- and hence the writ petition.
4. The respondents Nos. 1 and 2 by an Affidavit-in-Opposition stated that the writ petition is not maintainable because the petitioners duly availed of the statutory remedy of review and were afforded relief by the Assessment Review Committee. As in the instant writ petitions some highly disputed questions of fact have been raised those cannot be decided without taking evidence and are not amenable to the high prerogative writ jurisdiction of the High Court because the Hon'ble High Court would not be in a position to review what should be reasonably expected as rent from particular building or evaluate the circumstances for determination of fair rent and adjudicate as to the correctness of determination made by the Assessment Review Committee. It is further stated in the said Affidavit that in the year 1977-78 according to the Assessment Register of the Municipality the concerned holding consisted of two blocks and the annual valuation was Rs. 300/- only. In 1983-84 the annual valuation was brought down on re-determination to Rs. 120/-. By creating a mortgage of the property in question the petitioners borrowed a sum of Rs. 3.50 lakhs from the State Bank of India for the construction of a three storied building and let out the said building to the said Bank as its Nabadwip Branch. The sub-Assistant Engineer (I) of the Municipality inspected the building, took measurement and submitted a detailed report which is stated in the said Affidavit. The Sub-Assistant Engineer (I) by Memo dated 26th November, 1984 wrote to the State Bank of India enquiring about the monthly rent and in reply the said Bank by its letter dated 15th December, 1984 informed that an ad-hoc payment of Rs. 5,000/- per month is credited as monthly rent to the account of the owners pending final decision. It is further stated that the new construction enhanced potentially the gross annual rental of the Holding and this relate to re-valuation or re-assessing under Section 138(1)(d) of the Bengal Municipal Act, 1932. Considering the situation, the locality and the amenities provided it was reasonably expected that the building in principle shall fetch a rent of Rs. 10,000/- per month. As such on the basis of Rs. 10,000/-per month i.e. Rs. 1,20,000/- annually the valuation was determined, less the statutory allowance in accordance with the Act and Rules ad accordingly the valuation was determined at Rs. 1,08,120/- by the Commissioners of the Municipality at their meeting held on 26th February, 1985. On receiving the Notice dated 19th April, 1985 regarding the enhanced valuation as indicated hereinbefore the petitioners preferred review of their case under Section 148(1) of the Act. On the basis of the said objection, the Assessment Review Committee gave a personal hearing to the ion is to be levied under Section 124 of the Act and as such the consolidated rate conies to Rs. 28,000,'- annually or Rs. 7,000,,'- quarterly, and the aforesaid valuation came into effect from first quarter of 1985-86. It is further stated that no alternative procedure of determining annual valuation can be applicable in the instant case except reasonably expected rental of the building.
5. By a Supplementary Affidavit the Nabadwip Municipality stated that during the hearing of this case on 12th January, 1989 a question arose as to the exact amount of monthly rent that was finally settled between the parties in respect of the said building. On enquiry the Municipality came to know from the Bank by the Branch Manager's letter dated 21 st January, 1989 that with effect from 3rd December, 1985 the rent is paid at the rate of Rs. 6,716/- per month after deducting the water charges. From the said letter of the Bank it appears that from the said amount an interest of Rs. 3,500/- is recovered per month.
6. In the Affidavit-in-Reply the petitioners stated that no notice under Section 138(2) of the Act was ever served upon them and if any enqiry was made the same was done at their back contrary to the principles of natural justice; the Municipality did not allow any opportunity to the petitioners to produce evidence before it or did not give any hint as to the information obtained from the State Bank of India secretly. Had the Municipality allowed the opportunity to the petitioners, they could have cited several instances of comparable holdings to ascertain the valuation of the Holding in question. The decision of the Municipality relating to the fair rent upon which the valuation has been assessed is made without any material on records and without enquiry as required under Section 149(2) of the Act. No attempt was made to obtain necessary data of comparable units in the locality for the purpose of coming to a decision as regards the fair rental value of the Holding, The Assessment Review Committee also did not give any notice to the petitioners and no evidence could be adduced nor any enquiry was made. The matter was discussed among the members of the Review Committee and a decision was taken. It has been specifically stated in the said Reply that the petitioners do not earn a single rupee from the building as rent. On the contrary a sum of Rs.6,716/- per month is to be paid to the Bank to square up the monthly instalments. As the entire holding and the construction made thereon has been mortgaged to the Bank there is no financial gain at all and the petitioners deserve sympathetic consideration under Section 141 of the Act.
7. Mr. Majumdar, the learned Advocate appearing for the petitioners, submitted that from the Affidavit-in-Opposition of the Municipality it appers that the assessment of annual valuation commenced on 16th August, 1984 and thereafter the Municipality enquired from the Bank about the monthly rental and on 26th February, 1985 determined the annual valuation at Rs. 1,08,120/- which was subsequently reduced to Rs. 70,000/-. As such the letter of 21st January, 1989 issued by the Bank cannot be taken into consideration for the relevant period of enquiry which was concluded on 22nd July, 1985 and is the subject matter of dispute. Another aspect of the case is that the entire amount received from the Bank was deposited in loan account every month and interest of Rs. 3,500/- was recovered for the loan from the petitioners, he submitted that the rent of Rs. 5,000/- per month was with effect from 1st May, 1985 which continued till December 1985 and the decision was taken on 22nd July, 1985 and as such the rent taken into account cannot be considered as relevant and the assessment of the rent at Rs.6,500/- is wholly unjustified. Mr. Majumdar further submitted that the Assessment Review Committee which considered the case of the petitioners was illegally constituted and had no jurisdiction to decide the matter under Section 149 of the Act. Mr. Biswajit Bhattacharyya, a Commissioner of Ward No. 2, was a member of the Review Committee and he cannot take part under the proviso to section 149(1) of the Act at the hearing and/or determination of the valuation at the Review Committee because he happens to be a Commissioner of the Ward where the property is situated and the decision as such is void.
8. The learned Advocate emphasized that notice under Section 138(2) of the Bengal Municipal Act, 1932 is mandatory in nature. He cited the decision of Municipal Corporation of Greater Bombay v. Royal Western India Turf Club Ltd. which according to
him is applicable in the instant case for the purpose of establishing that profit basis is one of the well-known methods of valuation and may be resorted to for finding out the gross annual rental payable by the hypothetical tenant. Apart from the above decision he also cited the following decisions :--
(i) Govind Lal Chaggan Lal Patel v. The Agril. Produce Market, ; (ii) Municipal Council, Khurai v.
Kamal Kumar ; (iii) State of Rajasthan
v. The Mewer Textile Mills Ltd., ; (iv)
Commrs. of Asansol Muni- cipality v. Kinema Industries Pvt. Ltd. ; (v) Sharifuddin v. Abdul Gani Lone
; (vi) Devan Daulat Ray Kapoor v. New
Delhi Municipal Committee ; and (vii)
9. Mr. Roy, the learned Advocate appearing for the Nabadwip Municipality, submitted that as the two petitions are taken up analogously for hearing and both of them are based on the same cause of action and the reliefs claimed therein are identical and also the deponent of both the writ petitions is one and the same person Mihir Mohan Chatter-jee, as such the writ petitioners are debarred from seeking any relief because Mihir Chatterjee has made an averment in paragraph 12 of the writ petition being C.R. No. 14079 (W) of 1985 whereas a contradictory statement has been made by him in C. O. No. 9136 (W) of 1986 in paragraph 15. In the former, the said deponent who is petitioner No. 2 said that after filing objection he appeared before the Chairman of the Municipality whereas in the latter where the said Mihir Chatterjee is the sole petitioner stated that no opportunity was offered for hearing. The petitioners who have not come to the Court with clean hands do not deserve any relief. He further submitted that from the Affidavit-in-Opposition in the writ petition of 1985 the petitioners admitted to have borrowed a sum of Rs.3.50 lakhs from the State Bank of India and on ascertaining it was revealed from the Bank that the sum of Rs.5,000/- per month was credited as rent to the account of the owners. The reasonably expected rent of the building was taken at Rs. 10,000/- and after allowing statutory deduction the annual valuation stood at Rs. 1,08,120/-. Thereafter the petitioners filed objection and after affording personal hearing to one of the petitioners Mihir Chatterjee the Assessment Review Committee brought down the valuation to Rs. 70,000/- only and thereby the Committee went by the Fair Rent and not by the reasonably expected rent that the State Bank of India has been paying since December 1985 at Rs. 6,716/- per month after deducting water charges and this clearly establishes that the actual rent ultimately settled down between the parties is the said Rs. 6,716/- as fair rent which falls below the expected rent of Rs. 10,000/- per month. He further submitted that Rule 13 of the Assessment Rules lays down the procedure for determining the gross annual rental of a Holding and the Assessment Review Committee generally follows the procedure laid down in Rule 8. In case there is absence of strict compliance of Rule 8 that does not vitiate its decision. He said that in the instant case the petitioners have not alleged that there is a similar three storeyed building in the vicinity for a comparable valuation. The question of applying Rule 8(b) of the Assessment Rules does not arise in the instant matter. In this connection Mr. Roy also referred to Section 8(1)(d) of the West Bengal Premises Tenancy Act, 1956. He contended that the allegation of the petitioners that the Review Committee did not hold any enquiry under Section 149(2) of the Act is wholly unsound because taking of evidence and the inquiry to be made are entirely left to the discretion of the Review Committee and as the members of the Committee are elected representatives of the people so from their experience they dispose of such applications. Mr. Roy distinguished some of the decisions cited on behalf of the petitioners and further relied upon the following decisions :-- (a) P. Kasilingam v. P. S. G. College of Technology ; (b)
Satyanarayan Laxmi-narayan Hegde v. Mallikarjun Bhavanappa Tirumale ; and (c) Smt. Ujjam Bai v. State of Uttar
Pradesh, reported in AIR 1962 SC 1621.
10. Considering the facts of the case and the submissions made by the learned Advocates of the parties, it appears that the assessment of the annual valuation in respect of the Holding in question has not been made strictly in accordance to the various provisions of the Bengal Municipal Act, 1932 and Rules thereunder as well as the various decisions on the point relating to the particular nature of this case. The building was mortgaged for a sum of Rs.3.50 lakhs bor- rowed from the State Bank of India, Nabadwip Branch, and from that money the three storeyed building was constructed the assessment of which is the subject matter of the writ petition. The Bank used to pay Rs. 5,000/- per month as rent and the said Amount was credited in the loan account of the petitioners for realisation of monthly instalment of Rs. 6,716/- and this amount included an interest of Rs. 3,500/-. This means that actually a sum of Rs. 3,216/- was paid by the Bank towards the rent. The entire building is hypothecated to the State Bank of India for the loan taken. It further appears from the letter of the Bank dated 21st January, 1989 that initially the Bank used to pay Rs. 5,000/- per month on ad hoc basis from 1st May, 1984 but from 3rd December, 1985 the rent was fixed at Rs.6,716/- after deducting water charges. It is a fact that the Municipality assessed the monthly rental expected from the building at Rs. 10,000/ -per month much in excess even if the actual payment by the Bank towards the rent is taken into consideration and on that basis fixed the valuation under Section 138(1)(cc) at Rs. 1,08,120/- at the meeting of the Commissioners held on 26th February, 1985. The petitioners preferred an application for review under Section 148(1) of the Act and the Assessment Review Committee reduced the amount of annual valuation to Rs. 70,000/-. The petitioners have contended that the proviso of Section 149(1) of the Act was not complied with as in the said Committee one Biswajit Bhattacharyya, a Commissioner of Ward No. 2, in which the property is situated was present and according to the Proviso no Commissioner of the Ward from which the application is made shall take part in the hearing or determination of such application. This, in the submission of the petitioners, vitiates the decisions of the Assessment Review Committee. The Municipality has contended that the building is situated in Ward No. 13 and not in Ward No. 2. But the Municipality has failed to produce any document to substantiate this claim and failed to refute the allegation of the petitioners save and except making oral arguments. The Municipality did not produce a chit of paper as to who and on what basis and enquiry the Municipality has come to the alleged determination of the annual valuation. It is the specific case of the petitioners that no notice under sub-section (2) of Section 138 of the Act was given and even if any enquiry was made by the Municipality the same was done at their back. The Review Committee did not give any opportunity to the petitioners to adduce any evidence nor made any enquiry but decided the valuation on the basis of papers before it. The contention of the Municipality that Mihir Chatterjee's averments in the two writ petitions differed does not hold good because the statements differ so far as the notice under Section 128 of the Act is concerned and it cannot be inferred from the averments that he refers to the notice by which the objection is filed. His statement in paragraph 12 of the writ petition of 1985 is that no enquiry by the Assessing Authority was conducted with any notice tallies with paragraph 15 of the writ petition of 1986 where he says that no notice was, issued to the petitioners before enquiry. There is not much of difference between the two paragraphs in the two writ petitions.
11. It will be better to come direct to the point involved in the writ petitions. It is an admitted position that the property in question in respect of which the annual assessment has been made had been hypothecated with the State Bank of India for the loan taken from the Bank and the entire amount paid as rent by the Bank, whatever be the quantum, is credited to the account of the petitioners but actually adjusted towards the payment of the instalments of the loan. In respect of hypothetical tenant a principle has been laid down in the case of Municipal Corporation of Greater Bombay v. Royal Western India Turf Club Ltd. (supra) wherein it was held by the Supreme Court that it was true that the net rateable value calculated after deducting expenses would be less than the actual rent but the rateable value need not always be equal to the actual rent. It was held by the Supreme Court in this case that though the net rateable value as calculated by the Bombay High Court is Rs. 1,94,175/- but the rateable value need not always be equal to the actual rent. The Supreme Court observed that the measure is what a hypothetical tenant is expected to pay taking the property as it exists with all its privileges, advantages and burdens. If this principle applies then the rateable value of the property in question will be much less than the actual rent payable by the Bank. The principles laid down in the aforesaid case is applicable in the instant writ applications for the purposes of establishing that profit basis is one of the methods of valuation and may be resorted to for finding put the gross annual rental payable by the hypothetical tenant. This decision of the Supreme Court has been relied on by the Division Bench of Calcutta High Court presided over by M. N. Roy, J. In the case of Commrs. of Asansol Municipality v. Kinema Industries Pvt. Ltd. (supra) and dealt with in detail in paragraph 14 thereof. The Division Bench felt after taking into consideration Rule 8 of the Rules prescribing the procedure to be followed by an Assessor of Municipal taxes appointed under the Act and by the Assessment Review Committee as framed under Section 215 (a) and (b) of the Bengal Municipal Act, 1932 and also after considering the decision of the Municipal Corporation of Greater Bombay (supra) that net profit would be a proper and
relevant test in appropriate cases. The Supreme Court specifically held in the case of Devan Daulat Ray Kapoor (supra) that it is immaterial whether the landlord is receiving a higher rent. The Supreme Court held that even in a case of a building in respect of which no standard rent has been fixed with the result that the landlord is lawfully entitled to continue to receive the contractual rent, the annual rent must be limited to the measure of standard rent and cannot be determined on the basis of the higher rent actually received by the landlord from the tenant. In the case of Dr. Balbier Singh v. M/s. M. C. D., (supra) the Supreme Court followed the
principle as laid down in the aforesaid case of Devan Daulat Ray Kapoor (supra) and added that the test is not what is the standard rent of the building but what is the rent which the owner reasonably expects to receive from a hypothecated tenant and such reasonable expectation can in no event exceed the standard rent though it may in a case be lowered than standard rent. The case of Municipal Council, Khurai v. Kamal Kumar, (supra) has been cited to bring home the point that in writ jurisdiction the High Court can interfere to grant relief to a party if it thinks proper to do so in the circumstances of the case even if an alternative remedy is left open to the aggrieved party.
12. Four decisions have been cited on behalf of the Municipality in support of the determination of the annual valuation. The decision in P. Kasilingam v. P. S. G. College of Technology
(supra) has been cited to silence this Court in embarking upon an enquiry into the facts of the case on merits of controversy and to bring home the point that only the Municipal authorities are competent to draw their conclusions on the annual valuation. Again the decision of Satyanarayan Laxminarayan Hedge (supra) reminds
this Court the limitation of its power that only an apparent error on face of record can be interfered with under Article 226 of the Constitution and not otherwise. A 7-Judge decision reported in AIR 1962 SC 1621 (supra) per Majority Judgment held that if there is no violation of any fundamental right no writ petition was maintainable. There are well-known principles of law and do not require any citation on the point. None of the decisions cited by Mr. Roy for the Municipality help his clients so far the question involved in this writ petition is concerned. His attempt to distinguish the various decisions cited on behalf of the petitioners does not go a long way in consolidating the case of the Municipality as almost all the decisions cited by the petitioners directly help them in support of their contentions.
13. An attempt has been made by Mr. Roy to establish that the notice under subsection (2) of Section 138 of the Bengal Municipal Act is directory in nature and not mandatory. The sub-section (2) of Section 138 of the Act is quoted as follows :-- "The Commissioners shall give at least one month's notice to the recorded owner or owners or occupier or occupiers of any alteration which the Commissioners propose to make under clauses (a), (b), (cc), (ccc), or (d) of subsection (1) and of the date on which the alteration will be made". The test to determine whether the interpretation of Section 138(2) of the Act and particularly the use of the word 'shall' is mandatory or directory should be gathered not merely from the word used but by the intention of the Legislature and other circumstances and considerations. Here the use of the word 'shall' indicates that the Legislatures has used it as a language of compulsive force and it is of great relevance in the context of this Section. In this connection the test of determination as laid down in (supra) is of importance. The
aforesaid decision as to the mandatory rule and directory rule of a provision is explained out more clearly in (supra)
where the Supreme Court pointed out the difference between a mandatory rule and a directory rule that while the former must be strictly observed, in the case of the latter, substantial compliance may be sufficient to achieve the object regarding which the rule is :nacted. Whenever a statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to a specific consequence, it would be difficult to hold that the requirement is not mandatory and the specified consequence would not follow. In the Section under discussion one month's notice has been made compulsory for any alteration which the Commissioners propose to make under clauses (cc), (ccc) and (d). If Section 138( 1) & (2) are read together it will be clear that the statute in principle prescribes a particular act to be performed in a particular manner and indicates that the failure to comply with the said requirement of notice would lead to a specific consequence which in that case would be arbitrary revaluation or re-assessment or arbitrary increasing the valuation and assessment. As such the provision of Section 138(2) must be treated as mandatory in nature. Maxwell's Interpretation of Statutes while dealing with Imperative or Directory aspects says as under :-- "What intention is to be attributed by inference to the legislature? Where, indeed, the whole aim and object of the legislatuft would be plainly defeated if the command to do the thing in a particular manner did not imply a prohibition to do it in any other, no doubt can be entertained as to the intention", and then "Where powers, rights or immunities are granted with a direction that certain regulations, formalities or conditions shall be complied with it seems neither unjust nor inconvenient to exact a rigorous observance of them as essential to the acquisition of the right or authority conferred, and it is therefore probable that such was the intention of the legislature" (11th Edition, 1962, pp. 362, 364). When read in the background of Maxwell's words as well as the two decisions of the Supreme Court it becomes crystal clear that the notice under Section 138(2) of the Bengal Municipal Act, 1932 is mandatory in nature and must be complied with otherwise the assessee shall suffer irreparable loss and injury and the whole exercise will become arbitrary.
14. In the light of the discussion made hereinbefore I am compelled to come to the conclusion that the annual assessment of Rs. 70,000/- made in respect of the Holding in question is absolutely arbitrary in nature and contrary to the provisions of law as discussed hereinbefore. This valuation cannot stand as the same is based on wrong footings and the data is derived ex parte at the back of the petitioners. Even the Assessment Review Committee did not go into the facts and circumstances of the case properly and did not scrutinise the basis upon which the annual valuation should be made.
15. In the circumstances the annual valuation Rs. 70,000/- in respect of the Municipal Holding No. 10-B/1, Sreebas Angan Road, Nabadwip, in the District of Nadia as determined by Assessment Review Committee is hereby quashed and also the notice of demand dated 17th September, 1985 for realisation of Rs. 7,000/- as tax of first quarter of 1985-86 in respect of the said Holding is set aside. The respondents Nos. 1 and 2 are directed to make a fresh assessment of the Holding in question Strictly in keeping with the provisions of the Bengal Municipal Act, 1932 and Rules thereunder and the observations made in this judgment after giving full opportunity of hearing to the petitioners or their duly authorised representative who shall be at liberty to produce any documents or papers f,or the perusal of the authorities. Immediate steps must be taken to implement this order and the fresh assessment must be completed within 31st July, 1990.
16. The Rule is made absolute. The Civil Order is also disposed of accordingly. There will be no order as to costs.
17. If urgent certified copy is applied for, the same be expeditiously given.
18. Order accordingly.