Property Owners Association vs State of Maharashtra

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2019 Supreme(Bom) 680

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
A.S. OKA, RIYAZ I. CHAGLA, JJ.
Property Owners Association and Others - Appellant
Versus
State of Maharashtra and Others - Respondent
Writ Petition No. 2592, 1278, 1812 of 2013, 142 of 2014, 228 of 2014, 234 of 2014, 322 of 2014, 539 of 2014, 754 of 2014, 758 of 2014, 1076 of 2014, 1262 of 2014, 1348 of 2014, 1524 of 2014, 1695 of 2014, 1738 of 2014, 1739 of 2014, 1755 of 2014, 1756 of 2014, 1766 of 2014, 1767 of 2014, 1772 of 2014, 1774 of 2014, 1775 of 2014, 1781 of 2014, 1782 of 2014, 1783 of 2014, 1784 of 2014, 1785 of 2014, 1786 of 2014, 1788 of 2014, 1789 of 2014, 1790 of 2014, 1791 of 2014, 1792 of 2014, 1793 of 2014, 1807 of 2014, 1832 of 2014, 1843 of 2014, 1917 of 2014, 1943 of 2014, 2184 of 2014, 2248 of 2014, 2266 of 2014, 2389 of 2014, 2392 of 2014, 2393 of 2014, 2396 of 2014, 2397 of 2014, 2398 of 2014, 2399 of 2014, 2401 of 2014, 2468 of 2014, 2528 of 2014, 2659 of 2014, 2686 of 2014, 2848 of 2014, 2855 of 2014, 2872 of 2014, 118 of 2015, 121 of 2015, 275 of 2015, 696 of 2015, 1045 of 2015, 1197 of 2015, 1200 of 2015, 1214 of 2015, 1223 of 2015, 1253 of 2014, 1472 of 2015, 1488 of 2015, 1512 of 2015, 1622 of 2015, 1624 of 2015, 1906 of 2015, 2089 of 2015, 2118 of 2015, 2205 of 2015, 2310 of 2015, 2465 of 2015, 2751 of 2015, 2777 of 2015, 2834 of 2015, 2839 of 2015, 2881 of 2015, 2922 of 2015, 62 of 2016, 90 of 2016, 129 of 2016, 438 of 2016, 872 of 2016, 1063 of 2016, 1199 of 2016, 1672 of 2016, 1983 of 2016, 2375 of 2016, 40 of 2017, 315 of 2017, 916 of 2017, 1019 of 2017, 1629 of 2017, 2087 of 2017, 2369 of 2017, 656 of 2018, 1277 of 2018, 1297 of 2018, 1671 of 2018, 1791 of 2018, 2552 of 2018, 3115 of 2018; Writ Petition (Ldg) No. 2393 of 2018, 2482 of 2018 4394 of 2018; Public Interest Litigation No. 46 of 2014; Notice of Motion (Ldg) No. 130 of 2015, 795 of 2015; Notice of Motion No. 272 of 2018, 376 of 2018, 283 of 2017
Decided On : 24-04-2019

Advocates Appeared:
Rafiq Dada, Adv., H. Daruwalla, Adv., H.N. Vakil, Adv., Mulla & Mulla, Adv., Jehangir Jeejeebhoy, Adv., Bharucha & Partners, Adv., Sandeep Jalan, Adv., Akshay Patil, Adv., Mandar Soman, Adv., A.R. Vaidya & Co, Adv., Zaid S Ansari, Adv., Mangesh Kokare, Adv., Deep Morabia, Adv., Karl Tamboly, Adv., Vaibhav Sugdare, Adv., Samsher Gharud, Adv., Radhika Nair, Adv., Jaykar & Partners, Adv., S.K. Kapoor, Adv., Mulla & Mulla & Craigie Blunt & Caroe, Adv., Rajesh Satpalkar, Adv., Shaheen Moghul, Adv., Kirtida Chandarana, Adv., Manasi Kalvit, Adv., Mahernosh Humranwala, Adv., Prateeti Thakar, Adv., Shubham Mittal, Adv., Ff & Associates, Adv., Milind Sathe, Adv., H. Devrajan, Adv., T.C. Deshpande, Adv., V.B. Dhawan, Adv., Vishal Kanade, Adv., Yasmin Bhansali, Adv., Kahmish Khan, Adv., Yasmin Bhansali & Co, Adv., Swapnil Gupte, Adv., Argus Partners, Adv., R.A. Dada, Adv., Rashmin Khandekar Shailesh Mendon, Adv., Smruti Kanade, Adv., Negandhi Shah & Himayatullah, Adv., Balakrishna Adyanthaya, Adv., N.A. Pathan, Adv., Sanjiv Sawant, Adv., S.U. Kamdar, Adv., Yashesh Kamdar, Adv., Niyathi Kalra, Adv., Rujuta Patil, Adv., Negandhi Shah & Himayatulla, Adv., R.M. Nakhwa, Adv., Vasant Dhavan, Adv., Aniketh Nair, Adv., Mustafa Motiwala, Adv., B.H. Antia, Adv., J. Shah, Adv., Saket Mone, Adv., Neha Joshi, Adv., Subit Chakraborti, Adv., Vidhii Partners, Adv., Zubair Dada, Adv., Kathleen Lobo, Adv., Aastha Arora, Adv., Khaitan & Co, Adv., Jagdish Reddy, Adv., Arvind D Aswani, Adv., Nilima V Sangvikar, Adv., Samshed Garud, Adv., Bijal Gandhi, Adv., Hormaz Daruwala, Adv., Amruta A Sawant, Adv., Sonal Doshi & Co, Adv., Amit Khairnar, Adv., Toufiq Kapadia, Adv., Prasad Dhande, Adv., T. Kapadia, Adv., Shahazad Irani, Adv., D.H. Law Associates, Adv., Smisha Patel, Adv., Wadia Ghandy & Co, Adv., Virag Tulzapurkar, Adv., Nikhil Apte, Adv., Akshit Dedhia, Adv., Sowmya Srikrishna, Adv., Jasmine Kachalia, Adv., Abinash Pradhan, Adv., A.G. Damle, Adv., Ranjieev Carvalho, Adv., Akanksha Patil, Adv., Shah Legal, Adv., Zainul Badami, Adv., Huda Diamondwala, Adv., Diamondwala & Co, Adv., Bhushan Deshmukh, Adv., R.K. Satpalkar, Adv., Sanjay Kadam, Adv., Apeksha Sharma, Adv., Sanjeel Kadam, Adv., Sayli Rajpurkar, Adv., Kadam & Co, Adv., Jayom M Shah, Adv., Pooja Shroff Dhandhukia, Adv., Shweta Rankhambe, Adv., Aagam Doshi & Co, Adv., Chintan Thakker, Adv., Anilkumar Joshi, Adv., B.N. Shukla, Adv., D.J. Kamdin & Co, Adv., Pushpa Thapa, Adv., Kavita Shah, Adv., Prachi Khandge, Adv., M.P. Vashi & Associates, Adv., Makarand Raut, Adv., Hima Khuman, Adv., G.B. Walawalkar, Adv., S.P. Thorat, Adv., Nikhil Patil, Adv., V.P. Sawant, Adv., Jimmy Pochkhanawalla, Adv., V. Sridharan, Adv., S.S. Pakle, Adv., J.J. Xavier, Adv., S.M. Modle, Adv., Pallavi Thakar, Adv., Rupali Adhate, Adv., A.A. Kumbhakoni, Adv., G.W. Mattos, Adv., Ashutosh Kulkarni, Adv., Gaurav Sharma, Adv., G.R. Shastri, Adv., A.L. Patki, Adv., Milind More, Adv., H.S. Venegaonkar, Adv., Uma Palsule-Desai, Adv., M.A. Sayed, Adv., L.T. Satelkar, Adv., Kedar Dighe, Adv., Dushyant Kumar, Adv., R.J. Mane, Adv., Jyoti Chavan, Adv., U.S. Upadhyay, Adv., Amar Mishra, Adv., S.B. Gore, Adv., Manish Upadhyay, Adv., Amit Shastri, Adv., V.P. Kakade, Adv., Akanksha Kalyanpur, Adv., Samarth Patel, Adv., Sahil Gandhi, Adv., Rishi Jha, Adv., Markand Gandhi & Co, Adv., Rajiv Chavan, Adv., D.P. Singh, Adv., Yashodee Deshmukh, Adv.

JUDGMENT :

A.S. OKA, J.

1. By an administrative order dated 31st May 2018 passed by the Hon'ble the Acting Chief Justice, this group of writ petitions has been assigned to this Bench.

OVERVIEW

2. In the State of Maharashtra, there are three main legislations concerning municipalities. The first is the Mumbai Municipal Corporation Act, 1888 (for short "the BMC Act"), the second is the Maharashtra Municipal Corporations Act, 1949 and third is the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965. These laws governing the municipalities provide for imposition of various taxes including the property tax on buildings and lands which include general tax, water tax, water benefit tax, sewerage tax, sewerage benefit tax, street tax etc. These enactments earlier provided for levy of property tax on the basis of certain percentage of rateable value of the buildings or lands. The basis for determination of rateable value as provided in the aforesaid enactments was the annual rent for which such buildings or lands might reasonably be expected to let from year to year. The rateable value was arrived by deducting 10% from annual rent. This deduction is on account of allowances for repairs or on any other account whatsoever. In the State, there were always various Rent Control Legislations right from the year 1939. Different legislations were applicable to different areas. There are decisions of the Apex Court holding that the annual rent calculated for the purpose of arriving at rateable value cannot exceed the standard rent as determined in terms of the Rent Control Legislations wherever it was applicable. With effect from 31st March 2000, all Rent Control Acts applicable to the State have been repealed and the Maharashtra Rent Control Act, 1999 has been brought into force which is applicable throughout the State. Perhaps, the restriction imposed in the form of upper limit on the annual rent for the purpose of determination of rateable value created certain difficulties in municipal administration. The standard rent was pegged down to a particular date under the Rent Control Legislations and, in the meanwhile, the municipal expenditure went on increasing.

3. It appears that the Municipal Corporation of Brihan Mumbai (for short "BMC") which was established under the BMC Act appointed Tata Institute of Social Sciences (for short "TISS") 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. TISS studied the practice followed in developing countries. Based on the recommendations of TISS, the BMC Act was amended by the Maharashtra Act No.XI of 2009. The amendment incorporated an option 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. Corresponding amendments were made to various provisions of the BMC Act. We have adverted to the said provisions in subsequent paragraphs of the judgment. The bill of Maharashtra Act No.XI of 2009 was introduced in the State Legislature in the year 2006. A part of the said Act No.XI of 2009 came into force with effect from 1st April 2010 and remaining part came into force on 26th August 2010. The objects and reasons appended to the said bill are relevant which read thus:

"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 r

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2019 Supreme(Bom) 680

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