CIVIL APPELLATE JURISDICTION : Civil Appeal No. 462 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 appellant. M. C. Chagla and I. N. Shroff, for the respondent.’ The Judgment of the Court was delivered by Ramaswami, J.-The question of law involved in this appeal is whether the primary liability is imposed on the appellant under the Bombay Municipal Corporation Act, 1888 (Act No. 3 of 1888) to pay property taxes to the respondent i.e., the Municipal Corporation of Greater Bombay in respect of landowned by the appellant and let on a monthly basis to a third party who has constructed a building thereon. The appellant is a banking company incorporated in the United Kingdom and has established places of business in India. The appellant is the sole trustee of the estate of the late Mr. F. E. Dinshaw and in that capacity is the owner of a plot of land at Manchubhai Road, Malad, Greater Bombay in the State of Maharashtra, bearing No. P-Ward No. 6418, Street No. 299B. The said plot of land had been leased by the former trustee of the estate to one Mr. R.-R. Pande Thereinafter referred to as the lessee) since a number of years at a monthly rent of Rs. 12-50. The lessee had constructed at his own cost a tiled house on the said plot of land. The Malad area merged into Greater Bombay on 1st February, 1957. Upto the date of the merger the Malad District Municipality was. assessing and levying taxes on the land and the structure separately and recovering the same from the landlord and the tenant. After the merger, the Bombay Municipal Corporation issued a notice to the appellant under section 167 of the Act informing him that the assessment book had been amended by inserting, the name of the appellant and that the rateable value of the house had been fixed at Rs. 430/-. Being aggrieved by this order the appellant preferred an appeal to the Chief Judge Small Causes Court, Bombay under section 217 of the Act. The appeal was dismissed by the Chief Judge, Small, Causes Court by his order dated 3rd August, 1960. The appellant took the matter in further appeal to the Bombay High Court. The appeal was heard by Mr. Justice Patel and was dismissed on the 14th January, 1964. The learned Judge felt that he was bound by the decision of Chagla, C.J. and Shah, J. in , Ramji Keshavji v. Municipal Corporation for Greater Bombay(1). The appellant thereafter preferred a Letters Patent Appeal No. 28 of 1964 which was summarily dismissed by Chief Justice H. K. Chainani and Mr. Justice Gokhale on 25th March, 1964. The present appeal is brought by special leave from the judgment of the Bombay High Court dated 25th March, 1964. Section 3(r) of the Bombay Municipal Corporation Act, 1888 (Act, No. 3 of 1888) (hereinafter called the Act) defines ’land’ as including "land which is being built upon or is built upon or covered with water......... Section 3(s) defines ’buildings’ as including a house, out-house, stable, shed, hut and every other such structure, whether of masonry bricks, wood, mud, metal or any other material whatever. Section 3(gg) defines ’Premises’ as including messages, buildings and lands of any tenure, whether open or enclosed, whether built on or not and whether public or private. Section 140 states :
"140. The following taxes shall be levied on
buildings and lands id Greater Bombay and
shall be called "property taxes", namely:-
(a)a water tax of so many per centum of
their rateable value as the corporation shall
deem reasonable for, providing a water-supply
for Greater Bombay.
(b)a halalkhor-tax of so many-per centum,
not exceeding five of their rateable value as
will, in the opinion ofthe corporation,
suffice to provide for the collection, removal
and disposal, by municipal agency, of all
excrementitious and polluted matter from
privies, urinals and cesspools and for
efficiently maintaining and repairing the
municipal drains, constructed or used for the
receiptions or conveyance of such matter,
subject however, to the provisions that the
minimum amount of such tax to be levied in
respect of any one separate holding of land,
or of any one. building or of any one portion
of a building which is let as a separate
holding, shall (1) 56 Bom. L.R. 11 32.
be six annas per month, and that the amount of
such tax to be levied in respect of any hotel,
club or other large premises may be specially
fixed under section 172;
(c)a general tax of not less than eight and
not more than twenty-six per centum of their
rateable value, together with not less than
one-eighth and not more than three-quarters
per centum of their rateable value added
thereto, in order to provide for the expense
necessary for fulfilling the duties of the
corporation arising under clause (k) of
section 61 and Chapter XIV;
(ca) the education cess leviable under s. 195E;
(d)betterment charges leviable under
Chapter XII-A."
Section 146 provides
"146. (1) Property taxes shall be leviable
primarily from the actual occupier of the
premises- upon which the said taxes are
assessed, if such occupier holds the said
premises immediately from the Government or
from the corporation or from a fazendar.
Provided that the property taxes due in
respect of any premises owned by or vested in
the Government and occupied by a Government
servant or any other person on behalf of the
Government for residential purposes shall be
leviable primarily from the Government and not
the occupier thereof.
(2)Otherwise the said taxes shall be
primarily leviable as follows, namely:-
(a) if the premises are let, from the
lessor;
(b) if the premises are sub-let, from the
superior lessor; and
(c)if the premises are unlet, from the
person in whom the right to let the same
vests.
(3)But if any land has been let for any
term exceeding one year to a tenant, and such
tenant On any person deriving title howsoever
from such tenant has built upon the land, the
property taxes assessed upon the said land and
upon the building erected thereon shall be
leviable primarily from the said tenant or
such person, whether or not the premises be in
the occupation of the said tenant or such
person".
5 6 9
Section 147 states
"147. (1) if any premises assessed to any
property tax are let, and their rateable value
exceeds the amount of rent payable in respect
thereof to the person from whom, under the
provisions of the last preceding section, the
said tax is leviable, the said person shall be
entitled to receive from his tenant the
difference between the amount of the property
tax levied from him, and the amount of which
would be leviable from him it the said tax
were calculated on the amount of rent payable
to him.
(2)If the premises are sub-let and their
rateable, value exceeds the amount of rent
payable in respect thereof to the tenant by
his sub-tenant, or the amount of rent payable
in respect thereof to a sub-tenant by the
person holding under him, the said tenant
shall be entitled to receive from his sub-
tenant or the said subtenant shall be entitled
to receive from the person holding under him,
as the case may be, the difference between any
sum recovered under this section from such
tenant or sub-tenant and the amount of
property-tax which would be leviable in
respect of the said premises if the rateable
value thereof were equal to the difference
between the amount of rent which such tenant
or subtenant receives and the amount of rent
which he pays.
(3)Any person entitled to receive any sum
under this section shall have, for the
recovery thereof, the same rights and remedies
as if such sum were rent payable to him by the
person from whom he is entitled to receive the
same".
Section 154(1) enacts as, follows
"In order to fix the rateable value of any
building or land assessable to a property-tax’
there shall be deducted from the amount of the
annual rent for which such land or building
might reasonably be expected to let from year
to year a sum equal to ten per centum of the
said annual rent and the said deduction shall
be in lieu of all allowances for repairs or on
any other account whatever".,
Section 155 enacts
"155. (1) To enable him to deter-mine the
rateable value of any building or land and the
person primarily liable for the payment of any
property tax leviable in respect thereof the
Commissioner may require the owner or occupier
of such building, or land, or of any portion
thereof, to furnish him, within such
reasonable period
as the Commissioner prescribes in this
behalf, with in formation or with a written
return signed by such owner or occupier-
(a)as to the name and place of abode of the
owner or occupier, or of both the owner and
occupier of such building or land; and
(b)as to the dimensions of such building or
land, or of any portion thereof, and the rent,
if any, obtained for such building, or land,
or any portion thereof.
(2)Every owner or occupier on whom any such
requisition is made shall be bound to comply
with the same and to give true information or
to make a true return to the best of his
knowledge or belief.
(3)The Commissioner may also for the
purpose aforesaid make an inspection of any
such building or land".
Section 156 states
"The me Commissioner shall keep a book, to be
called "the assessment book" in which shall be
entered every official year-
(a)a list of all buildings and lands in
Greater Bombay distinguishing each either by
name or number, as he shall think fit;
(b)the rateable value of each such building
and land determined in accordance with the
foregoing provisions of this Act-
(c)the name of the person primarily liable
for the payment of the property taxes, if any,
leviable on each such building or land....... It was contended by Mr. Khambatta that on a proper construction of section 146(2) of the Act there should, have been separate assessments in respect of the building and the land in the present case. It was argued in the alternative that even if section 146(2) of the Act contemplates a compo site assessment of the building and the land, the primary liability should be imposed upon the owner of the building and not on the owner of, the land. It was said that the right to let the building vests in the lessee of the land and not in the appellant, and so, the primary liability was upon the lessee under section 146(2) of the Act. The argument was pressed that the appellant cannot be treated as a lessor under section 146(2) of the Act,, because the appellant has not let the land with the building thereon as one-unit to the lessee. The opposite viewpoint was presented on behalf of the respondent. It was, argued, in the first place, that section 146(2) of the Act contemplates that there should be a composite assessment of the land and the building taken as one unit. In the case of such a composite assessment, the primary liability of the payment of tax was on the landlord under sub-section (2)(a) of section 146 except in the case, referred to in sub-section (3) where the primary liability was-upon the tenant and not upon the landlord. Admittedly, the present case did not fall under section 146(3), and, therefore,. the primary liability was placed upon the appellant. In our opinion, the argument put forward on behalf of the respondent is well-founded and must be accepted as correct. In the first place, the language of section 146(2) indicates that the Legislature contemplated that in a case where the land and the building are owned by different persons there should be a composite assessment of property tax. The reason is that in section 146(1) and (2) the word premises’ is used in contrast to section 146(3) where the words ’land and building’ are separately mentioned. In section 154(1) of the Act again, the Legislature uses the expression ’building or land’. Then section 155 provides for the right of the Commissioner to call information from the owner or the occupier in order to enable him to determine the rateable value of ;any building or land and the person primarily liable for the payment of any property, tax levied in respect thereof. Section 156 provides that the Commissioner shall maintain a book to be called ’the assessment book’ which book is to contain among other things a list of all lands and buildings. Therefore, the scheme of section 146 is that, when the land is let and the tenant has built upon the land, there should be a composite assessment of tax upon the land and building taken together. We are further of opinion that in the case of such a composite unit the primary liability of assessment of tax is intended to be on the lessor of the land under; section 146(2)(a) of the Act. It was objected by Mr. Khambatta that the appellant was only the lessor of the land and not of the building, and so, the appellant cannot be held to be the lessor within the meaning of section 146(2) (a). ’We do not think that there is any merit in this objection. Section 146(3) of the Act furnishes the key to the interpretation of section 146(2)(a), in the context of section 146(3) the lessor of the premises as mentioned in section 146(2)(a) must be construed as to mean the lessor of the land on which the building has been constructed by the tenant. In this connection, reference should be made to section 147 which provides for an apportionment of responsibility for property tax when the premises assessed are let or sub-let. The language of this sub-section sugge sts that the lessor of the land has the right of recovering from his tenant the amount of tax which he has paid in excess, of the tax which the property is liable to pay on the basis of the rent recovered by the lessor. It is also clear that the intention, of the Legislature in fixing the primary liability of property tax upon the owner of the land in a case not falling under s. 146(3) of the Act is to facilitate the collection of, property tax. In the, case of a monthly tenant who puts up a temporary shack or asbestos shed on the land and who may at any time terminate the lease at a short notice, it is not always possible for the Corporation to keep track of the lessee and to collect the property tax from him. It is not unreasonable therefore that in a case of this description the Legislature should impose the primary liability for the payment of the property tax upon the lessor of the land and to give him the right of recoupment under section 147. A similar view with regard to the interpretation of section 146, of the Act was expressed by a Division Bench of the Bombay High Court consisting of Chagla, C.J. and Shah, J. in Ramji Keshavji’s(1) case. It was held by the learned judges in that case that where the owner of a land had leased it to a tenant for a period of one year and the tenant had put up a structure upon the land, the owner of the land was primarily liable to pay property tax together with the structure constructed thereon. Counsel on behalf of the appellant challenged the correctness of this decision, but for the reasons already expressed we hold that the ratio of this decision is correct. We Shall, however , assume in favour of the appellant that the meaning of section 146 (2) of the Act is obscure and that’ it is possible to interpret it as throwing the primary liability for payment of property tax upon the lessee who has constructed a, building on the land. Even upon that assumption we think that the view of the law expressed by the Bombay High Court in this case ought not to be interfered with. The reason is that in a case where the meaning of an enactment is obscure, the Court may resort to contemporary construction, that is the construction which the authorities have put upon it by their usage and conduct for a long period of time. The principle applicable is "optima legum interpres est consuetudo" (2). In Ohlson’s case(3), in dealing with the interpretation of section 39 of the Pawnbrokers, Act, 1872, Stephen, J. said :
" What weighs with me very greatly in coming
to the present conclusion is the practice of
the Inland Revenue Commissioners for the past
sixteen years. So long ago as 1874 this very
point was decided by Sir Thomas Henry, for
whose decisions we ’all have very great res-
pect; and the least that can be said with
regard to the (1) 56 Bom. L. R. 11 32. (3) [1891] 1 Q.B. 485, 489. (2) 2 Co. Rep. 8 1. 5 7 3
case before him is that he pointedly called
the attention of the commissioners to the
case-the learned magistrate having offered to
state a case-an offer refused by the
,commissioner, who by their refusal must be
taken to have acquiesced in the decision.
’Mat is a very strong contemporaneous
exposition of the meaning of the Act". The same principle was referred to by Lord Blackburn in Clyde Navigation Trustees v. Laird(1). The question in dispute in that case was, whether the Clyde Navigation Consolidation Act, 1858 (repealing eight prior Acts) imposed navigation dues on timber floated up the Clyde in logs chained together. From 1858 to 1882 dues had been levied on this class of timber without resistance from the owners; and some judges in the Court of Session suggested that this nonresistance might be considered in construing the statute. On this point Lord Blackburn said .
"I think that submission raises a strong prima
facie ground on which they (the owners) could
not resist, And I think a court should
be cautious, and not decide unnecessarily that
there is no such ground. If the Lord
President (Inglis) means no more than this
when he calls it ’contemporanea exposito of
the statutes which is almost irresistible’, I
agree with him. I do not think that he means
that enjoyment at least for any period short
of that which gives rise to prescription, if
founded on a mistaken construction of a
statute, binds the court so as to prevent it
from giving the true construction. If he did,
I should not agree with him, for whom I know
of no authority, and am not aware of any
principle, for so saying . In our opinion, the principle of contemporanea exposito applies to the present case. The Act was passed in the year 1888 and there appears to be a practice followed by the Bombay Municipal corporation for a very long time of treating the land and the building constructed upon it as single unit and charging the property tax upon the owner of the land in a case where the land is let for a period of less than one year to a tenant who has constructed a building thereon [See Ramji Keshavji’s case(2)]. For the reasons expressed, we hold that there is no merit in this appeal which is accordingly dismissed with costs. R.K.P.S. Appeal dismissed. (1) 8 A.C.658 670. (2) 56 Bom. L.R. 1132. L10Sup./69-2