1990 (12) TMI 332 - SC - Indian Laws

Supreme Court restores Chief Judge's decision on subsidized housing scheme consultation

The Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the decision of the Chief Judge of the Small Causes Court, ... Rateable value determination under Sub-section (1) and Sub-section (3) of Section 154 - recognised scheme of subsidised housing for industrial workers or lower income groups - mandatory nature of statutory consultation in the Explanation to Sub-section (3) - exception to the general rule for fixing rateable value - effect of failure to consult the Corporation on applicability of the exceptionRateable value determination under Sub-section (1) and Sub-section (3) of Section 154 - recognised scheme of subsidised housing for industrial workers or lower income groups - mandatory nature of statutory consultation in the Explanation to Sub-section (3) - effect of failure to consult the Corporation on applicability of the exception - Whether the rateable value of the respondent's building could be fixed under Sub-section (3) of Section 154 despite the State Government's failure to consult the Corporation as required by the Explanation to that Sub-section - HELD THAT: - The Explanation to Sub-section (3) gives the phrase 'recognised scheme of subsidised housing ... as may be recognised by the State Government from time to time after consultation with the Corporation.' Consultation is a procedural safeguard intended to protect the Corporation's financial interests because Sub-section (3) operates as an exception to the general rule under Sub-section (1) and caps rateable value per tenement. Where the exercise or decision (recognition of a scheme) is likely to affect proprietary or financial interests of the body to be consulted, the statutory requirement to consult must be regarded as mandatory. The court examined authorities and administrative-law principles to conclude that the right of the Corporation to be consulted is a substantive safeguard; consultation must genuinely take place on essential points so that the Corporation can express its views, even if those views are not binding on the Government. In the absence of such consultation, the conditions for applicability of Sub-section (3) are not satisfied and the Corporation cannot be compelled to fix the rateable value under that exception; the ordinary rule under Sub-section (1) therefore governs assessment. [Paras 8, 10, 14, 15, 17]Failure of the State Government to consult the Corporation as required by the Explanation renders Sub-section (3) inapplicable and the rateable value must be determined by the ordinary method under Sub-section (1); the High Court's contrary view is set aside and the Chief Judge of the Small Causes Court's decision is restored.Final Conclusion: Appeal allowed; the requirement of consultation in the Explanation to Sub section (3) of Section 154 is mandatory where the Government's recognition of a subsidised housing scheme affects the financial interests of the Corporation; absence of such consultation precludes fixing rateable value under Sub section (3), and the matter is to be assessed by the general rule under Sub section (1). Issues Involved:1. Determination of rateable value under Sub-section (1) or Sub-section (3) of Section 154 of the Bombay Municipal Corporation Act, 1888.2. Applicability of the 'Government Subsidised Scheme for Industrial Workers' and its recognition.3. Mandatory nature of consultation with the Corporation as per the statutory requirement.Detailed Analysis:1. Determination of Rateable Value:The core issue in this case is whether the rateable value of the respondent's building, constructed under the 'Government Subsidised Scheme for Industrial Workers,' should be determined under Sub-section (1) or Sub-section (3) of Section 154 of the Bombay Municipal Corporation Act, 1888. The Corporation initially fixed the rateable value under Sub-section (1), which considers the annual rent the property might reasonably be expected to let from year to year, minus a 10% deduction for repairs. The respondent argued that the rateable value should be determined under Sub-section (3), which limits the rateable value to a maximum of Rs. 32.50 per tenement if the building is part of a recognised subsidised housing scheme.2. Applicability of the 'Government Subsidised Scheme for Industrial Workers':The building in question was constructed under a scheme that provided a subsidy and a loan from the Government, as per an agreement dated 12 November 1959. Clause 8 of the agreement restricted the respondent from charging more than Rs. 26.50 per month per tenement, inclusive of municipal rates and taxes. The High Court directed the Corporation to reassess the rateable value based on the actual rentals recoverable, i.e., Rs. 26.50 per month, which would be the standard rent for each block, under Sub-section (3) of Section 154.3. Mandatory Nature of Consultation:A significant issue was whether the consultation with the Corporation, as required under the Explanation to Sub-section (3) of Section 154, was mandatory. The High Court found that the Government did not consult the Corporation before sanctioning the scheme and deemed this omission as non-critical, considering the consultation directive rather than mandatory. However, the Supreme Court held that the consultation requirement is mandatory because it safeguards the Corporation's financial interests. The failure to consult the Corporation before implementing the scheme means the Corporation cannot be compelled to fix the rateable value under Sub-section (3).The Supreme Court emphasized that procedural safeguards, especially those affecting financial interests, are generally mandatory. The Corporation's obligatory functions, funded primarily through property taxes, necessitate that any scheme potentially impacting its revenue must involve its consultation. The absence of such consultation invalidates the application of Sub-section (3) for rateable value determination.Conclusion:The Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the decision of the Chief Judge of the Small Causes Court, Bombay. The Court underscored the necessity of mandatory consultation with the Corporation before any subsidised housing scheme could be recognised under Sub-section (3) of Section 154, thereby affecting the rateable value determination. No order as to costs was made.