Holding

The Supreme Court held that the appellant’s challenge after 23 years was not justified, the increase in rateable value was lawful and not exorbitant, and the assessment was final under Section 219, thereby dismissing the appeal and ordering payment of dues.

Summary

M.K. Palia & Sons Pvt. Ltd., a lessee of the Mumbai Port Trust, filed a writ petition in 2005 challenging the rateable value of its commercial premises that had been revised in 1984‑85 from Rs.20,100 to Rs.25,645 per annum. The appellant argued that the increase was excessive and relied on the Jamshed Hormusji Wadia decision, while the respondents contended that the increase was lawful, the assessment had become final under Section 219 of the Mumbai Municipal Corporation Act, 1888, and the appellant had continued to pay the higher rate until 1999. The High Court dismissed the petition as untimely, and the Supreme Court affirmed that the appellant could not reopen a settled assessment after a lapse of 23 years, that the increase was not exorbitant, and that the appellant’s claim was frivolous. Consequently, the Court ordered the appellant to pay the outstanding taxes, penalty and interest, and dismissed the appeal with costs.

Issues considered

The appellant’s right to challenge the rateable value after a lapse of 23 years under the Mumbai Municipal Corporation Act, 1888.
Whether the increase in rateable value from Rs.20,100 to Rs.25,645 is excessive or unlawful.
Whether the appellant can rely on the judgment in Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai (2004) 3 SCC 214.
Whether the assessment is final under Section 219 of the Act and cannot be reopened.
Whether the appellant is liable to pay outstanding taxes, penalty and interest.

Legislation cited

Mumbai Municipal Corporation Act, 1888s. 156, s. 160, s. 162, s. 164, s. 165, s. 167, s. 217, s. 219

Subjects

rateable valuemunicipal corporation actassessment finalitytax assessmentlimitation periodfrivolous petitioninterest and penaltyproperty tax

Judgment

[2008] 12 S:C.R. 808

y
A M.K. PALIA & SONS PVT. LTD.
v.·
MUMBAI MUNICIPAL CORPORATION & ANOTHER
(Civil Appeal No. 5242 of 208)
AUGUST 26, 2008
B
[DALVEER BHANDARI AND HARJIT SINGH BEDI, JJ.] ~.,._

Mumbai Municipal Corporation Act, 1888 - Increase in
rateable value ':'"" Challenge to, by lessee of Mumbai Port
c Trust after 23 years - Held: Not justified - Rateable value of
the property was revised from Rs.20, 1001- p.a. to Rs.2!5,6451
- in 1984~85 on account of increase in rent by Mumbai Port
Trust - Increase of Rs. 5, 5451- after 23 years is not exorbitant
- .More so, lessee continued to pay increased rateable value
without any demur ti/11999 - Lessee by filing frivolous petition
D
should not get undue advantage over all other 599 lessees,
"1
who have been regularly paying taxes within the prescribed
time - Thus, lessee directed to pay the entire outstanding -....;.

amount with fnteresf@ 10% p.a. from the date when the
amount became due with penalty and fees towards notice of
E demand ~ Delay/Laches;

There are 600 lessees of the Mumbai Port Trust.
Appellant is.one of the lessees of the commerc.ial premises
in the prominent area of Mumbai. Appellant filed writ
F petition after 23 years challenging the fixation of the
rateable value by the Mumbai Municipal Corporation in t-
year 1982. The 599 lessees have been paying the rateable
value fixed by the respondent-Corporation. Appellant has
regularly paid the rateable value fixed by the Corporation
till 1999. The Division Bench of High Court held that there

-
G
was no justification in approaching the court after a lapse
of 23 years. Hence the present appeal. ·-+
Dismissing the appeal, the Court

H 808
M.K. PALIA & SONS PVT. LTD. v. MUMBAI 809
MUNICIPAL CORP. & ANOTHER
---.. HELD: 1.1 The submission of the appellant that they A
.....
I
are entitled to seek review of the rateable value on the
basis of Jamshed Hormusji Wadia 's case is totally devoid
of any merit. [Para 16] [818 B]
~
Jamshed Hormusji Wadia v. Board of Trustees, Port of
Mumbai and Anr. 2004 (3) SCC 214 - distinguished. B
~ 1.2 The High Court correctly observed that it was
not a case of unjust enrichment made under the mistake
of law by the respondent. [Para 18] [818-D]
Mafatlal Industries Ltd. and Ors. v. Union of India and c
Ors. 1997 (5) SCC 536 - referred to.
1.3 The appellant's property No. 2797(1) being used
for commercial purpose was assessed on 31st March,
1961 at the rateable value of Rs.20,100/- per annum. The D
premises was assessed as land with C.I. Shed having an
t
area of 2860 sq. ft. assessed at the rate of Rs.8/- per brass
~ and remaining land for storage was assessed at the
estimated rent of Rs.1,766/-. The property was, therefore,
assessed at a rateable value of Rs.20, 100/- per annum
with effect from 31.3.1961. The rateable value of the E
property was revised to Rs.25,645/- in the year 1984-85
on account of increase in rent by the owner. There has
been increase of Rs.5,545/- in the rateable value after about
23 years, which cannot be said to be exorbitant by any
stretch of imagination. The rateable value for 2006-07 is F
-.f still Rs.25,645/-. The appellant continued to pay increased
rateable value without any demur till 1999. The complaint
for the first time was filed on 12.11.2005. However, the
appellant has not paid property tax from the year 2000 till
December, 2007. The total amount of Rs.5,86,185/- is G
+
-,, -· outstanding by way of taxes an amount of Rs,64,216/- by
way of penalty and Rs.750/- towards fees for notice of
demand. Admittedly, these amounts have not been paid
by the appellant. [Paras 23 and 24] (819-G-H 820-A-D]
H
. --
810 SUPREME COURT REPORTS [2008] 12 S.C.R.

A 1.4 The. appellant by filing a frivolous petition should
not get undue advantage over all other 599 lessees, who
have been regularly paying the taxes within the.prescribed
time. Therefore, the appellant is directed to pay the entire
outstanding amount' with 10% interest per annum from
B the date when the amount became due and payable along
with penalty and-the fees towards notice of demand being
charged by the respondent. In case the amount is not paid
by the appellant within two months time, then respondent
no. 1 would ·be entitled to get..15% int~rest on the
c outstanding taxes from the .date when it becomes due and
payable and would als'o be at liberty to take appropriate
steps in accordance with law. [Para 25] [820-E-G]
Case ·Law Reference
2004 (3) sec 214 _ Referred to .. 16
D
· 1997 (5) sec 536 . Referred to. 17
CIVILAPPELLATE JURISDiCTION: Civil Appeal No. 5242
of 2008 ~ '· · ·,

E From the final Judgment and Order dated 25.09,2006 of
the High Court of Judicature at Bombay in VVrit Petition No.
1989 of 2006 ·"

Kavin Gulati, Rasmi Singh and.T. Mahipal fort~eAppell~nt.
F R.P. Bhatt, Atul Y. Chitale; Sunaina Dutta and Suchitra Atul
' Chitale for the Respondents. · · . ·

.
.-Th~ Judg.men.t of the. Co~rt
. . was delivered by
DALVEER BHANDARI, J. ·1. Leave granted .
G 2. This appeal is dir~ct~d aga.inst the judgment pf the
Bombay. High Court dated 25.9.2006 passed in 'Nrit _Petition
No.1989 of 2006.
3. Brief facts giving- rise to the present appeal are
recapitulated as under:
H
M.K. PALIA & SONS PVT. LTD. v. MUMBAI·' 811
MUNICIPAL CORP. & ANOTHER [DALVEER BHANDARI, J.]

The appellant is one of the 600 lessees of th~ Mumbai A
Port Trust, who after a lapse of 23 years has challenged the
rateable value fixed by the Mumbai Municipal Corporation in
the year 1982.
4. There are 600 lessees and the appellant is one of them.
According to the learned counsel appearing for the respondent 8
Mumbai Municipal Corporation, 599 lessees have already paid
the rateable value fixed by the Mumbai Municipal Corporation.
The appellant has challenged the rateable value fixed in the
year 1982 by filing a complaint in November, 2005. The appellant
is the lessee of commercial premises ad measuring 845. 70 sq. C
meter area i.e. 9048 sq. ft. ·
5. Under Section 162 of the Mumbai Municipal Corporation
Act, 1888 (for short 'the Act'), the Commissioner has to give
fifteen days notice from the date of publication of such notice
0
according to the scheme of the Act. The notice has to be
advertised in the local newspapers and published in the Official
Gazette and complaints against the amount of any rateable
value shall be entertaiAed by the office.
,\ ...
6. In order to properly comprehend the controversy in this E
case, it is imperative to understand the scheme of the Act by
carefully perusing the provisions of the Act.

7. Section 156 of the Act deals with rateable value of each
such building and land determined in accordance with the
provisions of the Act. Section 156 of the Act reads as under: F

"156. Assessment book what to contain- The
Commissioner shall keep a book, to be called "the
assessment boo'k" which shall be entered every official
·'
~~ G
(a) a list of all buildings and lands in Brihan Mumba·i
distinguishing each either by name or number, as he
shall think fit;
(b) the rateable value of each such building and land H
s·12 SUPREME COURT REPORTS [2008] 12 S.C.R. ...

~
A determined in accordance with the foregoing r ~

provisions of this Act; '~
' it:-
(c) the name of the person primarily liable for the payment
of the property taxes, if any, leviable on each such
building or land;
B
(d) if any such building or land is not liable to be assessed
to the general tax, the reason of such non-liability; >-- '
(e) when the rates of the property-taxes to be levied for
the year have been duly fixed by the corporation and
c the period fixed by public notice, as hereinafter
provided, for the receipt of complaints against the
amount of rateable value entered in any portion of
the assessment-book, has expired, and in the case
of any such entry which is complained against, when
D such complaint has been disposed of in accordance tI
with the provisions hereinafter contained, the amount . 4

at which each building or land entered in such portion
-.,(
of the assessment-book is assessed to each of the
property-taxes, if any, leviable thereon;
E (f) if under section 169, a charge is made for water
supplied to any building or land by measurement or
the water taxes or charges for water by measurement
are compounded for, or if, under section 170, the
sewerage taxes or sewerage charges for any building
F or land are fixed at a special rate, the particulars and
amount of such charges, composition or rates; ~

(g) such other details, if any, as the Commissioner from
time to time thinks fit to direct."
G 8. Sections 160 and 162 of the Act read as under:
........_
"160. Public notice to be given when valuation of property ·~' <"'i
in any ward has been completed. (1) When the entries
required by clauses (a), (b), (c) and (d) of section 156
have been completed, as far as practicable, in any ward
H
r
I

~-
~

M.K. PALIA & SONS PVT. LTD. v. MUMBAI 813
MUNICIPAL CORP. & ANOTHER [DALVEER BHANDARI, J.]

assessment book, the Commissioner shall give public A
notice thereof and of the place where the ward
assessment-book, or a copy of it, may be inspected.
(2) Such public notice shall be given by advertisement in the
Official Gazette and in the local newspapers, and also by
posting placards in conspicuous places throughout the ward. 8

162. Time for filing complaints against valuations to be
publicly announced. (1) The Commissioner, shall at the
time and in the manner prescribed in section 160, give
public notice of a day, not being less than fifteen days c
from the publication of such notice, on or before which
complaints against the amount of any rateable value
entered in the ward assessment-book will be received in
his office.
(2) Special notice to be issued in certain cases.- In every D
case in which any premises have for the first time been
'" entered in the assessment-book as liable to the payment
of property rates or in which the rateable value of any
premises liable to such payment has been increased, the
Commissioner shall, as soon as conveniently may be after E
the issue of the public notice under sub-section (1), give
a special written notice to the owner or occupier of the
said premises specifying· the nature of such entry and
informing him that any complaint against the same will be
received in his office at any time within fifteen days from F
the service of the special notice."
9. Under section 164 of the Act, all complaints received by
the Commissioner are properly investigated and under Section
165 of the Act, those complaints are disposed of in the presence
of the complainants. Sections 164 and 165 of the Act read as G
under:
"164. Notice to complaints of day fixed for investigating
their complaints. - The Commissioner shall cause all
complaints so received to be registered in a book to be. H
814 SUPREME COURT REPORTS [2008] 12 S.C R.

A kept for this purpose and shall give notice in writing to
each complainant, of the day, time and place when and
whereat his complaint will be investigated.
165. Hearing of complaint.- (1) At the time and place so
fixed the Commissioner shall investigc;tte and dispose of
B the complaint in the. presence of the Complainant, if he
shall appear, and, if not, in his absence.
(2) For reasonable cause, the Commissioner may' from
time to time adjourn the investigation.
c (3) When the complaint is disposed of, the result thereof
shall be noted in the book of the complaints kept under
section 164, and any necessary amendment shall be made
in accordance with such result, in the assessment-book."
10. Section 167 is also relevant and the same reads as
D
under:
"167. Assessment-book may be amended by the
Commissioner during the official year.- (1) The
Commissioner may, upon the representation of any person
E concerned, or upon any other information, at any time during
the official year to which an assessment-book relates
amend the same by inserting therein the name of any
person whose name ought to be so inserted or any
premises previously omitted or by striking out the name of
F any person not liable for the payment of any property tax,
or by increasing or reducing the amount of any· rateable
value and .of the assessment based thereupon, or by
making of cancelling an entry exempting any premises
from liability to any property-tax.
G (2) Every such amendment shall be deemed to have been
made, for the purpose of determining the liability or
exemption of the person concerned in accordance with
the altered entry, f~om the earliest day in the current official
year when the circumstances justifying the amendment
H existed"
M.K. PALIA & SONS PVT. LTD. v. MUMBAI 815
--¥ MUNICIPAL CORP. &ANOTHER [DALVEER BHANDARI, J.]

... 11. According to the scheme of the Act, any person A
aggrieved by disposal of the complaint regarding fixation of
rateable value can challenge the same by filing an appeal under
section 217 of the Act.
12. Section 217 of the Act reads as under:
8
217. Appeals when and to whom to lie. (1) Subject to the
provisions hereinafter contained, appeals against any
rateable value or tax fixed or charged under this Act shall
be heard and determined by the Chief Justice of the Small
Cause Court. c
(2) But no such appeal by the Chief Judge of the Small
Cause Court shall be entertained by the said Chief Judge,
unless-
(a) it is brought within fifteen days after the accrual of the
D
cause of complaint;
)t
(b) in the case of an appeal against a rateable value a
complaint has previously been made to the
Gommissioner under section 163 as such complaint
has been disposed of; E
(c) in the case of an appeal against any amendment
made in the assessment book under section 167
during the official year, a complaint has been made
by the person aggrieved within fifteen days after the
first received notice of such amendment, and his F
complaint has been disposed of;

(d) in the case of an appeal against a tax, or in the case
of an appeal made against rateable value the amount
of the disputed tax claimed from the appellant, or the
·~
-r.,., amount of the tax chargeable on the basis of the
G

disputed rateable value, up to the date of filing of the
appeal, has been deposited by the appellant with
the Commissioner.

(3) In the case of any appeal entertained by the Chief H
816 SUPREME COURT REPORTS [2008] 12 S.C.R

A Judge, but not heard by him before the date of
commencement of the Maharashtra Municipal Corporation
(Amenament) Act, 1975, the Chief Judge shall not hear
and decide such appeal unless the amount of the dispute
tax claimed from the appellant, or the amount of the tax
B chargeable on the basis of the disputed rateable value,
as the case may be, up to the date of filing the appeal, has
been deposited by the appellant with the Commissioner
within thirty days from the date of publication of a general
notice by the Commissioner in this behalf in the local
c newspapers. The Commissioner shall simultaneously
serve on each such appellant a notice under section 484
and 485 and other relevant provisions of this Act, for
intimating the amount to be deposited by the appellant
With him.
0 (4) As far as possible, within fifteen days from the expiry
of fhe period of thirty days prescribed under sub-section
(3) the Commissioner shall intimate to the Chief Judge
the names and other particulars of the appellants who
have deposited with him the required amount within the
E prescribed period and the names and other particulars of
the appellants who have .not deposited with him such
amount within such period. On receipt of such intimation,
the Chief Judge shall summarily dismiss the appeal of
any appellant who has not deposited the required amount
F with the Commissioner within the prescribed period.
(5) In the case of any appeal against any rateable value or
property tax fixed or charged under this Act, which may
have been entertained by Chief Judge before the
commencement of the Act aforesaid, or which may be
G entertained by him after -the said date, the Chief Judge
shall not hear and decide such appeal unless the property
tax, if any, payable on the basis of the original rateable
value plus eighty per centum of the property tax claimed
from the appellant on the increased portion of the rateable
H v·a1ue of the property out of the property tax claimed under
...... ···-" ... .~,.. •• ........ ,W:•• ~·.), :~ .... ..
M.K. PALIA & SONS PVT. LTD. v. MUMBAI 817
MUNICIPAL CORP: & ANOTHER (DALVEER BHANDARI, J.]
--r
each of the bills, which may have been issued, from time A
~
to time, since the Filing of appeal, is also deposited with
the Commissioner within the period prescribed under the
Act. In case of default of the appellant, on getting an
intimation to that effect from the Commissioner, at any
time before the appeal is decided, the Chief Judge shaH B
summarily dismiss the appeal:
-I
Provided that in case the appeal is decided in favour of
the Corporation, interest at 6.25 per centum per annum
shall be payable by the applicant on the balance amount
of the property tax from the date on which the amount of c
property tax was payable:
Provided further that, in case the appeal is decided in
favour of the appellant and the amount of property tax
deposited with the Corporation is more than the property
D
tax payable by him, the Commissioner shall adjust the
• excess amount of the property tax with interest at 6.25 per
~
centum per annum from the dale on which the amount is
deposited with the Corporation towards the property taxes
payable thereafter."
E
13. The entire scheme of challenging the rateable value
has been fixed by the Corporation. There is also a statutory
provision of filing an appeal after the complaint has been
decided by the concerned authority.
14. In the instant case, the appellant has approached the F
-(
court regarding fixation of rateable value by filing a writ petition
after a lapse of 23 years. The other 599 lessees of the building
have already paid the rateable value fixed by the respondent
Corporation. Even the appellant has also regularly paid rateable
value fixed by the Corporation till 1999. G
~
-t-,-•
15. In the impugned judgment of the Division Bench of the
High Court dated 25.9.2006, it has been rightly observed-that
there seems to be no justification of approaching the court after
a lapse of 23 years.
H
818 SUPREME COURT REPORTS [2008] 12 S.C.R.

•t-
A 16. Faced with this situation, the learned counsel for the
appellant tried to take shelter of the judgment of this Court in ...,
Jamshed Hormusji Wadia v. Board of Trustees, Port of
Mumbai & Another (2004) 3 SCC 214. We .have carefully
.perused this judgment. It does not help the appellant at all. The
B submission of the appellant that they are entitled to seek review
of the rateable value on the basis of Wadia's judgment (supra)
\-
is totally devoid of any merit.

17. Nine-Judge Bench of this court in Mafatlal Industries
Ltd. & Others v. Union of India & Others (1997) 5 SCC 536
c held that "once assessment or levy became final in case of a
manufacturer-assessee, he cannot later file suit or writ petition
claiming refund on the ground that decision of the court or tribunal
in another person's case led him to discover the mistake of law
under which he paid the duty".
D
18. The High Court correctly observed that it was not a
case of unjust enrichment made under the mistake of law by the
~
respondent.
19. In pursuance to the notice issued qy this court, the
E Assistant Assessor and Collector of Mumbai Municipal
Corporation has filed a detailed counter affidavit. It was
submitted that the appellant has not only failed to file __any
complaint in the year 1984 or in the subsequent years
challenging the increase in the rateable value but also paid the
F . taxes on the basis of increase in rateable value without any
demur or protest. Regarding increase in the rateable value, by
no stretch of imagination, it can be said to be excessive,
disproportionate or contrary to the provisions of the Act. The
appellant is carrying on commercial activities in the prominent
G area of Mumbai and cannot be permitted not to pay a reasonable
.......
rateable value of the premises. .__: ~-

20. In the counter affidavit, it is also incorporated that the
rateable value of the property was increased in accordance
with law in the year 1984-85 on account of the increase i11 the
H

I
M.K. PALIA & SONS PVT. LTD. v. MUMBAI 819
MUNICIPAL CORP. & ANOTHER [DALVEER BHANDARI, J.]

lease rent by the Mumbai Port Trust. The appellant has paid the A
taxes as per rateable value fixed by the Corporation upto the
year 1999 and the same..has attained finality under section 219
of the Act and cannot be re-opened with retrospective effect.
21. Section 219 deals with unappealed vatue and taxes
8
and decisions on appeal to be final and the same reads as
under:
"219. Unappealed values and taxes and decisions to
appeal to be final.- (1) Every rateable value fixed under
this Act against which no complaint is made as c
hereinbefore provided, and
the amount of every sum claimed from any person under
this Act on account of any tax, if no appeal therefrom is
made as hereinbefore provided, and
D
the decision of the Chief Judge aforesaid upon any appeal
against any such value or tax, if no appeal is made
' therefrom under section 2180, shall be final.
(2) Effect shall be given by the Commissioner to every
decision of the said Chief Judge on any appeal against E
any such value or tax."
22. It was submitted by the respondent that in view of the
aforesaid provisions it is not within the powers of the
Commissioner or the respondent to reopen the assessment or F
make any alternation in the assessment done with retrospective
effect.
23. Though it was not necessary to examine the detailed
averments of the complaint, however, in order to satisfy
ourselves that there is no injustice done to the appellant, we G
have also looked into the facts of this case. The appellant's
property No. 2797(1) being used for commercial purpose was
assessed on 31st March, 1961 at the rateable value of
Rs.20, 100/- per annum. The premises was assessed as land
with C.I. Shed having an area of 2860 sq. ft. assessed at the H
' .. ~· . ,.
820 SUPREME COURT REPORTS [2008) 12 S.C.R.

'f
A rate of Rs.8/- per brass and remaining land for storage was
assessed at the estimated rent of Rs.1, 766/-·. The property ....
was, therefore, assessed at a rateable value of Rs.20, 100/-
per annum with effect from 31.3.1961. The rateable value of the
property was revised to Rs.25,645/- in the year 1984-85 on
B account of increase in rent by the owner. There .has been
increase of Rs.5,545/- in the rateable value after about 23 years,
which cannot be said to be exorbitant by any stretch of
imagination. It may be pertinent to mention that rateable value
for 2006-07 is still Rs.25,645/-. The appellant continued to pay
c increased rateab~::: value without any demur till 1999. The
complaint for the first time was filed on 12.11.2005.
24. It is incorporated that the appellant has, however, not
paid property tax from the year 2000 till December, 2007. The
total amount of Rs.5,86, 185/- is outstanding by way of taxes an
D amount of Rs.64,216/- by way of penalty and Rs.750/- towards
'(

fees for notice of demand. Admittedly, these amounts have not
.,A:_
been paid by the appellant.
25. We do not want the appellant to get undue advantage
E over all other 599 lessees, who have been regularly paying the
taxes within the prescribed time. The appellant by filing a
frivolous petition should not get unjust advantage over other
, lessees, therefore, we direct the appellant to pay the entire
outstanding amount with 10% interest per annum from the date
when the amount became due and payable along with penalty
F ,._
i
and the fees towards notice of demand being charged by the
respondent. In case the amount is not paid by the appellant
within two months time, then respondent no. 1 would be entitled
to get 15% interest on the outstanding taxes from the date
when it becomes due and payable and would also be at liberty
G
to take appropriate steps in accordance with law. +
..,.: ''I"":
26. This appeal, being devoid of any merit, is accordingly
dismissed with costs.
N.J. Appeal dismissed.
H