(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. This appeal is filed by the Ahmedabad Municipal Corporation calling in question the legality of the judgment and order dated 16.1.2001 passed by the learned Judge of the Small Causes Court in Municipal Valuation Appeal No.1972/98. The respondent herein, owner of premises situated in Ellisbridge-B Ward bearing survey No.578/6/51 had filed the said appeal challenging the GRV of Rs.49,670/- adopted by the Municipal Authorities for the purpose of calculating municipal tax for the property in question for the year 1997-98.
2. In the appeal, it was contended that the occupier had not made any additional construction, the constructed area of the property therefore remained 94.90 sq. meters and on the basis of the purchase price, 7% return be applied for ascertaining GRV.
3. Before the Small Causes Court, the owner/occupier produced a certificate issued by the New Madhuvan Association indicating that he had made payment of total amount of Rs.3,08,400/- for purchase the said property. He also produced the judgment of the Small Causes Court dated 2.3.2000 fixing the GRV of the same property at Rs.25,443/- for the year 1998- 99.
4. The Small Causes Court, Ahmedabad by the impugned judgment and order allowed the appeal of the owner partially reducing the GRV from Rs.49,617/- to Rs.25,443/-. The Municipal Corporation therefore preferred this appeal against the said judgment.
5. Learned counsel Ms.Jirga Jhaveri appearing for the Municipal Corporation submitted that the Small Causes Court erred in reducing the GRV which was fixed after following the procedure under the Rules. She submitted that 7.25% return adopted by the court was not proper. She relied on a decision of Division Bench of this Court in the case of A.M.C. v. Dena Bank, 2004 (2) GLR 1117 in this respect.
6. Though served, no one appeared for the respondent.
7. From the record it emerges that before the Small Causes Court, certain documents were produced and accepted. In particular, certificate of the Association indicating that the owner had paid purchase price of Rs.3,08,400/- was also exhibited. The present respondent also produced a judgment though rendered previously, but for the year 1998-99 passed by the Small Causes Court reducing the GRV to Rs.25,443/-.
8. We do not find that the Small Causes Court committed any error. The valuation of the property was on record. Same valuation was also accepted in the judgment dated 2.3.2000. On such valuation, the court permitted a reasonable return of 7.25%. In the decision in the case of AMC v. Dena Bank (supra), the court observed as under:
“So far the city of Ahmedabad is concerned, it is a matter of common knowledge and certainly judicial notice can be taken of such fact that the real estate market is passing through recession period for the last several years and to add to that the devastating earthquake which occurred on 26th January, 2001 has brought further recession in the said market since the people are now scared of having residence in multi-storeyed buildings. Needless to say that the city is having number of such buildings. It may also be noted here that so far the gilt-edged securities of the Government are concerned, the rates of interest have been curtailed substantially. Ofcourse, the rate of interest prevailing for such securities as on today are higher than the rate of return that may be had on immovable property. This, however, has its adverse effect on the paying capacity of the buyer. It is obvious that rate of return yielded by the residential property is normally lesser than the rate of interest yielded by commercial properties. The Court of Small Causes has without application of mind adopted the formula of 7% in most of the cases which are before us. If the Court had applied its mind to aforesaid aspects, it could have realised that considering variety of reasons, the criteria of 7% cannot be applied uniformly, irrespective of the facts of the case. It is quite possible that considering the then economic condition and the commencement of process of recession in real estate market, as submitted by counsels for the respondents, the rate of interest by way of yield on the property may be lesser than 7%. For this reason also, the cases in these appeals are required to be reconsidered.”
It can thus be seen that the court disapproved the uniform and standard formula of 7% return on the investment on the part of the Small Causes Court without proper application of mind. It was observed that such criteria cannot be applied uniformly irrespective of the facts of the case. In fact, such observations were made in the background of the fact that the court found that in the city of Ahmedabad, there was recession in the property market due to several factors including the devastating earthquake which took place on 26.1.2001. In the present case, the Small Causes Court in fact applied formula of 7.25% return on the investment. If at all, the present respondent could have questioned such application without further discussion. Be that as it may, we are not inclined to interfere. In the decision previously rendered, but for the subsequent year, same formula was adopted. Significantly, in the present case, as already noted, the valuation of the property was established on record.
9. No case for interference is made out. Appeal is, therefore, dismissed. R & B to be transmitted to the court below.
(Akil Kureshi J.) (C.L.Soni, J.) (vjn)