Somayya, J.:— These are two appeals filed against the decrees of the Court of the Subordinate Judge, Bezwada, in two suits filed by the appellant against the respondent for refund of certain taxes which were alleged to have been illegally levied under the Madras District Municipalities Act (V of 1920) on the vacant lands belonging to the appellant.

The appellant is the Madras and Southern Mahratta Railway Company owning several buildings and vacant sites within the limits of Bezwada Municipality and the Municipal Council of Bezwada is the respondent. The respondent council levied certain taxes under the Madras District Municipalities Act on the appellant's vacant lands from 1929 to 1935. The plaint in Original Suit No. 41 of 1935 was filed for recovery of Rs. 22,092-13-0 which was the tax levied for the year 1931-1932. The other suit, Original Suit No. 61 of 1935, was filed for recovery of a sum of Rs. 76,706-10-4 made up of various sums which were levied for the years 1929-1930, 1930-1931, 1932-1933, 1933-1934 and 1934-1935, i.e, for five years. The Subordinate Judge tried the two suits together, dismissed O.S No. 41 of 1935 and decreed O.S No. 61 of 1935 in part, ordering a refund of the sums claimed in respect of 1929-1930 and 1930-1931 and dismissing the rest of the claim. The plaintiff appeals. Appeal Suit No. 297 of 1937 is the appeal against the decree in Original Suit No. 41 of 1935 and Appeal Suit No. 240 of 1937 is the appeal against the decree in Original Suit No. 61 of 1935. The main judgment was delivered in Original Suit No. 61 of 1935 and the relevant papers, are printed in the appeal against that decree. In both the suits substantially the same question arises for consideration, viz., whether the levy of the tax is legal.

To understand the questions raised in these suits, certain provisions of the Indian Railways Act and of the Madras District Municipalities Act have to be referred to. Under the Indian law, railway companies are not liable to pay any tax to any local authority unless the Governor-General in Council notifies under section 135 of the Indian Railways Act that the railway company is liable to pay, and the railway company is then bound to pay the taxes mentioned in the notification, in this case a notification was issued on 14th February 1929 under the above section by which the appellant company was declared liable to pay, in aid of the funds of the respondent municipality, the general property tax and a water and drainage tax. There were prior notifications with which we are not concerned as the notification of 14th February 1929 was in supersession of all prior notifications. Under section 78 of the District Municipalities Act, every municipal council may levy among other things a property tax. Under section 81(1) of the said Act, the municipal council may by a resolution levy property tax on all buildings and lands situated within the municipality subject to certain exceptions, and the property tax may comprise among other things (i) a tax for general purposes and (ii) a water and drainage tax. Section 81(2) provides that these taxes shall be levied at such percentages of the annual value of the lands or buildings or both as may be fixed by the municipal council. Under section 81(3), the municipal council may, in the case of lands which are not used exclusively for agricultural purposes and which are not occupied by or adjacent and appurtenant to buildings, levy these taxes at such percentages of the capital value of such lands or at such rates with reference to the extent of such lands as it may fix. This power is subject to a certain proviso which will be mentioned later on. Section 82 provides for the method of assessment. Under clause 2 of this section, the annual value of the lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to let from month to month or from year to year, subject to certain deductions. The proviso to this sub-section says that, in the case of Government or railway buildings or buildings which are of a class not ordinarily let, the gross annual rent of which cannot in the opinion of the executive authority be estimated, the annual value of the premises shall be deemed to be six per cent of the total of the estimated value of the land and the estimated present cost of erecting the building subject to certain deductions for depreciation. The taxing authority under this Act is the executive authority and, in the years with which we are concerned, the chairman of the municipality was the executive authority empowered to levy the tax. One other section of the Indian Railways Act must be referred to and that is section 135(2) which runs thus:

“While a notification of the general controlling authority under clause 1 of this section is in force the railway administration shall he liable to pay to the local authority either the tax mentioned in the notification or in lieu thereof such sum, if any, as an officer appointed in this behalf by the general controlling authority may, having regard to all the circumstances of the case, from time to time, determine to be fair and reasonable.”

The Collector of the district has, been appointed by the Governor-General in Council as the officer authorised to act under this sub-section. For the years 1929-1930 and 1930-1931, the Collector of Kistna District fixed a particular amount as payable to the municipality and the municipal council levied a sum in excess of the amount fixed by the District Collector. The lower Court held that this was illegal and decreed a refund of the sums collected for the years 1929-1930 and 1930-1931, and there is no appeal by the municipal council.

As regards the other four years, the railway company challenges the levy chiefly on the ground that, in making the assessment, the provisions of section 82(2), proviso, were applied, and they point out that those provisions apply to certain cases of buildings only. They also say that the municipal chairman did not determine the assessment, but that a certain committee of three did it. Next it is said that, owing to certain rules not being framed, they are not assessable at all.

The defendant repelled the contentions of the plaintiff and stated that the tax was properly levied, that the municipal chairman actually levied the tax and that the committee referred to in the plaint was only an advisory body. It was also stated that the provisions of the Act were in substance and in effect complied with and that therefore, under section 354(2) of the Act, no suit can be brought to recover any sum of money collected under the authority of the Act on account of assessment.

The question for decision is whether the provisions of the District Municipalities Act have been in effect complied with by the respondent in levying the tax in question.

It is common ground that, under section 81(1), the respondent council passed a resolution that a property tax for general purposes and a water and drainage tax shall be levied for all the years in question on all buildings and lands within the municipal limits except those which are exempted. The lands in question are not claimed to come under this exemption and therefore became liable to pay a tax for general purposes and a water and drainage tax. Under clause 2 of the said section, which provides that these taxes shall be levied at such percentages of the annual value of lands or buildings or both as may be fixed by the municipal council, it is agreed that the council fixed sixteen and a half per cent of the annual value as the tax payable. It is also agreed that, under section 81(3) of the Act, which applies to vacant lands which are not agricultural lands and which are not adjacent and appurtenant to buildings, the municipal council passed a resolution that on such lands the tax should be levied at the rate of one per cent on their capital value. There is a proviso to sub-section 3 of section 81 which runs thus:

“Provided that such percentages or rates shall not exceed the maxima, if any, fixed by the Local Government and that the capital value of such lands shall be fixed in such maimer as may be prescribed”;

and the word “prescribed” is defined under section 3, clause 19, as meaning,

“prescribed by the Local Government by rules made under this Act”.

It appears that, when framing rules under this proviso for the manner in which the capital value is to be fixed by the municipal authorities, the Local Government confined their operation to Vacant lands not belonging to a railway company and expressed the view that, in the case of vacant lands belonging to a railway company, the assessment should be made on the annual value basis and not by the capital value basis. The procedure adopted by the respondent council in fixing the tax was this. A committee was convened in accordance with the instructions given by the Local Government on 15th March 1929, which is Exhibit A-6 printed on page 21 of the exhibits book. The relevant portion of Exhibit A-6 runs as follows:—

“With the concurrence of the Government of India the Local Government are pleased to issue the following instructions for the assessment of railway buildings and lands to property tax in municipalities. Chairmen of municipal councils and the Commissioner of the Madras Corporation are requested to follow the instructions with effect from 1929-1930….

(i) The ‘annual’ value of buildings of a class not ordinarily let shall be deemed to be 6 per cent of their book value for a period of five years after their first construction.

(ii) In the case of other buildings and lands after a period of five years after construction in the case of buildings mentioned in sub-paragraph (i) above, the ‘annual value’ shall be fixed once in five years in accordance with section 82 of the Madras District Municipalities Act, 1920, by a committee consisting of (a) the chairman of the municipal council in the case of mufassal municipalities and the Commissioner in the case of the Madras City Municipality; (b) the Executive Engineer of the division; and (c) one representative of the railway administration concerned to be chosen by its agent.”

A committee was formed which fixed the capital value and the annual value of the lands and the municipal chairman adopted it and levied the tax on the annual value so arrived at. This procedure is now attacked by the appellant as illegal, and it is also said that, in taking the capital value as the basis of assessment, the assessing authority followed a provision enacted for a different class of properties. It is now conceded that this committee has no legal status under the Act to, make any assessment; it can only be taken to be an advisory body to the authority empowered under the Act to fix the tax. However all the parties proceeded upon the footing that a committee should be convened in accordance with this notification. It appears that the appellant company was very anxious that the committee procedure should be followed and notified the municipality to convene a committee. On 8th February 1930, the municipal council sent Exhibit B-2 (page 55) calling upon the railway company to pay a sum of Rs. 17,558-6-0 as the tax for the vacant lands of the railway company for the year 1929-1930. Thereupon the railway company replied by Exhibit B-4, dated 19th February 1930 (pages 59 and 60), objecting to the assessment of the vacant lands at Rs. 17,558-6-0. The letter winds up by saying:

“I also beg to refer you to G.O No. 4894, L. & M., dated 29th October 1929, issuing instructions to the municipal councils that railway lands should be assessed on their annual value and that the chairman should, in fixing the annual value of the properties of the railway administration, follow strictly the procedure laid down in paragraph 2 of G.O No. 1258, L. & M., dated 15th March 1929.”

Thus the railway company asked the municipality to follow the committee procedure laid down in Exhibit A-6. The municipal council replied by Exhibit. C-3, dated 20th August 1930, and said that the municipal council resolved by its resolution, dated 5th August 1930, that a committee referred to in Exhibit A-6 should be called for for revision of taxes on vacant lands belonging to the company and asked for the name of the official who would attend the meeting on behalf of the railway company. The third member under Exhibit A-6 is the Executive Engineer of the division who is a Government official. The municipal chairman, the Executive Engineer of the division and the official nominated by the railway company are the three persons to constitute the committee, and by Exhibit C-3 the municipal council asked the railway company to mention the name of the official to represent the company. The District Engineer, Bezwada, was chosen by the railway company and the fact was communicated by Exhibit C-4, dated 6th September 1930. The committee so constituted met on 15th December 1930 and a copy of the proceedings of the committee is Exhibit C-9 (page 65). In this document the committee says:

“It is agreed that there has been an exceptional rise in land values, during the last few years in Bezwada, anything from three to six times.”

The Executive Engineer of Kistna district suggested in view of the exceptional rise in land values that Rs. 150 an acre should be taken to be the annual rental value and that rate should prevail until 31st March 1931. The municipal chairman and the railway representative agreed subject to the approval of the municipal council and the Railway Agent. According to the annual rental value fixed in this document, the railway company had to pay a sum of Rs. 2,154-15-6 for each year. The assessment for the prior years was Rs. 887-12-0. For the years 1929-1930 and 1930-1931, the municipal council demanded Rs. 2,154-15-6 a year in accordance with the decision of the committee, dated 15th December 1930. The railway company objected to this valuation and addressed Exhibit D-1 to the District Collector of Kistna asking that Rs. 50 per acre should be fixed as the annual rental value of these lands. This was evidently a request for action being taken under section 135(2) of the Indian Railways Act. The Collector by his proceedings, dated 30th June 1931 (Exhibit D-11), said as follows:—

“As observed by the Collector, Mr. Stewart, while fixing the assessment in the year 1925, it is very difficult to determine the annual value of railway lands especially of those occupied by embankments, cuttings, sidings, level-crossings, culverts, etc., and I therefore direct that the method and rate of assessment adopted by the Collector in 1926, namely, the levy on the basis of extent at One-third of the tax payable by an ordinary taxpayer for general purposes as well as water and drainage purpose should continue.”

This order was varied by that of another District Collector who restored the value suggested by the committee's resolution of 15th December 1930. So, the municipal council collected from the railway company taxes at the rate of Rs. 2,154-15-6 a year for the years 1929-1930 and 1930-1931. It was held by the Court below that, once action was taken by a Collector under section 135(2), it was not open to revision and on this ground a decree has been passed by the lower Court for refund of the excess levy in respect of 1929-1930 and 1930-1931 and, as mentioned before, there is no appeal by the municipal council in respect of that amount. For the years 1931-1932 onwards, another valuation committee was convened by the municipal council by its letter, dated 12th March 1932 (Exhibit D-12). The 4 railway District Engineer, Bezwada Division, was deputed by the railway company by its letter, dated 16th March 1932 (Exhibit D-13). The committee met on the 19th March 1932 and the proceedings of the committee are evidenced by Exhibit D-15 (pages 81 and 82). The committee took the capital value of the vacant lands and fixed 6 per cent of the capital value as the gross annual rental value. It winds up by the note of page 82:

“The annual value will be calculated at 6 per cent of the capital value as arrived at by the committee,”

All the three agreed and signed this document. In accordance with this valuation the tax payable by the railway company was levied by the municipal chairman. Exhibit D-14, dated 21st March 1932, is a letter calling upon the railway company to pay the tax for the year 1931-1932. Porty-six demand notices, evidently one for each separate plot, were enclosed and a statement showing the particulars was also enclosed. This statement is Exhibit D-16 and it was sent as an enclosure to Exhibit D-14. The validity of Exhibits D-16 and D-14 is a point to be determined in these appeals. Similar demand notices were issued for the successive years and they all proceeded upon the same valuation which was adopted for the year 1931-1932 and in fact, as would be noticed from Exhibit A-6 set out already, the value of buildings and lands should be fixed once in five years by the committee mentioned therein. So, for the quinquennium beginning with 1931-1932, the municipal council levied tax on the annual value fixed in Exhibit D-15.

The railway company made various attempts to get this amount reduced. They approached the Collector of the district but the. Collector declined, stating that what he considered to be an appeal in the ordinary course was not filed before him. The municipal council was asked to revise the tax and they pointed out by Exhibit E-3, dated 25th March 1932, that it was open to the railway company to appeal to the Collector under section 135(2) of the Indian Railways Act. Representations to the Local Government and the Railway Board proved in fructuous, and these suits were then filed objecting to the levy of the tax on the basis of Exhibit D-15. Thus, the questions that arise are whether the procedure followed by the municipal council is a substantial compliance with the provisions of the Act within the meaning of section 354(2) which says that, if the provisions of the Act have been in substance and in effect complied with, no suit can be brought to recover any sum of money collected under the authority of this Act on account of any assessment.

The chief contention of the appellant is that the municipal council followed the procedure fixed in section 82(2), proviso, which is enacted for quite a different class of property and that, in doing so, the council violated the express provisions of section 82(2) which says that the annual value should be fixed by taking the gross annual rent at which they may reasonably be expected to let from month to month or from year to year. It is said that no attempt at all was made by the municipal council to find out the gross annual rent at which these lands may reasonably be expected to let and that, instead of doing so, they followed the procedure which is fixed for another class of property, namely buildings belonging to Government or a railway company or of a class not ordinarily let. It is urged that, by enacting the capital value method in the case of buildings covered by the proviso, the Legislature has, by implication, prohibited the use of that method for the lands in question. It is said that the annual value should be fixed by taking only the gross annual rent, whatever might be the difficulties in arriving at that rent, and that in so doing the capital value procedure is by implication excluded by the proviso to section 82(2). It is then said that, even apart from the implied prohibition of the capital value method, the committee in this case made no attempt whatever to get at the gross annual rent and that it is clear from Exhibit D-15 that they simply followed the capital value method provided for a particular class of buildings. The next objection advanced is that, if the, levy is taken to have been made under section 81(3), the Local Government expressly declined to make any rules for fixing the capital value of the vacant lands belonging to a railway company and directed that such lands should be assessed on the annual value basis and not on the capital value basis. It is said that, even if this view of the Government is wrong, inasmuch as no rules have been framed under the proviso to clause 3 of section 81, the power given to the municipal council in clause 3 to levy the taxes at a percentage on the capital value cannot be exercised in the case of railway vacant lands. It is also said that the valuation committee did not adopt a percentage on the capital value which in this case has been fixed by the municipal council at one per cent of the capital value but, as Exhibit D-15 shows, they followed the procedure under the proviso to section 82(2), i.e, after taking the capital value they took six per cent of the capital value as the annual rental value and fixed sixteen and a half per cent thereon as the tax. The tax actually levied does not come to one per cent of the capital value but amounts to a sum which is slightly less than one per cent. And the last objection is that the valuation committee determined the capital value and the annual value, that the committee has no legal existence, and that the chairman, who is the only authority to fix the tax, has not done so and that therefore the levy is illegal as made by a person who had no authority to do so.

These contentions are met by the learned Advocate-General who appears for the respondent by pointing out that, in the case of lands with which we are now concerned, it is not possible, as the District Collector of Kistna observed, to find the annual rental value, that: they cannot, as they are, be let to any one and that it is practically impossible to fix with any degree of accuracy the gross annual rent at which they may reasonably be expected to let. He urges that, in such cases, the gross annual rent at which the property may reasonably be expected to let may be fixed by what is known as the capital value method by taking the value of the land and by fixing a percentage of that value as the rental value. Reference is made to the analogous provisions of the English rating statutes and the decisions thereunder which, it is said, establish that a resort to the capital value method is not absolutely ruled out when the gross annual rental value has to be fixed. He says that, in this case, Exhibit d-15 contains only the final conclusion of the committee, that it is a fair and reasonable inference to draw that, as gentlemen having wide experience in such matters and having presumably known prior proceedings, the committee members all felt that they could not with any fairness to either party fix any sum as the rent at which these lands could be expected to let and that therefore they resorted to the capital value method. If this is correct, there is no doubt that the provisions of the Act would have been substantially complied with and that the appellant would have no case.

It is then urged that the levy can be justified even under section 81(3). In this case the municipal council has issued notifications under section 81(3), and the notifications say that, on vacant lands of the kind coming under section 81(3), the tax would be levied at one per cent of the capital value. It is urged that, by its omission or refusal to frame rules for the determination of the capital value of the railway vacant lands, the Local Government cannot deprive the municipal council of its power to levy a tax under section 81(3). The Advocate-General says that, if the Local Government does not choose or refuses to make the necessary rules, the municipal council may levy it in such manner as it thinks fit. As regards the objection that Exhibit D-15 shows that it was not on the basis of one per cent of the capital value that the tax was fixed, but that six per cent of the capital value was first taken as the annual value and that sixteen and a half per cent thereon was fixed as the tax, the answer is that the amount which is so levied is less than what would have been leviable under section 81(3) and that therefore the railway company has no grievance. And lastly, it is said that it was the municipal chairman who levied the tax, that the committee procedure was followed in accordance with the rules issued by the Local Government, that the Chairman did not surrender his judgment to the committee and that by adopting the conclusions of the committee finally the levy is his and not that of the committee. He also says that it was the railway company that wanted the committee procedure to be followed.

No authorities of the Indian High Courts have been brought to our notice by either side. The learned Advocate-General relies on certain decisions on the construction of the term “gross value” as defined in the English rating statutes and urges that the language of the English Act and of the Act under consideration is similar and that therefore the decisions of the English Courts would be helpful. Before referring to the decisions, we may refer to the statutes mentioned. There are certain rating statutes in England under which rates and taxes are fixed on the gross value of hereditament, and the “gross value” is defined to be the gross annual, rent. The term “gross value” is defined in the Valuation (Metropolis) Act, 1869 (32 and 33 Victoria, chapter 67) thus:

“The term ‘gross value’ means the annual rent which a tenant might reasonably be expected taking one year with another to pay…. for a hereditament….”

The Rating and Valuation Act, 1925, defines the term “gross value” thus:

“‘Gross value’ means the rent at which a hereditament might reasonably be expected to let from year to year…”

The latter definition approximates very nearly to the language used in section 32(2) of the Indian Act. The definition in the Act of 1925 is practically equivalent to that ‘contained in the Act of 1869; see Halsbury's Complete Statutes of England, Volume XIV, pages 553 and 554.

In London County Council v. Erith Churchwardens and Overseers of Parish of(1) the definition as given in the 1869 Act is set out on page 587. Then they say at the top of page 558:

“The annual rent which a tenant might reasonably be expected, taking one year with another, to pay for a hereditament is the same thing as the rent at which the same might reasonably be expected to let from year to year.”

Then on page 600, the Lord Chancellor says this:

“Lush, J. stated that the rateable quality of land was not to be determined by what it once was, or by what it might thereafter become, but by what it was at the time the rate was made. I quite agree with this.”

So, we have to decide the rateable quality of the vacant lands in question as they stand at present. As pointed out in Railway Assessment Authority v. Southern Ry. Co..

“The foundation of our rating law is the Poor Relief Act of 1601…. In 1836 the Parochial Assessment Act of that year provided, by section 1, that the rate was to be based upon an estimate of the net annual value of the several hereditament rated thereunto; that is to say, of the rent at which the same might reasonably be expected to let from year to year….’ Substantially the same language is used in the Parochial Assessment Act, 1862, and in the Valuation of Property Metropolis Act, 1869, with regard to London. My Lords, this method of assessing liability for rates was no doubt very suitable for the simple conditions which prevailed in the regard of Queen Elizabeth; but when it was sought to apply it to modern conditions, and especially to the assessment of great public utility undertakings, such as railways, waterworks, gasworks and the like, whose operations might easily extend over great areas, stretching far beyond the limits of any individual parish, the greatest difficulty was found in adapting the statutory provisions to the facts of such a case…. Unfortunately, the Legislature did not see its way to intervene and the courts were compelled to evolve a system of calculation, with the assistance of the expert advisers to the rating authorities and to the undertakings, which involved a number of very difficult assumptions, but which received the approval of Your Lordships' House on a number of occasions, and which became recognized as the standard method of assessing the rateable value of hereditaments in these cases….”

As pointed out herein, owing to frequent changes in the conditions of modern life, great public utility undertakings such as railways, waterworks, gasworks and the like have come into existence in several places. On some of the lands acquired by these concerns, buildings are erected and the rest are kept vacant. In the cases of both the buildings and the vacant sites, great difficulty arose as to how the gross value or the annual rental value was to be arrived at. In solving the difficulty, English Courts took two alternative methods of arriving at the gross value or the annual rental value: (i) capital value basis or contractor's method; and (ii) profit basis. Two classes of cases frequently arose for consideration: (a) lands occupied by profit earning concerns, and (b) those occupied by concerns which were not of a profit earning character. Under the latter category come school buildings, waterworks and sewage farms, and under the former come railways, etc. The law is well discussed in Liverpool Corporation v. Llanfyllin Assessment Committee. It was a case of waterworks concern. The following passage occurs on pages 20 and 21:—

“It is familiar law that, where a hereditament can be compared with other hereditament of a like nature which are the subject of letting, its rateable value may be arrived at by showing what rent tenants from year to year will in fact give for such hereditaments; but a difficulty in rating law arises with regard to hereditament which cannot be compared with other similar hereditament so as to ascertain the rent which a tenant will actually give for them. Therefore, inasmuch as a rateable hereditament cannot be allowed to escape from being rated because no such comparison can-be made, in such cases it has come to be a recognised position that the rent which a hypothetical tenant would give for the hereditament must be estimated in some other way. In a case like the present, where no profits are earned in the parish by the use of the hereditament, a rough way of arriving at the rateable value by rule of thumb, there being no other way available, is to see what the site and the construction of the works cost, and take a percentage on the capital amount so expended as representing the rent which a tenant would give.”

In the case of Liverpool Corporation v. Chorley Assessment Committee and Withnell Overseers(2) the Liverpool Corporation who were owners and occupiers of a system of reservoirs and waterworks purchased 1,165 acres of land to serve as a gathering ground for the water flowing into the reservoirs. The corporation raised plantations on 306 acres of the said land and the remaining 859 acres were kept as moorland. The question was whether the corporation could be rated in respect of the said land. The Court of Appeal held it could. On page 293 of the report, Kennedy L.J observes:

“The only other question, therefore…. is whether or not evidence of the price paid by the corporation is admissible as a basis for calculating the assessment for rating purposes, or, in other words, whether the interest upon that price is some evidence of the rent which an occupying tenant of the gathering ground would pay. I think it is. The law appears to me to be correctly stated by Mr. Ryde at page 176 of the second edition of his work on Rating. He says: ‘The measure of rateable value is defined by statute as the rent which may reasonably be expected; interest on cost or on capital value cannot be substituted for the statutory measure, but can be looked at as prima facie evidence in order to answer the question of fact what rent a tenant may reasonably be expected to pay’.”

This decision was taken up on appeal on another point and the House of Lords confirmed the decision in Liverpool Corporation v. Chorley Union Assessment Committee.

Lastly, in the case of Railway Assessment Authority v. Southern Ry. Co., both the contractor's method and profit basis are referred to. On page 274, Viscount Hailsham, Lord Chancellor, points out that, so far as the railways are concerned, the method adopted was to divide the undertaking into those portions which were regarded as directly productive of profit, such as permanent way, and those portions which were regarded as only indirectly productive, such as stations and other hereditament of that kind. Then the Lord Chancellor, points out that, in the latter case what he refers to as “contractor's basis” was applied. Next as regards directly productive portions, he points out, on page 275, that

“the method of assessment of the rateable value which was in fact adopted was the method which was commonly described as profit basis….. It is not known who first applied this system, but it certainly was in common use by the middle of last century, and it was the system invariably adopted from that time till the outbreak of the Great War.”

Lands covered by culverts, embankments, etc., cannot be compared with other similar hereditaments, because there are none such in the neighbourhood. As pointed out in London County Council v. Erith (Churchwardens and Overseers of Parish of) to which reference has been made already, it is not the property as it was or the property as it might become hereafter, but the property as it is in its present state, that has to be considered in fixing the rateable value. Then, as pointed out in Liverpool Corporation v. Llanfyllin Assessment Committee, inasmuch as a rateable hereditament cannot be allowed to escape from being rated because no such comparison can be made, in such cases it has come to be a recognised, position that the rent which a hypothetical tenant would give for the hereditament must be estimated in some other way. As pointed out in all these cases, where no profits are earned by the use of the hereditament, a rough way of arriving at the rateable value is to see what the site and the construction of the works cost, and take a percentage thereof as representing the rent which a tenant would give.

Mr. Venkatarama Sastri urges that these decisions deal with buildings and lands occupied by buildings and lands which are appurtenant to them. But, even in the case of such buildings and sites, there was only one rule enacted in the Act of 1869, viz., that the gross or annual value i.e the annual rent which a tenant might be expected to pay for it, should be taken as the basis of assessment. And, when determining the “gross value” in the cases of buildings belonging to such concerns, it is pointed out that the rule of thumb, as they call it, of taking the capital value and then fixing a percentage thereon is not unwarranted. We may also point out that, in the case that went up to the House of Lords in London County Council v. Erith (Churchwardens and Overseers of Parish of), some of the lands with which they were concerned consisted of outfall works, sewage works and appurtenances thereto and that on thirty-four acres of land there were no buildings. In Liverpool Corporation v. Chorley Assessment Committee and Withnell Overseers, the land consisted of 1,165 acres of moorland and plantations. In these cases also the same rule was applied.

Therefore if, under the Valuation (Metropolis) Act, resort to the method of capital value or the contractor's method, as it is (jailed, is permissible in a case where there are no similar hereditaments with which to compare that which has to be taxed, then the same conclusion ought to follow in considering the construction of section 82(2) of our Act, which says that the annual value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to let.

It is no doubt true that this rule has been statutorily recognised in the case of railway and Government buildings and buildings of a class not ordinarily let, and in these cases the statute provides that six per cent of the capital value less certain deductions must be taken as the annual value. Even here, it will be seen that the amount arrived at, in the way indicated by the proviso, is stated to be the annual value of the premises. This only means that in certain specified cases six per cent of the capital value less certain deductions is the exclusive method of arriving at the annual value, and its does not mean, as Mr. Venkatarama Sastri asks us to say, that in no other case is the capital value method to be resorted to. It would have been easy for the Legislature to say so if that is what it meant. In section 82(2) the language is general and approximates very nearly to the language used in the English Act of 1869. In the case of lands which cannot ordinarily” be let, the Legislature does not evidently wish to confine the rating authority to the one method, namely, of taking six per cent of the capital value as the rental value, but it leaves it to the rating authority to find the rental value by any of the methods known to law and apply that test which is applicable to the facts of a particular case. The rating authority may take the capital value basis or it may take the profit basis or it may find the’ rental value by some other method. It is left free to adopt that method which is suitable to the facts of each case. We must take it that, as business men, the members of the committee were satisfied that resort to the capital value method was the appropriate method in this case. We are therefore of opinion that the rating authority did not act ultra vires.

We find no substance in the argument that the municipal chairman abdicated his functions and that the tax was fixed by the valuation committee. It is urged on behalf of the respondent that, originally, it was the railway company that invited a resort to the committee procedure, but this cannot prevent the appellant company from urging the objection that, if really the tax was levied not by the chairman but by someone else, the levy is illegal. But in this case we find that it was the chairman who levied the tax ultimately. No doubt, as directed by the Local Government and as requested by the railway company, he convened a meeting and took the sense of the committee, but ultimately he adopted it as his own when issuing the demand notices evidenced by the covering letter, Exhibit D-14.

As the Railway Board has recognised in Exhibit VI(c), this committee has no legal existence. Resort to the committee procedure gives rise to arguments that the levy itself is illegal. The learned Advocate General does not say that there is any foundation in the Act for resort to this procedure. Where the chairman differs and is in a minority, it might well be urged that the levy was made by the committee and not by the chairman. Seeing that it can only lead to complications, the Local Government might well withdraw Exhibit A-6 or put it on a statutory basis.

The next argument is that the vacant lands in question can only be assessed under section 81(3) and that, the Local Government not having framed any rules, the railway company escapes altogether.

We cannot accept the contention of the appellant that, merely because the Local Government has not prescribed the manner in which the capital value should be determined, the municipal council is deprived of the power of levying the tax under: section 81(3). There is in this case a ratification under section 81(3) by the respondent council, by which the council notified that the lands of the category falling under clause 3 would be assessed at one per cent of the capital value. The Local Government refused to frame rules for the vacant lands belonging to railways, and they purport to confine the rules which they did prescribe to other vacant lands coming under clause 3. We doubt very much whether the Local Government can restrict the rules which they frame in the manner in which they have done. It is open to them not to frame any rules relating to the manner in which the capital value of lands falling under section 81(3) should be determined but, once they prescribe the manner in which the capital value of the lands coming under clause 3 should be determined, it is doubtful whether they have the power to restrict the application of those rules to vacant lands other than railway lands.

Evert otherwise, the omission of the rule-making authority to frame rules cannot take away the right of the municipal council to levy tax at the rate mentioned in the notification issued under clause 3. If, for instance, the Local Government refrained from prescribing the manner in which the value of such lands should be determined, it cannot, we think, be said that the municipal council has no power at all to levy the tax at a percentage of the capital value merely because the method of determining the capital value has not been prescribed by the Local Government. If the Local Government does not prescribe it, then the municipal authority is free in our opinion to fix it in any manner it chooses. We have not been referred to any decision on this point except that of the Judicial Committee in Wigg v. Attorney-General for the Irish Free State, but it is doubtful how far that decision applies to the circumstances of this case. We therefore do not propose to rely upon that decision. No other authority has been brought to our notice by either side. We think it is not correct to say that the omission by the Local Government to prescribe the manner in which the capital value is to be determined deprives the municipal council of the power of levying the tax on the capital value basis.

Lastly, it was urged that the municipal council cannot seek to justify the levy under section 81(3), if really the levy was not justified under section 82(2). Our attention was called to the decisions in Foulsham v. Pickles a decision under the Income-tax Act. We do not think it profitable to go into these cases because, in our opinion, the levy under section 82(2) is perfectly justified. But we may point out that there seems to be a vast difference between the provisions of the Income-tax Act and the provisions of the Act under consideration. Here it is the levy of the property tax that is objected to. Even if resort to section 81(3) is necessary, it might well be said that the municipal council is not seeking to justify the levy of the tax under a different schedule or different category but that justification is sought by relying on another rule under the same class of property tax. In the Municipalities Act there are various categories of taxes, property tax, profession tax, tax on companies, tax on animals, etc., and they are set out in section 78(1). If a particular amount is levied from an individual as property tax and if his property is not taxable, then the municipal council cannot justify it on the ground that he is following a profession for which he would be liable to pay the same amount as and by way of profession tax. It looks to us that the decisions relied on by the learned Advocate for the appellant would apply to such cases and not to a case like the present where the same amount of property tax is leviable under one rule or the other. Whether section 81(2) read with section 82(2) is adopted or whether section 81(3) is adopted, in either case it is property tax that is levied and we think, though we do not wish to express a final opinion on it, that resort to section 81(3) would be justified by way of supporting the levy that has been made in this case.

In the view we take, we do not think it necessary to deal with the applicability of Order II, rule 2, of the Civil Procedure Code to the claim made in Original Suit No. 61 of 1935.

Both the appeals are therefore dismissed with costs.

Solicitors for appellants: King & Partridge.

N.S