Norman Macleod, Kt., C.J.
1. The plaintiff filed this suit in the Small Causes Court claiming to recover rent of premises let out to the defendant. They were originally let to the defendant in September 1917 for a period of two years at Rs. 55 a month. The defendant paid that rent up to October 1918, and thereafter was willing to pay Rs. 44 a month; which he alleged to be the standard rent. The plaintiff claimed that the basis for the standard rent was Rs. 55, that the premises were not let out at their full and proper value of Rs. 55 a month on January 1, 1916, but at a confessional rent of Rs. 40 to the plaintiff's sister's husband and; therefore, he was entitled to charge the defendant Rs. 60-8-0. The plaintiff also stated that he had spent Rs. 58,000 for extensions and improvements to the premises in 1919, and so he claimed standard rent at Rs. 110 from July 1920, on the basis of the said improvements and extensions. He further claimed that he had to pay Municipal taxes on a higher rateable value, and had paid Rs. 400 to the Municipality for the said excess up to September 30, 1921. The fact that the rateable value was increased was due, according to the plaintiff, to the defendant's sub-letting a portion of the premises at a rent of Rs. 225, after they had been improved.
2. On the application of the defendant the suit was transferred to the High Court. The defendant then filed his written statement and counterclaim. The following issues were raised at the hearing before Mr. Justice Pratt:-
(1) What is the standard rent of the promises in defendant's occupation ?
(2) What is the expenditure incurred by the plaintiff in making improvements or structural alterations, if any, to the premises in defendant's occupation?
(3) From what date is the plaintiff entitled to such increase, if any ?
(4) Whether the plaintiff agreed to restore defendant to possession within three months or reasonable time of his vacating the premises and whether he committed a broach of that agreement'!
(5) If so, to what damages is defendant entitled for such breach ?
3. The Judge disallowed issues Nos. 4 and 5, and found that the standard rent was Rs. 53 plus 10 per cent, total Rs. 60-8-0. On the facts proved before him, the Judge was of opinion that Rs. 40 paid by Ferdun or Ferdun's wife, when in occupation of the premises on January 1, 1916, was a concessional rent, and consequently, he was entitled to treat the rent paid under the lease of 1917 as the proper rent for the purposes of the Act.
4. Now it appears that Ferdun's wife was related to the plaintiff. Ferdun's business was not doing well, therefore the plaintiff, as the premises were vacant, let them to Ferdun at a lower rent than would ordinarily be charged. We think there was justification for the Judge holding that Rs. 40 was a concessional rent, and the cross objections as to this finding must be disallowed.
5. The plaintiff, however, has appealed against the Judge's finding that he was not entitled to charge rent at Rs. 110, after the premises had been altered and. improved, as he had not given proper notice under Section 7 of the Bombay Rent (War Restrictions) Act II of 1918. The plaintiff relied upon the letter written to the defendant on June 30, 1920, at p. 14, Part III. Under Section 7 (1) (a):-
Where the increase of rent is on account of such expenditure as is mentioned in Section 4 [that is to say, expenditure on improvements and alterations], (notice to increase the runt must be accompanied) by a statement of the improvements or alterations effected and of their cost.
6. Now there is no statement in the letter of June 30, 1920, of the improvements or alterations effected to the premises occupied by the defendant. The statements of account annexed to the letter show that Rs. 58,473-6-0 had been spent on the building. But it is impossible to make out from those statements what were the actual improvements and alterations effected to the whole building, let alone what improvements or alterations were effected to the premises occupied by the defendant. We think the Judge was right in holding that the plaintiff' could not seek to charge the defendant a higher rent on account of improvements and alterations effected to the premises in his occupation.
7. Then the next question was whether the plaintiff was entitled to recover a certain proportion of the Municipal rates and taxes paid by him after the rateable value had been increased. The plaintiff claimed to recover that amount irrespective of the Kent Act under Section 147 of the City of Bombay Municipal Act 1888. The learned Judge thought that that section must be read subject to the restrictions contained ins. 7 of the subsequent Bombay Act II of 1918, and this increase in assessment was not recoverable as increased rent from the tenant unless notice thereof had been given in accordance with the terms of that section. Therefore, he held that the plaintiff was not entitled to recover anything as increased rent or on account of the increase in the Municipal taxes, but was entitled to recover arrears of rent at the rate of Us. 55 from November 1, 1918, to August 31, 1919, and Rs. 60-8-0 from September 1, 1918, to February 28, 1922. He passed a decree for that amount, without making any order for the costs of the suit. The defendant's counter-claim was dismissed with costs.
8. We cannot agree with that decision. Under Section 147(1) of the City of Bombay Municipal Act III of 1888 :--
If any premises assessed to any property-tax are let and their rateable value exceeds the amount of tent payable in respect thereof to the portion 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 which would be leviable from him if the said tax were calculated on the amount of rent payable to him.
9. That means that if the rent paid by the tenant is leas than the rateable value, the landlord can recover from the tenant the tax which he has to pay on the difference between the rent payable by the tenant and the rateable value fixed by the Municipality. The right to claim from the tenant under Section 147 (1) payment of a certain portion of the Municipal taxes, which are primarily leviable under Section 146 of the Bombay Municipal Act from the lessor, has nothing whatever to do with the question of rent payable by the tenant.
10. In this case the defendant seeks to connect the plaintiff's claim to recover a portion of the taxes with Section 6 of the Bombay Rent Act, which says :--
Where the landlord pays any Municipal rates cesses, or taxes in respect of any promises, an increase of the rent thereof shall not be deemed to be an increase for the purposes of this Act, if the amount of the increase does not exceed any increase in the amount for the time being payable by the landlord in respect of such rates, cesses or taxes over the amount paid in the period of assessment which included the first day of January 1916.
11. That section applies to an entirely different state of facts to that which was intended to be covered by the provisions of Section 147 of the City of Bombay Municipal Act. If a landlord seeks to increase the rent payable by the tenant, and if he can show that he is paying a higher amount for rates or taxes than he was paying on January 1, lyl6, then so far as his demand for an increase of rent is covered by the increased amount payable by him for rates and taxes, it will not be considered an increase of rent for the purposes of the Act.
12. So the question whether proper notice was given under Section 7 of the Rent Act does not arise in this case. The mention in the letter of June 30, 1920, of the probability of the Municipal taxes being increased is somewhat obscure, apart from being ungrammatical. But at any rate, it cannot be said that the plaintiff was seeking to charge an increased rent, because the t ix was increased, and it may be inferred that he was seeking to recover the difference between the tax on the rate able value and the tax on the rent payable by the tenant. In any event, we think the plaintiff was entitled to take advantage of the provisions of Section 147 of the City of Bombay Municipal Act, and that the Rent Act did not apply, if plaintiff could show that the rateable value of the premises exceeded the amount of the rent payable in respect thereof by the tenant. It dues not appear from the evidence that this point was sufficiently carefully considered when the evidence was being recorded, and its importance was only realised when the arguments of counsel were heard at the close of the case.
13. If the parties cannot agree on the excess amount which was paid by the plaintiff owing to the difference between the rate able value of the premises and the rent payable by the defendant, there must be a reference to the Commissioner to ascertain that difference before we can pass a final decree. We see no reason why the plaintiff should not be entitled to a portion of the costs of the suit, as it was at the defendant's instance that the suit was transferred to the High Court. Therefore the plaintiff will be entitled to three-fourths costs of the suit and the appeal. Plaintiff is entitled to the coats of the cross-objections.