1. These two revisional applications raise a common question and the question raised is about the meaning to be given to the expression 'rent' as occurring in Rule 7(1) of the Taxation Rules in Chapter VIII of the schedule to the Bombay Provincial Municipal Corporations Act, 1949.
2. The applicants are owners of certain tenements which were let out to different tenants. These tenements are situate within the limits of the Municipal Corporation of Ahmedabad and the rateable value of these tenements for the year 1952-53 had to be fixed. It appears that there was a covenant in a lease executed between the applicants and their tenants whereby the tenants were to pay the rent as well as the Municipal taxes to their landlords. The Municipal Corporation calculated the rateable value, treating the rent and taxes as rent recovered by the landlords.
3. The applicants, feeling aggrieved by the aforesaid method of calculation, contended that they were entitled to deduct the amount of taxes as the applicants were merely the agents of the Corporation when they collected the taxes from their tenants. They took the contention that the rateable value should, therefore, be fixed on the basis of rent alone. The Small Cause Court, Ahmedabad 'before which this proceeding was taken, held that the taxes paid by the tenants should be included in the amount of the rent in determining the rateable value of the tenements aN appeal was preferred from the order of the Court of Small Causes in the Court of the District Judge, Ahmedabad and the learned Assistant Judge, Ahmedabad confirmed the view taken by the Court of Small Causes and dismissed the petitioners' appeal. It is from that order that the present application in revision has been brought.
4. Upor this application, it is contended on behalf of the applicants that the learned Assistant Judge was wrong in taking the view that the taxes should be taken into consideration along with the amount of the rent in determining the rateable value of these tenements. Mr. C. K. Shah has drawn our attention to certain provisions of the enactments. To take the Bombay Provincial Municipal Corporations Act, 1949, first, the material provision which requires construction is Rule 7(1) of the taxation rules. The rule in question runs as follows:
'In order to fix the rateable value of any building or land assessable to a property-tax there shall be deducted from the amount of the annual rent for which such land or building might reasonably be expscted to let from year to year a sum equal to ten per cent of the said annual rent, and the said deduction shall be in lieu of all allowance for repairs or on any other account whatever'.
It should be noticed that, according to Rule 7(1), there is a flat rate of deduction which is a reduction of 10 per cent of the annual rent and it is significant that the rule goes on to provide that the deduction shall be in lieu of all allowances for repairs or on any other account whatever. The expression 'in lieu of all allowances for, repairs or on any other account whatever' is significant. This shows that once a ten per cent deduction is made then there is no other allowance permissible according to Rule 7(1). Now, the expression 'rent' is not defined in the Act, But it will be convenient to mention two definition's as given in Section 2(53) and 8 2(54). In Section 2(53), the term 'rack rent' has been defined and it means the amount of the annual rent for which the premises with reference to which the term is used might reasonably be expected to let from year to year as ascertained for the purpose of fixing the rateable value of such premises. Then Section 2(54) defines 'rateable value' and it means the value of any building or land fixed in accordance with the provisions of the Act, and the rules for the purpose of assessment to property taxes. Now, We are here concerned with the rent and not the rack rent and, therefore, we will have to go, for the purpose of definition, to Section 105 of the Transfer of Property Act. Section 105 defines the expression 'lease' and it says:
'A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time., express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered, periodically or on specified occasions to the transfer by the transferee, who accents the transfer on such terms. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium and the money, share, service or oilier thing to be so rendered is called the rent.'
It is apparent that the expression 'rent' as defined in Section 105 is wide. The expression 'rent' does not mean only money. The rent may be in the form of share. It may again be in the form of service or it may take the form of Siny other thing to be so rendered. Now, in this case, there was a covenant between the landlords and the tenants, and under the covenant the tenants were to pay the rent in addition to the municipal taxes to the landlords. There can be no doubt, therefore, that according to the terms of the lease, it was the tenant who was liable to pay the municipal taxes. But the liability under the Act is primarily the liability of a landlord. In this connection, reference may be made to Section 105 which, by Sub-section (1)(b) (i). says: 'If the premises are not so held, from the lessor if the premises are let.' This shows that the primary liability is upon a landlord, and not upon a tenant. If this be the true position, as indicated in Section. 139, what happens is that where the statutory liability is upon a landlord, the liability to pay municipal taxes is transferred, according to the terms of the lease, to a tenant. In other words, the position is that the landlord is saved the amount and it may well be that that was a consideration while granting the lease. To the extent that a tenant pays these taxes, the landlord undoubtedly gets a benefit; and when the landlord has got this benefit in so far as the tenant is required to pay the municipal taxes. It may well be that that was a consideration which Influenced the landlord in fixing the amount of the rent. As we read the definition of the expression 'rent' occurring in Section 105 of the Transfer of Property Act, there is no difficulty in saying that the rent may not necessarily be in the form of cash only. If the rent can be in any other form as in this case in the nature of the payment of municipal taxes, there is no reason why we should not Rive the expression 'rent' a meaning which is consistent with the definition as occurring in Section 105. Mr. C. K. Shah, who appears for the applicants, contends that in so interpreting the expression 'rent', we would be adding to the section words which do not occur there. He says that, the expression 'rent' means rent and nothing else. He says that it cannot mean that in the expression Tent' the municipal taxes need be included. But, we think that that is not necessarily the only construction. After all, there is a covenant and under the covenant the liability is placed upon the tenant. But the primary liability is upon the landlord. Therefore, the payment of municipal taxes may well be in the nature of rent, though not the rent, strictly so-called.
5. In this connection, one may refer to what the learned author of the Transfer of Property Act, 4th Edition, 1956, has observed at page 609 under the caption 'Rent'. The following passage occurs there:
'But in Indian Law, any payment by the lessee that is part of the consideration of the lease is rent. Thus when the lease provides for collection charges in addition to rent, such charges are really part of the rent.'
With respect, this is the right view to take.
6. Mr. C. K. Shah, says that so far as the Bombay Municipal Boroughs Act, 1925, is concerned, there was a distinct provision and that provision is to be found in Section 78. He says that there is no corresponding provision to be found in the Bombay Municipal Corporations Act, 1949. But, in our view, rule 7(1) is, in itself, clear, it provides for a deduction of 10 per cent which, we think, is a flat rate, and what is significant is the expression 'on any other account whatever'. Some reasonable meaning must be given to this expression. It means obviously, we think, that the municipal taxes cannot be omitted from consideration in determining the rateable value of a property.
7. Mr. V. S. Desai, the learned Assistant Government Pleader, to whom we are indebted for mentioning to us the practice prevailing in the three Municipal Boroughs existing in this State, says that the practice as prevailing in Bombay and in Poona is that the municipal taxes are not taken into consideration, whereas in Ahmedabad the practice is to take into consideration the municipal taxes along with the rent in determining the rateable value of a property. But we think that the practice, if any, cannot surely be a determining factor in ascertaining the true meaning of Rule 7(1). If there is a lease between a landlord and a tenant and by the lease the tenant agrees to pay the municipal taxes and the landlord is saved, to that extent, from the payment of municipal taxes, there is no reason why we should not consider the municipal taxes as forming part of the rent. It is at least in the nature of rent and this view is supported by the observations to which reference has been made already and also having regard to the definition of the expression 'rent' as occurring in Section 105 of the Transfer of Property Act.
8. In our view, therefore, the decision of the learned Assistant Judge is right.
9. Mr. R. M. Shah, has pointed out Section 413 of the Act as affording an answer to the applicants' contentions. Section 413, by Sub-section (1), provides that every rateable value fixed under the Act against which no complaint is made as 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 the decision of the Judge aforesaid upon any appeal against any such value or tax if no appeal is made therefrom under Section 411 and if such appeal is made the decision of the District Court in such appeal shall be final. Mr. R. M Shah says that the intention seems to be that the order of the District Court is to be final. which means that the matter cannot be agitated further by way of revision in this Court. Now, the present application is under Section 115 of the Code and we can interfere only if the case falls within any one of the three clauses of Section 115. But, surely, it cannot be suggested that if the question is one of principle, the High Court will be powerless to Interpret the provisions of law, and Mr. R. M. Shah has not contended in that sense. His contention is that the jurisdiction of the High Court to interfere in revision is a limited jurisdiction and unless it is shown that the decision is one which strictly comes within one of the three clauses of Section 115, we should not interfere with the order of the Court below. There is something to be said in support of this contention; but as, in our view, the decision of the 'Court below is right, it is not necessary to consider the precise scope of Section 413 of the Act.
10. The result is that the view taken by the Court below is right. The application, therefore, fails and the rule will be discharged with costs.
11. Revisional application No. 80 of 1956 raises a similar point, in that application the applicants are the same and the year in question is the year 1953-54. The point raised in this revisional application is precisely the same and for the reasons given in revisional application No. 825 of 1955, this application must also fail and the rule will be discharged with costs.
12. Rule, discharged.