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Municipal Corporation, Delhi Vs. Sham Kapur, Dewan Daulat Ram, Balkishan Kapur, Phoolan Devi and Brij Amarpal Singh - Court Judgment

LegalCrystal Citation
SubjectMunicipal Tax
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 580 of 1971 and Letter Patent Appeal Nos. 54, 55, 56, 57, 58, 59, 60 and 61 of
Judge
Reported in1972RLR166
ActsDelhi Municipal Corporation Act, 1957 - Sections 116
AppellantMunicipal Corporation, Delhi;dewan Daulat Ram Kapur
RespondentSham Kapur, Dewan Daulat Ram, Balkishan Kapur, Phoolan Devi and Brij Amarpal Singh;new Delhi Municip
Advocates: P.N. Lekhi,; S.N. Chopra,; A.L. Saigal,;
Excerpt:
.....- in other cases annual value shall not exceed agreed rent unless it is tainted by fraud - assessment to be done on basis of agreed rent legally recoverable under rent act where standard rent not fixed. - - the learned judge was of the view that the only provision for the purpose was relating to reasonable cost of construction as well as the market value of th3 land and issued the mandamus. (2) fixing annual value beyond the limits of rent fixed by the rent act is not a reasonable letting value, (3) according to the definition of standard rent in the west bengal rent act, it is the rent which has been fixed or at which it would have been fixed if an application for the purpose had been made (4) the prohibition in the municipal act like the one contained in s. (6) in acutyal..........about the reasonable letting value of a premises. (2) fixing annual value beyond the limits of rent fixed by the rent act is not a reasonable letting value, (3) according to the definition of standard rent in the west bengal rent act, it is the rent which has been fixed or at which it would have been fixed if an application for the purpose had been made (4) the prohibition in the municipal act like the one contained in s. 26 of calcutta municipal corporation act, 1923 was immaterial because it was implicit in the definition of the annual value. (4) padma debi's case was followed in corporation of calcutta vs . life insurance corporation of india : [1971]1scr249 . in guntur municipal council vs . guntur town rate payer's association : [1971]2scr423 , the view in padma debi's case was.....
Judgment:

Andley, J.

(1) The Letters Patent Appeals and the writ petition came up for hearing before Division Bench of the High Court. As these involved consideration of a number of decisions of the Supreme Court and the High Court, these were ordered to be heard by a Fall Bench. The writ petition is in respect of property situated in Jor Bagh within the limit of New Delhi Municipal Committee which is governed by the provisions of the Punjab Municipal Act. The Appeals are in respect of properties to which Delhi Municipal Corporation Act applies. In none of these standard rent has been fixed by the Controller. All the properties are let out to tenants at agreed rate. These properties were assessed for house tax on the basis of agreed rent. This was' challenged on the ground that the basis should be the would be standard rent under the Delhi Rent Control Act. :

(2) The question that arises for consideration, shortly stated is whether in fixing the annual value New Delhi Municipal Committee and Delhi Municipal Corporation are bound by the Standard Rent of the premises which may have been fixed under the provisions of the Rent Restriction Acts and in other cases to determine the standard rent that may be fixed upon an application made for the purpose and to fix annual value at or below but not higher than the standard rent so ascertained or determined.

(3) The learned Single Judge was of the opinion that even in cases where the standard rent had not been fixed under the Rent Act by the Controller it was incumbent upon the Corporation while proceeding to fix the annual value to determine the standard rent in accordance with the provisions of the Delhi Rent Control Act, 1958 and arrive at annual rateable value on that basis. The learned Judge was of the view that the only provision for the purpose was relating to reasonable cost of construction as well as the market value of th3 land and issued the mandamus. The annual value detemineable under section 116 of the Corporation Act and under section 3(b) of the Punjab Municipal Act. The provisions of the two are similar except that section 116 has a proviso to the effect that where standard rent has been fixed under the Delhi and Ajmer Rent Control Act, 1952, the annual value shall not exceed the Standard rent where it has been fixed. It is conceded by the parties that the absence of a similar provision in the Punjab Municipal Act is not material and that it does not alter the law per Corporation of Calcutta v. Life Insurance Corporation 1970 (2). S.C.C. 43. It is further conceded that where standard rent has been fixed or is statutorily determined, the annual value cannot exceed the amount so fixed or determined. The only contention is that where the standard rent has not been fixed in either of the two modes, is it open to the Corporation or the Committee to fix the annual value in accordance with the contractual rent of the premises which has been let out and if it has not been so let and is self occupied by the owner then in accordance with hypothetical rent which a hypothetical tenant shall pay. The contention of the appellant is that it is. While the respondents contend that it is incumbent upon the Corporation or the Committee to ascertain what is the standard rent in accordance with the provisions of the Rent Control Act and then to fix the annual value. In Patel Gordhandas Hargovinddas Vs Municipal Commissioner : [1964]2SCR608 the various Municipal Acts were examined and it was observed that the word rate meant a tax on the annual value of the building or land. Supreme Court considered the effect of local Rent Restriction Acts in Corporation of Calcutta Vs . Smt. Padma Devi : [1962]3SCR49 and it was held that (1) bargain between a Lesser and a lessee affords a useful guide about the reasonable letting value of a premises. (2) fixing annual value beyond the limits of rent fixed by the Rent Act is not a reasonable letting value, (3) according to the definition of standard rent in the West Bengal Rent Act, it is the rent which has been fixed or at which it would have been fixed if an application for the purpose had been made (4) the prohibition in the Municipal Act like the one contained in S. 26 of Calcutta Municipal Corporation Act, 1923 was immaterial because it was implicit in the definition of the annual value.

(4) Padma Debi's case was followed in Corporation of Calcutta Vs . Life Insurance Corporation of India : [1971]1SCR249 . In Guntur Municipal Council Vs . Guntur Town Rate payer's Association : [1971]2SCR423 , the view in Padma Debi's case was held as incontestable. This decision and the decision in Padma Debi's case was followed by a Division Bench of this Court in Municipal Corporation v. Gauri Shanker Gupta 1972. Raj L R 107] in which it has been held 'As the landlord cannot be lawfully expected to get more than the standard rent the assessment of rateable value by the Municipal Corporation should have taken into account the measure of standard rent as determinable under the Delhi Rent Control Act, 1958 by beeping in view the principles laid down in the said Act for fixation of standard rent. The method of flat rates adopted was not in confirmity with the provisions of the Act no. 59 of 1958 and the enhancement made in the valuation could not, thereforee, be sustained irrespective of the correctness or otherwise of the amount assessed.'

(5) It seems to us that if the basis of the valuation by the Municipal Authority is the agreed rent where the standard rent has not been fixed and if such agreed rent is legally recoverable then the principles of Padma Debi's case would not apply. If Rent Act permits or does not prohibit the recovery of agreed rent in the absence of fixation of standard rent then the agreed rate may be taken as the rent at which the premises may be reasonably expected to let. This opinion gets support from the decision Motichand Hirachand and Ors. v. Bombay Municipal Corporation 1958 (1) S.C.R. 546. The annual value of a building is determined under section 131 of the Delhi Municipal Corporation Act and under section 3(1)(b) of Punjab Municipal Act. Under the Delhi Rent Control Act standard Rent is defined 'in relation to any premises, means the standard rent referred to in section 6 or, where the standard rent has been increased under section 7 such increased standard rent.' Section 9 empowers the Controller to fix it in accordance with the provisions of section 6. Section 4 and 6 prohibit the recovery of rent in excess of standard rent and section 48 imposes penalties for contravention of section 5 etc. of the Rent Act. Because of these the dictum in Padma Debi's case fully applies and rent in excess of the standard rent, whether fixed by the Controller or is statutorily determined, cannot be treated as reasonable amount for which the premises can be let. It was held in M.M. Chawla Vs . J.S. Sethi : [1970]2SCR390 that agreed rent under the Delhi Rent Control Act is legally recoverable. thereforee the limit placed by the Supreme Court in Padma Debt's case on rent for which premises can reasonably be let will apply only if the standard has either been fixed by the Controller or is statutorily determined. In Ram Par shad. v. Municipal Corporation of Delhi C.W. No. 112-D of 1962, decided on 19.1.1971, second proviso to section 116(1) fell for cosideration. The premises had been let out at the time of the commencement of the Delhi and Ajmer Rent Control Act, 1952 and the standard rent was statutorily determinable. The Single Judge rightly held that it was not necessary that standard rent should have been actually fixed. The further observation that the second proviso would also cover cases where the standard rent was neither fixed nor statutorily determinable was not correct. In Vidya Parkash v. Municipal Committee 1969 71.P.L.R. 179, Division Bench of this Court construed section 3(1) (b) of the Punjab Municipal Act and rightly held that where standard rent has not been fixed, the actual rent can be deemed to be reasonable letting value of the building. In Municipal Corporation of Delhi v. Lacchmi Narain Singh 1971.R.G.R. 230, the premises had been let out at the time of the commencement of the Act of 1952 and the standard rent stood statutorily determined under the provisions of the Act of 1952. House tax of respondent's house in 1956 was Rs. 40.00 on the basis of annual value of Rs. 444.00. In 1957 the Committee sought to raise the same to Rs. 75.60. The owner objected that the annual value could not be raised because of the statutorily determined standard rent. It was held that since under the Act of 1952, original rent at the time of first letting was the standard rent till the same was varied, the proposed enhancement was not valid and the same was struck down. In our view this case was correctly decided. In Filmistan P. Ltd. v. Municipal Commissioner 1970. Maharashtra. Law journal 866, it was held by trial Court that the agreed rent was reasonable letting value and that Chief Judge under section 217 was not competent to determine the standard rent and that the standard rent could be determined only under the Rent Act, The case was remanded by the High Court asking the Small Cause Court to determine the standard rent. If the learned Judges were of the view in the remand order that the agreed rent, in the absence of standard rent, could not be the basis of the annual value, even though |in the Rent Act its recovery was not prohibited, then we respectfully disagreee with that view.

(6) In acutyal tenancy, a hypothetical tenant materialises into actuality and the agreed rent which is not tainted by fraud, emergency, relationship and such other consideration is a good measure of the rent for which a premises may reasonably be expected to let. Such agreed rent would be subject to the ceiling provided by the standard rent if it has been fixed by the Controller or has been statutorily determined under the relevant Rent Act. If such standard rent has not been fixed by the Controller or statutorily determined under the Rent Act, the agreed rent will be legally recoverable according to Chawla's case and would not, thereforee, be the rent for which the premises cannot be reasonably expected to let. There may, however, be premises which are not let and are occupied by the owner in the relevant year of assessment or premises which have never been let or premises which are newly obstructed but not let and whose annual value is to be ascertained. Even' for such premises, annual value will have to be arrived at in accordance with the provisions of the Rent Act as held in Guntur's Case.

(7) In case of rented premises Annual value shall not exceed standard rent if standard rent is fixed by the Controller or is statutorily determined under the Rent Act, in other cases annual value shall not exceed agreed rate unless it is tainted by fraud, emergency or relationship etc. In case the premises is not let in the year of assessment but let out previously, annual value shall not exceed the standard rent if fixed earlier by the Controller or statutorily determined. In its absence the annual value shall not exceed the agreed rent in earlier year. In case of premises never let or if its annual value is being fixed for the first time, annual value shall not exceed the amount arrived at in accordance with the provisions of Section 6(1)(A)(2)(b) or 6(1), 6(2)(b) of the Rent Act as the case may be, and if the value is not so ascertainable then it should be on the basis of section 9(4) of the Rent Act.

(8) In all cases before us the properties have been let and assessment of the annual value is on the basis of agreed rent which is legally recoverable under the Delhi Rent Control Act as standard rent has not been fixed by the Controller or is statutorily determined. Single Judge was thereforee not right in holding that even in these case the Corporation must ascertain the reasonable cost of construction and the market value to the land to arrive at the annual value. judgments of Single Judge are set aside and cases should be placed before him for deciding other points.


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