P.R. Gokulakrishnan, J.
1. The 1st defendant is the appellant. The plaintiff is a tenant in respect of a building door No. 15-A in West Veli Street, Madurai, belonging to the 2nd Respondent. The case of the plaintiff is that the building is an old and partly dilapidated one. In or about 1956, the plaintiff as a tenant took the building on lease under agreement Exhibit A-5, agreeing to pay a rent of Rs. 200 per mensem to the 2nd respondent. A sum of Rs. 1,000 as advance was given for improvements. About two days later it was found that Rs. 1,000 was not enough for improvements of the building. There was then a further fresh agreement on a rent of Rs. 215 per mensem with the tenant advancing Rs. 10,000 for improvements to be made, providing that if any further sum was to be spent over Rs. 10,000 the tenant should alone bear it; out of it Rs. 5,000 was to go in reduction of rent monthly and the balance to be given when the plaintiff vacated. But 2nd respondent contends that it was a gift. It is admitted that Rs. 10,000 and more was spent and he was occupying from 1959. The tax till then was only Rs. 59-9-0 but after finishing of the lodge, under Exhibit A-1 the tax was increased to Rs. 578-32 and odd, vide Exhibit A-2 for 1957-58 and it was further raised to Rs. 975-22 for 1960-61 on the ground that besides the plaintiff's running the Regal Lodge and occupying a portion, there were 6 other tenements, a number of rooms and other 6 tenements paying fixed cent, and that several rooms fetched daily rent. There was a revision petition by the owner 2nd respondent under Exhibit B-2 resulting under Exhibit B-7 in the order reducing half-yearly tax to Rs. 919-34. The enhanced assessment of Rs. 919-12 from Rs. 341-02 for 6| years amounted to Rs. 2,046-12 and is now claimed to be illegal assessment and due to the plaintiff by way of recovery in the suit. The 1st defendant who is the appellant herein contended that the plaint is not maintainable as he is not entitled to file this suit being in occupation of only a portion of the building. The plaintiff has improved the portion occupied by him by spending Rs. 10,000. The landlord is getting a rent of Rs. 360 per mensem from the other 6 portions. In the portion occupied by the plaintiff, a monthly rent was fixed at Rs. 500 after making due allowance for amenities, vacancies and services rendered. The annual value was fixed at Rs. 9,632 and the half yearly tax was assessed at Rs. 975-22 NP. for 1960-61. In the revision petition filed by the 2nd defendant the annual value was reduced to Rs. 9,080 and the half yearly tax was reduced to Rs. 919-22 NP. which was also confirmed in appeal. The levy of the assessment is within the framework of the Act and is in strict compliance with the provisions of the Act and this suit is barred under Section 354 of the Madras District Municipalities Act. No excess amount as alleged has been collected. The plaintiff is getting an additional rent of Rs. 15 by leasing a portion of the building for advertisement and the annual value was increased to Rs. 9,248 and the half yearly tax to Rs. 936. 33 NP. for S962-63.
2. The 2nd defendant contended that he is adopting the plaintiff's contention regarding the 1st defendant's power to enhance the assessment in respect of the suit property commencing from April, 1960. He disputes the plaintiff's allegations regarding the contract of lease as between himself and the plaintiff. He denies the allegation that the plaintiff had paid Rs. 2.046-12 NP. to the 1st defendant as he had paid only Rs. 1,023-06 and that has been adjusted in the rent payable. He refutes the allegation that the plaintiff approached him to join hands with him in filing the suit. Regarding the plaint allegations about the lease he has sent a reply notice. He contended that he is not a necessary party to the suit. The trial Court after elaborately discussing the evidence on record and also the Madras District Municipalities Act declared the assessment in question illegal and void and decreed for the recovery of Rs. 2046-12NP. from the 1st defendant who is the appellant herein. The 1st defendant i.e. the Madurai Municipality through its Executive Authority the Commissioner preferred an appeal to the Second Additional Sub-Judge, Madurai. The lower Appellate Court took up for consideration as to whether the enhanced assessment made by the Municipality to the extent from Rs. 578-32 to 919-34 for every half year and in all amounting to Rs. 2046-12 is an illegal one and irrecoverable from the plaintiff. The lower appellate Court after observing that the income must be representing the actual rent that went into the pocket of the landlord and that the real rental income that would go to the landlord is only Rs. 215 per mensem as the other income is a fluctuating one daily or yearly, there being no guarantee that the same income would be throughout the month and year, held that the assessment is illegal. The result was that the suit filed by the plaintiff who is the 1st respondent herein was decreed. Aggrieved by the judgment and decree of the Courts below the 1st defendant has preferred the above Second Appeal. Mr. Alagiriswami, the learned Counsel for the Madurai Municipality was not able to advance his case about the basis of the assessment, in view of the bench decision in Municipal Council, Tirunelveli v. Haniffa : (1969)2MLJ495 . But he contends that there is a definite improvement in respect of the suit building to the tune of Rs. 10,000 and the Municipality can take this into account and then collect the assessment on this basis. I do not think it is necessary for me to decide as to how and on what amount the Municipality has to assess the tax payable by the parties concerned, since the Municipality has ample power under the Madras District Municipalities Act either to revise assessment on fresh facts or at the stage when it makes the assessment on quinquennial basis. It is always open to the Municipality to take into consideration the relative facts as per the provisions of the statute for the purpose of enhancing the property tax. The decision in this case is confined as to whether the basis adopted by the Municipality in enhancing the tax is legal or not. Section 82 of the Madras District Municipalities Act deals with method of assessment of property. Section 82(2) states '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 from month to month or from year to year less a deduction in the case of buildings, of ten per cent, of that portion of such annual rent which is attributable to the buildings alone, apart from their sites and adjacent lands occupied as an appurtenance thereto; and the said deduction shall be in lieu of all allowance for repairs or on any other account whatever'. The learned Judges of this High Court have observed in Municipal Council, Tirunelveli v. Haniffa : (1969)2MLJ495 . 'Under the guise of levying property tax, it would not be competent to the municipality to levy tax upon the profits earned by the tenant in his business though the municipality seeks to levy and recover the tax from the owner. The main basis is the rent realised by the landlord i.e., the value of the holding in his hands and not the value of the holding in the hands of the tenant after he had invested capital and effected several improvements and changes and made it suitable for particular purpose after providing various amenities.' The High Court has further held: 'Though the municipality while determining the annual rental value is not bound by the actual rent paid by the tenant, the rent fixed under the lease deeds should normally be taken as the best prima facie evidence in the absence of proof that any other element was responsible for fixing up a lower rent. If the municipality wants to enhance rent, there must be proof that a hypothetical tenant intending to use the property for the same purpose would pay more. If the claim of the municipality based upon the subsequent use to which the tenant would put the property in future were accepted it will lead to strange and anomalous results besides serious hardship and injustice to the owners of the property.' Considering the section of the Madras District Municipalities Act and also the decision in Municipal Council, Tirunelveli v. Haniffa : (1969)2MLJ495 , it is clear that the basis adopted by the Madurai Municipality is illegal. The Municipality has definitely taken into consideration the income earned by the tenant and has completely given a go-by to the principles and the method enunciated in Section 82 of the Madras District Municipalities Act. The observations of the lower appellate Court as if the income must be representing the actual rent that went to the pocket of the landlord cannot be correct and the assessment need not be on the basis as to what actually the landlord receives from the land but it must be on the basis of the gross annual rent at which they may reasonably be expected to let from month or from year to year as enunciated in Section 82(2) of the Madras District Municipalities Act. In any event, it is admitted that the basis on which the taxes have been increased is upon the income received by the tenant, who has put up the building for the purpose of letting out for the lodgers. It is clearly in contravention of Section 82 of the Madras District Municipalities Act. Hence the basis of assessment is illegal. In this view, I do not think there is any point in the present Second Appeal and hence the same is dismissed. There will be no order as to costs. No leave.