Skip to content


Corporation of Calcutta Vs. East India Commercial Company Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtKolkata High Court
Decided On
Case NumberC.R. Nos. 2657-63 of 1980
Judge
Reported inAIR1982Cal479,86CWN926
ActsCalcutta Municipal Act, 1951 - Section 168; ;West Bengal Premises Tenancy Act, 1956 - Section 8(1)
AppellantCorporation of Calcutta
RespondentEast India Commercial Company Pvt. Ltd.
Appellant AdvocatePradip Kumar Ghosh and ;Subrata Basu, Advs.
Respondent AdvocateRanjit Kumar Banerjee, ;A. Mitra and ;Milava Mitra, Advs.
Cases ReferredMrs. Shiela Kaushish v. I. T. Commissioner
Excerpt:
- anil k. sen, j.1. these 7 rules, obtained by the corporation of calcutta on as many as 7 revisional applications, raise a fundamental question as to the mode of assessment of annual value under section 168 of the calcutta municipal act, 1951 (hereafter referred to as the said act) in respect of buildings which are actually let out to tenants on rent agreed but not fixed by the controller under the rent restriction act. such a question arose before the learned chief judge, court of small causes, calcutta, in 7 municipal appeals now pending before him though at an interlocutory stage and the said question having been decided against the corporation of calcutta by the learned chief judge by an order dt. june 30, 1980, the corporation of calcutta has now challenged that order in these.....
Judgment:

Anil K. Sen, J.

1. These 7 Rules, obtained by the Corporation of Calcutta on as many as 7 revisional applications, raise a fundamental question as to the mode of assessment of annual value under Section 168 of the Calcutta Municipal Act, 1951 (hereafter referred to as the said Act) in respect of buildings which are actually let out to tenants on rent agreed but not fixed by the Controller under the Rent Restriction Act. Such a question arose before the learned Chief Judge, Court of Small Causes, Calcutta, in 7 municipal appeals now pending before him though at an interlocutory stage and the said question having been decided against the Corporation of Calcutta by the learned Chief Judge by an order dt. June 30, 1980, the Corporation of Calcutta has now challenged that order in these revisional applications. Both the parties now before us have waived all objections to our deciding the issue at this stage on a revisional application and have invited as to decide on review of the position in law, the correct method to be adopted for assessment of the annual value of buildings so let out to tenants and thus shorten the litigation. The question raised is as to whether the Corporation can assess the annual value of a building which has been let out to tenants having regard to the contractual rent payable therefor when the standard rent of such a building had not been fixed by the Controllerin accordance with the provisions of the West Bengal Premises Tenancy Act, 1956

2. We may refer to the facts of one of the appeals, namely, Municipal Appeal No. 182 of 1972 out of which these rules arise to appreciate how the dispute now brought over to us did arise. The respondent before us raised a multi-storeyed building at premises No. 20, Abdul Hamid Street previously known as British India Street, Calcutta. The building was so raised after the year 1956. By a notice dt. Oct. 10, 1966, issued under Section 180 of the said Act, the Corporation proposed to assess the annual value of the said building to the extent then constructed at Rs. 63,365 with effect from 3rd quarter of 1966-67 until a fresh valuation was made. The respondent preferred an objection u/s. 181 of the said Act and the Special Officer II in disposing of the said objection reduced the valuation to Rs. 49,368. Being aggrieved by the order of the said officer, the respondent preferred an appeal before the Court of Small Causes, Calcutta, which was registered as Municipal Appeal No. 182 of 1972.

3. On May 31, 1974, the respondent filed a petition in the said appeal praying for permission to examine an expert valuer as a witness to prove the cost of construction of the said premises. Such a prayer was made on the plea that for the purpose of assessing the annual value of the disputed premises under Section 168 of the said Act, fair rent thereof should be determined on the basis of actual cost of construction of the building and the market value of the land as envisaged by Section 8 (i) (d) of the W. B. Premises Tenancy Act, 1956, since the building had been constructed after the year 1956.

4. Such a prayer made on behalf of the respondent was strongly opposed by the Corporation on the ground that when undisputedly the premises had been wholly let out, the rent at which the premises might reasonably be expected to let can be determined on the basis of the rent actually realised and as such there is no necessity of adducing any evidence with regard to the cost of construction of the building or the market value of the land for the purpose of determining the annual value under Section 168 of the said Act. The Corporation took the stand that the rent of the premises at the time of assessment being determinate with referenceto the actual rent realised and such rent not being tainted by any extraneous consideration, it was not necessary to determine the fair rent in terms of the W. B. Premises Tenancy Act, 1956, for the purpose of assessing the annual valuation, the agreed rent should be accepted to approximate the fair rent as envisaged by the Premises Tenancy Act,

5. The learned Chief Judge by his order dt. June 7, 1974 upheld the objection raised by the Corporation and overruled the prayer on behalf of the respondent in view of a Bench decision of this court in the case of Corporation of Calcutta v. Basanta Investment Corporation, ILR (1975) 2 Cal 309 where A. C. Gupta, J. (as his Lordship then was) observed:--

'As the premises were actually let out, no question arises in this case as to what rent a hypothetical tenant would be willing to pay for the premises. Reference to Section 8 (i) (d) of the West Bengal Premises Tenancy Act made by the learned Judge of the court below in this context seems to be irrelevant. The court below appears to have overlooked the provisions of Section 4 of the said Act that in case where fair rent of the premises has not been fixed, the tenant must pay to the landlord the rent agreed upon.'

6. It may be pointed out at this stage that special leave petition bearing No. 1256 of 1974 (Civil) for a further appeal to the Supreme Court against the above Bench decision was dismissed by the Supreme Court on Feb. 7, 1975. That apart, the view expressed in the above Bench decision was the consistent view expressed by this court all along. Reference may be made to the Bench decisions in the cases of Corporation of Calcutta v. Union Jute Mill Company Limited, : AIR1957Cal230 and James Finlay Company Ltd. v. Corporation of Calcutta, (1969) 73 Cal WN 961. In the latter decision P. N. Mukherji, A.C.J., observed :

'With regard to this last contention it may at once be stated that, in the absence of any other material relevant on the point, the actual rent may well be a good index of the hypothetical fair rent. From that point of view making of the instant assessment on the basis or in the light of actual rent cannot be objected to.'

7. The respondent challenged the said order passed by the learned Chief Judge on the earlier occasion in a revisional application which was registered as C. R. No. 2360 of 1974 but this court refused to interfere in exercise of its revisional jurisdiction without going into the question of correctness or otherwise of the said decision of the learned Chief Judge.

8. In that background when the said appeal was still pending before the learned Chief Judge and the other 6 appeals were directed to be heard analogously, the respondent renewed his prayer for permission to examine an expert valuer on grounds similar to those made out in his earlier application dt. May 31, 1974, and sought for adjournment of the hearing of the appeal for the said purpose. Obviously the respondent was inspired to do so again in view of a later decision of the Supreme Court in the case of Dewan Daulatrai Kapoor v. New Delhi Municipal Committee, : [1980]122ITR700(SC) . The learned Chief Judge by the order now impugned before us. has this time allowed the prayer made by the respondent. He held: 'That the law as stands today is clearly to the effect that even in the present case where the landlord is realising actual rent from the tenants, for the purpose of assessing annual value, the assessing authority must have to follow the principles laid down in the W. B. Premises Tenancy Act for determining the fair rent.' In that view, the learned Chief Judge recalled the order dt. June 7, 1974, passed by his predecessor and allowed the respondent's prayer for examining an expert valuer for the purpose of determining the fair rent of the building in accordance with the provisions of Section 8 (i) (d) of the W. B. Premises Tenancy Act, 1956. Feeling aggrieved, the Corporation has now moved this court strongly disputing the correctness of the view taken by the learned Chief Judge and the order passed thereon. The respondent appearing to contest these revisional applications, on the other hand, has supported the view taken by the learned Chief Judge. According to the respondent when the W. B. Premises Tenancy Act has fixed the fair rent payable by a tenant in respect of any premises covered by the said Act, a hypothetical tenant cannot reasonably be expectedto pay anything more than the fair rent so fixed by the statute; hence irrespective of what actual rent is being realised from tenants the annual value should be assessed only, on the basis of the fair rent because Section 168 (1) of the said Act en.ioins assessment of annual value not with reference to the actual rent but with reference to the rent at which the premises might reasonably be expected to let. As we have indicated hereinbefore, both the parlies now before us have agreed that the issue raised is a fundamental one and should in the interest of both be decided by this court at this stage so that either of the parties may not be relegated to the position of raising this issue later while preferring an appeal against the final order.

9. In deciding the issue thus raised before us it would first be necessary to recall certain basic principles which are well settled by now. It was pointed out by the Supreme Court in the case of Patel Gordhandas Hargovindas v. Municipal Corporation, Ahmedabad, : [1964]2SCR608 that the term 'rate' had always the meaning of a tax on the annual value or rateable value of lands or buildings and not on their capital value. The methods adopted for the purpose of determining such annual or rateable value are usually threefold, namely. (1) actual rent fetched by land or building where it is actually let, (2) where it is not let. rent based on hypothetical tenancy particularly in the case of buildings and (3) where either of these two methods is not available by valuation basis on capital value from which annual value has to be found by applying a suitable percentage. In India Municipal Acts in authorising municipal authorities to impose a tax by way of rates on lands and buildings really authorise such authorities to levy a tax on the annual or rateable value of such land and building but not on the capital value. Such is the provision in Section 165 of the said Act. Most of these Acts again have adopted the second and third method referred to hereinbefore for the purpose of assessing the annual or the rateable value. The Act now under consideration, that is, the said Act, has adopted such a method and this is quite explicit on the terms of Section 168 (1) (2) and (3) which may conveniently be set out as hereunder:

'168. Amount of consolidated rate, how to be fixed.-- (1) For the purposeof assessment to the consolidated rate the annual value of any land or building shall be deemed to be the gross annual rent at which the land or building might at the time of assessment be reasonably expected to let from year to year, less, in the case of a building, an allowance of ten per cent, for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross rent:

(Provided that in respect of any land or building the rent of which has been fixed under the provisions of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 or the West Bengal Premises Tenancy Act, 1956 (West Bengal Act XVII of 1950, West Bengal Act XII of 1956) the annual value thereof shall not exceed the annual amount of the rent so fixed.) (2) If the gross annual rent of the land not ordinarily let cannot be easily estimated, the gross annual rent of the land for the purpose of Sub-section (1) shall be deemed to be five per cent, of the estimated present value of the land.

(3) If the gross annual rent of a building not ordinarily let cannot be easily estimated, the gross annual rent of the building for the purpose of Sub-section (1) shall be deemed to be five per cent, of the value of the building obtained by adding the estimated cost of erecting the building at the time of assessment less a reasonable amount to be deducted on account of depreciation, if any, to the estimated present market value of the land valued with the buildings as part of the same premises.'

10. It would, however, be useful to remember that in an ordinary situation adoption of the second method does not rule out the application of the first because if the rent actually paid is the result of a fair bargain between the landlord and the tenant and is not affected by any extraneous consideration, that would be the safest index of what a hypothetical tenant would reasonably be expected to pay by way of rent for the land or the building. The position, however, is changed if a statute intervenes and either supersedes the bargain or materially limits the same. Thus if a rent restriction statute operating on the field derecognises the contractual rent and supersedes the same by statutorily fixing the rent payable for such land or building, the contractual rent cannot obviously be the index of rentreasonably expected to be payable by a hypothetical tenant. As pointed out by the Supreme Court where statutory limitation of rent circumscribes the scope of bargain, the hypothetical rent cannot exceed the limit.

11. In the case of Corporation of Calcutta v. Padma Debi, : [1962]3SCR49 , the Supreme Court was considering an assessment under Section 127 (a) of the Calcutta Municipal Act. 1923, terms whereof are materially comparable to those in Section 168 (1) of the said Act, without, however, the proviso now added to Sub-section (1) of Section 168. In that case the rent of the premises under assessment had been fixed by the Controller under the provisions of the W. B. Premises Rent Control (Temporary Provisions) Act, 1950 and yet the assessing authorities of the Corporation in making the assessment of annual value refused to accept the position that such value must not be fixed at a figure higher than the rent fixed by the Controller. On an appeal the Small Cause Court and this Court too upheld the objection of the assessee and held that in view of the provisions of W. B. Premises Rent Control (Temporary Provisions) Act, 1950, the annual value must be assessed with reference to the rent fixed by the Controller. The Supreme Court in upholding the view of this court pointed out that when under the Calcutta Municipal Act, it is the letting value of the land or building to the owner-landlord which has been made the criterion for determining the annual value and when under the Rent Act, the landlord can realise no rent other than the rent fixed by the Controller, such rent must furnish the basis for the valuation. Referring to the terms of Section 127 (a) of Calcutta Municipal Act, 1923, the Supreme Court observed that when assessment has to be made with reference to the gross annual rent at which the land or the building might at the time of assessment reasonably be expected to let, it would be incongruous to consider fixation of rent beyond the limits fixed by the penal legislation as reasonable. The Supreme Court approved the following observation of Atkin. L. J., namely, (at p. 154 of AIR) 'If no higher rent than the standard rent and statutory increases is enforceable as a matter of common sense that seems to be the limit of the rent a tenant can be reasonably expected to give', quoted and relied on by Lord Carson in his dissenting judgment in the case of Metropolitan Borough of Poplar v. Roberts (1922) 2 AC 93,

12. To appreciate the true effect of this decision of the Supreme Court one must take note of the material provisions of the W. B. Premises Rent Control (Temporary Provisions) Act, 1950. That Act was a temporary statute, the object whereof was to make better provision for the control of rents of premises in Calcutta and other municipal areas. Section 2 (10) defined standard rent to mean (a) the standard rent determined in accordance with the provision of Schedule A and (b) where the rent has been fixed under Section 9, the rent so fixed: or at which it would have been fixed if the application were made under the said section. Schedule A statutorily fixed the standard rent by allowing specified percentages of increase under different circumstances prescribed thereunder to the basic rent which again was defined to mean the rent fixed under the previous rent restriction laws and where it had not been so fixed the rent as prevailing on the 1st day of Dec. 1941'. Section 9 provided for fixation of standard rent by the Controller with reference to Schedule A where applicable together with certain increases sanctioned under circumstances prescribed. This section further provided that where Schedule A is not applicable though the premises were in existence since prior to Dec. 1941, the standard rent should be fixed in accordance with Schedule A taking the rent which would have been reasonably payable for the premises if let on the 1st day of Dec. 1941 as the basic rent for the premises. In case of newly constructed buildings Section 9 further provided that the standard rent payable for one year shall be fixed at a rate equal to 6% of the actual cost of construction as determined by the Controller added to the market price as on 31st Dec. 1946, of the land included in the premises or to the market price of the said land as on the date of completion of the construction whichever is less. Having thus statutorily fixed the standard rent, Section 3 of the Act provided that any amount in excess of the standard rent of any premises shall be irrecoverable notwithstanding any agreement to the contrary. Section 17 (1) further provided that such portion of the rent as exceeds the standard rent determined according to the provisionsof this Act shall be irrecoverable from the month of the tenancy next after the month in which the Act comes into force whether the said rent was fixed by agreement or by proceeding under the W. B. Premises Rent Control (Temporary Provisions) Act, 1948. Section 7 provided that where any sum has been paid or deposited on or after the date of commencement of the Act on account of rent which is by reason of the provisions of this Act irrecoverable shall be ordered to be refunded by the Controller on an application being made to him. Furthermore, Section 33 (1) (a) of the Act made it penal for the landlord to receive directly or indirectly any sum on account of rent of any premises in addition to the standard rent. These were the provisions relating to rent realisable from the tenants and were in addition to Section 4 of the Act which prohibited realisation of any selami or premium in consideration of the grant, renewal or continuance of any tenancy.

13. These provisions make it clear that the rent restriction statute then operating on the field did not recognise the contractual rent at all and on the other hand having statutorily fixed the rent payable by a tenant to the landlord made it penal for the landlord to realise anything more than the rent so fixed by the statute. Section 3 and Section 17 (1) in express terms rendered irrecoverable that part of the contractual rent which exceeded the standard rent. As held by Bachawat, J. (as His Lordship then was) in the case of Broja Behari Sen v. Ved Prakash, : AIR1958Cal261 , in contemplation of law the standard rent and the portion of the contractual rent which was not legally recoverable had notional existence as from 30-3-1950 before the standard rent was actually determined by the Rent Controller. In reality, therefore, the statute superseded the contractual rent and imposed the rent fixed by the statute and it is only in the light of such statutory provisions that the Supreme Court held in Padma Debi's case that the annual value has to be determined with reference to nothing else than the standard rent prescribed by the statute, the landlord and the tenant not having any right to determine the rent by mutual bargain.

14. The principles enunciated in the case of Padma Debi : [1962]3SCR49 was reaffirmed by the Supreme Court in the case of Corporation of Calcutta v. Life Insurance Corporation, : [1971]1SCR249 where however, the assessment was being made under Section 168 (I) of the Calcutta Municipal Act. 1951, now under consideration. In reaffirming the principle earlier laid down the Supreme Court overruled the contention of Corporation of Calcutta that addition of the proviso to Sub-section (1) of Section 168 of the said Act changed the legal position and limited application of standard rent only io cases where such a rent had been fixed by the Controller. The Supreme Court held that by addition of the proviso the meaning of the expression gross rent at which the land or the building might reasonably be expected to let is not altered. Hence, the principle earlier laid down in the case of Padma Debi having regard to those terms and having regard to the provisions of the Rent Restriction Act operating on the field was reaffirmed. We must, however, remember that in this case also the rent restriction statute operating on the field was the W. B. Premises Rent Control (Temporary Provisions) Act, 1950, that is the same Act which was the subject matter of consideration in Padma Debi's case and the material provisions whereof we have referred to hereinbefore.

15. In the case of Moti Chand v. Bombay Municipal Corporation, : [1968]1SCR546 (para 5), the Supreme Court held that though the owner of a building cannot charge rent in excess of what is fixed by the rent restriction statute, if such a building because of any special advantage attached to it is likely to fetch some amount in addition to rent, the hypothetical tenant is to take into consideration such extra income and would be prepared to pay over and above the actual rent something in respect of such additional advantage and as such that income comes into consideration in assessing the annual value under the parallel provision of Section 154 (1) of the Bombay Municipal Corporation Act, 1888. This decision establishes the position that it is not the inflexible rule that the annual value must invariably be restricted to the rent as determined by the rent restriction statute irrespective of any other consideration.

16. In both the cases of Padma Debi : [1962]3SCR49 and the Life Insurance Corporation : [1971]1SCR249 referred to hereinbefore Supreme Court was affirming the decision of this court and upholding the view expressed bythis court in the light of the provisions of the W. B. Premises Rent Control (Temporary Provisions) Act, 1950. It is only because that Act statutorily fixed the rent and superseded the contractual rent that this court held that the assessing authorities cannot go beyond the limits of the statute and make the assessment on the rent realised from subtenants or on their own assessment of what the rent payable would be. It is quite obvious that it was so held because the Rent Act of 1950 not only superseded the contractual rent but made realisation of anything more than the standard rent incapable of and penal under the statute.

17. Notwithstanding the view so expressed in those two cases this court again in case of assessment made after 1956, when the W. B. Premises Tenancy Act, 1956, came into effect, consistently held that where fair rent has not been fixed by the Controller under the provisions of the Act of 1956, assessment of annual value can be made having regard to the contractual rent as paid by the tenant. It was so held in the case of James Finlay Company Limited (1069-73 Cal WN 961) and Basanta Investment Corporation (ILR (1975) 2 Cal 309) referred to hereinbefore and the last of the aforesaid decisions was approved by the Supreme Court when the special leave petition for a further appeal to the Supreme Court against that decision was dismissed. In our considered opinion, this court held as such not on oversight of the principles enunciated in the earlier decisions but because of the material change introduced by the W. B. Premises Tenancy Act, 1956. Section 2 Clause (c) of the 1956 Act defines fair rent to mean fair rent referred to in Section 8 or where the fair rent has been increased under Section 9 such increased rent or where the fair rent has been revised under Section 11, such revised rent. Section 8 no doubt statutorily fixes what the fair rent would be and Section 9 permits certain increases to the fair rent on grounds specified. But Section 5 unlike the Act of 1950, prohibits realisation of only any premium or other consideration for the grant, renewal or continuance of a tenancy but not any rent in excess of fair rent as estimated by the statute. But what is more important by way of change is the revised terms of Section 4 thereof, material part whereof may be set out hereunder :

'4. Excess over fair rent to be irrecoverable,

(1) A tenant shall subject to the provisions of this Act pay to the landlord :

(a) in cases where fair rent has been fixed for any premises such rent;

(b) in other cases the rents agreedupon until fair rent is fixed,

* * * (3) any sum in excess of fair rent referred to in Sub-section (1) shall not be recoverable by the landlord.'

Unlike the provisions of Section 3 and 17 (1) of 1950 Act, there is no statutory prohibition against realisation of rent in excess of notional fair rent where such rent had not been fixed by the Controller. Moreover under the new scheme the legislature not only withdrew the statutory prohibition against realisation of any rent other than the fair rent as estimated by the statute but imposed an obligation on the tenant to pay the agreed rent if the fair rent had not been fixed. The reason for introducing such a change was perhaps the fact that rent restriction laws having already been in operation for more than 8 years, the legislature thought that where the landlord and the tenant abide by the rent agreed between them and do not go for fixation by the Controller they do so because the agreed rent bears a reasonable approximation to the fair rent as envisaged by the Act otherwise either of them would have gone on for fixation. Obviously in view of such a change introduced by the statute in a manner recognising the agreed rent to be the fair substitute for the fair rent as estimated by the statute, this court in cases of assessment after the year 1956, upheld the assessment of annual value made on the basis of the agreed rent in cases where the fair rent had not been fixed. Now the only question that arises for our consideration in these Rules is as to whether this view stands overruled by the two subsequent decisions of the Supreme Court in the case of Gun-tur Municipal Council v. Guntur Town Rate Payers' Association, : [1971]2SCR423 and Devan Daulat Rai Kapoor v. New Delhi Municipal Committee, : [1980]122ITR700(SC) as seems to be the view taken by the learned Judge in the court below.

17-A. In the case of Guntur Municipal Council what was being challenged was the general revision made by the Municipality in the year 1960 by increasingthe rental value of buildings to more than the rental value which prevailed on the dates provided in the Rent Control Act in force prior to 1960. Obviously the municipality was totally ignoring the provisions of the Rent Control Act, in making the assessment and a question was raised on behalf of the Rate Payers' Association as to whether such a procedure was in accordance with law or not. All the courts below upheld the objection so raised on behalf of the Rate Payers' Association and the said decision was upheld, by the Supreme Court. Incidentally, it was sought to be argued before the Supreme Court that Section 82 (2) of the Madras Municipalities Act, which is comparable to Section 168 now under consideration, made a distinction between buildings, the fair rent of which has been actually fixed by the Controller and those in respect of which no rent had been fixed. Such a contention was overruled by the Supreme Court when it was held that under Section 82 (2) Municipality is not free to assess any arbitrary annual value but such valuation must take into account the measure of fair rent as determined by the statute whether such determination is incorporated in a fixation made by the Controller or not. Apart from the material difference between the provisions of Andhra Pra-desh Buildings (Lease, Rent and Eviction) Control Act, I960, and those of the W B. Premises Tenancy Act, now under consideration to which reference would be made hereinafter, in the Guntur case, the Supreme Court was not called upon to consider the correctness of an assessment based on agreed rent where the parties abide by such rent and have not gone on for fixation by the Controller and when the statute imposed no prohibition to the realisation of such rent.

18. The point in the aforesaid perspective, however, came up for consideration before the Supreme Court in the case of Devan Daulat Rai Kapoor v. New Delhi Municipal Committee : [1980]122ITR700(SC) (supra). There individual assessments made on the basis of contractual rent where the standard rent had not been fixed by the Controller were challenged. Such assessment was upheld by the Delhi High Court but was set aside by the Supreme Court. There it, was held by the Supreme Court that even in case of a building in respect of which no standard rent had been fixed within theperiod of limitation prescribed by the statute and the tenant's right to apply for fixation of standard rent is barred with the result that the landlord is lawfully entitled to continue to receive the contractual rent, the annual value must be limited to the measure of standard rent determinable under the statute and not on the basis of the higher rent actually received even under those circumstances by the landlord from the tenant. No landlord can reasonably expect to receive from a hypothetical tenant anything more than what is determined by the Act and this would be so equally whether the building has been let out to a tenant who has lost his right of fixation of the standard rent or the building is self-occupied by the owner. The assessing authority would in either case have to arrive at its own figure of the standard rent by applying the principles laid down in the Delhi Rent Control Act, 1958, for determination of standard rent and determine the annual value of the building on the basis of such figure of standard rent. The Supreme Court thought that to be the legitimate extension of the principle initially laid down in Padma Debi's case : [1962]3SCR49 which was reaffirmed in the case of Life Insurance Corporation.

19. In our view it would be necessary to refer to the material provisions of the Delhi Rent Control Act, 1958, and the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960, in the light of the provisions whereof the Supreme Court held that the measure of rent as prescribed by the statutes must prevail over the contractual rent for furnishing the basis for assessment of the annual value. Section 2(k) of the Delhi Rent Control Act, 1958, defines standard rent in relation to any premises to mean the standard rent referred to in Section 6 or where the standard rent has been increased under Section 7, such increased rent. This definition clause is similar to the one in the W. B. Premises Tenancy Act 1956. Section 6 of the Delhi Act, like Section 8 of the W. B. Premises Tenancy Act, statutorily fixes the standard rent. Section 7 permits certain increases. But Sections 4 and 5 of the Delhi Act are materially different from the corresponding provisions of the W. B. Act. Section 4 provides in express terms that subject to one exception (not relevant for our present Purposes) no tenant shall notwithstanding any agreement to the contrary be liable to pay to his landlord for the occupation of any premises any amount in excess of the standard rent of the premises unless such amount is a lawful increase of the standard rent in accordance with the provisions of this Act. Sub-section (2) of Section 4 goes on to provide that any agreement for payment of rent in excess of standard rent shall be construed as if it were an agreement for the payment of the standard rent only. Sub-section (1) of Section 5 prohibits any person from claiming or receiving any rent in excess of standard rent notwithstanding any agreement to the contrary and Sub-section (2) thereof incorporates such a prohibition against realisation of any premium or other consideration for grant, renewal or continuance of a tenancy. The Delhi Act incorporates a new innovation when in Section 12 it provides for limitation for filing an application to the Controller for fixation of rent under Section 9. This Act unlike the W. B. Act does not recognise the contractual rent and in substance supersedes the same by the standard rent fixed by the statute. That follows from the provisions of Sections 4 and 5(1) of the Delhi Rent Control Act. It may be that in an individual case the right to have the standard rent fixed by the Controller may be lost to an existing tenant by the limitation prescribed by the statute as a result whereof it may not be unlawful for the landlord to realise the contractual rent from that tenant but that is not important because the statute does not recognise the contractual rent in any manner and when the assessment of the annual value has to be made not on the basis of rent paid but on what would be reasonably expected to be payable by a hypothetical tenant, it was pointed out by the Supreme Court that the hypothetical tenant cannot reasonably be expected to pay anything more than what is determinable under the statute because the limitation will never operate as against him.

20. The provisions of A. P. Buildings (Lease, Rent and Eviction) Control Act, 1960, are a little different from the Delhi Act. But this Act too bears a material difference from the W. B. Act now under consideration by us. In the A. P. Act, there is no definition clause but Section 4 provides that the Controller shall fix the fair rent having regard tothe considerations set out in the section itself together with certain permissible increases. Section 5 provides for increases to fair rent once fixed. Sub-section (1) of Section 7 imposes a prohibition on the landlord prohibiting him from claiming, receiving or stipulating for payment anything in excess of the fair rent where fair rent has been fixed and Sub-section (2) of that section imposes such a prohibition on the landlord prohibiting him from claiming, receiving or stipulating for payment of any amount in excess of the agreed rent where the fair rent had not been fixed. This slatute unlike the W. B. Act does not recognise the contractual rent though it does not make such rent irrecoverable until the fair rent is fixed.

21. We have referred to the material provisions of the W, B. Premises Tenancy Act, 1956, now under consideration. The change that was introduced in that Act from the previous Rent Restriction Acts has got an important bearing which in our view makes all the difference. Unlike the Delhi Act or the A. P. Act, the Act now under consideration by us not only recognises the contractual rent but makes it obligatory for the tenant to pay such rent until the fair rent is fixed. This positive nature of the statutory provision equates the contractual rent with the fair rent as estimated by the statute. It would bear repetition to say that the statute did so because it contemplated that where the landlord and the tenant abide by the contractual rent and do not go for fixation by the Controller they do so because the contractual rent bears a reasonable approximation to the fair rent envisaged by the statute. Such being the difference in the scheme of the W. B. Act from the scheme of the Acts under consideration by the Supreme Court in the above two cases, we feel inclined to hold that the principles enunciated by the Supreme Court in the later two cases particularly, in the case of Devan Daulat Rai Kapoor : [1980]122ITR700(SC) (supra) can have no application to a case like the one now under consideration. For the very same reason the still later decision of the Supreme Court in the case of Mrs. Shiela Kaushish v. I. T. Commissioner, Delhi, : [1981]131ITR435(SC) is distinguishable from the present case. Here the Rent Act itself having recognised the contractual rent and having made it payable by the tenant on the basis thatsuch rent bears fair approximation to the measure of rent prescribed by the statute there would be no bar on the assessing authority to assess the annual value with reference to such contractual rent as is being paid without any objection by the tenant to the landlord. On the scheme of the present W. B. Act in a case where the rent had not been fixed by the Controller the contractual rent as paid by the tenant cannot be said to furnish no foundation for assessment of rent reasonably payable by a hypothetical tenant. Such being the position, we are unable to hold that the learned Judge in the court below was right in his conclusion that the law as it stands is to the effect that even in a case where the landlord is realising contractual rents from the tenants no fair rent being assessed under the statute, for the purpose of assessing the annual value the assessing authority cannot base his assessment on such contractual rent but has to follow the principles laid down in the W. B. Premises Tenancy Act for determining the fair rent. On the view we take the impugned order made on a misapprehension of the legal position and as such in illegal exercise of jurisdiction should be set aside as otherwise the parties are bound to suffer serious prejudice. In the result, Rules are made absolute and we set aside the impugned order and reject the assessee's application for permission to examine an expert to prove the cost of construction with a view to fix the fair rent with reference to Section 8 (1) (d) of the W. B. Premises Tenancy Act, 1956. Parties do bear their respective costs in this Rule.

22. Certificate under Article 133(1) of the Constitution is prayed for and the same is refused on the ground that this is not a final order.

23. There will be stay of the operation of the order for a period of one month from date, as prayed for.

B.C. Chakeabarti, J.

24. I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //