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Corporation of Calcutta Vs. Sm. Padma Debi and ors. - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 349 of 1953
Judge
Reported inAIR1957Cal466,61CWN129
ActsCalcutta Municipal Act, 1923 - Sections 127 and 150; ;West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 - Sections 3, 5, 9, 26 and 33;;Constitution of India - Article 14
AppellantCorporation of Calcutta
RespondentSm. Padma Debi and ors.
Appellant AdvocateSunil Kumar Basu, Adv.
Respondent AdvocateBijan Behari Das Gupta and ;Sarojendra Nath Das Majumdar, Advs.
Cases ReferredB. N. Ry. Co. v. Corporation of Calcutta
Excerpt:
- lahiri, j.1. the questions which arise for my consideration on this reference under clause 36 of the letters patent have not been formulated by the division court which heard the appeal; but on going through the dissentient judgments of the two differing judges (guha ray and sen jj.) i understand that they differed on the following questions:1. whether in determining the annual, value of a building under section 127 (a), calcutta municipal act, 1923 the corporation of calcutta is bound by the standard rent fixed by a rent controller under the west bengal premises rent control (temporary provisions) act, 1950.2. what is the meaning of the expression 'at the time of the assessment' occurring in section 127(a), calcutta municipal act, 1923?3. whether in tin's particular case it can be said.....
Judgment:

Lahiri, J.

1. The questions which arise for my consideration on this reference under Clause 36 of the Letters Patent have not been formulated by the Division Court which heard the appeal; but on going through the dissentient judgments of the two differing Judges (Guha Ray and Sen JJ.) I understand that they differed on the following questions:

1. Whether in determining the annual, value of a building under Section 127 (a), Calcutta Municipal Act, 1923 the Corporation of Calcutta is bound by the standard rent fixed by a Rent Controller under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950.

2. What is the meaning of the expression 'at the time of the assessment' occurring in Section 127(a), Calcutta Municipal Act, 1923?

3. Whether in tin's particular case it can be said that a standard rent was in existence at the time of the assessment.

2. I am not very sure whether I have -any jurisdiction to frame questions under Clause 36 of the Letters Patent for the purpose of answering them; but at the same time I am not inclined to reject this reference on this technical ground when I have been able to understand the points CL difference on a perusal of the two judgments, more particularly in view of the fact that it is of the utmost importance to both the parties that the dispute between them should be finally settled as quickly as possible so far as this Court is concerned.

3. The facts which are relevant for the pur-noses of the case and which are undisputed may be briefly stated as follows:

4. The Corporation of Calcutta started proceedings for general revaluation of premises No. 296 Bowbazar Street under Section 131, Calcutta Municipal Act, 1323 with effect from the second quarter of 1950-51 which began with the month of July 1950. There is no dispute that the annual value is to be determined under Section 127(a) of the Act because thebuilding was 'erected for letting purposes'. In the immediately preceding valuation which commenced with the second quarter of 1944-45 and remained in force upto the end of the first quarter of 1930-51 the annual value of the building was Rs. 5637 as stated by the learned Advocate for the appellant. As a result of fifth revaluation, however, the annual value was increased to Rs. 14092 and this figure was arrived at by taking Rs. 1450/- as the monthly rent at which the building 'might at the time of assessment reasonably be expected to let from year to year'' as contemplated by Section 127 (a) (vide Ex. A-objection docket of the assessment department of the Corporation of Calcutta). The building in question comprises a total area of 10,309 sq. ft. which is in the occupation of a tenant named Bombay Co. Ltd. for Rs. 1200/- per month and about 375th of this total area, i.e. 6184 sq ft. is sublet to B. C. Nawn & Co. at a monthly rent of Rs. 809/13/-. The general notice of the valuation was published on 28-6-1950 and special notice of the increase of valuation was served on the owner on 20-6-1950; on 7-7-1950 the owner filed an objection to the valuation and after some adjournments the Special Officer who heard the objection passed an order on 22-1-1951 which runs as follows: 'Postponed for fresh enquiry as to rents'. On 19-6-51 a fresh enquiry report was submitted and it runs as follows:

'Entire premises let out to Bombay Co. Ltd. of Pollock House for Rs. 1200/- per month since standardised by R. C at Rs 550/- per month w.e.f. April 1951 &Rs.; 632/8/- per month w.e.f. August 1951.

Sublet to B. C. Nawn & Co. (approximately 37 5th of the premises) originally for Rs. 809/13/- per month which is to be reduced proportionately in terms of the R. C. Court's Order. Approximately it is likely to come to about Rs. 400/- per month.

Bombay Co. pays occupier's share of the taxes

Total area -- 10309 sq. ft.

B. C. Nawn & Co. -- 6184 sq. ft.

Bombay Co. -- 4125 sq. ft.'

On receipt of this report the Special Officer passed the following order on 10-8-51:

'Seen records and P. E. Report. No certified copy of judgment of R. Court produced.

P. E. Report cannot be acted upon in the absence of R. C. C. judgment. Confirmed.'

5. Before proceeding further I must place on record my emphatic protest against the use of abbreviations in public documents winch have the only effect of making them utterly unintelligible. The authorities concerned must bear in mind that departmental code is not permissible in public documents. Left to myself I could not decipher the meaning of the alphabets 'w. e. f.' and the expression 'F. E. Report' and it was only with assistance of learned lawyers appearing at the bar that I understood the meaning of the first three alphabets to be 'with effect from' and of the second expression to be 'fresh enquiry report'.

6. The assessee filed an appeal under Section 141 of the Act to the Small Cause Court as a result of which the annual value was reduced to Rs. 6831/-. In arriving at this figure the learned Small Cause Court Judge took the standard rent fixed by the Rent Controller as the rent at which the building might at the time of assessment reasonably be expected to let. Against that decision the corporation of Calcutta brought an appeal to this Court and it was heard by Guha Ray and Sen JJ. The order of the Rent Controller which was not produced before the Special Officer was, however, produced in the Small Cause Court and marked as Ex. 1. It shows that by an order dated 16-5-1951, the Rent Controller fixed the standard rent of the Bombay Co. Ltd. in a proceeding under Section 9, West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 at Rs. 550/- per month with effect from April, 1951 and at Rs. 632/8/- per month with effect from August, 1951. The learned Small Cause Court Judge has taken the latter sum as the monthly rent since the revaluation was to begin from the month of July, 1950. Before Guha Ray and Sen JJ. two points were argued ori behalf of the Corporation:

(a) that the monthly rent at which the building might at the time of assessment reasonably be expected to let under Section 127 (a) of the Act is a hypothetical rent which has no relation to the actual or standard rent which may be determined either by a contract between the parties or by the Rent Controller and therefore the Corporation of Calcutta is entitled to go behind the standard rent fixed by the Rent Controller.

(b) that the phrase, 'at the time of assessment' in Section 127(a) of the Act refers to a point of time before the publication of the general notice under Section 137 of the Act and as in the present case the, general notice was published about a year before the determination of the standard rent by the Rent Controller that standard rent cannot be taken into account in determining the annual value of the building under Section 127Ca) of the Act.

7. Guha Ray J. accepted both the contentions advanced on behalf of the Corporation and determined the annual value of the building on the basis of the rent paid by the sub-tenant B. C. Nawn & Co. to the tenant Bombay Co. Ltd. According to him the monthly rent at which the building might reasonably be expected to let was Rs. 1349/- and after making statutory deductions he fixed the annual value at Rs. 13,130/-. On the second question he has held that the time of assessment means the time when the. Executive Officer has completed his valuation under Section 131 of the Act which must be a elate prior to the publication of the general notice under Section 137 of the Act. Upon this view he has come to the conclusion that the standard rent determined by the Rent Controller cannot be taken into account because the determination took place long after the publication of the general notice. Sen. J. on the other hand, has rejected both the contentions and come to the conclusion that the Corporation has no right under Section 127(a) to go behind the standard rent fixed by the Rent Controller under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 and therefore the annual value as determined by the Court of Small Causes must be upheld. On the second question he has held that the time of assessment means the period which expires with the determination of the objection of the assessee under Section 140 of the Act and since that objection was determined in the present case after the fixation of the standard rent by the Rent Controller, that standard rent can and must be taken into account in determining the annual value under Section 127(a) of the Act. Sen' J. has further held that even if the date of assessment is the date when the assessing inspector made his valuation under Section 131 of the Act that valuation is liable to be altered, because the proceeding for the determination of the standard rent was brought to the notice of the special officer before the disposal of the objection filed, by the assessee.

8. 1 shall now proceed to record my opinion on the three questions which I have formulated above: but I must state at the outset that the third Question formulated by me is a subsidiary one and may be said to 'be a corollary of the second.

9. Under the express terms of Section 127(a) the annual value of the building is equivalent to nine-tenth of the gross annual rent at which it mightreasonably be expected to let at the time of assessment. Since the rent which is to be taken into account is a 'reasonable' rent there can be no doubt that under this section the assessing authorities are entitled to go behind the 'actual' rent paid by a tenant to enquire whether the actual rent is reasonable rent; and if it is found that the actual rent is not the reasonable rent the actual rent may be ignored and valuation made on the reasonable rent. It is true that more often than not the actual rent paid by a tenant is a matter of ordinary business arrangement and the actual rent is the best evidence of reasonable rent; but there may be cases where the actual rent is determined not merely by business considerations but by extraneous or personal considerations as well, e.g., relationship between the owner and the tenant or payment of a large sum by the tenant as premium and in such cases the actual rent may be ignored. That is what is meant by saying that the rent contemplated by Section 127(a) need not be the actual rent, but may be a 'hypothetical, estimated, notional or ideal' rent: but I do not think that this hypothetical rent includes a rent which no one could possibly pay. In cases where the rent is determined by the free play of the law of demand and supply the hypothetical rent is what a tenant requiring the building for the up? for which it was built would consider it reasonable to pay rather than resort to renting a less suitable building and then adapting it to his requirements at his expense. The expense which a hypothetical tenant is prepared to incur for adapt-ing a less suitable building to his requirements represents the marginal utility of the building to him. If the rent is higher he will rather rent a less suitable building, but if the rent is upto that limit he will pay it; but there can be no case where the hypothetical rent may be said to include a rent which no one could possibly pay.

10. The second principle which follows from the definition of annual value is that though what has to be valued is land or building the measure of that value is the rent at which the owner of the land or building might reasonably be expected to let it out to tenants. The annual value upon which rates have to be assessed is the intrinsic value of the land or building to the owner in its present condition. The measure of that intrinsic value is no doubt the maximum rent which a hypothetical tenant would be willing to pay but the ultimate criterion is the value of the property to the owner. The letting value contemplated by Section I27(a) may represent either the value of beneficial occupation by a tenant or the value of the property to the owner. Having regard to the fact, however, that under the Calcutta Municipal Act mere ownership carries with it the liability to be rated the conclusion cannot be avoided that the annual value contemplated by Section 127(a) is the value of the property to the owner. In the case of B. N. Ry. Co v. Corporation of Calcutta, 51 Cal WN 336: (AIR 1947 PC 50) (A) the Privy Council pointed out that one of the fundamental distinctions between the English and the Indian Law of rating is that 'the owner of land in England is not chargeable with rates as owner, at all. If he leaves land vacant and unoccupied he pays no rate. Under the Calcutta Act mere ownership carries with it a liability to pay one half of the rate assessed on the annual value of the land'. The conclusion that in determining the annual value of the land and building it is the value of the property to the owner which has to be taken into account is also supported by the decision of the Madras High Court (Collins C. J. and Muttusami Ayyar J.) in the case of Secretary of State v. Municipal Commissioners of the City of Madras, ILR 10 Mad 38 (B). Section 123, City of Madras Municipal Act (Madras Act I of 1884), isvery similar in its terms to Section 127(a), Calcutta Municipal Act, 1923 and runs as follows:

'The gross annual rent at which a building or land might reasonably be expected to let from month to month or from year to year shall for the purposes of assessment under this Act be deemed to be the annual value of such building or land.'

In an assessment under this section Collins C, J. and Mutiusami Ayyar J. said at page 41:

'The standard of value is certainly the value of the property to the owner which is to be measured, whether he occupies the property himself or lets it out to a tenant, by the amount of rent per annum it would be worth to a hypothetical tenant.' This view is also supported by the decision of Mukherjee J. in the case of Corporation of Calcutta v. Ashutosh DE : AIR1927Cal659 and although Roy J. was of a different opinion the point that was actually referred for the decision of another Bench under Section 98, C. P. Code, did not include this point. However, that may be I agree with the view expressed by Mukherji J. because it agrees with the decision of the Privy Council and of the Madras High Court.

11. After the annual value has been determined on the basis of the intrinsic value of the building to the owner the Corporation is entitled to impose a consolidated rate not exceeding twenty three per cent under Section 124 which is the charging section. Half of the consolidated rate thus imposed is payable by the owner and the remaining half by the occupier under Section 149. Notwithstanding the provisions of Section 149, Section 157 authorises the Corporation to recover the entire consolidated rate from the owner if the land Or building is occupied by more than one person holding in severally or the annual value is less than two hundred rupees and Section 163 authorises the Corporation to realise the whole of the Consolidated rate from the occupier if he fails to furnish the Executive Officer, within fifteen days of the service of a notice to that effect with the name and address of the owner of the land or building. The scheme of these sections, suggests that the ownership of land and building is not only liable to be rated under the Calcutta Municipal Act but the owner is made liable to pay the entire consolidated rate whenever defined portions of the land or building are in the occupation of different persons or the annual value is less than two hundred rupees. In the case before me two-fifth of the entire building is in the occupation of Bombay & Co. Ltd. as a tenant and the remaining three-fifth is in the occupation of B. C. Nawn and Co: as a sub-tenant under the Bombay Company Limited. Therefore the Corporation is entitled to realise the whole of the consolidated rate from the owner under Section 157.

12. The fact that after the determination of the annual value in accordance with the principles embodied in Section 127(a) of the Act the consolidated rate is imposed under Section 124 upon the land or building and the fact that after the imposition of the consolidated rate one-half is made payable by the owner and the other half by the occupier under Section 148 and the further fact that under certain circumstances the whole of the consolidated rate is recoverable from the owner under Section 157 or from the occupier under Section 163 of the Act do not, however, make any difference to the annual value which has to be calculated on the gross annual rent at which the land, or building might reasonably be expected to let tO my mind it is a mistake to suppose that in determining the annual value under Section 127(a) the rating authorities are entitled to take into account all classes of interests existing on the land or building, including the interests of all grades of sub-tenants. It is thevalue of the land or building to the owner alone which can be taken into account, whether the owner occupies it himself or lets it out to tenants; and as the owner is not interested in anything that is paid by the sub-tenant the actual or reasonable rent paid or payable by a sub-tenant does not enter into the calculation.

13. If I am right in my opinion that what has to be valued under Section 127(a) of the Act is the value of the property to the owner it follows as a matter of course that the Corporation is as much bound by the standard rent fixed by the Rent Controller as the owner himself under Section 3, West Bengal Premises Rent Control (Temporary Provisions) Act, (West Bengal Act XVII of 1950), any amount in excess of the standard rent of any premises shall be irrecoverable notwithstanding any agreement to the contrary and under Section 33 of the came Act whoever knowingly receives, whether directly or indirectly, any sum on account of the rent of any premises in excess of the standard rent, shall be liable, for the first offence to a line extending upto five times the amount recovered in excess of the standard rent and for the second or subsequent offences to a fine extending up to ten times the amount. As a result of these statutory prohibitions it is not open to the owner to throw his property into the open market to secure the maximum rent that a hypothetic tenant might be willing to pay for it nor is it possible for him to secure the maximum return for his property. As the Legislature has fixed a statutory limit to the gross profits that may be earned by the owner and as the annual value has to be determined under Section 127(a), Calcutta Municipal Act, upon those profits it is difficult to see how the rating authorities can go beyond those statutory limits for the purpose of arriving at the gross annual rent at Which the land or building might reasonably be expected to let at the time or assessment. The word 'reasonably' in Section 127(a) connotes 'legally' and as a building can never be expected to be legally let, out at a rent higher than the standard rent, any rent in exess of the standard rent cannot be said to be the rent at which the building might reasonably be expected to let. Where the market is not open but closed there is no scope for the free play of the law of demand and supply and to my mind the hypothetical or notional or deal rent contemplated by Section 127(a) merges in the standard rent.

14. On behalf of the Corporation of Calcutta it has been argued that the object or the Rent Control Act is to regulate the rents of premises in Calcutta to meet the contigency arising from acute shortage of accommodation resulting from the last world war and the artificial rules for control of rents laid down by that Act were not intended to be applicable to the determination of annual value nor can they be accepted as an accurate measure of the hypothetical rent which Section 127(a), Calcutta Municipal Act, has in view. The fallacy of this argument is that in construing a statute the intention of the Legislature is to be gathered if possible from the plain words used in that statute and if there is any ambiguity in those words the intention may be gathered from the preamble and the object for which the statute was enacted. In the present case both Sections 3 and 33 of West Ben. Sal Act XVII of 1950 are absolute in their terms and there is nothing to indicate that the application of those sections is confined only to landlord and tenant and does not extend to proceedings for determination of annual value under Section 127(a) of the Municipal Act. It is not open to me to curtail or restrict the scope or effect of the general words used in those sections by reference to a supposedintention of the Legislature to be gathered from the preamble of the Act. But apart from this the measure of annual value under Section 127(a) of the Municipal Act is the 'gross annual rent'' and this gross annual rent is the subject-matter of control under the Rent Control Act; so it is idle to contend that the two Acts are not pari materia and the provisions of one cannot be interpreted by reference to the other. With regard to the objections that the rules laid down by the Bent Control Act are artificial or temporary I must say that they are equally futile. An artificial standard if adopted by the Legislature becomes a part of the law of the land and it is not open to any citizen to object to it on the ground that it is not natural but artificial. The temporary character of the provision also makes no difference, because under Section 127 (a) of the Municipal Act the relevant point of time is the 'time of the assessment'. If 'at the time of the assessment' there is a statute which prescribes that the gross annual rent shall not exceed a certain limit effect has to be given to it, however temporary its duration may be. The fact that the valuation once made is to last for six years under Section 131 of the Municipal Act does not require that the statute which fixes the standard ' rent must also remain in force for that period. It is enough if the Rent Control Act is operative 'at the time of assessment'. The expiry of a temporary statute does not affect the validity of anything done during its continuance.

15. The next objection raised on behalf of the Corporation of Calcutta is more serious. It is pointed out that under Section 26, Calcutta Rent Act, 1920, the Corporation of Calcutta was prohibited from raising the assessment of any premises above thp standard rent on the ground of increase of value and a similar provision has been enacted by the proviso to Sub-section (1) of Section 168, Calcutta Municipal Act 1951 (West Bengal Act XXXIII of 1951), which is to the following effect :--

'Provided that in respect of any land or build-ing the standard rent of which has been fixed under Section 9 of the West Bengal Premises Rent Control (Temporaly Provisions) Act, 1950, the annual value thereof shall not exceed the annual amount of the standard rent so fixed.'

16. But there is no such prohibition either in the Rent Control Ads or Orders that were passed from time to time between 1942 and 1950 or in the Calcutta Municipal Act of 1923 which remained in force from 1-4-1924 upto the date of the commencement of the Calcutta Municipal Act of 1951. It is claimed that the presence of the prohibition in the Calcutta Rent, Act or 1920 and the Calcutta Municipal Act of 1951 and its absence during the intermediate period point to the concision that during that period there was nothing to prevent the Corporation from raising the annual value over the annual amount of standard rent determined by the Rent Controller. It appears from the decision of the Privy Council in the case of Karnani Industrial Bank Ltd. v. Satya Niranjan Shaw. 55 Ind App 344: 32 CaI WN 1093: (AIR 1928 PC 227) (D) that the Calcutta Rent Act of 1920 was originally to remain in force for three years from 5-5-1920 but its life was extended by the Calcutta Rent Amendment Act of 1923 and the Calcutta Rent Amendment Act of 1924 upto the end of March, 1927 with certain modifications. On the date, therefore, on which the Calcutta Municipal Act of 1923 came into operation the Calcutta Rent Act of 1920 was in force; but it expired within three years from the commencement of the Municipal Act of 1923. It is accordingly contended on behalf of the Corporation that if it was the intention of the Legislature to protect the assesses against any increaseof the annual value beyond the standard rent it was necessary to enact a provision similar to Section 26 of the Rent Act of 1920 or the Proviso to Section 168(1) of the Municipal Act of 1951 and in the absence of any such legislation it must be held that the Corporation has a right to assess the annual value at a figure which exceeds the annual standard rent. This contention would be fatal to the claim made by the assessee and would be decisive of the case in favour of the Corporation if the Corporation had the right under Section 127 (a) to exceed the annual standard rent in determining the annual value of the building. But if the Corporation has no such right under Section 127 (a), Municipal Act, 1923, the presence or absence of a prohibition like that of Section 26, Rent Act, 1920, or Section 168 (1) Proviso of the Act or 1951 is immaterial; because it may be said that these sections do nothing more than express the true meaning of Section 127 (a), Municipal Act, 1923, or of Section 168 (1) of the Act of 1951.

17. Upon the view I have taken as to the true effect of Section 127 (a), Municipal Act, 1923, I have 110 doubt, that independently of Section 26, Rent Act, 1920, the Corporation had no right to go beyond the standard rent and that Section 26 did not confer any new right to the assesses being only explanatory of what was inherent in Section 327 (a) and was added by the Legislature by way of abundant caution to remove all doubts. The absence of any provision like that of Section 26. Rent Act, 1920, either in the Municipal Act of 1923 or in the Rent Control Acts that were passed from time to time between 1942 to 1950 does not therefore either enlarge the rights of the Corporation or restrict the rights of the assessee under Section 127 (a).

18. The next argument advanced on behalf of the Corporation is based upon Section 150, Municipal Act, 1923 which provides that in cases where the annual value of any building exceeds the amount of rent payable to the owner, the owner may recover from the tenant the difference between the sum assessed as the owner's share of the consolidated rate and the sum at which such share would have been assessed if the building had been valued only at the amount of rent actually payable to the owner; and which further provides that 'notwithstanding anything contained in any other law for the time being in force in Bengal.' Such difference shall be added to the rent and shall be recoverable as rent. On behalf of the Corporation it is claimed that this section postulates the right of the Corporation to fix the annual value at a sum exceeding the gross annual standard rent and authorises the owner to recover the extra amount assessed from the tenant by adding it to the rent payable by him and it is further painted out that this provision is to prevail over any prohibition in any Rent Control Act for the time being in force. . This section evidently applies to a case where the annual value has been determined upon a hypothetical rent which is higher than the actual rent and has no application where the rent that would be paid by a hypothetical tenant coincides with the standard rent under the Rent Control Act. The adverbial phrase 'notwithstanding anything contained in any other law for the time being in force in Bengal' supersedes the contrary provisions of any law which was in force on 1-4-1924 when the Municipal Act of 1923 came into operation and cannot exclude the operation of Sections 3 and 33, West Bengal Premises Rent Control Act, 1950, which came into force after twenty six years and under which any amount in excess of the standard rent is irrecoverable and conscious recovery punishable with fines. I accordingly hold that Section 150 has notthe effect attributed to it by the learned Advocate appearing for the Corporation.

19. The next argument by Mr, Bose appearing for the Corporation is that Section 9 (1) (b), West Bengal Premises Rent Control Act, 1950, shows that the Corporation has a right to determine the gross annual rent at a figure higher than the gross annual standard rent. That section is in the following terms:

'9 (1) In any of the following cases the Controller shall on application by any landlord or tenant, fix the standard rent as set forth hereunder:

(b) Where during the currency of a standard rent payable for any premises there has been an increase in the Municipal taxes rates or cesses in respect of the premises by adding to it the amount of such increase as is payable by the landlord by agreement with the tenant over and above what is payable by the landlord himself under the local Municipal law''.

It is urged that this section contemplates the possibility of an increase in municipal rates during the currency of a standard rent which again presupposes the right to increase the annual value beyond the standard rent. Now, an increase of municipal taxes may be due either to increase of the annual value or to the increase in the percentage of the annual value under Section 124; and if the increase in municipal taxes is not unequivocally referable to the increase in annual value it cannot be said that the increase in municipal taxes contemplated by Section 9 (1) (b) authorises the Corporation to go beyond the standard rent. Section 9 (1) (b) of the West Bengal Premises Rent Control Act of 1950 corresponds to Section 7 of the Calcutta Rent Act of 1920 In the case of : AIR1927Cal659 , it was argued on behalf of the Corporation that Section 26 of that Act militates against Section 7 and in repelling that argument Rankin C. J. observes at p. 372 (of Cal WN) : (at p. 665 of AIR).

'It is quite clear that in view of Section 26 the only way in which 3. 7 can come into play is in a case where there has been an increase in the percentage or in the number of annas in the rupee which have to be paid by way of rate upon the figure of the assessment.'

But apart from this a standard rent is defined by Section 2 (10) (b). West Bengal Premises Rent Control Act, 1950, in the following manner :

'A standard rent in relation to any premises means :

(a) the standard rent determined in accordance with the provisions of Schedule A.

(b) Where the rent has been fixed under Section 9 the rent so fixed; or at the rate at which it would have been fixed if application were made under that section.'

This definition makes it clear that standard rent has a notional existence even before its actual determination by the Rent Controller under Section 9 and therefore a standard rent came into existence as soon the Rent Control Act of 1950 came into force. The expression ''during the currency of a standard rent' in Section 9 (1) (b) accordingly means 'from the time when the Rent Control Act of 1950 came into operation'. It is not correct to say that a standard rent cannot be current before it is actually fixed by the Court. This view is supported by a decision of a Division Bench of this Court (Das Gupta and Debabrata Mookerjee JJ.) in the case of P.C. Mallik v. Bhabatosh Das, 59 Cal WN 491 (E) which is binding on me. If that be so, it is quite possible to conceive of a case where there has been an increase in the annual value after the coming into operation of the Bent Control Act of 1950 and in such a case the owner is entitled to the benefit of Section 9 (1) (b) ; but that will not lead to the conclusion that the Corporation is entitled to go beyond the standard rent. I shall make the point clear toy an illustration; Suppose at the previous valuation the annual value was Rs. 360/- but after the coming into operation of the Rent Control Act of 1950 the annual, value is assessed at Rs. 430/-. The owner is at once entitled to the benefit of Section 9 (1) (b) without any reference to the question whether the increase in the annual value was in excess of the standard rent. Therefore the fact that the owner has been given the right to add the amount of increase in municipal taxes or rates under Section 9 (1) (b), Rent Control Act, 1950 has no bearing on the question whether the Corporation has a right to ignore the standard rent in determining the annual value of a building under Section 127 (a).

20. I have now to consider the authorities cited at the bar on the question whether the Rent Control Act affects the right of the Corporation to essess the annual value under Section 127 (a). The root authority on the subject as to the application of which there has been a divergence of judicial opinion, in India is a decision of the House of Lords in the case of Poplar Assessment Committee v. Roberts, (1922) 2 A. C. 93 (F) where four out of five Law Lords--Lord Buckmaster, Lord Atkinson, Lord Sumner and Lord Parmoor - (Lord Carson dissenting) -- held that for the purposes of the valuation of a hereditament under Section 4 of the Valuation (Metropolis) Act, 1869 the maximum gross value to be assigned to the hereditament was not limited to the standard rent of the hereditament under the Increase of Rent and Mortgage Interest Restriction Act, 1920. The Rangoon High Court by a Pull Bench decision in the case of Municipal Corporation of the City of Rangoon v. Surati Bara Bazar Co. -- ILR 1 Rang -668 : (AIR 1924 Rang 194) (G) held that the law of rating in India is different from the law of rating in England and therefore the aforesaid decision does not apply to India and that in fixing the rateable value under Section 80 (2), City of Rangoon Municipal Act, 1922, the Corporation should take as its basis the standard rent as defined in Section 2(e), Rangoon Rent Act, 1920. A Division Bench of the Bom. High Court on the other hand has held in the case of Mongharam Jiwandas v. Municipal Corporation of the City of Bombay, that the law of rating is the same in India as in England & therefore in arriving at a valuation for the purposes of Section 154, City of Bombay Minicipal Act, 1888, the maximum gross value to be assigned to the property is not limited to the standard rent determined under the Bombay Rent Control Act of 1947.

21. The decision of the House of Lords in the case of Poplar Assessment Committee (F) proceeded upon a construction of Section 4 of the Valuation (Metropolis) Act. 1869, which defines 'gross value' as 'the annual rent which a tenant might reasonably be expected, taking one year with another, to pay for an hereditament,' and rateable value as 'the gross value after deducting therefrom the probable annual average cost of repairs, insurance and other expenses as aforesaid'. In the case of : AIR1927Cal659 Mukherji J. pointed out that the language of that section is substantially different from the language of Section 127 (a), Calcutta Municipal Act, 1923 which defines annual value as 'The gross annual rent at which the land or building might at the time of assessment reasonably be expected to let.' Mukherji J. pointed out that

'Letting connotes a contract enforceable at law and in that way the restrictive prohibitions of the Calcutta Rent Act, 1920, come in for consideration while 'paying' is an act which may be done voluntarily without the aid of or unfettered by any provision of law.'

It is however, contended on behalf of the Corporation that though the language of the Valuation (Metropolis), Act, 1869 is different from the language used in Section 127 (a), Calcutta Municipal Act, the definition of annual value as given in the Parochial Assessments Act, 1836, is substantially the same and in the case of London County Council v; Church Wardens of Erith etc. (1893) A. C. 562 (I) it was held by the House of Lords that the definition given in the Valuation (Metropolis) Act, 1869, is the same as the definition in the Parochial Assessments Act, 1836. The definition of annual value in the Parochial Assessments Act. 1836, is as follows :

'Annual value is 'the rent at which the hereditament might reasonably be expected to let from year to year etc.'

It must be conceded that this definition is very similar to the definition of annual value in Section 127 (a) Calcutta Municipal Act In the case of (1893) AC 562 (I), Lord Herschell made the following observations at page 588:

'The annual rent which a tenant might reasonably be expected taking one year with another to pay for a hereditament is the same thing as the rent at which the same might reasonably be expected to let from year to year.'

22. Relying upon this passage it is contended that the distinction pointed out by Mukherji J. in the case of Corporation of Calcutta v. Ashutosh De (C) cannot hold good and that the principle of the decision in the case of Poplar Assessment Committee (F) must govern the determination of annual value under Section 127 (a), Calcutta Municipal Act. This argument, though plausible, does not in my opinion, bear scrutiny. In England rateability depends on the value of the beneficial occupation of the premises to the occupier quite apart from their value to the owner. This point is emphasised by all the Law Lords in the case of Poplar Assessment Committee (P) and in particular by Lord Parmoor who expresses himself in the following words :

'Under 43 Elizabeth C. 2 rates are to be levied upon every occupier of land, houses, etc. The distinction between owner and occupier in this connection is or primary importance. The occupation value of property may be and often is distinct from its value to the owner. This distinction would probably be emphasised where an artificial statutory maximum is fixed and a statutory restriction prevents p,n owner from recovering from any tenant a greater amount, as rent, than the statutory maximum'.

In Infill, on the other hand, as I have already said, the annual value is to be determined by the intrinsic value of the property 'to the owner. If that be so the aforesaid passage from the address of Lord Herschell must be understood as re erring to the quantum of rent payable by a beneficial occupier of the land and hereditament and not to the contract between owner and occupier, because the interest of the owner is not considered at all under the English law for the purpose of determining what, the assessment should be as pointed out by Lord Buckmaster in the Poplar Case (F). The observation of Mukherji J., therefore, which I have already read, is not touched by what has been said by Lord Herschell in the case of London, County Council (I).

23. To illustrate the proposition that under the English law of rating the owner's interest is not taken into account I would refer to the observations of the Privy Council in the case of B. N. Rly. Co. (A) which I have already read & I would also refer to the following passages from the addresses of the different Law Lords in (1922) 2 AC 93 (F). At page 103 Lord Buckmaster says :

'So far as the occupier is concerned the provisions of the Kent Restriction Act have not in any way made his occupation, less beneficial. It is the landlord who is affected and he, as landlord is not the subject of assessment nor can his interest in the property be considered for the purpose of determining what the assessment should be.' Again at page 104--

'From the earliest time it is the inhabitant who is to be taxed. It is in respect of his occupation that the rate is levied. In my opinion the rent that the tenant might reasonably be expected to pay is the rent which apart from all conditions affecting or limiting its receipt in the hands of the landlord would be regarded as reasonable rent,' At page 105 his Lordship points out that occupation is made the test of liability for assessment. So also Lord Atkinson says at page 107--

'What the rate prayer is under both the Act of 1836 and that of 1869 rated in respect of is decided by many cases in this House to be the beneficial occupation of a hereditament.' Lord Sumner says at page 116 --

'Rating is a process between an occupier and a fating, authority, to the determination of which the landlord and the lessee are strangers' Lord Parmoor's observations have already been quoted above. In view of the fact that the definition of annual value as given in Section 127(a), Calcutta Municipal Act, 1923, the owner's interest is not excluded as under the English law of rating I cannot agree with the argument that the principle of the decision in Poplar Assessment case (F) will govern the determination of the annual value under the Calcutta Municipal Act.

24. The second ground upon which the Popjar Assessment case (F) should be held to be inapplicable to an assessment under the Calcutta Municipal Act is based on the distinction between the provisions of the English Rent Restriction Act, 1920 and the West Bengal Premises Rent Control Act, 1950. Under the English Act it was not illegal to take any rent in excess of the standard rent. Certain amounts were recoverable in excess of the standard rent as 'Permitted increases in rent' under Section 2 and if the increased rent exceeded the amount permitted under the Act, the excess Was irrecoverable under Section 1 of the Act. There was, however, no bar to the owner's accepting a higher rent if it was voluntarily paid by the tenant. Under Sections 3-.and 33 of the West Bengal Act, however, not only any amount in excess of the standard rent is irrecoverable but the acceptance of any amount in excess of the standard rent, is an offence punishable with fine, even if it is voluntarily paid by the tenant. In the case of Sculcoates Union v. Dock Co. at Kingston Upon Hull, (1895) A. C. 136 (J) the question arose whether in determining the rateable value of the Dock Company the rent which could have been earned by it but which it could not earn on account of a statutory prohibition could be taken into account, and the House of Lords answered the question in the negative. In that case the Dock Company was prohibited by an Act of Parliament from realising any tolls from a certain railway company for ferrying wagons and the question before the House of Lords was whether those tolls could be taken into account in determining the rateable value of the Dock Company.

Lord Herschell in his speech says as follows at page 150 :

'The question is whether you are to consider the profits which it might earn if a state of things existed which does not exist or whether you are to consider the profits which it can earn under the only conditions under which it is allowed to earn profit at all. It seems to me that the latter is the state of things which must be taken into account, and that any other course will not only lead to absurdities, but to the gravest injustice as regards the rating imposed.'

This case is an authority for the proposition that any profits which cannot be earned on account of a statutory prohibition cannot be taken into account for the purpose of rating. In Poplar Assessment Committee's case CF) the decision of the Court of Appeal is reported in Roberts v. Assessment Committee of the Metropolitan Borough of Popla (1922) 1 K. B. 25 (K). The judgment of the majority of the Judges of the Court of Appeal was reversed by the House of Lords; but the dissentient judgment of Bankes L. J. was affirmed. Bankes L. J. held that the Rent Restriction Act, 1920, might be regarded as fixing the limit which the rateable, value could not be permitted to exceed if its effect was to 'fix and not merely to affect the value of the premises for rating purposes. The distinction is between 'fixing' and 'affecting' the value of the premises and his Lordship pointed out that if upon a true construction of the Act, read as a whole

'its effect is to render it illegal, and consequently impossible for any higher rent that the standard rent to be paid or received for the premises to which the Act applies, the principles of the Sculcoates case (J) ..... would in myopinion apply; and the rateable value could not be fixed higher than the standard rent' but his Lordship held that

'though the Rent Restriction Act, 1920 may affect the rateable value of the premises, it does not fix the rateable value and that any voluntary payment for the occupation of the premises in excess of the standard rent which a tenant might be expected to make can be taken into consideration in arriving at what the gross and rateable value of the premises should be.' With regard to this reason given by Bankes L. J., Lord Buckmaster observed as follows in his address to the House of Lords:--

'The conclusion I have reached is independent of the view put forward by Bankes L. J. that in fact there is no restriction impesed on the tenant to prevent him paying rent; he can pay it if he pleases without any breach of the Statute, but this fact would, in my opinion, be fatal to the respondents'.

25. Upon these authorities it is clear that if voluntary payment and acceptance of any rent in excess of the standard rent are not prohibited by Statute the valuation for rating purposes is not limited by the Standard rent; but if such voluntary payment is illegal, the rateable value cannot be fixed higher than the standard rent. The effect of Section 33. West Bengal Rent Control Act, 1950, is to make it illegal and impossible for the owner to accept any rent in excess of the standard rent and the result is that according to the very principles approved by the House of Lords in the Poplar Assessment case (F) the present will be governed by the decision of the House of Lords in Sculcoates Union (J). In my opinion the effect of the West Bengal Rent Control Act of 1950 is not merely to affect the value of the premises but to 'fix' it and consequently the rateable value cannot exceed the gross annual standard rent.

26. For the aforesaid reasons I respectfully agree with the decision of Robinson C. J. of the Rangoon High Court in the Full Bench case of SLR 1 Rang 668: (AIR 1924 Rang 194) (G). With regard to the decision of the Bombay High Court in the case of it appears to me that the foundation of that decision is an assumption that there is no distinction between the Indian and English law of rating with regard to the rating value of premises and that under both the rateable value depends not upon the value of the premises to the owner but upon the value of the beneficial occupation to the tenant. Bavdekar J. of the Bombay High Court observes at page 724 (of ILR Bom): (at p. 324 of AIR) that his Lordship could have accepted the argument advanced on behalf of the landlord 'if one were to come to the conclusion that in India the rates are to be levied upon the value of the premises to the owner. There is an obvious difference between the two; but if we look at the City of Bombay Municipal Act, we find that in India also the valuation is made not upon the value of the premises to the owner, but the value of the beneficial occupation to the tenant'. Section 154(1), City of Bombay Municipal Act (Bombay Act III of 1888), is very similar to Section 127(a), Calcutta Municipal Act and in a case under the latter Act the Privy Council pointed out the distinction between the Indian & English law of rating on this point in the case of B. N. Ry. Co. v. Corporation of Calcutta (A) to which I have already referred. Incidentally I may point out that the attention of the Bombay High Court does not appear to have been drawn to this decision of the Privy Council. For these reasons I am unable to agree with the view of the Bombay High Court that the law of rating is the same in India as in England.

27. Lastly it has been contended by Mr. Bose that if the standard rent determined under the West Bengal Rent Control Act, 1950, be held to limit the right of the assessing authorities under Section 127 (a), Municipal Act, 1923, it will introduce inequality in the matter of valuation. It is pointed out that under Sections 3 and 5 of the Rent Control Act of 1950 certain classes of leases are exempted from the operation of the Act and in respect of those leases the Corporation will be free to assess the Valuation at the open market rent whereas it will not have that right in cases to which the Rent Control Act applies. It is argued that the object Of the Municipal Act is to secure uniformity in the matter of assessment and that object will be defeated if it is held that the hypothetical rent under Section 127(a) cannot exceed the standard rent. It is true that the preambles to the Rating Acts of England 'dwell on the expediency of establishing a common basis of value and promoting uniformity of assessment' as pointed out by Lord Buckmaster in the Poplar Assessment case (F). The Valuation (Metropolis) Act. 1369, is described as 'An Act to provide for uniformity in the Assessment of Rateable property in the Metropolis.' The Rating and Valuation Act, 1925 (15 and 16 Geo 5, C. 90) is also described as an Act '..... to promote uniformity in the valuation of property for the purpose of rates.....' In our country, however, I do not find any such object in the preamble. The preamble to the Calcutta Municipal Act, 1923, with which I have to deal merely states that the object of the Act is to 'amend and consolidate..... the law relating to the municipal affairs of the town and suburbs of Calcutta'. The classification introduced by the Legislature by Sections 3 and 5 of the Rent Control Act of 1950 has not been challenged as invalid. If that classification stands I see no reason why the valuation of premises to which the Rent Control Act applies should not be governed by different; principles from those which would be applicable to premises to which the Act does not apply. The principle of uniformity of assessment of rateable property has not, as far as I know, been introduced in India and there is nothing in the language of the Calcutta Municipal Act, 1923, to justify its introduction.

28. I have now to record my opinion on the second question on which the learned Judges of the Division Court have differed and that is the meaning of the expression 'at the time of assessment' in Section 127 (a), Calcutta Municipal Act. Guha Ray J. has held that that expression means the period which expired before the publications of the general notice under Section 137 i. e. before 28-6-1950 and as the standard rent, fixed by the Rent Controller by his order dated 16-5-1951, came into operation from the month of August, 1951 it could not be taken into account for the purpose of determining the annual value under Section 127(a) of the Act. Sen J. on the other hand has held that the time of assessment extends upto the hearing of the objection lodged by the assessee by the Executive Officer or Deputy Executive Officer under Section 140 and as the hearing of the objection in the present case took place on 10-8-51 the standard rent fixed by the Rent Controller could be taken into account.

29. The West Bengal Rent Control Act, 1950, came into operation on 30-3-1950 and if the standard rent as defined in that Act came into existence from that date as was held in the case or 59 Cal WN 491 (E) even before its actual determination by the Rent Controller, it must be held that even upon the view taken by Guha Ray J. the standard rent was in existence on 28-6-1950 on which date tbe public notice was published under B. 137, Calcutta Municipal Act. 1923. As I have already said the standard rent as defined in the West Bengal Rent Control Act of 1950 has a notional existence even before its actual determination by the Rent Controller under Section 9 of the Act. Accordingly in the present case the standard rent of the premises in question came into existence with the commencement of the Rent Control Act of 1950 i. e. from 30-3-1S50. In this view of the matter it must be held that there was a standard rent of premises at the time of assessment even if that time expired before the publication of the public notice under Section 137 cf the Act.

30. Upon a construction of Sections 131 and 136 to 142 of the Act also I am unable to agree that the time of assessment can be said to be the time which expired before the publication of the general notice under Section 137. Section 131 provides that the valuation of land and buildings made under the previous Act shall be deemed to be the valuation for the 'assessment of the consolidated rate on such land or building under this Act,' and that the annual value ot such land and building shall 'after such assessment has been made by the Executive Officer, have effect for a period of six years' and it further authorises the Executive Officer to revise the valuation at the termination of successive periods of six years. For the purpose of making the valuation under Section 131 the Executive Officer is authorised by Section 136 to require the owner or occupier to furnish him with the returns or measurements and of the rent or annual value, of the land or building. The determination of valuation under Section 131, however, is an ex parte process which takes place behind the back of the owner or occupier. After the valuation under S, 131 has been completed Section 137 requires the Executive Officer to give public notice of the place, where the list of valuation may be inspected and Section 138 requires him to give special notice to the owner or occupier incases where the land or building is valued for the first time or where the previous valuation is increased as a result of revaluation. Section 139 gives the assessee the right to file an objection to the valuation made under Section 131 within a certain period and under Section 140 the Executive or the Deputy Executive Officer is required to hear and determine the objection. If, however, the assessee files no objection the valuation made under Section 131 becomes final under Section 142(1). The scheme of these sections is that the valuation made by the Executive Officer under Section 131 does not become final till the assessee has been given notice of the increase in valuation and an opportunity to file an objection to the same. Assessment is one continuous process beginning with Section 131 and ending with the determination of the objection under Section 140. Thereafter the assessee is given a right of appeal to the Court of Small Causes under Section 141 and another right of appeal to the High Court under Section 142(3) but so far as the rating authorities are concerned the process of assessment terminates with the determination of the assessee's objection under Section 140.

31. Learned Counsel for the Corporation argu-ed that the opening sentence of Section 137 indicates that the assessment must be deemed to have been completed before the publication of the general notice under that section. That section runs thus: 'When the valuation under Section 131 has been completed the executive officer shall cause, etc.' The completion of valuation is in my opinion an entirely different thing from assessment of valuation. As I have already said the completion of valuation under Section 131 is an ex parte process. Assessment, however, connotes the statutory imposition of that valuation upon the rate-payer which cannot be done without, giving him an opportunity of being heard. Moreover, if it is held that the time of assessment expires before the publication of the general notice under Section 137 the objection that can be filed by the rate payer under Section 139 becomes illusory because in that case the rate payer can only show that upon the materials that were available to the Executive Officer before the publication of the general notice under Section 137 the valuation made by him was wrong. Again it is possible to conceive of a case where the Special notice under Section 138 is served after the publication of the general notice under Section 137. In that case also the rate prayer will not be entitled to rely upon any event which happened between the two notices, in support of his claim for reduction of valuation. For these reasons I am unable to agree with the contention that the time of assessment referred to in Section 127(a) expires before the publication of the general notice under Section 137. To my mind that time commences with the making of the valuation under Section 131 and ends with the determination of the objection under Section 140 and any event which took place during this period may be relied upon for assessing the annual value under Section 127(a).

32. The answer to the last question formulated by me follows from the answer to the second question. Upon the decision of the Division Bench in the case of 59 Cal WN 491 (E), the standard rent was in existence even upon the restricted meaning of the expression 'at the time of assessment' as given by Guha Ray, J. But even apart from that decision, as I have held that the time of assessment extends up to the determination of the rate payers' objection under Section 140 the standard rent must, in this case be held to have been in existence at the time of the assessment.

33. In the result I agree with the conclusionsarrived at by Sen, J. on all the points on which his Lordship differed from Guha Ray, J.

34. The appeal will now be placed before the Hon'ble the Chief Justice so that it may go back to the Division Bench which heard it in order that they may record a final order in the appeal.

35. In the case of : AIR1927Cal659 , which arose out of a difference Of opinion between Mukherjee and Roy JJ. the appeal was heard by Rankin, C. J. Buckland J. and Cammiade J. In that case Rankin, C. J. awarded to the assessee the costs of hearing before the Bench presided over by him. Following that precedent I direct the Corporation of Calcutta to pay the costs of hearing before me and I assess the hearing fee at ten gold mohurs.


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