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The principle of the decision in Padma Devi 's case was invoked by the assessee for contending that the annual value of the building could not be determined at a figure higher than the standard rent and this contention was upheld by the Court, though there was no fixation of standard rent by the Controller under sectio... |
The Court pointed out that the standard rent stood defined by the latter part of section 2(10) (b) and by virtue of that provision it was statutorily determined at Rs. 2,800 per month though not fixed by the Controller under section 9 and proceeded to hold, by applying the principle of the decision in Padma Devi 's cas... |
It will be seen that this decision marked a step forward from the decision in Padma Devi 's case because here the standard rent was not fixed by the Controller under section 9 and it was not penal for the landlord to receive any rent in excess of the statutorily determined standard rent of Rs. 2.800 per month and yet i... |
It may be pointed out that an attempt was made on behalf of the Corporation to distinguish the decision in Padma Devi 's case by contending that that decision was based on the interpretation of section 127(a) of the Calcutta Municipal Corporation Act, 1923 while the provision which fell for interpretation in this case ... |
The argument was that under the proviso the annual value was limited to the standard rent only in those cases where the standard rent was fixed under section 9 and since in the case before the Court the standard rent of the building was not fixed under section 9, the proviso has no application and the assessing authori... |
This argument was negatived by the Court and it was held that the enactment of the proviso in section 168 of the Calcutta Municipal Corporation Act, 1951 did not alter the law and by the addition of the proviso, the meaning of the expression "gross rent at which the land or building might reasonably be expected to let"... |
It was for this reason that we pointed out at the commencement of the judgment that the existence of the proviso in section 116 of the Delhi Municipal Corporation Act, 1957 is immaterial and we may proceed to deal with the appeals arising under that Act as if the definition of "annual value" did not contain that provis... |
That takes us to the third decision in Guntur Municipal Council vs Guntur Town Rate Payers ' Association(1) which extended still further the principle of the decision in Padma Devi 's case. Ratio |
This was a case where the annual value was to be determined under the Madras District Municipalities Act, 1920 which applied in the city of Guntur. Ratio |
Section 82 sub section (2) of the Act gave a definition of "annual value" practically in the same terms as section 3(1)(b) of the Punjab Municipal Act, 1911 and section 116 of the Delhi Municipal Corporation Act, 1957 without the second proviso. Ratio |
There was also in force in the city of Guntur, the Andhra Pradesh Buildings (Lease Rent and Eviction) Control Act, 1960, which provided inter alia for fixation of fair rent of buildings. Ratio |
It is necessary to refer to a material provisions of this Act. Ratio |
Section 4, sub section (1) conferred power on the Controller, on application by the tenant or landlord of a building, to fix the fair rent for such building after holding such inquiry as he thought fit and sub section (2) to (5) of section 4 laid down the formulae for determination of fair rent in different classes of ... |
Sub section (1)(a) of section 7 gave teeth to the determination of fair rent by providing that where the Controller has fixed the fair rent of a building, the landlord shall not claim, receive or stipulate for the payment of anything in excess of such fair rent and sub section 2(a) of that section recognised that where... |
Section 29 made it penal for any one to contravene the provisions of subsections 1(a) and 2(a) of section 7. Ratio |
Now there could be no doubt that if the fair rent of a building were fixed under section 4, sub section (1), the decision in Padma Devi 's case would be clearly 616 applicable and the annual value would be limited to the fair rent so fixed. Ratio |
But, would the same principle apply where the fair rent were not fixed ? Ratio |
Would the annual value in such a case be liable to be assessed in the light of the provisions contained in the Rent Act ? That was the question which arose before the Court in the Guntur Municipal Council 's case. Ratio |
The Guntur Municipal Council urged that the decision in Padma Devi 's case was not applicable and attempted to distinguish it by saying that under section 7, sub section (1) it was only after the fixation of fair rent of a building that the landlord was debarred from claiming or receiving payment of any rent in excess ... |
" This attempt, however, did not find favour with the court and it was held that there was no distinction "between buildings the fair rent of which has been actually fixed by the Controller and those in respect of which no such rent has been fixed. Ratio |
" The Court pointed out: "It is perfectly clear that the landlord cannot lawfully expect to get more rent than the fair rent which is payable in accordance with the principles laid down in the Act. Ratio |
The assessment of valuation must take into account the measure of fair rent as determinable under the Act. Ratio |
It may be that where the Controller has not fixed the fair rent, the municipal authorities will have to arrive at their own figure of fair rent but that can be done without any difficulty by keeping in view the principles laid down in section 4 of the Act for determination of fair rent. Ratio |
" It will thus be seen that even though fair rent had not been fixed under the Act as in Padma Devi 's case, nor was it statutorily determined as in the Life Insurance Corporation 's case (there being no provision in the Andhra Pradesh Rent Act similar to the latter part of section 2(10)(b) of the West Bengal Rent Act)... |
The Court observed that the assessing authority would have to arrive at its own figure of fair rent by applying the principles laid down in sub sections (2) to (5) of section 4 for determination of fair rent. Ratio |
This decision clearly represented a further extension of the principle in Padma Devi 's case to a situation where no standard rent has been fixed by the Controller and in the absence of fixation of standard rent, there is no prohibition against receipt of higher rent by the landlord. Ratio |
It is in the light of these decisions that we must consider whether in case if a building in respect of which no standard rent has been fixed by the Controller under the Delhi Rent Control Act, 1958 the annual value must be limited to the measure of standard rent determinable under that Act or it can be determined on t... |
But before we proceed to examine this question, we must refer to a recent decision of this Court in Municipal Corporation, Indore & Ors.vs Smt.Ratnaprabha & Ors.(1) which apparently seems to strike a different note. Ratio |
That was a case relating to a building situated in Indore and subject to the provisions of the Madhya Pradesh Accommodation Control Act, 1961. Ratio |
The building was self occupied and hence there was no occasion to have its standard rent fixed by the Controller. Ratio |
The annual value of the building was sought to be assessed for rating purposes under the Madhya Pradesh Municipal Corporation Act, 1956 and section 138(b) of that Act provided that the annual value of any building shall, notwithstanding anything contained in any other law for the time being in force be deemed to be the... |
The argument of the assessee was that even though no standard rent in respect of the building was fixed by the Controller, the reasonable rent contemplated by section 138(b) could not exceed the standard rent determinable under the Act and it was incumbent on the Municipal Commissioner to determine the annual value of ... |
This argument was sought to be supported by relying on the three decisions to which we have already made a reference. Ratio |
Now it would appear that the decision in Guntur Municipal Council 's case was clearly applicable on the facts of this case and following that decision the Court ought to have held that the annual value of the building could not exceed 618 the standard rent determinable under section 7 of the Act and the assessing autho... |
But the Court negatived the applicability of the decision in Guntur Municipal Council 's case and the earlier two cases by relying on the words "notwithstanding anything contained in any other law for the time being in force" in section 138(b). Ratio |
The Court pointed out that while 'the requirement of the law is that the reasonable letting value should determine the annual value of the building, it has also been specifically provided that this would be so "notwithstanding anything contained in any other law for the time being in force" and observed that it would b... |
This view will, in our opinion, give proper effect to the non obstante clause in clause (b), with due regard to its other provision that the letting value should be "reasonable". Ratio |
The Court leaned heavily on the non obstante clause in section 138(b) and distinguished the decision in Guntur Municipal Council 's case and the earlier two cases on the ground that in none of the three Municipal Acts which came up for consideration before the Court in these cases, there was any such non obstante claus... |
We are not at all sure whether this decision represents the correct interpretation of section 138(b) because it is rather difficult to see how the non obstante clause in that section can possibly affect the interpretation of the words "the annual value of any building shall. . . . be deemed to be the gross annual rent ... |
" The meaning of these words cannot be different in section 138(b) than what it is in section 127(a) of the Calcutta Municipal Corporation Act, 1923 and section 82(2) of the Madras District, Municipality Act, 1920 and the only effect of the non obstante clause would be that even if there is anything contrary in any oth... |
But it is not 619 necessary for the purpose of the present appeals to probe further into the question of correctness of this decision, since there is no non obstante clause either in section 3(1)(b) of the Punjab Municipal Act, 1911 or in section 116 of the Delhi Municipal Corporation Act, 1957 and this decision has th... |
Now let us turn to the present appeals and see how far the trilogy of decisions referred to earlier throws light on the solution of the problem before us. Ratio |
We may first refer to the relevant provisions of the Delhi Rent Control Act, 1958 for that was the law in force at the material time relating to restrictions of rent of buildings situate within the jurisdiction of the Delhi Municipal Corporation and the New Delhi Municipal Committee. Ratio |
Section 2(k) defined '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. Ratio |
" Sub section (1) of section 4 provided that, subject to a single narrow exception which is not material for our purpose, "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" and sub... |
Section 5 sub section (1) enacted a prohibition injuncting that "no person shall claim or receive any rent in excess of the standard rent, notwithstanding any agreement to the contrary." Then, section 6 proceeded to set out different formulae for determination of standard rent in different classes of cases and each for... |
Section 9 sub section (1) provided that the Controller shall, on an application made to him in this behalf either by the landlord or by the tenant, fix in respect of any premises the standard rent referred to in section 6 and sub section (2) of section 9 laid down that in fixing the standard rent of any premises, the C... |
Sub section (4) of section 9 provided for determination of standard rent in a case where for any reason it was not possible to determine the standard rent on the principles set forth under section 6 and said that in such a case "the Controller may fix such rent as would be reasonable having regard to the situation, loc... |
Section 9 sub section (7) enjoined the Controller, while fixing the standard rent of any premises, to specify a date from which the standard rent so fixed shall be deemed to have effect and added a proviso that in no case the date so specified shall be earlier than one year prior to the date of the application for the ... |
Lastly, section 12 laid down a period of limitation within which an application for fixation of the standard rent may be made by the landlord or the tenant by providing that such application must be made within 2 years from the date of commencement of the Act in case of premises let prior to such commencement and if th... |
The proviso to section 12 empowered the Controller to entertain the application after the expiry of the period of limitation if he was satisfied that the applicant was prevented by sufficient cause from filing the application in time. Ratio |
These provisions of the Delhi Rent Control Act, 1958 came up for consideration before this Court in M. M. Chawla vs J. section Sethi(1) where the question was whether in answer to a suit for eviction filed by the landlord, the tenant was entitled by way of defence to ask the Controller to fix the standard rent of the p... |
The argument of the tenant was that by reason of the prohibition enacted in section 4 and sub section (1) of section 5, it was not competent to the landlord to claim or receive any amount in excess of the standard rent and even though the period of limitation prescribed for making an application for fixation of standar... |
This Court speaking through Shah, J. negatived the contention of the tenant and construing the scheme of the Act, pointed out: ". . . . . the prohibition in sections 4 and 5 operate only after the standard rent of 621 premises is determined and not till then. PRE |
So long as the standard rent is not determined by the Controller, the tenant must pay the contractual rent: after the standard rent is determined the landlord becomes disentitled to recover an amount in excess of the standard rent from the date on which the determination operates. PRE |
We are unable to agree that standard rent of a given tenement is by virtue of section 6 of the Act a fixed quantity, and the liability for payment of a tenant is circumscribed thereby even if the standard rent is not fixed by order of the Controller. PRE |
Under the scheme of the Act standard rent of a given tenement is that amount only which the Controller determines. PRE |
Until the standard rent is fixed by the Controller the contract between the landlord and the tenant determines the liability of the tenant to pay rent. PRE |
That is clear from the terms of section 9 of the Act. PRE |
That section clearly indicates that the Controller alone has the power to fix the standard rent, and it cannot be determined out of court. PRE |
An attempt by the parties to determine by agreement the standard rent out of court is not binding. PRE |
By section 12 in an application for fixation of standard rent of premises the Controller may give retrospective operation to his adjudication for a period not exceeding one year before the date of the application. PRE |
The scheme of the Act is entirely inconsistent with standard rent being determined otherwise than by order of the Controller. PRE |
In our view, the prohibition against recovery of rent in excess of the standard rent applies only from the date on which the standard rent is determined by order of the Controller and not before that date. PRE |
" it was, thus, held that the prohibition in section 4 and sub section (1) of section 5 against recovery by the landlord of any amount in excess of the standard rent was operative only after the standard rent was fixed by the Controller under section 9 and until the standard rent was so fixed, it was lawful for the lan... |
The Revenue relied heavily on this decision and contended that since in each of the present appeals the building was let out to the tenant, but its standard rent 622 was not fixed by the Controller under section 9 and the period of limitation for making an application for fixation of the standard rent had expired, the ... |
The argument of the Revenue was that if it was not penal for the landlord to receive the contractual rent from the tenant, even if it be higher than the standard rent determinable under the provisions of the Act, it would not be incorrect to say that he landlord could reasonably expect to let the building at the contra... |
This argument, plausible though it may seem at first blush, is in our opinion not well founded and must be rejected. Ratio |
Ordinarily we would have examined the validity of this argument first on principle and then turned to the authorities, but we propose to reverse this order because the decisions in the Life Insurance Corporation 's case and the Guntur Municipal Council 's case (supra) completely cover the present controversy and do not... |
Of course, the decision in Padma Devi 's case may be said to be distinguishable on the ground that in the present cases, unlike Padma Devi 's case, the standard rent of the building was not fixed by the Controller and hence it could not be said that it was unlawful or penal for the landlord to receive anything more tha... |
But so far as the decision in Life Insurance Corporation 's case is concerned, it is difficult to see how its applicability could be disputed, because there also, as in the present case, the standard rent of the building was not fixed by the Controller and in the absence of fixation of the standard rent, it was open to... |
The only distinction which could be urged on behalf of the Revenue was that under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, which came up for consideration in the Life Insurance Corporation 's case, the standard rent was statutorily determinable on the application of a mathematical formula... |
Now undoubtedly there is some difference in the provisions of the two statutes but this difference is not of such a character as to affect the applicability of the decision in the Life Insurance Corporation 's case, because in that case too, the prohibition against the landlord to receive any rent in excess of the stan... |
If the standard rent though not fixed and hence not legally enforceable, could provide the measure for the reasonable expectation of the landlord to receive rent from a hypothetical tenant in the Life Insurance Corporation 's case, there is no reason, why it should not equally be held to provide such measure in the pre... |
The upper limit of the standard rent, though yet to be fixed by the Controller, would enter into the determination of the reasonable rent. Ratio |
Moreover, it is not correct to say that under section 9 sub section (2) of the Delhi Rent Control Act, 1958 it is left to the unfettered and unguided discretion of the Controller to fix any standard rent which he considers, reasonable. Ratio |
He is required to fix the standard rent in accordance with the relevant formula laid down in section 6 and he cannot ignore that formula by saying that in the circumstances of the case, he considers it reasonable to do so. Ratio |
The only discretion given to him is to make adjustments in the result arrived at on the application of the relevant formula, where it is necessary to do so by reason of the fact that the landlord might have made some addition, alteration or improvement in the building or circumstances might have transpired affecting th... |
The compulsive force of the formulae laid down in section 6 for the determination of the standard rent is not in any way whittled down by section 9 sub section (2) but a marginal discretion is given to the Controller to mitigate the rigour of the formulae where the circumstances of the case do require. Ratio |
The amount calculated in accordance with the relevant formulae set out in section 6 would, therefore, ordinarily represent the standard rent of the building, unless the landlord or the tenant, as the case may be, can persuade the Controller that there are circumstances requiring adjustment in the amount so arrived at. ... |
It would thus be seen that there is no material distinction between the West Bengal Premises 624 Rent Control (Temporary Provisions) Act, 1950 and the Delhi Rent Control Act, 1958 so far as the provisions regarding determinations of standard rent are concerned and the decision in the Life Insurance Corporation 's case ... |
But more than the decision in the Life Insurance case decision, it is the Guntur Municipal Council 's case which is nearest to the present case and is almost indistinguishable. Ratio |
In that case also, so in the present cases, the standard rent of the building was not fixed by the Controller and under the Andhra Pradesh Rent Act which applied in the town of Guntur, in the absence of fixation of the fair rent, it was lawfully competent to the landlord to recover rent in excess of the fair rent deter... |
Moreover, the Andhra Pradesh Rent Act did not prescribe any clear cut formula to be applied mechanically for statutorily determining the standard rent, but it was left to the Controller to fix the standard rent having regard to (a) the prevailing rates of rent in the locality for the same or similar accommodation in si... |
The discretion left to the Controller to fix the fair rent was thus much larger than that under the Delhi Rent Control Act, 1958 and yet it was held that, even though the fair rent was not fixed by the Controller, the annual value was limited by the measure of the fair rent determinable under the Act. Ratio |
The view taken was that there was no material distinction between buildings fair rent of which has been actually fixed by the Controller and those in respect of which no such rent has been fixed and even if the fair rent has not been fixed by the Controller, the upper limit of the fair rent payable in accordance with t... |
The principle of this decision applies wholly and completely in the present cases and following that principle, it must be held that the annual value of a building governed by the Delhi Rent Control Act 1958 must be limited by the measure of standard rent determinable under that Act. Ratio |
The landlord cannot reasonably expect to get more rent than the standard rent payable in accordance with the principles laid down in the Delhi Rent 625 Control Act, 1958. Ratio |
It is true that the standard rent of the building not having been fixed by the Controller, the assessing authority would have to arrive at its own figure of standard rent by applying the principles laid down in the Delhi Rent Control Act, 1958 for determination of standard rent, but that is a task which the assessing a... |
When the assessing authority arrives at its own figure of standard rent by applying the principles laid down in the Act, it does not, in any way, usurp the functions of the Controller, because it does not fix the standard rent which would be binding on the landlord and the tenant, which can be done only by the Controll... |
That is a perfectly legitimate function within the scope of the jurisdiction of the assessing authority. Ratio |
Now it is true that in the present cases the period of limitation for making an application for fixation of the standard rent had expired long prior to the commencement of the assessment years and in such of the cases, the tenant was precluded by section 12 from making an application for fixation of the standard rent w... |
But from this fact situation which prevailed in each of the cases, it does not follow that the landlord could, therefore, reasonably expect to receive the same amount of rent from a hypothetical tenant. Ratio |
The existing tenant may be barred from making an application for fixation of the standard rent and may, therefore, be liable to pay the contractual rent to the landlord, but the hypothetical tenant to whom the building is hypothetically to be let would not suffer from this disability created by the bar of limitation an... |
This position becomes absolutely clear if we take a situation where the tenant goes out and the building comes to be self occupied by the owner. Ratio |
It is obvious that in case of a self occupied building, the annual value would be limited by the measure of standard rent determinable under the Act, for it can reasonably be presumed that no hypothetical tenant would ordinarily agree to pay 626 more rent than what he could be made liable to pay under the Act. Ratio |
The anomalous situation which would thus arise on the contention of the Revenue would be that whilst the tenant is occupying the building the measure of the annual value would be the contractual rent, but if the tenant vacates and the building is self occupied, the annual value would be restricted to the standard rent ... |
It is difficult to see how the annual value of the building could vary accordingly as it is tenanted or self occupied. Ratio |
The circumstance that in each of the present cases the tenant was debarred by the period of limitation from making an application for fixation of the standard rent and the landlord was consequently entitled to continue to receive the contractual rent, cannot therefore affect the applicability of the decisions in the Li... |
The problem can also be looked at from a slightly different angle. Ratio |
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