TMI Blog1995 (5) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... r premises, standard rent is not fixed under Section 11 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1944 (Bombay Rent Act) the annual rent received by the owner in respect of such building or land or premises shall, notwithstanding anything contained any other law for the time being in force, be deemed to be the annual rent for which such building or land or premises might reasonably be expected to let from year to year with reference to its use . The Gujarat High Court has held on the first question that an appeal can be preferred only by the owner of the building and not by any other person including the tenant. On the second question, it has recorded its opinion on the meaning and effect of proviso (aa), Tenant right to object to assessment and his rent to file appeal: The contention of the learned counsel for the appellants-tenants is this: by virtue of the agreements entered into between the appellants and their respective landlords, the obligation to discharge the property taxes has been placed exclusively upon the tenants. The landlord receives the rent exclusive of the property taxes which means that any increase/enhancement of property taxes affects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foremost tax mentioned in the sub-section is (a) property taxes . Section 139 specifies the person who shall be primarily liable for property taxes assessed upon any premises. Section 139 reads as follows : 139. (1) Subject to the provisions of sub-section (2) property taxes assessed upon any premises shall be primarily leviable as follows, namely : (a) if the premises are held immediately from the Government or from the Corporation, from the actual occupier thereof: Provided that property taxes due in respect of buildings vesting in the Government and occupied by servants of the Government or other person on payment of rent shall be leviable primarily from the Government; (b) if the premises are not so held -- (i) from the lessor if the premises are let; (ii) from the superior lessor if the premises are sub-let; (iii) from the person in whom the right to let the premises vests if they are unlet. (2) If any land has been let for any term exceeding one year to a tenant and such tenant has built upon the land, the property taxes assessed upon the said land and upon the building erected thereon shall be primarily leviable from the said tenant or any person d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any period for which the occupier was not in occupation of the premises on which the tax is assessed. (4) If any sum is paid by, or recovered from, an occupier under this section, he shall be entitled to credit therefore in account with the person primarily liable for the payment of the same. Sub-section (1) says that (a) where the property tax due in respect of a premises remains unpaid in spite of service of a bill upon the person primarily liable therefore and (b) if such person is not the occupier of the premises for the time being, (c) the Commissioner may serve a bill for the amount upon the occupier of the premises and (d) if the premises is occupied by more than one occupier, the bill shall be served upon each of the occupiers specifying the amount proportionate to the rent he pays to the total rent payable in respect of the said premises. Sub-section (2)says that if the occupier fails to pay the sum mentioned in the bill within thirty days of its service, such amount can be recovered from him in accordance with the rules. Sub-section (3), however, clarifies that (i) no arrear of a property tax shall be recovered from any occupier under Section 140 which has remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complaint has previously been made and disposed of; (d) in the case of an appeal against any amendment made in the assessment book for property taxes during the official year, a complaint has been made by the person aggrieved within fifteen days after he first received notice of such amendment and his Complaint has been disposed of; (e) in the case of an appeal against a tax, or in the case of an appeal made against a rateable value, the amount of the disputed tax claimed from the appellant, or the amount of the tax chargeable on the basis of the disputed rateable value, up to the date of filing the appeal, has been deposited by the appellant with the Commissioner; Provided that where in any particular case the judge is of the opinion that the deposit of the amount by the appellant will cause undue hardship to him the judge may in his discretion, either unconditionally or subject to such conditions as he may think fit to impose, dispense with a part of the amount deposited so how-ever that the part of the amount so dispensed with shall not exceed twenty five percent of the amount deposited or required to be deposited. According to sub-section (2), the appeal must he pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such notice within which complaints against the amount of any rateable value entered in the assessment book will be received in his office. Sub-rule (2), upon which strong reliance has been placed by the learned counsel for the appellants, provides that where any premises is entered in the assessment book for the first time or where the rateable value of any premises is increased, the Commissioner shall, as soon as conveniently may be after the issue of the public notice under sub-rule (1) give a special written notice to the owner or occupier of the said premises specifying the nature of such entry and informing him that any complaint against the same will be received in his office at any time within fifteen days from the service of the special notice . Rule 20 says that upon the representation of any person concerned or on the basis of any other information received by him during the official year, the Commissioner may amend the entries in the assessment book. Such amendment may relate to the matters specified in the said sub- rule which include increase or reduction in the rateable value. Section 10 of the Bombay Rent Act provides the situation in which the landlord is ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public notice issued under Rule 35(1) or pursuant to special written notice issued under Rule 15(2) as well as the right to file an appeal under Section 406. This should be more so, if there is an agreement between the landlord and tenant whereunder the obligation to discharge and pay the property taxes in cast upon the tenant. IE is true that this is a private arrangement between the parties and cannot form the basis of a legal right but it is certainly an additional factor conferring the requisite locus standi upon the tenant. Even where the Bombay Rent Act is not applicable to a particular building, the existence and proof of such an agreement would enable the tenant to claim the requisite locus standi. Holding otherwise would be grossly unjust to the tenant. While he made liable, statutorily or by private treaty, for the enhancement in the property taxes, he is not being allowed to question the same. It is true, as contended by the learned counsel for the corporation, that no prudent owner of a building will allow the assessment to be enhanced unreasonably just to spite the tenant, it cannot at the same time be said that the tenant has no right to file an appeal against the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the owner of the premises is primarily liable for the property taxes and also because the Act does not specifically confer upon the tenant the right to object and file an appeal, the tenant has no such right. But, as explained hereinabove, the tenant is a directly affected party and it would not be just or equitable to deny him such a right unless the statute says so specifically. We have pointed out supra that it does not create any such bar even by implication. Nor is the right to file an appeal conditioned upon the filing of a complaint by the tenant. In other words, it cannot be said that since the tenant has to filed the complaint in a given case, he has no right to file the appeal. The right to appeal is governed by Sections 406 and 407, Section 407 speaks of disposal of complaint; it does not say that the complaint must have been filed by the person proposing to file the appeal. It may be noticed that the right of appeal conferred by Section 406 is more akin to the right of appeal provided by Section 96 of the Code of Civil Procedure. It provides a right of appeal but does not say who can file the appeal. It means that any person who is affected by or who can be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f and as contemplated by sub-clause (ii) in Clause (1A). The contention of the learned counsel for the appellants is that even where the standard rent is not fixed, it must be presumed that the annual rent for such buildings or lands or premises might reasonably be expected to let from year to year with reference to its use is the standard rent alone and not the actual rent received. The contention is that the corporation is not entitled to look to the actual rent received and that it is entitled to look only to standard rent because the landlord is not entitled in law to receive anything more than the standard rent. It is submitted that even where the standard rent is not fixed, an effort must be made by the assessing authorities to ascertain the standard rent in accordance with the provisions of the Bombay Rent Act and then adopt it as the annual rent for which such building, land or premises might reasonable be expected to let from year to year with reference to its use for the purposes of determining Annual Letting Value. Indeed, the validity of proviso (aa) is also questioned (See the ground (A) in the grounds of appeal in Civil Appeal No. 5405 of 1995 arising out of S.L.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eable value is to be determined. Rule 7(3) says that in order to fix the rateable value of any building, land or premises, there shall be deduction from the amount of the Annual letting value of such building a sum equal to ten percent of the Annual Letting Value and the said deduction shall be in lieu of all allowances for repairs or on any other account whatsoever. It is in this manner that the definition of Annual Letting Value assumes importance. The said definition, as already stated, occurs in clause (1A) in Section 2. Sub- clause (i) of the definition says that for the period prior to 1st April, 1970, Annual Letting Value shall mean the rent at which the premises can be reasonably be expected to be let if the Bombay Rent Act were not in force. We are not concerned with this sub-clause. Sub-clause (ii), which is relevant for our purposes, says that in relation to any other period, (Annual Letting Value shall mean) the annual rent for which any building or land or premises, exclusive of furniture or machinery contained or situate therein or thereon, might reasonably be expected to let from year to year with reference to its use and shall include all payments made or agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the estimated cost, at the time of the assessment, of erecting the building or, as the case may be, the building or buildings comprised in such premises; Now let us see what does each limb of the proviso say. Proviso (a) says that where the standard rent has been fixed under Section 11 of the Bombay Rent Act in respect of any building or land, the annual rent of such building/land shall not exceed the annual amount of the standard rent so fixed. Proviso (aa) says that where standard rent has not been fixed under Section 11 of the Bombay Rent Act in respect of any building, land or premises, the annual rent received by the owner in respect of such building etc. shall, notwithstanding anything contained in any other law for the time being in force, be deemed to be the annual rent for which such building etc. might reasonably be expected to be let from year to year with reference to its use, within the meaning of sub-clause (ii). Proviso (aaa) is in the nature of a proviso to proviso (aa). Where the Commissioner is of the opinion that the annual rent received by the owner is less than the reasonably expected rent, he can ignore the actual rent received. It is evident that proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent received -in respect of buildings etc. for which standard rent is not fixed under Section 11 of the Bombay Rent Act shall be deemed to be the annual rent for which such building etc. might reasonably be expected to let from year to year with reference to its use. The validity of proviso (aa), though raised in the grounds of appeal in the special leave petition, has not been urged before us, probably advisedly. Being a taxing enactment and also because the proviso does not more than to treat the actual rent received as the annual rent, the reasonableness of the said provisions can hardly be questioned. Be that as it may, we see no reason why the express language and command of proviso (aa) is not respected. Both the enactments, viz.., Bombay Rent Act and Bombay Provincial Municipal Corporations Act are stated enactments. Indeed, the Municipal Corporations Act is a later enactment. In view of the express provision in proviso (aa), it must be held that for the purpose of the Municipal Corporations Act, the actual rent received is a annual rent for the purposes of determining the annual letting value. The counsel for the appellants say that it cannot be. They say that one State ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition is unexceptionable. Hypothetical rent may be described as a rent which a landlord may reasonably be expected to get in the open market. But an open market cannot include a 'black market', a term euphemistically used to commercial transactions entered into between parties in defiance of law. In that situation, a statutory limitation of rent circumstances the scope of the bargain in the market. In no circumstances, the hypothetical rent can exceed that limit. According, it was held that the rental value of the building cannot be fixed higher than the standard rent under the Rent Control Act. This decision was followed in Life Insurance Corporation of India and Guntur Municipal Council. In the latter decision, it was clarified: it may be that where the controller has not fixed 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 (Rent Control Act) for determination of fair rent . In Ratna Prabha, a three Judge Bench was confronted with the above decisions in he the context of Madhya Pradesh Municipal Corporation Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adma Debi, Life Insurance Corporation of India and Guntur Municipal Council were distinguished on the ground that the municipal enactments concerned therein did not contain a non-obstante clause like the one contained in Section 138(b) of the M.P. Act and that the said non- obstante clause makes all the difference. Dewan Daulat Rai Kapoor arose under the Punjab Municipal Act, 1911 (as applicable to Delhi) and the Delhi Rent Control Act, 1958. A three-Judge Bench, speaking through P.N. Bhagwati, J., considered the aforesaid decisions and followed the ratio in Padma Debi, Life Insurance Corporation of India and Guntur Municipal Council in view of the fact that the definition of annual value in Section 3(l)(b) of the Punjab Municipal Act, 1911 was similar to those in the enactments considered in the above decisions; it did not contain a non-obstante clause as the one contained in M.P. Accommodation Control Act. When the decision in Ratna Prabha was cited, Bhagwati, J. distinguished by it saying that it is based wholly and exclusively upon the non-obstante clause found in the Madhya Pradesh Act and was, therefore, distinguishable. Having so said, the Bench expressed the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that a similar view has been expressed by this Court in Indian Oil Corporation Ltd. (Supra) where it is observed : 5. In Dewan Daulat Rai (supra), another 3- Judge Bench of this Court while construing a similar provision in the Punjab Municipal Act, 1911 referred to the decision in Ratna Prabha (supra) and distinguished it on the ground that there was no non-obstante clause in the relevant provision of the Punjab Municipal Act and, therefore, the decision in Ratna Prabha (supra) had no application. No doubt, in doing so, a reservation was expressed about the view taken in Rama Prabha (supra) on the basis of the existence of the non-obstante clause in Section 138(b) of the M.P. Act but that cannot have the effect of overruling the decision of this Court in Ratna Prabha (supra) inasmuch as a later co-equal Bench could not overrule it and could only refer it for reconsideration to a larger Bench, which it did not do. Indeed, a plea to reconsider the correctness of the ratio in Ratna Prabha was rejected in the following words: The other submission of the learned Additional Solicitor General is a plea for reconsideration of the decision of this Court in Ratna Prabha, [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interpretation. Probably a time has come when the said principle may have to be reviewed. In this case, however, this question does not arise at this stage and, therefore, it is not necessary to express a final opinion on the said issued. These observations emphasise the impracticality of the proposition that though the landlord may actually receive Rupees ten thousand per month as rent, the property tax in respect of the building can be levied only on the basis of say, Rupees five hundred, because that would be the fair rent/standard rent according to the relevant Rent Control Law, not- withstanding the fact that no such fair rent/standard rent had actually been fixed. Be that as it may, so far as the present case is concerned, the relevant provisions are clear. Where the standard rent is not fixed, the actual rent received shall be deemed to be the annual rent in which the property might reasonably be expected to be let, not with standing anything contained in any other law. The non-obstante clause prevents the application of the Bombay Rent Act to cases falling under proviso (aa) for determining the rent at which the property might reasonably be expected to be let. The pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not true, persons do not escape the correct levy. We must deal with one another contention urged by Sri Rohinton Nariman. He submitted that the special notice issued in his case under Rule 15(2) of Chapter - VIII of Schedule - A is totally devoid of any particulars or grounds upon which the assessment was sought to be enhanced. He relies upon the general proposition that a show cause notice must contain the relevant particulars and grounds sufficient to put the person concerned on notice of the proposed action and it basis. Absence of such particulars and grounds in such show cause notice, he submits, vitiates the special notice itself. The High Court has rejected the contention in the following words: Notice under Section 15(2) is issued after entry in the assessment book has been made. Sub-rule (2) of Rule 15 requires that the special written notice to the owner or the occupier shall specify the nature of such entry. In other words, the special notice must inform the owner about the entries mentioned in Rule 9, clauses (a), (b),(c) and (d) because the said Rule 15 has to be read with Rules 9 and 13. When a statute specified as to what should be the contents of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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