# >· INDIA AUTOMOBILES (1960) LTD v. CALCUTTA MUNICIPAL CORPORATION AND ANR - **Citation:** [2002] 1 S.C.R. 961 - **Court:** Supreme Court of India - **Decided:** 2002-02-13 - **Bench:** G.B. Pattanaik, R.P. Sethi, BlSHESHWAR PRASAD SINGH - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/india-automobiles-1960-ltd-v-calcutta-municipal-corporation-and-anr-18403 - **Pages:** 27 ## Headnote Calcutta Municipal Corporation Act, 1980: A B Section 174-Land or building-Annual Valuation-Determination of- C Basis-Gross annual rent actually paid by tenant or rent paid by sub-tenants to tenants-Held, the basis of annual valuation is the standard rent where the Rent Control Act is applicable· -In all other cases the basis of annual valuation is the actual rent received by the owner, the hypothetical standard rent, the rent being received by tenant from his sub-tenant and the prevalent rate of rent in the vicinity of the property being assessed-Where standard or fair rent has been f1JCed the municipal authorities should generally accept the same as the basis of valuation notwithstanding the non-applicability of the Rent Acts. Words and Phrases: "Reasonably"--Meaninf( of-In the context ofs.174(1) of the Calcutta Municipal Corporation Act, 1980. The appellant leased out the suit property to its tenant and the respondent-Corporation fixed the annual value of the suit property under Section 174 of the Calcutta Municipal Corporation Act, 1980 by taking in to consideration the rent paid by the sub-tenants to the tenant But the Municipal Assessment Tribunal fixed the annual value of the suit property on the basis of the rent actually received by the Appellant-owner from its tenant However, the High Court held that the annual valuation would be fixfd notwithstanding anything contained in the West Bengal Premises Rent Control Act, 1956 and set aside the order of the Tribunal and directed it to hear the appeal on merits keeping the mind the total amount paid by the sub-tenants to the tenant of the appellant. Hence this appeal. On behalf of the appellant it was contended that while assessing the value 961 962 SUPREME COURT REPORTS [2002] I S.C R. A of the suit property the amount taken by the tenant from a sub-tenant could not be taken into consideration and that the valuatioro had to be based on the basis of the actual rent received by the appellant from its tenant. Disposing of the appeal, the Court B HELD : 1.1. In cases where the municipal laws exclude the applicability of the Rent Acts by incorporating non-obstante clause in the taxing statute, the powers of the authorities under the Municipal Acts are not circumscribed by the limits indicated in Padma Debis s case. i.e. the criterion for fixing the annual value was the rent realisable by the landlord and not the value of the C holding in the hands of the tenant and the value of the property to the owner ~ was the standard rent in making the assessment. 1984-H) Corporation of Calculla v. Smt. Padma Debi. 11962) 3 SCR 49, referred to. 1.2. In cases where the fair rent payable by the tenant has been D determined and there is no justification for refusing to accept that fair rent as the rental value of the premises, the municipal authorities should generally accept the standard rent fixed, notwithstanding the non-applicability of the Rent Act because such a view would be a reasonable guideline to determine the rate of rent at which such land or building might, at the time ofassessmcnt, E be reasonably expected to be let from year to year. The rent which the tenant is receiving from his sub-tenant is also an important statutory consideration for determining the rent at the time of asst.-ssment to which the property might reasonably be expected to be let from year from year to year. Such a F consideration is also justifitd on the principle' of reasonableness. (985-A-BI ' 1.3. It is not possible to agree that in all cases, nomithstanding the nonobstante clause, t:1e annual rental ~alue cannot be fixed bc:yond the standard rent determined or determinable under the Rent statute. It is also difficult to hold that in all cases the rent actually paid by the sub-tenant to the tenant be taken as a sole criterion for detet mining the annual value on the assumption G that such land or building might, at the time of assessment, is reasom•bly expected to get the 11foresaid amount of rent if let ## Text _Characters 0–39,846 of 69,971. This is a partial read: ask again with offset=39846 for what follows._ >· .. INDIA AUTOMOBILES (1960) LTD. v. CALCUTTA MUNICIPAL CORPORATION AND ANR. FEBRUARY 13, 2002 [G.B. PATTANAIK, R.P. SETHI AND BlSHESHWAR PRASAD SINGH, JJ.] Calcutta Municipal Corporation Act, 1980: A B Section 174-Land or building-Annual Valuation-Determination of- C Basis-Gross annual rent actually paid by tenant or rent paid by sub-tenants to tenants-Held, the basis of annual valuation is the standard rent where the Rent Control Act is applicable· -In all other cases the basis of annual valuation is the actual rent received by the owner, the hypothetical standard rent, the rent being received by tenant from his sub-tenant and the prevalent rate of rent in the vicinity of the property being assessed-Where standard or fair rent has been f1JCed the municipal authorities should generally accept the same as the basis of valuation notwithstanding the non-applicability of the Rent Acts. Words and Phrases: "Reasonably"--Meaninf( of-In the context ofs.174(1) of the Calcutta Municipal Corporation Act, 1980. The appellant leased out the suit property to its tenant and the respondent-Corporation fixed the annual value of the suit property under Section 174 of the Calcutta Municipal Corporation Act, 1980 by taking in to consideration the rent paid by the sub-tenants to the tenant But the Municipal Assessment Tribunal fixed the annual value of the suit property on the basis of the rent actually received by the Appellant-owner from its tenant However, the High Court held that the annual valuation would be fixfd notwithstanding anything contained in the West Bengal Premises Rent Control Act, 1956 and set aside the order of the Tribunal and directed it to hear the appeal on merits keeping the mind the total amount paid by the sub-tenants to the tenant of the appellant. Hence this appeal. On behalf of the appellant it was contended that while assessing the value 961 962 SUPREME COURT REPORTS [2002] I S.C R. A of the suit property the amount taken by the tenant from a sub-tenant could not be taken into consideration and that the valuatioro had to be based on the basis of the actual rent received by the appellant from its tenant. Disposing of the appeal, the Court B HELD : 1.1. In cases where the municipal laws exclude the applicability of the Rent Acts by incorporating non-obstante clause in the taxing statute, the powers of the authorities under the Municipal Acts are not circumscribed by the limits indicated in Padma Debis s case. i.e. the criterion for fixing the annual value was the rent realisable by the landlord and not the value of the C holding in the hands of the tenant and the value of the property to the owner ~ was the standard rent in making the assessment. 1984-H) Corporation of Calculla v. Smt. Padma Debi. 11962) 3 SCR 49, referred to. 1.2. In cases where the fair rent payable by the tenant has been D determined and there is no justification for refusing to accept that fair rent as the rental value of the premises, the municipal authorities should generally accept the standard rent fixed, notwithstanding the non-applicability of the Rent Act because such a view would be a reasonable guideline to determine the rate of rent at which such land or building might, at the time ofassessmcnt, E be reasonably expected to be let from year to year. The rent which the tenant is receiving from his sub-tenant is also an important statutory consideration for determining the rent at the time of asst.-ssment to which the property might reasonably be expected to be let from year from year to year. Such a F consideration is also justifitd on the principle' of reasonableness. (985-A-BI ' 1.3. It is not possible to agree that in all cases, nomithstanding the nonobstante clause, t:1e annual rental ~alue cannot be fixed bc:yond the standard rent determined or determinable under the Rent statute. It is also difficult to hold that in all cases the rent actually paid by the sub-tenant to the tenant be taken as a sole criterion for detet mining the annual value on the assumption G that such land or building might, at the time of assessment, is reasom•bly expected to get the 11foresaid amount of rent if let f, om year to )'ear. The argument that the rent actually rel.uved h tlw ""'n" '~101Jld u!ways be deemed to be reasonable rent in the al>sc•1n of 1.-auu, _.,u11,m11 , 11d other extraneous considerations is too v:eneral ar>rl ~ bn•'.ld pn-.p<'">ilh.1 of I .. · 1 \\ hich cannot be accepted for the purpose' of :l"tcrm1rh1'! t'1~ ll'•oi:.I ,rive of the H property for the purposes of Section J"l 4 <'l :he 1 'l«•ti.t vt"ninpal !NOIA AC WMOB!Ll::S ( 1 Y6Q) LTD. v CALCUTT A MUNICIPAL CORPN 963 Corporation Act, 1980. In the light of clear and unambiguous provisions of A Section t 74 of the Act, it cannot be held that the amount realised by a tenant -'). from a sub-tenant cannot at all be tak~n into consideration for the proposes of determining the gross annual rent in the absence of extraneous considerations. (985-C-El •· 2.1. Allowing the Municipal Corporations to assess the annual rateable B value on the basis of the income of a tenant from the property would not be grossly unfair and would not have the effect of rendering the rate provisions of the Act unreasonable, arbitrary and unconstitutional. The Act itself has taken care by making sufficient provision in Sections 193 and 194 regarding the liability to pay the rent and apportionment of such liability when the C premises are assessed, let or sub-let. On proof of creation of sub-tenancy, the owners of the building may also be entitled to seek eviction of their tenants under the relevant provisions of the Rent Acts applicable in the State where the land or property is located. (985-F-G[ 2.2. The Calcutta Municipal Corporation Act, 1980 requires the D application of mind by the municipal authorities to determine the rents on the basis of reasonableness by keeping into account all relevant circumstances including the actual rent received by the owner, the hypothetical Standard rent, the rent being received by the tenant from his sub-tenant and other relevant consideration, such as prevalent rate of rent of lands and building in the vicinity of the property being assessed. Only because the owner of the E building is not getting tl>e same rent which the sub-tenant is paying to his lessor, cannot be made a basis to deprive the Corporations from determining the annual valuation and taxing the land or building on that basis. If such a plea is accepted, it would be against the provisions of the statute which has been enacted to provide civic services in the form of water, drainage, sewerage, F collection, removal, and disposal of solid waste, fire prevention and fire safety maintenance of street and public places, etc. in the Municipal area where such land or building is situate. (986-B-C[ 3. The basis for determination of annual rent value has to be the standard rent where the Rent Control Act is applicable and in all other cases G reasonable determination of such rent by the municipal authorities keeping in view various factors as already indicated, including the rent which the · tenant is getting from his sub-tenant. In appropriate cases the owner of the property may be in a position to satisfy the authorities that the gross annual rent of the building of which the annual valuation was being determined cannot be more than the actual rent received by such owner from his tenant. H 964 SUPREME COURT REPORTS (2002) I S.C.R. A The municipal authorities shall keep in mind the various pronouncements of this Court, the statutory provisions made in the specified Municipal Acts, and also keeping in mind the applicability or non-applicability of the Rent Act ~ and the peculiar circumstances of each case, to find out the gross annual rent of the building including service charges, if any, at which such land or building ... B might, at the time of assessment, be reasonably expected to be let from year to year in terms of Section 174 of the Act [986-E-GI Smt. Padma Debi v. Corporation of Calcutta, ( 1962 [ 3 SCR 49; Corporation of Calcutta v. Life Insurance Corporation of India, (1970( 2 SCC 44; v. Guntur Municipal Council v. Guntur Town Rate Payers' Association, (1971] 2 SCC 423; c Municipal Corporation v. Smt. Ratnaprabha. ]1976] 4 SCC 622; Diwan Dau/at ~ Rai Kapoor v. New Delhi Municipal Committee, :1 1186! 1SCC685; BalbirSingh v. MCD, (1985] l SCC 167; Srikant Kashinath J1tur1 v. Corporation of the City of Belgaum, (1994]] 6 SCC 572; Indian Oil Corporation Ltd. v. Municipal Corporation, ( 1995] 4 SCC 96; Asstt. General Manuger, Central Bank of India D v. Commissioner Municipal Corporation for the C11y of Ahmedabad, [1995] 4 SCC 696; Ea~t India Commercial Co. Pvt. Ltd v. Corporation of Calcutta, (1998] 4 SCC 368 and Government Servant Cooperative House Bui/din~ Society Ltd v. Union of India. (1996] 6 SCC 381, referred to. ~ CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5109 of E 2000. From th~ Judgment and Order dated 4.1.2000 of the Kolkatta High Court in C.O. No. 2468 of 1999. Jaid.:ep uupta, Anil Agarwal and K.V. Vijaykumar fur the Appellant. .._ F Tapash C. Ray, Gaurav Jain and Abha Jain for the Respondents. ' The Judgm~nt of the Court was delivered by SETHI, J. Aggrieved by the determination of annual valuation made G in terms of Section 174 of the Calcutta Municipal Corporation Act, 1980 (hereinafter called "the 1980 Act"), the appellant-owner of a nine storeyed building, admittedly, used for commercial purposes, filed an appeal before the Municipal Assessment Tribunal who vide its order dated 26th February, ,,_ 1999 allowed the appeal and fixed the annual value on the basis of rent actually received by the appellant-owner. Feeling aggrieved, the respondentH corporation approach.ct the High Court under Article 227 of the Constitution ---+ J_ INDIA AUTOMOBILES (1960) LTD. v. CALCUTTA MUNICIPAL CORPN. [SETHI, 1-] 965 of India who, vide the order impugned in this appeal, set aside the order of A the Tribunal and directed it to hear the appeals on merits keeping in mind that total amount paid by the sub-tenants to the tenant of the appellant should also be taken into consideration in assessing the annual valuation. It is not disputed that the property in question was leased out by the appellants to their tenant, named Banwarilal Pasari at a rental of Rs. 75,000 B per month vide a duly executed lease deed (Annexure P-l). There is also no dispute that the building is a nine storeyed building and is used for commercial purposes. The respondent-Corporation carried out the general revision of the annual valuation of the premises effective from fourth quarter of 1984-85 and also for the period from fourth quarter of 1990-91. Proposed valuation C was communicated to the owners vide two notices issued under the 1980 Act directing them to attend the hearing before the Hearing Officer of the Corporation on the date specified in the notice. The appellant submitted objections to the notices and objected to the same challenging the proposed valuation and the basis thereof. The Hearing Officer vide his two orders dated 15.4.1996 fixed annual valuation from fourth quarter of 1984-85 at Rs. D 18,80,600 and from fourth quarter of 1990-91 at Rs. 21,63,560. The annual valuation assessment was made under Section 174 of the l 980 Act by taking into consideration the rent paid by the sub-tenants. The Municipal Assessment Tribunal accepted the appeal of the owners by relying upon the judgment of this Court in Corporation of Calcutta v. life Insurance Corporation of India, E [1970] 2 SCC 44. Not satisfied with the judgment of the Tribunal, Municipal Corporation moved the High Court by way of a petition under Article 227 of the Constitution of India, which was allowed by setting aside the order of the Tribunal vide judgment impugned in this appeal. The High Court held that the aforesaid decision of this Court had no application to an assessment made under Section 17 4 of the 1980 Act which was found to be materially different F from Section 168 of the Calcutta Municipal Act, 1951 under which the assessment had been made in life Insurance Corporation's case (supra). The High Court further held that under 1951 Act the annual valuation in no case could exceed the standard rent fixed by the West Bengal Premises Rent Control (Temporary Provision) Act, 1950 but under the 1980 Act which had G a non-obstante clause, the annual valuation can be fixed notwithstanding anything contained in the_ West Bengal Tenancy Act, 1956 or any other law. for the time being in force. It has been further held that under the 1980 Act, the consolidated rate is primarily leviable, if the land and building is let upon lessor and if the land and building is sub-let, still upon the superior lessor under Section 193 of the Act, and for that reason Section 194 of the Act has H 966 SUPREME l Ol 'RT REl'OR l" 120021 1 S.C.R. A conferred a nght upon the lessor, ksse~ o.r the sub· lesset to recover the excess amount from their resp~ctive tenants for th~ \!xcess pavable by them due to creation of tenancy or sub-tenancy. It was furtht:r held that the Municipal Corporation is in no way bound by the fixation of standard rent or fair rent by the Rent Controller and the rent realised by a tenant from the sub-tenant B or by a sub-tenant from his tenant is required to be taken into consideration and such amount to be treakd as gross rent of the land or building for .he purposes of Section 174 of the I 980 Act. Finding that the Appellate Tribunal had acted illegally and with mater~al irregularity 'n holding that in assessing annual valuation of the building the amount realist:d from the sub-tenants cannot be taken into consideration, the matter was remanded to the Tribunal C to hear the appeal afresh on merits and decide the , . "1e in the light of the observations made by the High Court. Not satisfied v.n·· rhe Judgment of the High Court, the owners of the building have preferred t~ is appeal. When this appeal was listed in the Court on 10th November, 2001, tti~ Judges constituting the Bench kit that following observations of this Court in the case of LIC required reconsideration: D E "But under the Act the qudntum of the consolidated rate depends upon the dnnual value of land or building on !he gross rent for v.hich the land or buildmg might reasonably be expected 'o kt Jnd not the gro;s rent at which the ,;ubordinak intere~t of a tenant may be expected to sublet" The Bench directed the Registry to !'!ace the matter before the Hon 'ble Ch id Justice for 'isting this matter be•or<: a Be'\Ch ;if thrt:~ Judves. In such circumstances this appeal has com<: bdore us. It is contended on behalf of the appellant that the ,rder passed by the F Municipal Assessment Tribunal was strictly according to law and did not ' suffer from any infirmity with which the High Court could have interfered. It is submitted that while assessing the valuation of the property, the amount taken by the tenant from a ;;ub-knant cannot be tdken into con,ideration in view of the judgment of this Court in LIC's case (supra). According to the G appellant, the annual value of the land and building has to be deemed to be gross annual rent including service charges as conkmplated under Section 174 of the 1 olving the controversy. The 1980 Act was enacted to amend and consolidate the law relating to the municipal affairs of Calcutta. Chapter XII deals with the power of taxation at consolidated rates. Section 170 authorises the G Corporation to levy certain taxes enumerated therein. Section 174, dealing with the determination of annual valuation of the property within the municipal corporation provides: "174. Determination of annual valutation - (I) Notwithstanding anything contained in the West Bengal premises Tenancy Act, 1956 H 968 SUPREME COURT REPORTS [2002] I S.C.R. A or in any other law for the time being in force, for the purpose of assessment to the consolidated rate, the annual value of any land or building shall be deemed to be •he gross annual rent including service charges, if any, at which such land or building might at the time of assessment be reasonably expected to let from year to year, less an B c D allowance of ten per cent, for the cost of repairs and other expenses necessary to maintain such land or building in a state to command such gross rent: Provided that where there is a transfer, inter vivas, of ownership of any land or building since the last preceding periodical assessment under Section 179, the annual value of such land or building shall be fixed at seven and a half per cent of the amount stated in the deed of transfer as consideration for such transfer or, if no consideration is stated in such deed of transfer, at seven and a half per cent of the estimated market value thereof: Provided further that while determining the annual value in the case of any land or building or portion thereof exclusively used by the owner for his residential purpose, the gross annual rent of such land or building or portion, as the case may be, shall be reduced, - (a) where the gross annual rent does not exceed six hundred rupees, E by thirty per cent; F G (b) where the gross annual rent exceeds six hundred rupees but does not exceed eighteen thousand rupees, by such percentage of the gross annual rent as is worked out by dividing the gross annual rent by six hundred and subtracting the quotient from thirty-one, the difference being rounded off to the nearest place of decimal: Provided also that no such reduction in gross annual rent shall be made- (a) in case. the total covered area in any land or building under occupation for residential purpose by the owner exceeds one hundred and fifty square metres, or (b) where a person owns or occupies for residential purposes more than one plot of land or building or portions thereof within the municipal limit of Calcutta. H (2) The annual value of any land which is not built upon shall be - - -~ , • -- ~ • I INDIA AUTOMOBILES (1960) LTD. v. CALCUTTA MUNICIPAL CORPN. [SETHI, J] 969 fixed at seven per cent of the estimated market value of the land. A (3 )If the gross annual rent of any class or classes of land or buildings used exclusively for hospital or educational purposes or for the purposes of sports or as a place of worship or as a place for disposal of the dead cannot be easily estimated, the gross annual rent of such building shall be deemed to be five per cent of the value of the B building obtained by adding the estimated cost of erecting the building at the time of assessment less a reasonable amount to be deducted on account of depreciation, if any, to the estimated present market value of the land valued with the building as part of the same premises. (4) In the case of any land or building or part thereof used for public c cinema shows or theatrical performances or as a place of similar public recreation, amusement or entertainment, the gross annual rent of such land or building or part thereof, as the case may be, shall be deemed to be seven and a half per cent of the gross annual receipts in respect of such cinema shows or theatrical performances or place D of public recreation, amusement or entertainment, including receipts from rent and advertisements and sale of admission tickets but excluding taxes on the same of such tickets: Provided that the provisions of this sub-section shall not apply in the case of temporary fairs, circuses, and casual shows or performances. E (4A) If the gross annual rent of any land or building or part thereof cannot be easily estimated, the gross annual rent of such land or building for the purposes of sub-section (I) shall be deemed to be seven and half per cent of the value of the building obtained by adding the estimated present cost of erecting the building at the time F of assessment less a reasonable amount to be deducted on account of depreciation, if any, to the estimated present market value of the land: Provided that the estimated present cost shall not include the cost of any plant or machinery, excepting those enumerated in Schedule VIII, on the G land or the building as aforesaid. (5) The annual value as determined under this Chapter shall be rounded off to the nearest ten rupees." Section 180 deals with the revision of assessment and Section 181 provides H 970 SUPREME l'OIJRT REPOR1S (2002] 1 S.C.R. A for settlement of returns and inspection of '.ands and buildings for the purposes of assessment. Section 186 provides that subject to provisions of Section 181 or Section 182 any objection to the annuai v-.iue of the land and building as entered in the assessment list shall be made by the owner or the person liable to pay the consolidated rate, in writing, to the Municipal Commissioner before B the date fixed in the notice under Section 194 or Section 195 and shall state in what respect the annual value is disputed. Section 188 deals with the hearing of objections and Section 189 provides an appeal before the Municipal Assessment Tribunal. Section 193 catalogues the incidence of consolidated rate on lands and buildings and provides: C "193(1) The consolidated rate on lands and buildings shall be primarily leviable. - D (a) if the land or building is let, upon the lessor; (b) if th.: land or building is sublet, upon the superior lessor; ( c) if the land and building is unlet, upon the person in whom the right to 1et such land or building vests. t2) The consolidated rate on any land or buildin!,,. which is the property of the C-orporation and the possession of which has been delivered E under any agreement or licensing arrangement, shall be leviable upon the transfen:.e or the licensee as the case may be. F G (3) rhe liability of the se\.:ral owners of any land or building constituting a single unit of assessment, which is of purports to be severall} owned in part or flats or rooms, for payment of consolidated rates or any mstalment thereof payable during the period of such ownership shall be joint and several: Provided that the Municipal Commissioner may apportion the amount of consolidated rate on which land or building among the co-owners. (4) Notwithstanding the vesting of any land in the State under the Calcutta Thika Tenancy (Acquisition and Regulation) Act, 1981, in the case of any land comprised in a thika tenancy, the consolidated rate assessed in respect of such land and any hut or builping made thi:reon shall be primarily leviable upon then thika tenant. H Section I 94 provides: • INDIA AUTOMOBILES ( 1960) LTD. v. CALCUTTA MUNICIPAL CORPN. [>ETH!, J] 971 "194. Apportionment of liability for consolidated rate on land or A building when the premises assessed are Jet or sublet · · · (I) If the annual valuation of any land or building exceeds the amount calculated on the basis of the rent of such land or building payable to the person upon whom the consolidated rate on such land or building is leviable under Section I 93, such person shall be entitled to receive from his B tenant and difference between the amount of the consolidated rate on such land or building and the amount which would be leviable ifthe consolidated rate on such land or building were calculated on the basis of the rent payable to him. (2) If the annual valuation of any land or building which is sublet C exceeds the amount calculated on the basis of rent of such land or building payable to the tenant by his sub-tenant or to the sub-tenant by the person holding under him, the tenant or the sub-tenant shall be entitled to receive from his sub-tenant or the person holding under him, as the case may be, the difference between any·sum :-ecovered under this Act from such tenant or sub-tenant and the amount of D consolidated rate on such land or building which would be leviable if the annual valuation of such land or building were calculated on the basis of rent payable to the tenant by him sub-tenant or the subtenant by the person holding under him," It may be noticed at this stage that bdore the incorporation af Section E 174 of 1980 Act, Section 168 of the Calcutta Municipal Act, 1951 dealt with the assessment of lands and huildings to the consolidated rate. Sub-section (1) of Section 168 provided: "168 (I) For the purposes of ass~>sment to the consolidated rate the F dnnual value of any land or building shall be deemtd to be the gross annual rent at which the land or building might at the time of assessment be reasonably expected to let from year to year, less, in the case of a building, an allowance of ten per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross rent: Provided that in respect of any land or building the rent of which has been fixed under the provisions of West Bengal Premises Rent Control (Temporary Provisions) Act, I 950 or the West Bengal Premises Tenancy Act, 1956, the annual value thereof shall not exceed the G annual amount of the rent so fixed." H 972 SUPREME COURT REPORTS [2002) I S.C.R. ' . A Similarly, Section 127 of the Calcutta Municipal Act, 1923 provided: "127.For - · the purpose of assessing land and buildings to the ·consolidated rate,- (a) the annual value of land, and the annual value of any building erected for letting purpose or ordinarily let, shall be d~emed to be ·-. the gross annual rent at which the land or building might at the B time of assessment reasonably be expected to let from year to year, less, in· the case of a building, an allowance of ten per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to _command such gross rent; and c (b) the annual value of any building not erected for letting purposes and not ordinarily let shall be d~e'med to. be five per cent on the sum obtained by adding the estimated present cost of erecting the building, less a reasonable amount to be deducted on account of depreciation (if any), to the· estimated present value of the land ·valu.ed with the building as part of the same premises. D Provided as follows:- E F G • H (i) (ii) ' . ' the annual' value of the bus'f.e shall be deemed to be the gross annual rent at which the land contained 'within it, excluding the . lands which have been left vacant for the purposes of any bustee street prescribed in or under a standard plan approved by the Corporation under Chapter XXIJ, might reasonably be expected • to let from year to year, plus the gross annual rent at which the huts erected thereon might reasonably be expected to let from year to year, after deducting therefrom the rent of the land and an allowance of ten per cent, for the cost· of repairs _and for all . expenses necessary to maintain such huts in a state to command such gross ren~· in calculating the value of any land or buildL"lg under this section, the value of any machinery on such land or in such building shall be excluded, but all fixtures including lifts and electric and other fittings ~hich add to the convenience of the building shall be valued, subject in the case of a lift to such deduction from the valuation, as the Executive Officer may think proper, on account of the cost of repairS to, maintenance of," and attendance on, such ·. lift; (iii) if in the case of a building valuea under clause (b), the annual value ·of which does not exceed five hundred rupees, any . .; ·~ ' ; j INDIA AUTOMOBILES (1960) LTD. v. CALCUTTA MUNICIPAL CORPN. [SETHI, I.] 973 . exceptional circumstances exist which render a valuation of five A per cent, on the cost of erecting .the building less depreciation, exces~ive, a lower percentage may be taken; . , (iv) when any building has been valued at a special percentage taken under proviso (iii), it may be re-valued· at any time after the exception circumstances referred to in that proviso have ceased tci B · exist." The words "notwithstanding anything contained in the West Bengal Premises Tenancy Act, 1956 or any other law for the time being in force" appearing in Section 174 of 1980 Act were non existent in Section 168 of C 1951 Act and Section 123 of. 1923 Act. In support of their view points, learned counsel for the parties have relied upon various judgments of this Court reported in Smt. Padma Debi's case (supra); l!C's case (supra); G_untur Municipal Council v. Guntur Town Rate Payers' Association, [1971) 2 SCC 423; Municipal Corporation, Indore a_nd Ors. v. Smt. Ratnaprabha and Ors., [1976) 4 SCC 622; Diwan Dau/at Rai Kapoor and Ors. v. New Delhi Municipal D Committee a!'d Ors., [1980) I SCC 685; Ba/bir Singh and Ors. v. MCD and Ors., [1985)11 SCC 167; Srikant Kas.hinath Jituri and Ors. v. Corporation of the City of Belgaum, [1994} 6 SCC 572; Indian Oil Corporaiion Ltd. v. Municipal Corporation and Anr. [1995) 4 SCC 96; Asstt. General Manager, Central Bank of India and Ors. v. Commissioner Municipal Corporation for E the City of Ahmedabad and Ors., [1995) 4 SCC 696; East India Commercial Co. Pvt. Ltd v. Corporation of Calcutta, [1998) 4 SCC 368 and Government Servant Cooperative House Building Society Ltd and Ors. v. Union of India and Ors., [1998) 6 SCC_ 381. In Padma Debi's case (supra) this Court dealt with the law relating to F annual valuation under Section 127 of Bengal Act No. 3 of 1923 and held that the words "gross annual rent" at which the land or building might, at the time of assessment, reasonably be expected to let from year to year implies that the rent which the landlord might realise if the house was let is the basis for fixing the annual value of the building. The criterion was the rent realisable G . by the landlord and not the value of the holding in the hands of the· tenant. The value of the property to the owner is the standard rent in making the assessment. The word "reasonably" appearing in the section was held to be not capable of precise definition as in· ultimate analysis the same was the question of fact,, Whether a particular act was reasonable or not depended upon the circumstances in a given case._ A bargain between a willing lessor H.' 974 SUPREME COURT REPORTS (2002; I S.C.R A and willing lessee uninfluenced by any extraneous circumstances can afford a guiding test of reasonableness. The phrase "at the time of assessment" was held to mean the assessment commenced with the making of the valuation under Section 131 of the Act and ended with the detennination of the objection under Section 140 thereof. As in that case the Rent Control Act of 1950 was B found to be in existence before detennination of the assessment, the corporation was held to have no power to fix the annual value of the premises higher than the standard rent. In LIC's case (supra) this Court dealt with Section 168 of the Ca!cutta Municipal Corporation Act for the purposes of dete1mination of annual value C of the premises. The facts of that case were that M/s. A. Firpo Ltd. \\ere the tenants of the building belonging to Asiatic Assurance Ccmpany Ltd. under a lease at a monthly rent of Rs. 2,000 which was increased by mutual agreement to Rs. 2800 per month. Mis. A. Firpo Ltd., the lessee had sub-let a major part of the premises to five different .tenants and the aggregate rent received from the sub-tenants amounted to Rs. 4520. The corporation assessed D the annual value of the premises at Rs. 32076 for six years. The o~jection raised by the owner against the detennination of the annual value was rejected by the Special Officer of the Corporation and in appeal filed by the LIC, which had statutorily acquired the right of the owner of the building, the court of Small Causes assessed Rs. 30240 as the annual value. The said order · E was con finned in appeal to the High Court under Section 183(3) of the Calcutta Municipal Corporation Act, 1951. In appeal filed in this Court, the corporation claimed that in determining the annual value of the premises the assessing authority was entitled to take into consideration the rental received by Mis.A. Firpo Ltd. from its sub-tenant. Reliance was placed upon Padma Debi's case. This Court approved the judgment in Padma Debi's case, but F finding that as the standard rent stood detennined by the definition in Section 2(10)(b) of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, held that the High Court was right in assessing the annual value on the basis of the standard rent as statutorily determined. It was further held that under the Act the quantum of consolidated rate depends upon the value G of the land or building or the gross rent for which the land or building might reasonably be expected to let and not the gross rent at which the subordinate interest of a tenant may be expected to sub-let. In detennining the .issessmcnt of annual value, the assessing authority is not concerned with the rent which the tenant may receive from his sub-tenant. It is the gross rent which the owner may realise by letting the land or building under d bargain uninfluenced H by extraneous con.:aderations which determim:s the annual value. • .NDIA AUTOMOBILES ( 1960) LTD. v. CALCUTTA MUMCirAL CORPN. [SETHI, J.] 975 In Guntur Town Rate Payers' Association's case (supra) it was held A that the test for determining the rent at which the building may reasonably' be expected to be let is essentially what rent premises can lawfully fetch, if let out to a hypothetical tenant. The municipality is not free to assess any arbitrary annual value and has to look to and is bound by the fair or the standard rent which would be payable for a particular premises under the B Rem Control Act in force during the year of assessment. Such findings were returnt:d on the basis of the judgment of this Court in Padma Debi's case. In Smt. Ratnaprabha 's case (supra) this Court for the first time considered the effect of non obstante clause appearing in Madhya Pradesh M;,inicipal Corporation Act, 1956 for determining the gross annual rent for C which the building might reasonably be expected to be let. Clause (b) of Section 138 of the said Act provided: .. (b) 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 gross ?nnual rent at which such building, together with its D appurtenances and any furniture that may be let for use or enjoyment therewith might reasonably at the time of assessment be expected to be let from year to year, less an allowance of ten per cent for the cost of repairs and for all other expenses nece;:ssary to maintain the building in a state to command such gross annual rent." lntt:rpreting the section, the Court held: "As has been stated, clause (b) of section 138 of the Act provides that the annual value of any building shall 'notwithstanding anything contained in any other law for the time being in force' be deemed to E be the gross annual rent for which the building might "reasonably at F the time of the assessment be expeckd to be let from year to year". While therefore the requirement of the law 1s that the reasonable letting value should determine the annual value of the building, it has also been specifically provided that this would bL so 'notwithstanding anything contained in any other law for the time being in force'. It G appears to us that it would be a proper interpretation of the provisions of clause (b) of sect10n 138 of the Act to hold that in a case where the standard rent of a building has been fixed under Section 7 of the Madhya Pradesh Accommodation Control Act, and there is nothing to show that there has been fraud or collusion, that would be its reasonable letting value, but, where this is not so, and the building H A B 976 SUPREME COURT REPURI S l2l102) I S.C.R. has never been let out and is being used in a manner where the question of fixing its standard rent does not arise, it would be pennissible to fix its reasonable rent without regard to the provisions of the Madhya Pradesh Accommodation Control Act, 196i. 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'." After referring to Padma Debi's case, L/C's case and Guntur Town Rate Payer's case (supra), it was held in that case that the High Court had not properly appreciated the difference between the wording of Section 127 of C the Calcutta Municipal Corporation Act, 1913 and Section 138(c) of the Madhya Pradesh Municipal Corporation Act, 1956 and thus committed an error in thinking that the case was virtually similar to Padma Debi's case. In Diwan Dau/at Rai 's case (supra) this Court held that the facts of the case were covered by the decisions of this Court in UC' case and Guntur D Town Rate Payer's case (supra). The landlord cannot, reasonahly. expect to get more rent than the standard rent payable in accordance with the principles laid down in the Rent Control Act. ln a case where the standard rent of the building has not been fixed by the Controller, the assessing authority has to arrive at its own figures of standard rent by applying the principles laid down E in the Rent Act.