# MUNICIPAL CORPORATION, INDORE AND OTHERS v. SMT. RATNA PRABHA AND OTHERS

- **Citation:** [1977] 1 S.C.R. 1017
- **Court:** Supreme Court of India
- **Decided:** 1976-10-29
- **Case number:** Civil Appeal No. 2111 of 1969
- **Bench:** A. N. Ray, M. H. Beg, P. N. Shinghal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/municipal-corporation-indore-and-others-v-smt-ratna-prabha-and-others-6885
- **Pages:** 5

## Headnote

Madhya Pradesh Municipal Corporation Act 1956-Sec. 138(b)- Madhya
Prac!c-11 Accommodation Control Act 1961-Sec. 7-Must re11tal value under
1he Municipal Act follow the standard rent under Accommodation Control Act
when premises lei out-When used by owner.
·
•
The respondents are the, owner of a bμilding known as Viram Lodge.
.T~ey
run a hotel in the said building. The annual gross rental value of the bmldmg
was determined at Rs. 6,600/- in 1956. It was revised to Rs. 43,405 /- by the
Assessment Officer in 1965. Section) 138(b) of the Madhya Pradesh Municipal
Corporation Act, 1956, provides that notwithstanding anything contained in any
other law for the time being in force, the annual value of any building shall be
deemed to be the gross annual rent at which such building might be reasonably
at the time of assessment be expected to1 let from year to year at the time of
the less an allowance ofi 10 per cent for repairs etc. The respondent challenged
the valuation on the ground that the rental value ·of the premises could not be
fixed at a rate higher than the standard rent under section 7 of the Madhya
Pradesh Accommodation Control Act,
1961.
The
Municipal
Commissioner
negatived the respondents' contention.
An appeal filed by the respondents to
the Additional District Judge also failed.
The High Court however allowed the
Revision filed by the respondents.
Allowing the appeal by Special Leave held :
B
c
D
1. In the present case the building in question was never let on rent and
is being nsed by the owners as a hotel. [1019 A]
E
2. On a proper construction of section 138 (b) where the standard rent
<'>f a building has been fixed, under section 7 of the 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 the
building has never been let out the question of fixation standard rent
does not arise. In that case it wonld be permissible to fix its reasonable rent withont regard to the provisions of Madhya Pradesh AecomF
modation Control Act.
This view gives proper effect to the nonobstante clause in section 138(b ). [1019 D·F]
The Corpora/ion of Calcutla v. Smt. Padma Debi and
others
[1962] 3;
S.C.R. 49, Corporation of Calcutta v. Life Insurance Corporation of India [1971]
1. S;C.R. 246, Guntur Municipal Cou!Jcil v. Guntur Town Rate Payers'
Association [1971] 2 SC~ 423 and New Delhi Municipal Commitlee v. M. N. Soi
and another [1977] 1 S.C.R. 731, distinguished.

## Text

1017
MUNICIPAL CORPORATION, INDORE AND OTHERS
A
v.
SMT. RATNA PRABHA AND OTHERS
October 29, 1976
[A. N. RAY, C.J., M. H. BEG AND P. N. SHINGHAL, JJ.]
Madhya Pradesh Municipal Corporation Act 1956-Sec. 138(b)- Madhya
Prac!c-11 Accommodation Control Act 1961-Sec. 7-Must re11tal value under
1he Municipal Act follow the standard rent under Accommodation Control Act
when premises lei out-When used by owner.
·
•
The respondents are the, owner of a bμilding known as Viram Lodge.
.T~ey
run a hotel in the said building. The annual gross rental value of the bmldmg
was determined at Rs. 6,600/- in 1956. It was revised to Rs. 43,405 /- by the
Assessment Officer in 1965. Section) 138(b) of the Madhya Pradesh Municipal
Corporation Act, 1956, provides that notwithstanding anything contained in any
other law for the time being in force, the annual value of any building shall be
deemed to be the gross annual rent at which such building might be reasonably
at the time of assessment be expected to1 let from year to year at the time of
the less an allowance ofi 10 per cent for repairs etc. The respondent challenged
the valuation on the ground that the rental value ·of the premises could not be
fixed at a rate higher than the standard rent under section 7 of the Madhya
Pradesh Accommodation Control Act,
1961.
The
Municipal
Commissioner
negatived the respondents' contention.
An appeal filed by the respondents to
the Additional District Judge also failed.
The High Court however allowed the
Revision filed by the respondents.
Allowing the appeal by Special Leave held :
B
c
D
1. In the present case the building in question was never let on rent and
is being nsed by the owners as a hotel. [1019 A]
E
2. On a proper construction of section 138 (b) where the standard rent
<'>f a building has been fixed, under section 7 of the 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 the
building has never been let out the question of fixation standard rent
does not arise. In that case it wonld be permissible to fix its reasonable rent withont regard to the provisions of Madhya Pradesh AecomF
modation Control Act.
This view gives proper effect to the nonobstante clause in section 138(b ). [1019 D·F]
The Corpora/ion of Calcutla v. Smt. Padma Debi and
others
[1962] 3;
S.C.R. 49, Corporation of Calcutta v. Life Insurance Corporation of India [1971]
1. S;C.R. 246, Guntur Municipal Cou!Jcil v. Guntur Town Rate Payers'
Association [1971] 2 SC~ 423 and New Delhi Municipal Commitlee v. M. N. Soi
and another [1977] 1 S.C.R. 731, distinguished.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 2111
of
1969.
(Appeal by Special Leave from the Judgment and Order dated
26-9-1968 of the Madhya Pradesh High Court in
Civil
Revision
No. 711/66).
V. S. Desai, P. C. Bhartari and D. N. Misra for the Appellants.
B. N. Lokur and Rameshwar Na:~h for the Respondents.
G
H
A
1018
SUPREME COURT REPORTS
[ 1977] 1 S.C.R.
The Judgment of the Court was delivered by
•
SHINGHAL, J.-This appeal by special leave is directed against the
judgment of the Madhya Pradesh High Court dated September 26,
1968 setting aside the appellate order or the Second Additional
District Judge, Indore, dated October 29, 1966 and remitting
the
"
matter to the Municipl!l Commissioner for a fresh determination of
B
the annual value of the building.
c
n
E
F
G
H
The building in question is known
as
"Viram
Lodge",
on
Ravindra Nath Tagore Marg, Indore.
It belongs to the
respon~nt
and has been used by them as a hotel.
The annual gross
r~ntal
value of the building was determined at Rs. 6600/ in 1956. It was
revised by the Assessment Officer on June 3, 1965 and was.raised
to Rs. 43,405.20.
The respondents, filed objections to the valuation,
but the Municipal Commissioner· fixed
the annual value
at
Rs. 43,405.20.
He held that, in view of the "11011-obstante" clause
in section 138(b) of the Madhya Pradesh Municipal Corporati9n
Act, 1956, hereinafter referred to as the Act, there was no justification for the argument that the rental value of the premises could not
be fixed at a rate higher than the standard rent under section 7 of
the Madhya Pradesh Accommodation
Control
Act,
1961.
An
appeal was taken to the Second
Additional District Judge,
but
without success.
The respondents then filed an application for revision, which was allowed by the impugned judgment of
the
High
Court dated September 26, 1968. This is how the present appeal
has arisen at the instance of the Municipal Corporation
and
its
officers.
Section l3 8 of the Act prescribes the mode for determining the
annual value of any land or building for purposes of assessing it to
property tax. Clause (a) of the section deals with the annual value
of land, and it is not the case of the parties that it has any bearing
on the controversy.
Clause (b) prescribes the mode of determining
the annual value of a building and reads as follows,-
" (b) the annual value of any building shall notwithstanding anything contailied in any other law for the time
being in force be deemed to be the gross
annual
rent at which such building, to~ether with its appurtenances and any furniture that may be let for use
or enjoyment· therewith might reasonalJJ.y
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 necessary
to maintain the building in a state to command such
gross annual rent."
There are two explanations to the clause. It is nobody's case that
they have any bearing on the short point in controversy before us.
Clause ( c) of the section prescribes that if the gross annual rent of
a building cannot be determined under clause (b) , the annual value
of the building shall be determined according to that clause. It is
•
,
f
I
/
•
MUNICIPAL CORP. "· SMT. RATNA PRABHA (Shinghal, J.)
1019
not in contr~versy before us that the Viram Lodge was never
let
. on rent, and is being run as a hotel by its owners, the present respondents, so that the question of fixing its standard rent under s. 'J
of the Madhya Pradesh Accommodation Control Act, 1961, has not
arisen. It has argued that, even so, the reasonable rent contemplated by s. 138(b) of the Act cannot exceed the standard rent to
be
fixed under the aforesaid section 7.
It has thus been. urged that it
was incumbent for the Municipal Commissioner to determine
the
annual value of the building on the same basis on which i!s standard
rent was required to be fixed under section 7.
Reliance m
this
conni!ction has been placed on the decisions of this Court in The
Corporation of Calcutta v. Smt. Padma Debi and others,(') Corporation of Calcutta v. Life Insurance Corporation of India,(') Guntur
Municipt!l Council v. Guntur Town Rate Payers' Association(') and
New Delhi Municipal Committee v. M. N. Soi and another.( 4 )
As has been stated, clause (b) of section 13 8 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 be the gross annual rent for which the building might
"reasonably at the time of the assessment be expected to be let from
year to year." While therefore 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".
It appears to us that it would be a proper
interpretation of the provisions of clause (b) of section 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 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 permissible to fix its reasonable rent
without regard to the provisions of the Madhya Pradesh Accommodation Control Act, 1961.
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".
•
•
A
B
c
D
E
F
We have gone through the decision in Padma Debi's case (supra).
G
...,
There the premises were on rent and section 127 (a)
of
Calcutta
Municipal Corporation Act, 1923, did not contain a 11011-vbstante
clause.
That the section provided, inter alia, was that the
annual
value shall be deemed to be the gross annual tent at which the land
or building might at the time of assessment "reasonably be expected
to let from year to year."
This Court examined the significance of
the word "reasonable" and held that it would be
incongruous
to
H
(1)
[1962] 3 S.C.R. 49.
(2) [1971] 1 .. C.R. 248.
(3) [197\j 2 S.C.R. 423.
(4) [1977] 1 S.C.R. 731.
15---1338SCT/76
A
B
c
D
E
F
G
H
1020
SUPREME COURT REPORTS
[1977] 1 S.C.R,
consider fixation o~ rent beyond the limits fixed by pemtl legislation
as reasonable.
That view was taken with reference to the provisions of th() Rent Control Act which penalised the taking of a higher
rent, and also made it irrecoverable. While, therefore, we are
in agreement with the view taken in Padma Debi's case (supra)
that it would not be reasonable to consider fixation of rent beyond
the. limits fixed by the Rent Control Act as reasonable,
it would
not be a proper interpretation of section 138(b) of the Act to ignore
the significance of its non-obstante clause altogether.
That is why
we have taken the view that it would be a fair and reasonable ipterpretation of section 13 8 (b) to hold that as no standard rent has
been fixed so far in respect of the Viram Lodge,
the Municipal
Commissioner was justified in adopting another suitable criti;{ion for
determining the annual value of the building.
There
is
in · fact
nothing in the Act to .make it obligatory for the Commiss.ioner to
follow the provisions of the Madhya Pradesh Accommodation Control Act in spite of the non-obstante clause and to limit the annual
value to any standard rent that the building might fetch under that
Act.
.
We have also gone through Corporation of
Calcutta
v.
Life
Insurance .Corporation of India (supra). That was also a case where
the premises had been let out on rent.
The standard rent had also
been fixed, and that was why Padma Debi's case (supra) was held to
be applicable.
So also, Guntur Municipal Council v. Guntur Town Rate Payers'
Association (supra) was a case where the premises. were on rent and
there also Padma Debi's case was held to be applicable even though
the standard rent had not been fixed, because it was held that there ·
was nothing to prevent the authorities concerned from
ascertaining
the fair rent by keeping ~ view the principles which had been laid
down for its determination: under the
Andhra Pradesh
Buildings
(Lease, Rent and Eviction) Control Act, 1960. Section 82(2) of
the Madras District Municipalities Act, which governed that case,
did not contain a non-obstante clause.
Much the same was the position in M. N. Soi's case which related
to a house in New Delhi, of which rate had to be assessed under the
provisions of the Punjab Municipal Act, •1911.
The High Court did not properly apprecl'ate the difference
between the wordings of section 127 of the Calcutta Municipal Corporation Act, 1923, and section 138(c) of the Act, and committed
an error in thinking that this was virtually similar to Padma Debi's
case.
We find that the High Court has taken the view that a full hearing was not given to the respondents at the time of fixing the annual
value of the Viram Lodge and that the valuation was based on
"no principle".
Here again, the High Court was clearly in error
because we find from the judgment of the Second Additional District
Judge, dated October 29, 1966, that the counsel for the respondents
•
r
•
f
'
MUNICIPAL CORP. V. SMT. RATNA PRABHA (Shinghal, J.)
1021
was given ;•ample opportunity" by the Municipal Commissioner
to
A
represent his case before him.
He has also stated that the Assessment Officer paid due regard to all the relevant circumstances which
had a bearing1 on the determination of the reasonable letting
value
of the building.
Counsel for the respondents has in fact not found
it worth his while to argue either that such a hearing was not given,
or that all the relevant factors were not taken into consideration in
determining the annual letting value of the premises.
B
In the result, the appeal is allowed and the impugned judgm,ent
of q High Court dated September 26, 1968, is set aside.
The
appellants will however pay the costs of the respondents as stipulated
in the order of this CouD: granting the special leave.
·
•
P.H.P.
Appeal allowed.
•
•