1970 (9) TMI 103 - SC - Indian Laws

Summary

Issues:
- Interpretation of Section 82(2) of the Madras District Municipalities Act 1920
- Whether the municipality was bound by Rent Acts in determining fair rent
- Validity of the general revision of rental values by Guntur Municipality in 1960

Analysis:

The Supreme Court was tasked with determining whether the Guntur Municipality's general revision of rental values in 1960 was legal and whether the municipality was bound by Rent Acts in assessing fair rent. The Court examined Section 82(2) of the Madras District Municipalities Act 1920, which mandates the annual value of lands and buildings to be based on the rent they could reasonably fetch. The Court emphasized that the municipality must consider the fair or standard rent payable under Rent Acts in force during the assessment period. Referring to the Corporation of Calcutta v. Sm. Padma Debi case, the Court held that the annual rent cannot exceed the standard rent under Rent Control Acts.

Moreover, the Court rejected the argument that fair rent fixation under the Rent Act was a prerequisite for assessing valuation. It clarified that the municipality must consider fair rent principles even when the Controller has not set a fair rent. The assessment should align with the principles laid down in the Rent Act applicable during the assessment period. The Court highlighted the confusion in lower court judgments regarding the applicable Rent Acts for valuation assessment under Section 82(2) of the Municipalities Act.

Consequently, the Supreme Court modified the decrees, ruling that the Guntur Municipality's revision exceeding fair rent determinable under Rent Acts was illegal and ultra vires. A permanent injunction was issued against the municipality from collecting excess tax amounts. The judgment emphasized that valuation for tax purposes must comply with Rent Act provisions in force during the assessment period. The parties were directed to bear their own costs in the proceedings.