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TMI Blog1976 (9) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... 'the Act'), and, in particular, the interpretation of the words may reasonably be expected to be let from year to year , impose upon the assessing authorities the obligation not to assess at a higher rental value than the standard rent . It is, not disputed that standard rent of the house was fixed on 25th September, 1941, in the following terms: After due consideration of all the facts and circumstances a fair rent of ₹ 170/- one Hundred and Seventy P.M., (unfurnished) on annual tenancy, exclusive of House Tax and Irrigation water charges, is hereby fixed for House No. 15, Prithvi Raj Road, New Delhi, under Clause 5 of the Rent Control Order 1939 . It appears from the statement of facts by the Full Bench, which has not been questioned before us, that the fixation of rent in 194-1, under the New Delhi House Rent Control Order, 1939, continues to be valid notwithstanding the repeal of the Control Order by Section 15 of the Delhi and Ajmer-Merwara Rent Control Act, 1947, which, in its turn, was repealed by Section 46 of the Delhi and Ajmer Rent Control Act, 1952. The repealing provi- sions maintained intact the validity of all that was legally done under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' means- (a) in the case of land, the gross annual rent at which it may reasonably be expected to let from year to year; Provided that, in the case of land assessed to land-revenue or of which the land-revenue has been wholly or in part released, compounded for, re- deemed or assigned, the annual value, shall if the State Government so direct, be deemed to be double the aggregate of the following amounts, namely :- (i) the amount of the land-revenue for the time being assessed on the land, whether such assessment is leviable or not; or when the land-revenue has been wholly or in part compounded for or redeemed, the amount which, but for such composition or redemption, would have been leviable and (ii) when the improvement of the land due to canal irrigation has been excluded from account in assessing the land-revenue, the amount of owner's rate or water advantage rate, or other rate imposed in respect of such improvement: (b) in the case of any house or building, the gross annual rent at which such house or building together with its appurtenances and any furniture that may be let for use or enjoyment therewith, may reasonably be expected to let fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by an artificially determined basis, fixed in the' past, without reference to the actual rent that may be derived from the house or building today ? On a bare reading of the provisions of Section 3(1)(a), set out above, no doubt is left that, although, annual value, for purposes of rating land, may be linked to the assessment of land reve- nue, if the State Government so directs, yet, in the cases of houses or buildings, it is the reasonable expectation to let such buildings, subject to certain reasonable deduc- tions, which governs valuation whatever may have been the origin of rating. The concept of rating and its origin have been commented upon by this Court several times (see: Patel Gordhandas Hargovindas v. Municipal Commissioner, Ahmada- bad,. [1964] 2 S.C.R. 608 and, Municipal Corporation of Greater Bombay v. M/s. Poly-chem Ltd . ) [1974] 3 S.C.R.687. In the case of the Municipal Corporation of Greater Bombay (supra), after considering various cases on the rating and commenting upon the case of Patel Gordhandas (supra), this Court observed (at p. 697) . This case links the nature of the property tax called a rate levied for local Government purposes with the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f fact. Whether a particular act is reasonable or not depends on the circumstances in a given situa- tion. A bargain between a willing lessor and a willing lessee uninfluenced by any extraneous circumstances may afford a guiding test of reasona- bleness. An inflated or deflated rate of rent based upon fraud, emergency, relationship, and such other considerations may take it out of the bounds of reasonableness. Equally it would be incongruous to consider fixation of rent beyond the limits fixed by penal legislation as reasonable. Under the Rent Control Act, the receipt of any rent higher than the standard rent fixed under the Act is made penal for the landlord. Section 3 of the said Act says that any amount in excess' of the standard rent of any premises shall be irrecovera- ble notwithstanding any agreement to the contrary. Section 33(a) thereof provides inter alia that whoever knowingly receives, whether directly or indirectly, any sum on account of the rent of any premises in excess of the standard rent will be liable to certain penalties. 'Standard rent' has been defined in 2(1)(b) to mean that 'where the rent has been fixed under s. 9, the rent so fixed, or at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax had to be paid on income illegally made even by indulging in criminal activities. In those cases, however, the basis of taxation was the actual income and not a deter- mination of what a prudent man could reasonably do to get the income. It is certainly no part of prudence for a landlord to extract higher rent than what law prescrib- ing restrictions of rent, by Rent Control legislation, enjoins and then visits their infringement with penal conse- quences. Hence, in the case before us, the prudence of the landlord has to be assumed and judged by normal standard to determine his reasonable expectation . This, we think was the ratio decidendi of Smt. Padma Debi's case (supra) which was decided as long ago as 1962. If the law has remained unchanged despite that pronouncement by this Court, of which the law making authorities must be deemed to be cognizant, the presumption would be that the intention, from allowing the State of the law so declared to continue, is to let rating be governed by the fixation of rent by Rent Control authorities and not by the test of actual income derived by. the landlord. In other words, the concept of an open market applicable to such cases is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the re- spondent which was accepted by the Full Bench.In any case, so long as the ratio decidendi of Smt. Padran Debi's case (supra) holds the ground, this Court cannot, by judicial interpretation,introduce a new concept of reasonable expec- tation. If the resulting position is not just or equitable, its remedy lies in the amendment of the law itself by legis- lation. We cannot remedy it. We may here indicate the penal provisions in the Delhi Rent Control Act of 1958, which make the ratio decidendi of Smt. Padma Debi's case (supra) ap- plicable to the case before us. Section 5(1) of this Act lays down: 5(1 ) Subject to the provisions of this Act, no person shall claim or receive any rent in excess of the standard rent notwithstanding any agreement to the contrary. And, Section 48(1)(a) enacts: 48 (1 ) If any person contravenes any of the provisions of Section 5, he shall. be punishable- (a) in the case of a contravention of the provisions of sub-section (1 ) of Section 5, with simple imprisonment for a term which may extend to three months, or with fine which may extend to a sum which exceeds the unlawful charge claimed or received under that sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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