BOMBAY MUNICIPAL CORPORATION versus LIFE INSURANCE CORPORATION OF INDIA, BOMBAY

Citation: [1971] 1 S.C.R. 335 · Decided: 21-04-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
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D 
E 
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'G 
H 
335 
BOMBAY MUNICIPAL CORPOUTION 
v. 
LIFE INSURANCE CORPORATION OF INDIA, BOMBAY 
April 21, 1970 
[J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.] 
Bombay Municipal Corporation Act, 1888, s. 154(1) uni/ 
Bombay 
Hotel and Lodging Houses Rates Act (57 of 1947), ss. 
5(7), 5(10). 
7, 10, lOA and IOAA-Educational cess permitted to be 
received from 
tenant by landlord and added ,to standard rent-If can be induded for 
fixation of annual value of buildings. 
Section 154(1) of the Bombay 
Municipal Corporation 
Act, 1888, 
provides that the annual rent for which a building might reasonably be 
expected to be let from year to year shall be the basis for fixing the rate-
able value of the building. Section 5( 10) of the Bombay Rents, Hotel 
a;1d Lodging House Rates Act, 1947 ·(the Rent Act) defines standard rent 
and s. 5(7) of the Rent Act defines 'permitted increase' to mean an in-
crease in rent permitted under the pro·faions of the Rent Act. 
Under 
ss. 10, lOA and lOAA of the Rent Act, a landlord can increase the rent 
on account of payment o'f rates, cesses or laxes imposed or levied by a 
.local authority. 
The appellant imposed a .tax known as educational cess on all the pro-
perties within its limits and the respondent increased the rents payable by 
its tenants to the extent of the educational cess under s. IOAA of 
t~e 
Rent Act. The appellant increased the rateable value on the ground that 
rhe educational cess should be deemed to be a part of the annual rent for 
which the building might reasonably be expected to be let from year to 
year. The High Court held that under s. 7 of. the Rent Act the increase 
shall not be deemed to be an increase in rent and that therefore the rate-
able. value could be fixed only on· the basis of the · standard rent fixed 
under the Rent Act. 
Jn, appeal to this Court, 
HELD : Section 7 df the Rent Act provides that it shall nol be lawful 
for the· landlord to claim on account of rent any increase 
above 
the 
standard rent, but it does not prohibit the· recovery of the increase to 
which a landlord . may be entitled under the provisions of the Act, 
in 
addition to the standard rent. The definition in s. 5 (7) and the langUage · 
and ss. 10, lOA and !OAA indicate that the Legislature treated the per-
mitted increase as a pa·rt of the rent which the landlord would he entitled 
to receive from the tenant. That is, the building can well said to he 
reasonably expected to be let from year to year at the figUre arrived at 
by adding the permitted increase to the standard rent. Therefore, in the 
present case, the valuation had to be aTrived at after taking into account 
the amount o·f educational cess. levied by the appellant, even if i.t leads to 
. some inconveeience by varying the valuation at frequent intervals. 
. 
f33TF-H; 338 D-F; 339 B-D] 
Tire Corpoflltion of Ca/cuua v. S1111. Padma Devi, [1962) 3 S.C.R. 49 
and Patel Gordlrandas Hargqvindas v. Municipal Commissioner. Ahmeda-
baJ, [1964] 2 S.C.R. 608, referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 402 of 
1967. 
336 
SUPREME COURT REPORTS 
[1971] l $.C.R. 
Appeal from the judgment and decree dated November 10. 
1964 of the Bombay High Court in Appeal No. 148 of 1962 from 
Original Decree. · 
Niren De, Attorne,v-Genera/, R. N. Banerjee and Ravinder 
Narain, for the appellant. 
S. V. Gupte, K. L Hath! and J. L. Hathi, for the respondent. 
Judgement of the Court was dellvered by 
Grover, J. This is an appeal from a judgement of the. Bom-
bay High Court in the matter of valuation of the premises belong-
ing to the respondent made under the provisions of the Bombay 
Muriicipal Corporation Act 1888, hereinafter called "the Act of 
I 888". 
For the years 1957,58 and 1958-59 the rateabl9 valuation of 
the building was fixed by the Municipal Corporation at 
Rs. 
I ,66,410. On April 1, ?958 an additional tax known as educa-
tional cess was imposed by the Municipai Corporation at the rate 
of 1 !% of the rateable value on all properties within its limits. 
This was done under s. 140 of the Act of 1888. As the landlord 
became entitled to increase •the rent recoverable from the tenant 
to tho extent of the increase in the tax payable to the Corporation 
under the provisions of s.10-AA of the Bombay Rents, Hotel and 
Lodging House Rates 1947 (Act No. LVII of 1947) hereinafter 
c11!2ed the Rent Act, the Assessor 11nd Collector of the Corporation 
served a notice on the respondent proposing to increas
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