INDIA AUTOMOBILES (1960) LTD. versus CALCUTTA MUNICIPAL CORPORATION AND ANR.

Citation: [2002] 1 S.C.R. 961 · Decided: 13-02-2002 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Disposed off

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Judgment (excerpt)

>· 
.. 
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 non-
obstante 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 \\ 

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