JUNAGADH NAGARPALIKA versus STATE OF GUJARAT AND ORS.

Citation: [1993] 2 S.C.R. 803 · Decided: 31-03-1993 · Supreme Court of India · Bench: J.S. VERMA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

MORYi MUNICIPALITY 
A 
v. 
STATE OF GUJARAT AND ORS. 
)--· 
WITH 
JUNAGADH NAGARPALIKA 
B 
v. 
STATE OF GUJARAT AND ORS. 
MARCH 31, 1993 
[J.S. VERMA, P.B. SAWANT AND N.M. KASLIWAL, JJ.] 
c 
~ 
Municipalities : Gujarat Municipalities Act, 1963. 
Sections 2( 1), 2( 17), 53, 99, 99(1), 99(1)(i), 99(J)(e), 105 to 112/Rules 
2(7), 4, 5-\funicipalities-Property tin-Annual letting value of building or D 
land or both-To be detemiined on the basis of annual standard/fair rent 
under Rell/ Con/fol Act-Assessment-Procedure-Limitation-Municipality 
to complete the authentication of tire assessment list before 31st 
Ju/y~-W11ether directory in nature. 
Gujarat Municipalities Rules: 
E 
Rules 4 and 5-Validity of 
Some tax-payers of the appellant-Municipality filed a writ petition 
in the High Court challenging the validity of the rules made by it for the 
levy of consolidated property tax on lands and buildings and also the F 
assessment list prepared and authenticated by the Municipality for the 
year 1967-68, 1968-69 and 1969-70. It was con_!ented before the High Court 
that Rules 2(7), 4 and 5 of the Rules of the consolidated property tax on 
the lands and buildings were ultra vires section 99(1) (i) and the proviso (e) 
to it read with section 2(1) of the Act, and that the assessment lists for the G 
years 1967-68, 1968-69 and 1969-70 were invalid since they were prepared 
-)'~ 
without following the procedure laid down in Sections 105 to 112 of the 
Act. 
The High Court upheld the validity of Rules 2 (7) and 4 and struck 
do"n the validity or Rule 5. It also declared that the tax collected by the H. 
803 
804 
SUPREME COURT REPORTS 
(1993] 2 S.C.R. 
A 
Municipality for the assessment years 1968- 69 and 1969-70 in excess of 
the amounts which may be determined in accordance with the principles 
laid down was without the authority of law and struck down the assesse-
ment list for the year 1967-68 on the ground that it was not prepared in 
compliance with the procedure laid down in Sections 105 to 112 of the Act. 
B 
Being aggrieved by the High Court's decision the appellants 
preferred the present appeals. 
Allowing the appeals, this Court, 
C 
HELD: 1. It is not the value of occupation of the property to the tenant, 
but the rental income from it to the owner which ·is to be taken into 
consideration while estimating the reasonable return that a landlord can . 
expect from his property. While estimating or calculating the annual rent 
which might reasonably be expected from such property, the provisions of 
such legislation have to be taken into consideration. Different rent restric-
D tion legislations have described the maximum rent recoverable under them 
differently such as standard rent, fair rent etc. Hence the annual letting value 
of the building or land or both to which the rent restriction legislation is 
applicable cannot exceed the annual standard or fair rent. It is the annual 
standard/fair rent which alone, therefore, can form the basis of the assess-
ment of the property tax by the local authority. [809 E-G) 
E 
1.2. Since there is no 11on-obsto11te clause in the Gujarat Munici-
palities Act, 1963, this Court refrains from going into the question of 
no11-obsto11te clause in the provisions of the Act levying property tax. 
[810-C] 
F 
1.3. If the expression 'annual letting value' in rule 4 is read as the 
annual letting value as determined by the outer limit prescribed by the 
standard or fair rent under the rent restriction legislation applicable to 
the premises, which in the present cast is the Bombay Rents, Hotel and 
Lodging House Rates Control Act, 1947, the validity of the said rule 
G cannot be assailed. [811-B) 
1.4. Rule 5 mandates the actual rent received to be taken into 
consideration for fixation of the annual letting value, even if it is in excess 
of the standard rent fixed under the rent restriction legislation, which is 
contrary to the interpretation placed by this Court on the expression 
H "annual letting value". The correct mode of getting over the difficulty is to 
, 
,... 
.-J_ 
MORYi MUNICIPALITY v. STATE OF GUJARAT 
805 
amend Rule 5 itself suitably to take care of such properties instead of A 
keeping It on the rule book as it is. There is nothing to prevent the 
Municipality from introducing a new rule in place of the said rule. 
(8128-E) 
y-
1.5. Even without Rule S and on the basis of Rule 4 as it is, the 
annual letting value can be calculated on the basis of the standard rent B

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