NEW DELHI MUNICIPAL COMMITTEE versus M. N. SOI AND ANOTHER

Citation: [1977] 1 S.C.R. 731 · Decided: 24-09-1976 · Supreme Court of India · Bench: M. HAMEEDULLAH BEG · Disposal: Dismissed

Cited by 1 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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731 
NEW DELHI MUNICIPAL COMMITTEE 
v. 
M. N. SOI AND ANOTHER 
September 24, 1976 
[M. H. BEG AND P. N. SHINGHAL, JJ.J 
New Delhi House Rent Control Order 1939-Cl. 5:__Standard rent. of house 
fixed in 1944-liareab/e ra/ue enhanced on the ba~is of rent rcceriwl '" 1966-
Wlwt/11.>r rating should be correlated to actual mcome. 
Under "cl. 5 of the New Delhi House Rent Control Order, 1939 standard 
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rent Qf the respondent's house in New Delhi was fi~ed in 1941 at l{s. 170/- per 
mensem on annual tenancy and no fixation of fall' rent or standard rent had 
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takeo. place thereafter. 
In 1966 an assessment order was P.assed and then 
modified in appeal, by the Additional District Magistrate, Delhi. enhancmg !he 
rateable value of the premises on the basis of the rent then received which 
"as Rs. 1500 p.m. 
The writ petition filed by the respondent under Art. 226 
of the -Constitution questioning the validity of the order of assessment was 
allowed by the High Court, quashing the impugned order of assessment. 
On the question whether rating, for purposes of house tax, is to be c01:rel~ted 
w the .a:ctual income from house property or is to be regulated by an artificrnlly 
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determined basis fixed in the past without reference to the actucl ren' derived 
:ir<0m the house. 
Dismi<Sing the a.ppeal, 
HELD : It is the reasonable rent at which the house is let that governs 
w.;iluation for pu1:poses of rating and such reasonable rent is the fair rent or 
·mndar.d Fent fixed nnrler the Rent Control legislation. [737A; Jc.! 
( l ) T.be fixation of rates for the purposes of assessment of house tax is 
·gOl'lerned by the provisions of s. 3(1) of·the Punjab Municipal Act, 1911. The 
section prwides that although annual value, for purposes of rating land, mav 
,be I.inked to the asseSEment of land revenue, if the State Government so directs. 
yet, in the cases of houses or buildings under s. 3 ( 1) (b) ·of the Punjd) Act 
it is the reasonable expectation to let such building>, subj,ct to certain reasonable 
deductions, whicp governs valuation, whatever may have. bec;i the origin of 
rntmg. [737 A-BJ, 
{2) (a) For purposes of rating, it is the rent which had been held to be 
fair rent in tiw past. even though it does not bear a real relationship to 1 he 
prevailing conditions of the market that determines ultimately the standard 
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rent which still affects the assessment of rates. 
Therefore, if a rent which is 
higher than that which can be legally demanded by the landlord was actually 
paid by a tenant, despite the fact that such violation· of the restriction on rent 
chargeable by law is visited by penal consequences, the Municipal authorities 
cannot take advantage of this d.efiance of the 1"1". by the landlord. 
Rating 
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cannot operate as a mode of sharmg the benefns of 11/cga/ rack-• c1•111?v indulccd 
in by rapacious landlords. [738 H; 739 A-BJ 
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Corporation of· Calcutta v. Smt. Padma Debi & Or.r. [1962] 3 S.C.R. 49 
followed. 
(b) The analogy of cases where income tax had to be paid on income 
illegally made referred to by the appellant has no application to this case 
because the basis of taxation in such cases was the actual income and not a 
determination of what a prudent man could reasonably do to get the income. It 
is .not prudent for a landlord to extract higher rent than what law enioins and 
then punishes violation with penal consequences. [739 C-DJ 
15-!234SCT/76 
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732 
SUPREME COURT REPORTS 
[1977] 1 s.c.R. 
lt is not the expectation of a landlord who takes the risk of prosecution 
and punishment, but the expectation of the· landlord who is prudent enough 
to abide by the law that serves as the standard of reasonableness for purposes 
of rating. f740 Gl 
( c) The appellant's contention that the absence of a restriction in the Punjab 
Act similar to the one found in the proviso to s. 116 of the Dell\i Municipal 
Corporation Act, 1957, that is to say, that the rateable value of a building 
shall not exceed the annual amount of the standard rent so fixed implies that 
there is no such restriction upon the powers of assessment under the Punja\j 
Act, is without force. The provision in the Delhi Act, far from helping .the 
appellant, suggest! that it is in conformity with notions of reasonable rental 
value today for the purposes of assessment The mere fact that s. 3 ( 1 )(b) of 
the Punjab Act left the determination of reasonable expectations of rent to 

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