IMPORTANT POINT
While determining rateable value of house property for the purposes of Section 116 of the Delhi Municipal Corporation Act, there cannot be wider disparity between building constructed earlier in point of time and building in question. The assessing authorities have to take into account the rent which the owner of similar premises constructed earlier and situate in the same or adjoining locality, might reasonably expect to receive from a hypothetical tenant and which would necessarily be within the upper limit of the standard rent of such premises, so that there is no wide disparity between the rate of rent per square foot or square yard which the owner might reasonably expect to get in case of the two premises.

Headnote:Municipal Corporation Act, 1957 -Section 116-Rateable value -Determination of-Criteria for-Basic principle is annual rent which a owner of premises may reasonably expect to get if premises were let out to hypothetical tenant-Rateable value cannot be in excess of standard rent which would be upper limit-There cannot be wider disparity between building constructed earlier in same locality and building in question-Assessing officer must proceed to find out standard rent of similarly situated premises in the locality whose construction might be older than property in question and reduce standard rent of premises in question so as to bring it at par with standard rent of other older premises in the locality.
       What is required to be considered for determining rateable value in case of recently constructed premises is as to what is the rent which the owner might reasonably expect to get if the premises are let out and that is bound to be influenced by the rent which is obtainable for similar premises constructed earlier and situate in the same or adjoining locality and which would necessarily be limited by the standard rent of such premises. The position in regard to the determination of rateable value of self-occupied residential and non-residential premises may thus be stated as follows : The standard rent determinable on the principles set out in sub-section (2)(a) or (2)(b) or (1)(A)(2)(b) or (1)(B)(2)(b) of Section 6, as may be applicable, would fix the upper limit of the rateable value of the premises and within such upper limit, the assessing authorities would have to determine as to what is the rent which the owner may reasonably expect to get if the premises are let to a hypothetical tenant and for the purpose of such determination, the assessing authorities would have to evaluate factors such as size, situation, locality and condition of the premises and the amenities therein provided. The assessing authorities would also have to take into account the rent which the owner of similar premises constructed earlier and situate in the same or adjoining locality, might reasonably expect to receive from a hypothetical tenant and which would necessarily be within the upper limit of the standard rent of such premises, so that there is no wide disparity between the rate of rent per square foot or square yard which the owner might reasonably expect to get in case of the two premises. Some disparity is bound to be there on account of the size, situation, locality and condition of the premises and the amenities provided therein. Bigger size beyond a certain optimum would depress the rate of rent and so aslo would less favourable situation or locality or lower quality of construction or unsatisfactory condition of the premises or absence of necessary amenities and similar other factors. But after taking into account these varying factors the disparity should not be disproportionately large.
       Law as interpreted as above by the Supreme Court in Dr. Balbir Singh & Sons v. Municipal Corporation, Delhi & Ors., 1985(2) SCR 439 cannot be brushed aside by saying to the effect that it is not in confirmity with statutory provisions. Law laid by this Court is explicit and admits of no doubt. For the purpose of arriving at the rateable value the basic principle is the annual rent which the owner of the premises may reasonably expect to get if the premises were let out to a hypothetical tenant. It would depend on the size, situation, locality and condition of the premises and the amenities provided therein. All these and other relevant factors would have to be followed in determining the rateable value. That, however, cannot be in excess of the standard rent which would be the upper limit. But then considering the run away prices of land and building materials if the standard rent were to be the measure of rateable value there would be a huge disparity between rateable value of old premises and those recently constructed though they may be similar and situated in the same or even adjoining locality. Considering the same and similar services which are provided by the local authority if there is vast disparity between the rateable value of the old premises and the new premises that would be wholly illogical and irrational. To avoid such a situation Dr. Balbir Singh s case laid the principles which have to be followed in arriving at the rateable value of the newly constructed premises. Of course, rateable value cannot be the same but then at the same time a wide disparity would certainly be irrational, unreasonable and unfaire which situation could be avoided by following the principles laid by this Court otherwise the rateable value recording wide disparity would be struck down. There cannot be any ambiguity as to the principles laid by this Court in arriving at the rateable value. (Para 6)
       The reasoning of the High Court is flawed that the Municipal Corporation of Delhi has no machinery if required to follow the principles laid by this Court. No two premises can be similar. In all revenue matters, there is no adversary system. Assessment records of the rateable value of the premises in the locality are certainly available in the records of the Municipal Corporation of Delhi. It has a field staff on the reports of which notices for enhancement of the rateable value are issued. Assessing authority hears the objections to the fixation of rateable value and acts in quasi-judicial capacity. Its orders are appealable. It cannot act in arbitration fashion ignoring principles of law by the Court. It cannot fall back on the spacious plea that it has no means to act on the principles of law laid by this Court. Even notice for enhancement of rateable value has to be based on reasons which must exist on record and the owner is entitled to be apprised of those reasons. High Court lent its support to the plea of the Municipal Corporation of Delhi which is contrary to the principles laid by this Court. (Para 7)

JUDGMENT

D.P. Wadhwa, J.-Appellant in Civil Appeal No. 4104 of 1998 is aggrieved by judgment dated July 7, 1997 of the Division Bench of Delhi High Court dismissing his writ petition wherein he had sought setting aside the order of assessment dated March 12, 1991 assessing the rateable value of his property for the purpose of property tax under Section 116* of the Delhi Municipal Corporation Act, 1957 (for short the "Act"). The property of the appellant comprised of his house constructed on a plot of land bearing No. II-1787 Chitranjan Park, New Delhi, measuring 311 Sq. yards. The writ petition was dismissed by the High Court relying on its earlier judgment in the case of Ravish Chander Rastogi v. Municipal Corporation of Delhi decided by the same Division Bench on May 29, 1997. Civil Appeal No. 4105 of 1998 is against that judgment of the High Court. It would, therefore, be appropriate to refer to the facts in the case of Ravish Chander Rastogi.

2. The appellant Ravish Chander Rastogi is the owner of the property bearing No. 55, Anand Lok, New Delhi. He was served with a notice dated March 20, 1986 under Section 126 of the Act proposing to enhance rateable value for the purpose of property tax from existing Rs. 1280/- to Rs. 1,79,000/- with effect from April 1, 1985. The reason for increase in the proposed rateable value was that the appellant had made new construction. Appellant filed his objections to the proposed rateable value. The assessing officer proceeded to assess the rateable value on the basis that the property was in the self-occupation of the appellant and rateable value, therefore, had to be determined under Section 6(1)** of the Delhi Rent Control Act, 1958 (for short the Rent Act ). For this two components are necessary: (1) market value of the land on the date of commencement of construction and (2) reasonable cost of construction. The assessing officer arrived at the market value of the plot, which measured 812 sq. yards at Rs. 6,00,000/- as on the date when building plans were sanctioned. He then estimated the reasonable cost of construction at Rs. 12,98,000/-. Keeping in view the provisions of the Rent Act he arrived at the aggregate of market value of the land and the cost of construction at Rs. 18,98,000/-. Standard rent of the property at the rate of 8.25% was thus Rs. 1,56,585/-. After giving 10% rebate for repairs, rateable value was arrived at Rs. 1,40,930/-. The effective date of fixation of rateable value was taken as March 17, 1986 when the appellant applied for the occupancy certificate of the premises. Objections of the appellant that the principles laid by this Court in Dr. Balbir Singh and Others v. Municipal Corporation, Delhi and Others1 be taken into consideration while fixing the rateable value, were not considered relevant as it was observed that the observationsof this Court were made in the context of the applicability of Section 9(4)*** of the Rent Act and that provisions of Section 9(4) would be applicable only where it was not possible to determine the standard rent of the premises on the principles set forth in Section 6 of the Rent Act. From the assessment order the appellant filed an appeal before the District Judge under Section 169 of the Act, which came for decision before Mr. P.K. Dham, Additional District Judge, Delhi. Learned Additional District Judge noticed three houses in the neighbourhood of the appellant where rateable value of the property was fixed at Rs. 12,660/- (house No. 52). Rs. 21,660/- (house No. 15) and Rs. 40,800/- (house No. 6). According to learned Additional District Judge principles laid by this Court in Dr. Balbir Singh s case were fully applicable, which were ignored by the assessing officer. He, therefore, set aside the assessment order and remanded the matter back to the assessing authority to decide the case afresh in accordance with law after giving opportunity to the appellant to be heard. Now, it was the respondent Municipal Corporation of Delhi

Click Here to Read the rest of this document

2000 Supreme(SC) 862

Cases Referred (1)