The determination of the rateable value of lands and buildings under Section 154 (1), City of Bombay Municipal Act is not to be limited by the maximum standard rent fixed under the provisions of the Rent Restriction Act.

Headnote:
Whether in arriving at the valuation, for the purposes of Section 154, City of Bombay Municipal Act, of property to which the Bombay Rent Control Act of 1947 applies, the maximum gross value to be assigned to the property is limited to the maximum standard rent of the property together with the additions thereto permitted by the latter Act.
Fact of the Case:

The question referred to the court was whether in arriving at the valuation, for the purposes of Section 154, City of Bombay Municipal Act, of property to which the Bombay Rent Control Act of 1947 applies, the maximum gross value to be assigned to the property is limited to the maximum standard rent of the property together with the additions thereto permitted by the latter Act.
Finding of the Court:

The court held that the determination of the rateable value of lands and buildings under Section 154 (1), City of Bombay Municipal Act is not to be limited by the maximum standard rent fixed under the provisions of the Rent Restriction Act.
Issues: Whether the maximum gross value to be assigned to the property is limited to the maximum standard rent of the property together with the additions thereto permitted by the Bombay Rent Control Act of 1947.
Ratio Decidendi: The court held that the word "rent" as used in Section 154 (1), City of Bombay Municipal Act does not mean the actual rent paid, which is governed by the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, but means hypothetical rent which a hypothetical tenant would be expected to pay without any regard being had to the statutory restrictions imposed upon its receipt.
Final Decision: The court answered the question referred to it in the negative.

Judgment

Bavdekar, J.

1. This is a reference made to us by the learned Chief Judge of the Court of Small Causes, Bombay under Section 218C, City of Bombay Municipal Act. The question referred to this Ct. is, whether in arriving at the valuation, for the purposes of Section 154, City of Bombay Municipal Act, of property to which the Bombay Rent Control Act of 1947 applies, the maximum gross value to be assigned to the property is limited to the maximum standard rent of the property together with the additions thereto permitted by the latter Act.

2. It appears from the record there was a dispute between the landlords of certain premises, which are liable to be assessed for Municipal taxes under the provisions of the City of Bombay Municipal Act, the Municipality about the rateable value of those premises. In order to apply the scale of rates, it is necessary to determine under Section 154, City of Bombay Municipal Act, the rateable value of the property in question; Section 154 (1) says that the rateable value shall be arrived at in the following manner:

"In order to fix the rateable value of any building or land assessable to a property-tax, there shall be deducted from the amount of the annual rent for which such land or building might reasonably be expected to let from year to year a sum equal to ten per centum of the said annual rent, the said deduction shall be in lieu of all allowance for repairs or on any other account whatever."

The rateable value is, therefore, nine-tenths of "the amount of the annual rent for which such land or building might reasonably be expected to let from year to year." These worda find a place in certain rating Acts in England, to which a reference will be made below, it does not appear that, when the question of their meaning was considered irrespective of the effect of any Rent Act, they have been given any meaning different from that given to the words "annual rent which a tenant might reasonably be expected.....to pay for a hereditament" which find a place in the Valuation of Property (Metropolis) Act 1869 which have been interpreted by the House of Lords in England. Reference may be made to a case of this Ct. namely, v in which the principles which have been adopted in England in cases of rating are declared to be applicable so far as they do not depend upon the words of any particular section in rating cases in India also. The landlords, who were the applts. before the learned Chief Judge of the Small Causes Ct. of Bombay, contended, however, that, in fixing the rateable value under the City of Bombay Municipal Act, in the first instance, the provision of the Rent Control Act will have to be taken into consideration; in the second instance, they said that where, under the terms of the Rent Restriction Act, it was not permissible for the landlord, upon penalty of fine imprisonment, to charge more than a certain sum mentioned as the standard rent permissible increases, the amount of annual rent for which any land or building might reasonably be expected to let from year to year was limited to the standard rent together with the permissible increases permitted by the Rent Act.

3. Now, a similar question arose for determination in England under Rent Restrictions Act, 1920. Valuation for the purposes of rating was there made under Section 4, Valuation (Metropolis) Act, 1869, which in the first instance, required the determination of a term called "the gross value." It was defined as the annual rent which a tenant might reasonably be expected, taking one year with another, to pay for a hereditament, if the tenant undertook to pay all usual tenants rates taxes, the landlord undertook to bear the cost of the repairs insurance, "rateable value was defined as the gross value after deducting therefrom the probable annual average cost of the repairs insurance." Under the terms of the Rent Restrictions Act, 1920, even if the tenant paid a rent in excess of the maximum prescribed by t

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