1956 Supreme(Cal) 89

HIGH COURT OF CALCUTTA
Lahiri
CORPORATION OF CALCUTTA - Appellant
Versus
SM. PADMA DEBI - Respondent
A. F. O. O.  349  Of  1953
Decided On : MAY 22, 1956

The annual value of a building under Section 127 (a) of the Calcutta Municipal Act, 1923 is the gross annual rent at which it might reasonably be expected to let at the time of assessment. The standard rent fixed by the Rent Controller under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 is binding on the Corporation of Calcutta in determining the annual value of a building under Section 127 (a) of the Calcutta Municipal Act, 1923.

Headnote:

CALCUTTA MUNICIPAL ACT, 1923 - S. 127(A) - ANNUAL VALUE OF BUILDING - DETERMINATION - STANDARD RENT FIXED BY RENT CONTROLLER UNDER WEST BENGAL PREMISES RENT CONTROL (TEMPORARY PROVISIONS) ACT, 1950 - WHETHER BINDING ON CORPORATION.

Fact of the Case:

The Corporation of Calcutta started proceedings for general revaluation of premises No. 296 Bowbazar Street under Section 131, Calcutta Municipal Act, 1323 with effect from the second quarter of 1950-51 which began with the month of July 1950. There is no dispute that the annual value is to be determined under Section 127 (a) of the Act because the building was "erected for letting purposes". In the immediately preceding valuation which commenced with the second quarter of 1944-45 and remained in force upto the end of the first quarter of 1930-51 the annual value of the building was Rs. 5637 as stated by the learned Advocate for the appellant. As a result of fifth revaluation, however, the annual value was increased to Rs. 14092 and this figure was arrived at by taking Rs. 1450/- as the monthly rent at which the building "might at the time of assessment reasonably be expected to let from year to year'' as contemplated by Section 127 (a) (vide Ex. A-objection docket of the assessment department of the Corporation of Calcutta ). The building in question comprises a total area of 10,309 sq. ft. which is in the occupation of a tenant named Bombay Co. Ltd. for Rs. 1200/- per month and about 375th of this total area, i. e. 6184 sq ft. is sublet to B. C. Nawn and Co. at a monthly rent of Rs. 809/13/ -. The general notice of the valuation was published on 28-6-1950 and special notice of the increase of valuation was served on the owner on 20-6-1950; on 7-7-1950 the owner filed an objection to the valuation and after some adjournments the Special Officer who heard the objection passed an order on 22-1-1951 which runs as follows: "postponed for fresh enquiry as to rents". On 19-6-51 a fresh enquiry report was submitted and it runs as follows:"entire premises let out to Bombay Co. Ltd. of Pollock House for Rs. 1200/- per month since standardised by R. C at Rs 550/- per month w. e. f. April 1951 andrs. 632/8/- per month w. e. f. August 1951. Sublet to B. C. Nawn and Co. (approximately 37 5th of the premises) originally for Rs. 809/13/- per month which is to be reduced proportionately in terms of the R. C. Court's Order. Approximately it is likely to come to about Rs. 400/- per month. Bombay Co. pays occupier's share of the taxes total area -- 10309 sq. ft. B. C. Nawn and Co.-- 6184 sq. ft. Bombay Co.-- 4125 sq. ft. "on receipt of this report the Special Officer passed the following order on 10-8-51: "seen records and P. E. Report. No certified copy of judgment of R. Court produced. P. E. Report cannot be acted upon in the absence of R. C. C. judgment. Confirmed. "

Finding of the Court:

1. The Corporation of Calcutta is bound by the standard rent fixed by a Rent Controller under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 in determining the annual value of a building under Section 127 (a) of the Calcutta Municipal Act, 1923. 2. The expression "at the time of assessment" in Section 127 (a) of the Calcutta Municipal Act, 1923 refers to the period which expires with the determination of the objection of the assessee under Section 140 of the Act. 3. In the instant case, the standard rent was in existence at the time of the assessment.

Issues: 1. Whether in determining the annual, value of a building under Section 127 (a), Calcutta Municipal Act, 1923 the Corporation of Calcutta is bound by the standard rent fixed by a Rent Controller under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950. 2. What is the meaning of the expression "at the time of the assessment" occurring in Section 127 (a), Calcutta Municipal Act, 1923? 3. Whether in tin's particular case it can be said that a standard rent was in existence at the time of the assessment.

Ratio Decidendi: 1. The annual value of a building under Section 127 (a) of the Calcutta Municipal Act, 1923 is the gross annual rent at which it might reasonably be expected to let at the time of assessment. The rent contemplated by Section 127 (a) need not be the actual rent, but may be a "hypothetical, estimated, notional or ideal" rent, but it cannot include a rent which no one could possibly pay. 2. The annual value upon which rates have to be assessed is the intrinsic value of the land or building to the owner in its present condition. The measure of that intrinsic value is no doubt the maximum rent which a hypothetical tenant would be willing to pay but the ultimate criterion is the value of the property to the owner. 3. The standard rent fixed by the Rent Controller under the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 is binding on the Corporation of Calcutta in determining the annual value of a building under Section 127 (a) of the Calcutta Municipal Act, 1923. The object of the Rent Control Act is to regulate the rents of premises in Calcutta to meet the contigency arising from acute shortage of accommodation resulting from the last world war and the artificial rules for control of rents laid down by that Act were not intended to be applicable to the determination of annual value under Section 127 (a) of the Municipal Act. 4. The expression "at the time of assessment" in Section 127 (a) of the Calcutta Municipal Act, 1923 refers to the period which expires with the determination of the objection of the assessee under Section 140 of the Act. The assessment is one continuous process beginning with Section 131 and ending with the determination of the objection under Section 140. Thereafter the assessee is given a right of appeal to the Court of Small Causes under Section 141 and another right of appeal to the High Court under Section 142 (3) but so far as the rating authorities are concerned the process of assessment terminates with the determination of the assessee's objection under Section 140.

Final Decision: The appeal was allowed and the matter was remanded back to the Division Bench for passing a final order.