*Balbir Singh v. M.C.D., AIR 1985 SC 339
*Not Printed
W. P. Nos. 483-86, 471 of 1980 etc.,, decided on 12/12/1984
Headnote
(A) Delhi Municipal Corporation Act (66 of 1957) , S.2(47), S.113, S.114— Rateable value of building – Determination of – Test – Standard rent is upper limit – Rent reasonably expected – Can be less than standard rent. Municipalities – Rateable value of building Punjab Municipal Act (3 of 1911) , S.3(1), S.61— Annual rent – Determination of Delhi Rent Control Act (59 of 1958) , S.2(k), S.6—
The rateable value of building, whether tenanted or self occupied, is limited by the measure of standard rent arrived at by the assessing authority by applying the principles laid down in the Rent Act and cannot exceed the figure of the standared rent so arrived at by the assessing authority.
The standard rent determinable on the principles set out in the Rent Act is the upper limit of the rent which the landlord may expect to receive from a hypothetical tenant, but it may in a given case be less than the standared rent having regard to various attendant circumstances and considerations. If, for example, the building is not in a proper state of repair or is so situate that it has certain disadvantages from the point of view of easy accessibility or means of transport or any other similar cause, the actual rent which the owner may reasonably expect to receive from a hypothetical tenant may be less than the standard rent determinable on the principles laid down in the Rent Act. The test therefore is not what is the standard rent of the building but what is the rent which the owner reasonably expects to receive from a hypothetical tenant and such reasonable expectation can in no event exceed the standard rent of the building determinable in accordance with the principles laidwith the principles laid down in the Rent Act, though it may in a given case be lower than such standard rent.(Para 6)
(B) Delhi Rent Control Act (59 of 1958) , S.2(k), S.6, S.7, S.9— Standard Rent – Determination of – Discretion of Rent Controller – Not unfettered and unguided. Houses and Rents – Standard rent Constitution of India , Art.14—
The definition of “standard rent” in S. 2(k) is not an inclusive but is an exhaustive definition and it defines the standard rent to mean either the standard rent referred to in S. 6 or the increased standard rent under S. 7. It is significant to note that it does not contain any reference to S. 9, Sub-sec. (4). Whenever, therefore, any reference is made to standard rent in any provision of the Rent Act, it must mean standard rent as laid down in Sec.6 or increased standard rent as provided in S. 7 and nothing more.S. 9, as the definition in S. 2(k) clearly suggests and the marginal mote definitely indicates, does not define what is standard rent but merely lays down the procedure for fixation of standard rent. The words “having regard to the circumstances of the case” undoubtedly leave a certain measure of discretion to the Controller in fixing the standard rent. But this discretion is not such an unfettered and unguided discretion as to enable the Controller to fix any standard rent which he considers reasonable. He is required to fix the standard rent in accordance with the formula laid down in S. 6 or S. 7 and he cannot ignore that formula by saying that in the circumstances of the case he considers it reasonable to do so. The only discretion given to him is to make adjustments in the result arrived at on the application of the relevant formula, where it is necessary to do so by reason of the fact that the landlord might have made some alteration or improvement in the building or circumstances might have transpired affecting the condition or utility of the building or some such circumstances of similar character. The compulsive force of the formula laid down in S. 6 for the determination of standard rent and of the provisions of S. 7 for increase in standard rent is not in any way whittled down by sub-sec.(2) of S. 9 but a marginal discretion is given to the Controller to mitigate the rigour of the formula where the circumstances of the case so require. Sub-s. (4) of S. 9 will be attracted only if it is not possible to determine the standard rent on the principles set out in S. 6.Where such is the case, the Controller is empowered to fix such rent as would be reasonable having regard to the situation, locality and condition of the premises and the amenities provided therein. But even while fixing such rent, the Controller does not enjoy unfettered discretion to do what he likes and he is bound to take into account the standard rent payable in respect of similar or nearly similar premises in the locality.(Para 9 10)
(C) Delhi Rent Control Act (59 of 1958) , S.6— Self occupied property – Rateable value – Determination of standard rent – Modes – Self-occupancy rebate of 20% – Resumption of rebate while assessing property tax on self occupied property, suggested. Delhi Municipal Corporation Act (66 of 1957) , S.113— Punjab Municipal Act (3 of 1911) , S.61— Self-occupied property – Rateable value.
The provision enacted in sub-s. (2)(b) of S. 6 cannot be applied for determining the standard rent of the premises when the premises have not been actually let out at any time. In case of premises which are constructed on or after 9th June 1955 and which have never been let out at any time, the standard rent would be determinable on the principles laid down in sub-Ss. (1)(a), (2)(b) of S. 6, so also in case of premises which have been constructed before 9th June 1955 but after 2nd June 1951 the standard rent would, for like reasons, be determinable under the provisions of sub-secs. (1)(a), (2)(b) of S. 6 if they have not been actually let out at any time since their construction.But if these two categories of premises have been actually let out at some point of time in the past, then in the case of former category, the annual rent agreed upon between the landlord and the tenant when the premises were first actually let out shall be deemed to be the standard rent for a period of five years from the date of such letting out and in the case of the latter category, the annual rent calculated with reference to the rent at which the premises were actually let for the month March 1958 or if they were not so let, with reference to the rent at which they were last actually let out shall be deemed to be the standard rent for a period of seven years from the date of completion of the construction of the premises.However, even in the case of these two categories or premises, the standard rent after the expiration of the period of five years or seven years as the case may be, would be determinable on the principles set out in sub-secs. (1)(a), (2)(b) of S. 6. Thus in the case of self-occupied residential premises, the standard rent determinable under the provisions of sub-sec. (2)(a) or (2)(b) of S. 6 in cases falling within the scope and ambit of those provisions and in other cases, the standard rent determinable under the provisions of sub-secs. (1)(a), (2)(b) of S. 6 would constitute the upper limit of the rateable value of the premises.(Para 11)
The self-occupancy rebate of 20% in the property tax assessed on self-occupied residential premises may be resumed by the assessing authorities, because there is a vital distinction, from the point of view of the owner, between self-occupied premises and tenanted premises and the right to shelter under a roof being a basic necessity of every human being, residential premises which are self-occupied must be treated on a more favourable basis than tenanted premises, so far as the assessability to property tax is concerned.(Para 11)
(D) Delhi Rent Control Act (59 of 1958) , S.6— Premises partly self occupied and partly tenanted – Standard rent – Determination for purpose of fixing rateable value. Delhi Municipal Corporation Act (66 of 1957) , S.2(47), S.113— Punjab Municipal Act (3 of 1911) , S.3(1), S.61— Rateable value – Premises partly self occupied and partly tenanted.
When the rateable value of a building consisting of distinct and separate units of occupation is to be assessed, the standard rent of each unit would have to be determined. The sum total of the rent which the owner may reasonably expect to get from a hypothetical tenant in respect of each distinct and separate unit of occupation would represent the rateable value of the building. This formula for determination of rateable value would apply, irrespective of whether any of the distinct and separate units of occupation comprised in the building are self-occupied or tenanted. The only difference in case of a distinct and separate unit of occupation which is tenanted would be that, subject to the upper limit of the standard rent, the actual rent received by the owner would furnish a fairly reliable measure of the rent which the owner may reasonably expect to receive from a hypothetical tenant, unless it can be shown that the actual rent so received is influenced by extra-commercial considerations.(Para 13)
(E) Delhi Rent Control Act (59 of 1958) , S.6, S.9— Premises constructed on land taken on lease from Government or on sub-lease from co-operative society – Standard rent determination of – Sub-Ss. (1)(a), (2)(b) or (1)(b), (2)(b) of S. 6 apply – Sub-s. (4) of S. 9 not attracted. Delhi Municipal Corporation Act (66 of 1957) , S.113— Punjab Municipal Act (3 of 1911) , S.61—
Where premises have been constructed by the owner on land taken on lease directly from the Government and where premises have been constructed by the owners on land taken on sub-lease from a Co-operative House Building Society which has in its turn taken a lease from the Government merely because the plot of land on which the premises are constructed cannot be sold, transferred or assigned except to member of the Co-operative House Building Society and without the prior consent of the Government, it does not necessarily mean that there can be no market price for the plot of land. It is not as if there is total prohibition on the sale, transfer or assignment of the plot of land, so that in no conceivable circumstance, it can be sold, transferred or assigned. The plot of land can be sold, transferred or assigned but only to one from amongst a limited class of persons, namely, those who are members of the Co-operative House Building Society and subject to the Rules and Regulations, any eligible person can be admitted to the membership of the Co-operative House Building Society. There is also a further restriction, namely that the sale, transfer or assignment can take place only with the prior consent of the Government. But subject to these restrictions, the sale, transfer or assignment can take place. It cannot, therefore, be said that the market price of the plot of land cannot be ascertained. Of course, when the class of potential buyers, transferees or assignees is restricted, the market price would tend to be depressed. But even so, it can be ascertained and it would not be correct to say that it is incapable of determination. Therefore the standard rent of premises constructed on such land can be determined on the principles set out in sub-s. (1)(a), (2)(b) or (1)(b), (2)(b) of S. 6 and there is no necessity to resort to S. 9(4).(Para 18)
(F) Delhi Rent Control Act (59 of 1958) , S.6— Premises constructed in stages – Standard rent – Determination of. Delhi Municipal Corporation Act (66 of 1957) , S.113— Punjab Municipal Act (3 of 1911) , S.61—
When any addition is made to the premises at a subsequent stage, three different situations may arise. Firstly, the addition may not be of a distinct and separate unit of occupation but may be merely by way of extension of the existing premises which are self-occupied.In such a case the original premises together with the additional structure would have to be treated as a single unit for the purpose of assessment and its rateable value would have to be determined on the basis of the rent which the owner may reasonably expect to get, if the premises as a whole are let out, subject to the upper limit of the standard rent determinable under the provisions of sub-s. (1)(a), (2)(b) of S. 6. Secondly, the existing premises before the addition might be tenanted and the addition might be to the tenanted premises so that the additional structure also form part of the same tenancy.Where such is the case, the standard rent would be liable to increase under S. 7and such increased rent would be the standard rent of the premises as a whole and within the upper limit fixed by such standard rent, the assessing authorities would have to determine the rent which the owner may reasonably expect to get if the premises as a whole are let out as single unit to a hypothetical tenant and in such a case, the actual rent received would be a fair measure of the rent which the owner may reasonably expect to receive from such hypothetical tenant unless it is influenced by extra-commercial considerations. Lastly, the addition may be of a distinct and separate unit of occupation and in such a case, the rateable value of the premises would have to be determined on the basis of the formula for assessing the rateable value of premises which are partly self-occupied and partly tenanted.(Para 19)
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