Madras High Court
Magdoom Sheriff Alias Sultan Sheriff vs Kancheepuram Municipality By Its ... on 30 November, 1992
Equivalent citations: (1993)2MLJ262
JUDGMENT Abdul Hadi, J.
1. The plaintiff is the appellant. He filed O.S. No. 101 of 1978 for declaration that the property tax assessment, by the defendant/municipality on him, dated 27.12.1977, with reference to the suit property is illegal and for consequential injunction. The said suit was decreed in his favour, but on appeal by the Municipality the decree was reversed and the suit was dismissed holding that the enhanced assessment of property tax made by the said Municipality on 27.12.1977 was not illegal. The appellate Court also held that the suit itself was not maintainable in view of Section 354 of the Tamil Nadu District Municipalities Act, 1920. Aggrieved by the said judgment and decree, the second appeal has been filed by the plaintiff.
2. The main point argued by the learned Counsel for the appellant is that the assessment made on 27.12.1977, enhancing the property tax from Rs. 633-44 to Rs. 2,063-04 was not in accordance with Section 82(2) of the abovesaid Act, and the decision in The Guntur Municipal Council v. The Guntur Town Rate Payers' Association (1971)2 M.L.J. (S.C.) 7.
3. Section 82 provides for the method of assessment of property for levying property tax. Section 82(2) says as under:
The annual value of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to let from month to month or from year to year (less a deduction in the case of buildings, of ten per cent, of that portion of such annual rent which is attributable to the buildings alone, apart from their sites and adjacent lands occupied as an appurtenance thereto) Interpreting the said Section 82(2), the Supreme Court in the abovesaid decision held as under:
Regarding the said "annual value" the test essentially is what rent the premises can lawfully fetch if let out to a hypothetical tenant. The Municipality is not free to assess any arbitrary value and has to look to and is bound by the fair or standard rent which would be payable for a particular premises under the Rent Action force during the year of assessment. ...It may be that where the Controller (Rent Controller) has not fixed the fair rent, Municipal authorities wall have to arrive at their own figure of fair rent but that can be done without any difficulty by keeping in view the principles laid down in the Section 4 of the Act for determination of fair rent.
4. Further in Devan Dault Raj Kapoor v. New Delhi Municipality , the same Tamil Nadu District Municipalities Act, 1920 was reiterated. Thus, it is true that the standard rent of the building not having been fixed by the Controller the assessing authority would have to arrive at its own figure of standard rent by applying the principles laid down in the Delhi Rent Control Act, 1959 for determination of standard rent, but that is a task which the assessing authority will have to perform as a part of the process of assessment and in the The Guntur Municipal Council v. The Guntur Town Rate Payers' Association (1971)2 M.L.J. (S.C.) 7, this Court has said that it is not a task foreign to the function of assessment and has to be carried out by the assessing authority. When the assessing authority arrives at its own figure of standard rent by applying the principles laid down in the Act, it does not, in any way, usurp the function of the Controller, because it does not fix the standard rent which would be binding on the landlord and the tenant, which can be done only by the Controller under the Act, but it merely arrives at its own estimate of standard rent for the purpose of determining the annual value of the building, (emphasis supplied).
5. But in the present case, though the lower appellate Court observed that "the municipality has more or less followed the principles applicable in fixing the fair rent Under Tamil Nadu Buildings Lease and Rent Control Act, 1960", it has to be seen whether actually the respondent-municipality has followed the said principles, Section 4 of Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 prescribes the method of determining the fair rent. As per Section 4, the market value of the site, the cost of construction of the building and the cost of amenities have all to be computed as prescribed. Taking into account these, 12% of the sum total of them has to be arrived at as the fair rent for a non-residential building. In the present case also the suit property is a non-residential building. Further, to assess the market value of the I site, on which building stands normally the price at which the nearby sites are sold in the open market at the relevant time and other necessary factors have to be taken into account. Further as per Section 4, the cost of construction of the building shall be determined with due regard to the rates adopted for the purpose of estimation by the P.W.D. of the Government for the area concerned.
6. But in the present case, the abovesaid method of assessing the fair rent has not been adopted. The method adopted by the respondent-municipality in assessing the annual value of the building in question is also extracted in the judgment of the lower appellate Court. On going through it, it is clear that the method adopted, is not in accordance with the above said Section 4 of the Rent Control Act. For example, the market value of the site was not taken into account. Though there is mention of 'land value' at a particular figure, there is nothing to show that it is the abovesaid market value spoken to in Section 4 of the Act. Likewise, in fixing the value of the building and the amenities the provisions contained in Section 4 have not been taken into account. On the whole, it cannot be said that for assessing the annual value of the building, the principles underlying the above Section 4 have been followed. No doubt, the learned Counsel for the respondent/municipality contends that what has been followed by the municipality in assessing the annual value of the building in question is in accordance with the abovesaid provision under the Rent Control Act, but obviously it is not so. The lower appellate Court erred in saying that the municipality 'more or less' followed the abovesaid principles. Thus, the lower appellate Court has committed substantial error of law.
7. No doubt, to this regard the learned Counsel for the respondent/municipality brought to my notice a decision of Thanikkachalam, J. in S. Sambandamurthy Mudaliar (deed.) and Ors. v. The Commissioner, Kancheepuram Municipality, S.A. No. 318 of 1982 dt. 22.6.1992, wherein when a similar question arose, the learned Judge has observed as follows:
The learned Counsel for the appellant contended that the annual letting value should be determined on the basis of the fair rent, as contemplated under the Tamil Nadu Buildings (Lease and Rent Control) Act 18 of 1960 and since this method was not followed by the assessing authority, enhancement is not sustainable. But the learned Counsel for the respondent pointed out that the Rent control Act is not applicable to this building, since the premises in question is a lodging house. Under Section 30(3) of the Tamil Nadu Buildings (Lease and Rent Control) Act 18 of 1960 if a lodging house is let out along with furnitures, then the lodging house cannot come under the purview of the Act. Therefore, the said Act is not applicable to the said building.
The learned Counsel for the respondent/municipality points out that in the present case also, the building is in question is a lodge similar to the lodge dealt with, in the abovesaid judgment dated 22.6.1992, and that therefore the said decision should be applicable in the present case also. He also submits that there is a Government Order G.O.Ms. No. 1738, R.D.L.A., dated 25.8.1976 as shown in Ex.B-3, that pursuant to the said G.O. alone the assessment has been made in the present case and that hence the assessment is valid. 8. But I am unable to accept this contention of the learned Counsel for the respondent/municipality. Regarding the abovesaid decision of Justice Thanikkachalam with due respect, I state that it has not taken into account the above extracted observations of the Supreme Court in the above referred to two decisions. As per the above extracted observations of the Supreme Court, it is clear that even when a particular buildings whether it is a lodging house or otherwise, is exempt from the provisions of the abovesaid Rent Control Act, the principles found in the relevant section of the said Rent Control Act providing for fixation of fair rent, has to be applied by the Municipal authority in assessing the annual value of the said building. That according to me, is the ratio decidendi of the abovesaid Supreme Court decisions: Therefore, even assuming the present building is a "Lodging house lei out along with furnitures", the principles underlying the abovesaid Section 4 to the said lodging house alone have to be applied in assessing the annua value/Further the learned" counsel for the respondent/municipality also could not point out any plea or proof to show that the present building would come under Section 30(3) of the abovesaid Rent Control Act.
9. Regarding the abovesaid G.O. I find that if at all it is applicable it would be only to Tourist Bungalows under the Control of the Tamil Nadu Tourism and Development Corporation Limited and not to the present Lodging house in question. Even otherwise, the said learned Counsel was also unable to substantiate his faint and strange argument that the said G.O. overrides the decisions laid down by the Supreme Court while interpreting the abovesaid Section 82(2).
10. One other argument of the learned Counsel for the respondent/municipality is that Section 354 of the Tamil Nadu District Municipalities Act, 1920 would be a bar to the maintainability of the present suit. I am unable to accept this contention also. Section 354 of the said Act states as under:
No assessment or demand made and no charge imposed, under the authority of this Act shall be impeached or affected by reason of any clerical error or by reason of any mistake, (a) in respect of "the name, residence place of business or occupation of any person, or (b) in the description of any property or thing, or (c) in respect of the amount assessed, demanded or charged; provided that the provisions of this Act have been in substance and effect, complied with. And no proceedings under this Act shall merely for defect in form, be quashed or set aside by any court of Justice.
So, in so far as material for the present case, it can be said that if there is any clerical error or mistake in respect of the amount assessed, Section 354(1) will come into operation and, that too, where the provisions of the Act have been in substance and effect complied with. Further it is only stated therein that if there is a defect in form, on that ground no proceeding under the Act could be set aside by civil court. But the present case is not one such, at all. The very basis of assessment is attacked as being not in conformity with Section 82(2) read with the above referred to Supreme Court decisions. Therefore, the lower appellate Court also erred in stating that only amount of tax is challenged. Merely because, the portion of P.W.1's evidence, extracted by the lower appellate Court, is that the tax assessed is in excess of the suit amount by Rs. 300, it cannot be concluded that the quantum of tax alone is challenged. Equally, the said extracted portion cannot also lead to the conclusion that there was only some clerical error or mistake in respect 6f the tax assessed. Therefore Section 354 of the above said Act, is not at all attracted to the facts of the present case and the present suit is certainly maintainable.
11. For all these reasons, the judgment and decree of the lower appellate Court are set aside and the judgment and decree of the trial court are restored. It is needless to say that it is open to the municipality to make a fresh assessment in accordance with law. In the circumstances of the case, there will be no order as to costs.