Gujarat High Court
Shree Anadi Mukta Sadguru ... vs Municipal Corporation Of The City Of ... on 14 November, 1994
Equivalent citations: (1995)1GLR816, 1995 A I H C 3932
Author: B.N. Kirpal
Bench: B.N. Kirpal
JUDGMENT B.N. Kirpal, C.J.
1. In this Appeal, the challenge is to the rateable value which has been fixed by the Ahmedabad Municipal Corporation and upheld by the Judge, Small Causes Court, Ahmedabad.
2. The appellant is the owner of the premises, which are non-residential, and which have been given on rent to its subsidiary trust, wherein a college, known as "Swaminarayan Arts and Science College, is being run in the City of Ahmedabad. Before the Municipal authorities, the contention of the appellant was that it was charging rent at Rs. 1,116/- per month for one part of the premises and Rs. 2,232/- for the second part of the premises. According to the appellant, the rateable value had to be fixed on the basis of the total rent of Rs. 3,348/- plus municipal taxes.
3. The Corporation had proposed rateable value of Rs. 1,54,700/-. The appellant had contended before the Municipal authorities that the annual letting value of the property could not exceed the annual amount of standard rent. In this connection, the appellant had relied upon the decision of the Supreme Court in Devan Daulat Rai Kapoor v. New Delhi Municipal Committee and Anr. and Dr. Balbir Singh and Ors. v. M.C.D. and Ors. . It was further submitted that, on an application having been filed, being Standard Rent Application No. 4131 of 1977, the Judge, Small Causes Court, Ahmedabad had fixed the standard rent of the premises at Rs. 3,348/- per month, inclusive of municipal tax. The education cess was also to be borne by the appellant.
4. The Municipal authorities did not accept the aforesaid contention and determined the rateable value at Rs. 1,54,700/-.
5. In the appeal filed by the appellant, it was reiterated that the gross rateable value could not exceed the standard rent as determined by the Small Causes Court. This plea was rejected on the ground that the standard rent had been fixed on the admission of the parties and, therefore, the rent so fixed was collusive and could be ignored. The Small Causes Court observed that the appellant had not led any evidence to show the extent of the area and the gross rateable value as determined by the Municipal authorities at Rs. 1,54,700/- was confirmed.
6. In the present appeal, the contention which is again urged is that the Small Causes Court could not have ignored the order passed under Section 11 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. Therefore, the rateable value had to be determined on the basis that the standard rent was Rs. 3,341/- per month.
7. Shri S.N. Shelat, learned Counsel for the respondent, however, submits that it is evident that the standard rent application was decided collusively. He submits that the appellant is a Trust, which owns property and the same has been let out to a subsidiary Trust and the application of standard rent was decided without any opposition. The conclusion, therefore, is that the said decision was collusive.
8. The question which would, however, arise is, even if we assume that the application under Section 11 for fixation of standard rent was determined without any contest and may have been regarded as collusive, can the Municipal authorities ignore an order which is passed under Section 11 of the Rent Act?
9. It is not in dispute that the gross rateable value on which property tax is levied has to be determined on the basis of the annual letting value. Section 2(1 A) defines "Annual Letting Value" and it, inter alia, means the annual rent for which any building or land or premises might reasonably be expected to let from year to year with reference to its use. The provisos to Sub-clause (ii) relate to cases where premises are given on rent. Proviso (a) states that in respect of any building or land, the standard rent of which has been fixed under Section 11 of the Rent Act, then the annual rent thereof shall not exceed the annual amount of standard rent so fixed. Proviso (aa) relates to cases where no standard rent is fixed under Section 11, but premises are given on rent and this proviso (aa) stipulates that the annual rent shall be the contractual rent of the premises in question. Proviso (aaa) carves out an exception to proviso (aa). It states that the contractual rent, referred to in proviso (aa) shall not apply to a case where such contractual rent is, in the opinion of the Commissioner, less than the annual rent for which such building or land can be expected to be let from year to year.
10. Proviso (aaa) is clearly an exception to proviso (aa). If rent which has been fixed, contractually, is not a bona fide rent or has been fixed collusively at a lower figure, presumably with a view to lessening the impact of property tax men proviso (aaa) gives the jurisdiction to the Commissioner to ignore the contractual rent and to determine the annual rent. Whereas the contractual rent under proviso (aa) can be ignored, there is no provision similar to proviso (aaa) with regard to the standard rent which is fixed under Section 11 of the Rent Act and which is referred to in proviso (a) to Section 2(1A) of the B.P.M.C. Act. In other words, the standard rent fixed by an order passed under Section 11 of the B.P.M.C. Act has to be taken into consideration while determining the annual rent. Even if an order under Section 11 is a collusive order, no right is given to the Corporation to ignore that. By accepting the contention of Mr. Shelat, this Court would be re-writing proviso (aaa) so as to enlarge its scope in order to include a collusive order allegedly obtained under Section 11 of the Rent Act. This obviously cannot be done. The provisions of such an Act which fastens tax liability has to be strictly and literally construed. We do not find any ambiguity in the Section as it stands and it is evident that whereas the Commissioner may not be bound by the contractural rent, if he comes to the conclusion that the same does not represent the correct annual rent, he however, is bound by an order of standard rent which is passed under Section 11 of the Rent Act.
11. In our opinion, therefore, on the correct construction of Section 2(1A) and of all provisos (a), (aa), and (aaa), it must follow that the gross rateable value had to be fixed on the basis of the standard rent determined by an order passed under Section 11, according to which the rent payable was only Rs. 3,348/- per month. The order of the Small Causes Court upholding the gross rateable value at Rs. 1,54,700/- was, therefore, not correct.
12. For the aforesaid reasons, this Appeal is allowed. The gross rateable value is liable to be fixed by taking the standard rent at Rs. 3,348/- per month, inclusive of muncipal tax. The Corporation will be at liberty to issue a fresh bill on the aforesaid basis. There will be no order as to costs.