Delhi High Court
Delhi Paints & Chemicals vs New Delhi Municipal Committee And Anr. on 16 March, 1993
Equivalent citations: 50(1993)DLT207, 1993(25)DRJ548, 1993RLR436
Author: D.P. Wadhwa
Bench: D.P. Wadhwa
JUDGMENT D.P. Wadhwa, J.
(1) Since we have heard the matter at length the writ petitions can be disposed of at this stage itself.
(2) These five writ petitions raise a common question of law. The question is as to what would the annual value of the properties subject-matter of these petitions under clause (b) of sub-section (1) of section 3 of the Punjab Municipal Act, 1911 (for short 'the Act') as applicable to New Delhi. The assessment year is 1991-92 (1 April 1991 to 31 March 1992). The properties involved are flats situated in multi-storeyed buildings in New Delhi area where the Act applies.
(3) To understand the issues involved in these petitions it will be appropriate to set out the facts of only one of these cases. The petitioner in C.W-P.No. 1032/92 owns flat in Surya Kiran Building at Kasturba Gandhi Marg, New Delhi. The flat has been let out at a monthly rent of Rs.4,316.00. The New Delhi Municipal Committee (N.D.M.C.), the first respondent, issued a notice under section 65 of the Act proposing to enhance the annual value from existing Rs.9,798.00 to Rs.56,977.00. In the notice it was stated that earlier the property had been assessed on the basis of standard rent as per provisions of the Delhi Rent Control Act, 1958 (DRC Act) and that after the amendment of the Drc Act w.e.f. 1 December 1988 it was proposed to revise the assessment of the .annual value as the property was fetching a rent more thanRs.3,500.00 per month. The notice further said that after the amendment, protection of the Drc Act was taken away in respect of the property in question and the ratio of computing rateable value as pronounced by the Supreme Court in Dr. Balbir Singh's case (Dr.Balbir Singh and others v. M.C.D. and others, ) was not then available and that the assessment was proposed to be revised at the annual actual rent/market rent which the property was fetching. Though this was the basis for proposed revision of the annual value it was also mentioned in the notice that (1) 10% increase in rent/actual increase in rent as per lease agreement provisions, whichever is higher, will be applicable every three years effective from 1 April 1989, and (2) properties self-occupied or with any additions/alterations are proposed to be assessed @ 10% of the market price of land and cost of construction, irrespective of the fact whether the property is residential or non-residential. These were, however, not made applicable as per the notice. The petitioner filed objections. It disputed the contentions of the N.D.M.C.and said that the flat was in existence and was being assessed since 1983-84 and that the amended provisions of Drc Act would be applicable only to properties which came into existence after 1 December 1988. It also mentioned that once the annual value had been fixed on the basis of standard rent there was no question of its enhancement until there was any structural change in the property, and since there was none the notice was not valid. The petitioner also disputed the ground of 10% increase in the rent as factually wrong and said that the property continue to be covered under the provisions of the Drc Act even after its amendment and the annual value could not be fixed other than as fixed on the cost of construction basis as per the principles laid down by the Supreme Court.
(4) N.D.M.C. by its resolution rejected the objections raised by the petitioner and finalised the annual value of the property at Rs.56,971.00 less 10% for the year 1991-92. We may reproduce the relevant portion of the decision of the N.D.M.C.:- "IT has been contended that the proposed annual value is not in accordance with the directions of the Supreme Court. The property is constructed prior to 1.12.1988 & is covered under the Amended Drc Act. Further, the Committee cannot revise the rateable value as the same already stands finalised on purchase price of the flat. The premises is on rent and is fetching a rent of more than Rs.3,500.00 - per month & as such it no longer enjoys the protection under the Drc Act & is to be assessed on rental basis under Section 6A of Drc Act. The premises is fetching a monthly rent of Rs.4,316.00 & on the basis of actual rent plus 10% increase as per the provisions of Section 6-A of Drc Act, the annual value works out to Rs.56,971.00less 10%. The proposed assessment is in order & as per law. "
(5) The petitioner appealed under section 84 of the Act. The second respondent, the Additional District Magistrate, New Delhi, by order dated 3 January 1992 dismissed the appeal and upheld the decision of the N.D.M.C. (6) Under section3(l)(b)oftheAct,"annual value" means, in the case of any house or building, the gross annual rent at which such house or building, together with its appurtenances and any furniture that may be let for use or enjoyment therewith, may reasonably be expected to let from year to year, subject to the following deductions - (I)..........(ii) a deduction of 10 per cent for the cost of repairs and for all other expenses necessary to maintain the building in a state to command such gross annual rent. The deduction under this sub-clause shall be calculated on the balance of the gross annual rent after the deduction (if any) under sub-clause (i); (iii) ......
(7) The provisions "may reasonably be expected to let from year to year" were subject-matter of two decisions of the Supreme Court: (1) Devon Daulat Rai Kapoor etc. v.New Delhi Municipal Committee and another and (2) Dr. Balbir Singh and others V.M.C.D. and others . In the first very case which was under the provisions of the Act itself the court upheld that where the rent of the building was subject to rent control legislation annual value could not exceed the standard rent. The court also held that even where the standard rent had not been fixed under the provisions of the Drc Act the assessing authority would nevertheless have to arrive at its own figure of standard rent by applying the principles laid down in that Act for determination of standard rent and determine the annual value of the building on the basis of such figure of standard rent. The case of Dr. Balbir Singh was under the provisions of the Delhi Municipal Corporation Act and again the court held that standard rent chargeable was the upper limit though the agreed rent could even be less than the standard rent. In both these cases the properties were governed by provisions of the Drc Act as the Drc Act applied to the areas under the jurisdiction of N.D.M.C. and of the Municipal Corporation of Delhi under the provisions of the Delhi Municipal Corporation Act as mentioned in section 1 (2) of the Drc Act. That covered almost whole of the urban areas of Delhi.
(8) Clause (k) of section 2 of Drc Act defines 'standard rent' which, in relation to any premises, means the standard rent referred to in section 6 or where the standard rent had been increased under section 7, such increased rent. Section 6 of this Act provides for fixation of standard rent of the premises, both residential and non-residential. Section 9 of this Act provides as to how the Rent Controller under this Act is to fix the standard rent, etc., and under sub-section (4) of section 9 where for any reason it is not possible to determine the standard rent of any premises on the principles set forth under section 6, the Rent Controller may fix such rent as would be reasonable having regard to the situation, locality and condition of the premises and the amenities provided therein and where there are similar or nearly similar premises in the locality, having regard also to the standard rent payable in respect of such premises. Under section 5 of the Drc Act, subject to certain provisions of this Act, no person shall claim or receive any rent in excess of the standard rent, notwithstanding any agreement to the contrary. Section 3 of the Drc Act before its amendment specified the premises to which this Act was not applicable. Clauses (c) and (d) were added by the Amendment Act of 1988 which are relevant for our purposes and may be set out as under:- (C)to any premies, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees; or (d) to any premises constructed on or after the commencement of the Delhi Rent Control (Amendment) Act, 1988, for a period often years from the date of completion of such construction.
(9) We are concerned here with addition of clause (c). Thus, nothing in the Drc Act shall apply to any premises, whether residential or not, whose monthly rent exceeds three thousand and five hundred rupees. This clause (c) envisages actual letting and Drc Act would not apply to the premises which have been let out for a monthly rent exceeding Rs.3,500.00. This clause does not talk of any notional monthly rent. It has to be actual monthly rent when there is letting. When there is no letting the question of monthly rent exceeding Rs.3,500.00 would not arise. In that case provisions of sections 6,7 and 9(4) of the Drc Act would continue to apply, and so also the principles laid down in the aforesaid two decisions of the Supreme Court in Daulat Rai Kapoor and Dr. Balbir Singh cases. Section 6-A was inserted in the Drc Act by the Amendment Act of 1988. This section 6-A is as under:- "REVISION of rent.- Notwithstanding anything contained in this Act, the standard rent, or, where no standard rent is fixed under the provisions of this Act in respect of any premises, the rent agreed upon between the landlord and the tenant, may be increased by ten per cent every three years. "
(10) This section 6-A will also not apply where there has been no letting. Where premises which are self occupied concept of any monthly rent cannot be introduced and for arriving at annual value as defined in the Act one has to fall back on the provisions of the Drc Act as amended and the principles as laid down by the Supreme Court. Where, however, there is actual letting those premises are taken out of the purview of the Drc Acf as in the present case. If so, section 6-A of the Drc Act can also not apply. N.D.M.C.j on the one hand says that Drc Act as amended is not applicable, yet it is invoking the provisions of section 6-A of this Act which is impermissible. Addition of the annual value, on the basis of section 6-A of the Drc Act has, therefore, to be struck down. N.D.M.C. cannot demand 10% increase in rent under the provisions of section 6-A of the Drc Act We cannot agree with interpretation put by the petitioner that irrespective of the fact that Drc Act is not applicable to the premises in question the annual value has to be arrived at on the basis of the provisions of the Drc Act and the principles laid down by the Supreme Court. We also cannot accept the other contention of the petitioner that since the flat in question was in existence prior to coming into force the amended Drc Act, the annual value would continue to be the same and that the amended Act is prospective in nature meaning thereby it would apply to the properties constructed after 1 December 1988.
(11) We find, therefore, that though the respondents have arrived at the annual value of the property in question correctly on the basis of the monthly rent @ Rs. 4,316.00 less a deduction of 10% for the cost of repairs, etc., the provisions of section 6-A of the Drc Act as amended have been wrongly invoked to work out the annual value. Similar will be in the case of other petitioners, and provisions of section 6-A of the Drc Act as amended could not be invoked there as well. To the extent aforesaid the writ petitions are allowed. There will be no order as to costs.