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(1) This appeal is brought by the Life Insurance Corporation of India who will be referred to as the Corporation against the judgment of the chief Judge of the small Causes Court, Bombay in a Valuation matter under the Bombay Municipal Corporation Act of 1888. Before the learned Judge there were several appellants and the questions that arose were common. The Corporation owns the Indian Globe Chambers at the junction of Hornby Road and Mangesh Shenoy street. It is occupied by the tenants of the Corporation. The rateable value for the years 1957-58 and 1958-59 was fixed by the Municipal Corporation at Rs.1,66,410/- In 1958 from the 1st April, an additional tax known as educational cess came to be imposed at 1 1/2 percent on the annual letting value. For the year 1959, therefore, an notice was sent to the Corporation of an increase in the rateable value from 1,66,410/- to Rs.1,68,585/-, This included the amount of permitted increase under the Rent Act which could be transferred to the Tenants. The Corporation made an application to the Assessor and Collector under section 163 of the act. The Assessor and Collector fixed the rateable value at Rs.1,66,180/-. Though the rateable value was fixed at a lesser amount than that for the year 1958-59, it was not by reason by the deduction of the permissible increases to transferred to the tenants but by reason of certain other deductions which the Corporation succeeded in establishing before the Assessor and Collector. Dissatisfied with the result of their complaint, the Corporation appealed to the Chief Judge of the Small causes court as provided by the Act along with several others.

(2) The two questions raided before the learned Judge were whether the Municipal Corporation was entitled to increases the rateable value (1) by the increase in the Halalkhore tax and (2) by the additional education cess. In the first case it was conceded before the learned Judge that the Halalkhore tax could for assessing the rateable value. As to the second, the learned Judge held that the education cess could be added to the actual rental for the purpose. He, therefore, made orders accordingly. The Corporation Challenges the decision of the learned Judge.

"Would land us in a vicious circle and would enable one to circumvent the provisions of the Rent Control Act, for though a tenant is not liable under an Act to pay a rent higher than the standard rent, by this process he would be compelled to pay a higher rent".

They observed:

"On the other hand, the scope of that Section can legitimately be confined to situations giving rise to increase of taxes such as the increase in the rate etc."

(7) Mr .Shah contends that though it is true that the landlord cannot earn anything more than the standard rent inasmuch as under the provisions of the Rent Act, the burden could be passed on to the tenant when the Municipal act imposes burden on the landlord, there can be no reason why once the landlord and thus be regarded as part of the rent which the tenant pays to the landlord and thus be regarded as increasing the rateable value of the property in question. We would repeat that this must land us again into a cycle of increments every year from figure to figure never intended by the framers either of the Rent Act or of the Municipal Act. This may be illustrate thus: Take for example a building, the rateable value of which is a lac of rupees- at least in Bombay there may be some buildings, which do have this annual letting value. The educational cess would be some 1,500/- in respect of this building. Next year, the rateable value, according to the contention of the Municipal Corporation, would be more by 1,500/-. If the incidence of the educational cess is increased from one and half percent, the rateable value would increase by 6,000/- and not by 1,500/-. All the taxes payable by the landlord would increase in proportion, including the educational cess. A year thereafter, all this further addition would be added on to the rent and treated as annual letting value. One does not know where the limit would be reached. It seems to us, therefore, that from a practicable aspect, if such a result could be avoided, as it ought to be. It is argued by Mr. Shah that ultimately it is the reasonable rent which a hypothetical tenant would pay to the landlord that has to be determined by the court. Any tenant would be prepared to pay this amount in addition to the standard rent on a reasonable view of the matter and therefore, this should be considered to be a proper addition to the rent for determining the rateable value of the building. But then, looking to the hardship of accommodation to-day a tenant would not only be prepared to pay this addition but far greater addition and it was in order to prevent such payments that the Rent Act was enacted. The framers are also careful in providing that the increase by the landlord made by reason of the additional tax burden in the rent would not be regarded as an increase is not also included in the definition of the standard rent. It is obvious, therefore, that the standard rent and such increase is not also included on the definition of the standard rent. It is obvious, therefore, the rents or the standard rent which the landlord can recover is limited by the Rent Act under the authority of the decision cited above, we do not see how any further amount can be added to actual rental and be called the rent of building which the landlord recovers.

" All these years in the total annual rent which is calculated by the Bombay Municipality under section 154 of the Bombay Municipal Corporation Act, these factors are taken into account and it is the total amount which the tenants pay to the landlord by way of consideration for the occupation of the tenements that is considered as the rent which can be expected by a landlord of the property from a hypothetical tenant".

There is no estoppel and practice does not necessarily make law. Whether or not the same consideration would apply to the general tax, a part of which is being probably recovered from tenants as permitted increase for determining the rateable value, does not fall to be considered just now, inasmuch as we are concerned only with the educational cess.