ORDER
M.S.A. Siddiqui, J.
1. The challenge in this writ petition is to the order dated 15.11.1989
passed by the learned Additional District Judge in H.T.A. No. 15/1989 and
HTA No. 16/1989, who, while accepting the appeals filed by the respondent
has determined the rateable value of the premises bearing No. A-105 Satya
Vihar, New Delhi.
2. It appears that construction of the premises in question was commenced in February, 1980 and it was completed in 1982. The ground floor of the property was occupied in November, 1980 and after completion of the first floor, the same was let out to Sh. M.S. Sharma for 2-1/2 months at a monthly rent of Rs. 1000/- w.e.f.
3. 1.8.1982 and thereafter it was let out to Mr. Ashok Raj for 3 years at
a monthly rent of Rs. 2001/- w.e.f. 14.10.82. A notice U/S 126 of the Delhi
Municipal Corporation Act (hereinafter called the Act) was issued to the respondent proposing enhancement of rateable value from Rs. 15,660/- to Rs. 33,490/-. In response to the said notice, the respondent submitted the objections against the proposed enhancement of rateable value, which were rejected by the Assessing Authority vide order dated 8.12.1988. By the said order, the Assessing Authority revised the rateable value to Rs. 33,490/-, as proposed. In appeal by the respondent, the learned Additional District
Judge set aside the assessment order and fixed the rateable value of the property at Rs. 23,140/- w.e.f. 1.7.1982 and at Rs. 23,900/- w.e.f. 1.8.1982 and at Rs. 23140/- w.e.f. 1.8.1987.
4. The learned counsel for the petitioner has assailed the impugned judgment of the learned Additional District Judge on the following grounds:
a) that the learned Additional District Judge has committed a patent illegality by determing the cost of land on the basis of land rates notified by the Delhi Administration for Jhilmil Colony.
b) that the learned Additional District Judge has committed a grave error by assessing the annual letting value of the portion let out by the respondent at a figure which does not represent the correct annual letting value of the said portion.
5. As regards the first point, it is significant that the learned Addl. District Judge has observed that the Assessing Authority had taken the value of the land at Rs. 550/- per square meter but the assessment order dated 8.12.1988 is conspicuous by absence of the said finding noticed by the learned Addl. District Judge. On the contrary, the learned Additional District Judge has determined the value of the land at Rs. 212/- per square meter on the basis of land rates notified by the Government for Jhilmil Colony. The Apex Court has observed in Diwan Daulat Rai Kapoor Vs. NDMC and Dr. Balbir Singh Vs. MCD that rateable value of a property should be determined on the cost of the land plus construction i.e. on the basis of standard rent determinable on the principles set out in Section 6 of the Delhi Rent Control Act. Their Lordships have also observed that if for any reason the standard rent cannot be so determined, then the Assessing Authority can have recourse to the provisions of Section 9(4) of the Delhi Rent Control Act. In my opinion, the learned Additional District Judge has committed a patent illegality in determining the value of the land on the basis of the rates notified by the Government for Jhilmil colony. In MCD Vs. C.P. Gosain CWP 4122/90 decided on 24th October, 1991 and MCD Vs. Jasvinder Singh and Another CWP-4096/91
decided on 17th May, 1993 and MCD Vs. N.C. Jain and Another CW 1312/90 decided on 24.7.1991 and K.P. Gupta CW 438/88 decided on 26th April, 1990 it was observed that neither the scheduled rates of the L & D.O. nor auction rates alone can form the basis for determing the market price of the land although both are relevant pieces of evidence which can be taken into consideration by the Assessing Authority alongwith other evidence which the parties may produce before the Assessing Authority. In MCD Vs. NC Jain (supra); it was observed by the Division Bench that ;
“…the assessing authority should try and ascertain the market
rate of land on the basis of sale deed, auction prices etc. near about the time when the construction taken in the immediate or near vicity of the land where it is situate…”
6. The same view has also been reiterated by another Division Bench of
this Court in Sita Nanda Vs. NDMC & Anr. 1996 (v) AD Delhi 34. It is pertinent to mention that while fixing cost of the land of the said portion of the building the Assessing Authority did not refer to any evidence on the basis of which the same was determined by it. Consequently, the assessment order determining rateable value of the portion of the building under self-occupation of the respondent cannot be sustained in law. In the instant case, the learned Additional District of Judge instead of himself determining the rate of the land ought to have set aside the order of assessment
and remanded the case to the Assessing Authority with the direction to
determine the market price of the land in accordance with law.
7. This takes me to the next point urged by the learned counsel for the
petitioner. It is undisputed that the first floor of the property in question was first let out to Sh. M.S. Sharma for 2-1/2 months at a monthly rent of Rs. 1000/- per month w.e.f. 1.8.1982 and thereafter it was let out to Sh. Ashok Raj for 3 years at a monthly rent of Rs. 2100/-. The Assessing Authority had determined the annual letting value of the said portion of the building on the basis of monthly rent of Rs. 2100/- and the learned Additional District Judge has disagreed with it and had preferred to assess
the annual letting value on the basis of rent of Rs. 1000/- per month
received by the respondent from his tenant for two and a half months only.
The question is: How to determine the annual letting value of the property
in such a situation?
8. In Dr. Balbir Singh Vs. MCD (supra), their Lordships of the Supreme
Court have observed:-
“Now, what is reasonable is a question of fact and it depends on
the facts and circumstances of a given situation. Ordinarily, “a bargain between a willing lessor and a willing lessee uninfluenced by extraneous circumstances, the actual rent payable by a tenant to the landlord would afford reliable evidence of what the landlord may reasonably expect to get from the hypothetical tenant, unless the rent is inflated or depressed by reason of extraneous considerations such as relationship, expectation of some as relationship, expectation of some other benefit etc. There would ordinarily be close approximation between the actual rent received by the landlord and the rent which he might reasonably expect to receive from a hypothetical tenant.”
9. In Govt. Servants Cooperative House Building Society Ltd. Vs. Union of
India, a Division Bench of this Court has held that;
“In respect of a building not subject to any such rent control
legislation the actual rent payable by a tenant to the landlord would afford reliable evidence of what the landlord reasonably expect to get from a hypothetical tenant, unless the rent is inflated or depressed by reason of extraneous considerations,
such as, relationship, expectation of some other benefit and the like. There would ordinarily be, in a free market, close approximation between the actual rent received by the landlord and the rent which he might reasonably expect to receive from hypothetical tenant.”
10. The Apex Court has observed in Dewan Daulat Rai vs. NDMC and Dr. Balbir Singh Vs. MCD (supra) that the rateable value can only be the rent which a owner can legally receive. The rent which can be legally received is controlled by the provisions of the Delhi Rent Control Act and it is not permisSible for an owner/landlord to receive more than the standard rent determinable under the said Act. It has further been held that the standard rent has to be determined by applying the provisions of Section 6 of the
Delhi Rent Control Act. Section 116 of the Act provides that ‘rateable value’ is to be the rent at which the building might reasonably be expected to let.’ Thus, the rateable value would be the actual rent received subject
to the maximum of the standard rent. In the case of first letting, however, the actual rent received by the landlord from his tenant itself becomes the standard rent under sub-section (2) of Section 6 of the Delhi Rent Control Act for five years. After five years’ period of the first letting is completed, then the standard rent will have to be fixed by applying the provisions of Section 6(1)(b). The deeming provisions in sub-section (2) of Section 6 has to be given its full effect. This full effect can be given if after the first letting the standard rent is to be taken to be that which is determined under sub-section (2) of Section 6 and not what is determined u/s 6(1)(b) of the Delhi Rent Control Act. In this view of the matter, I am fortified by the decision rendered by the Apex Court in Mrs. Shiela Kaushik vs. the Commissioner of Income-tax, Delhi, . Thus, it is apparent that sub-section (2) of Section 6 of Delhi Rent Control Act seeks to lay down mode of working out the annual letting value of the property. According to the said provisions, it is to be worked out by taking the
actual rent realised as the basis. The Act does not define the expression ‘annual letting value’. But Section 2(1) of Gujarat municipalities act 1964 defines the expression ‘annual letting value’ as follows;
“Annual letting value means the annual rent for any building or land, exclusive of furniture or machinery contained or situate therein might reasonably be expected to let from year to year, and shall include all payments made or agreed to be made by a tenant to the owner of the building or land on account of occupation, takes under any law for the time being in force, insurance or other charges incidental to his tenancy.”
11. Thus, the expression ‘annual letting value’ unmistakably indicates the annual rent received annually by the landlord from his tenant. It is the annual standard rent hich, alone, therefore, can form the basis of the assessment of the property tax by the Assessing Authority. For purposes of sub-section (2) of Section 6 of the Delhi Rent Control Act, the annual letting value should always be based upon the actual annual rent received by the landlord from his tenant and not on the standard or fair rent fixed
under Section 6(1)(b) Delhi Rent Control Act. In other words, the annual rent received by the landlord from his tenant shall be deemed to be the annual rent for which such building etc. might reasonably be expected to let from year to year. So far as the Act is concerned, the annual rent is
the actual rent received by the landlord from his tenant and it determines the basis for determining the annual letting value, rateable value and property tax. That is the plain effect and meaning of sub-section(2) of Section 6 of Delhi Rent Control Act. In my opinion, the rent of Rs. 1000/- per month does not represent the correct annual letting value of the first floor of the property in question. As stated earlier, the said portion of the building was first let out to Sh. M.S. Sharma for 2-1/2 months at a monthly rent of Rs. 1000/- and thereafter it was let out to Mr. Ashok Raj
for 3 years at a monthly rent of Rs. 2100/-. The difference between duration and the amount of rent between the two tenancies gives rise to an inference that the said portion of the building was let out to Mr. M.S. Sharma to have the benefit of sub-section (2) of Section 6 of the Delhi
Rent Control Act. In Sir Shobha Singh & Sons (Pvt.) Ltd. Vs. NDMC 1996 (iv)
AD (Delhi) 56 a Division Bench of this Court has quoted few instances which
may contribute for depression of the rent. The same are as under;
(1) The landlord has collected huge amount as “Pagri” and is
charging nominal rent.
(2) The premises are shown to have been
let out for a month or so on nominal rent to have the benefit of
Section 6(2)(b) of the DRC Act and after expiry of the period of alleged tenance, the real tenant pays much more than the alleged tenant. Say the premises were agreed to be let out to one of the sister concern at Rs. 20,000/-, per month for a period of three years. However, after the expirty of just three months the premises were let out at Rs. 75,000/- per month to a Public Sector Undertaking. Or to say the premises were shown to have been let out at Rs. 9,000/- p.m. for a period of two years, but the tenancy was terminated within a period of less than two months and the premises were let out at Rs. 36,000/- per monthly. On enquiries, it was found that even the completion certificate was not applied for when the alleged rent of Rs. 9,000/- per month was shown.
(3) The landlord collects huge amounts as interest-free security
and lets out thepremises at nominal rent with permission to sublet. The tenant, after taking over possession, lets out the premises at exorbitant rent.
(4) The premises are let out to a sister concern at low rent with permission to sublet, and the sister concern lets out the premises for huge amounts.
(5) The owner with his family members is staying in the premises and the same have been let out to either his employer or the employer of his son, to have benefit of rent. However, the rent is depressed as it cannot be more than the House Rent entitled of
himself or his son.
12. In my opinion, the learned Additional District Judge has committed a patent illegality in determining the annual letting value of the said portion of the property in question on the basis of rent of Rs. 1000/- per month which does not represent the correct annual letting value of the property.
13. For the foregoing reasons, the writ petition is allowed. The impugned
judgment of the learned Additional District Judge is set aside and the assessment order fixing the rateable value of the portion of the building let out by the respondent is restored. However, the assessment order of the Assessing Authority is set aside to the extent at determines the rateable value of the portion of the property under self-occupation of the respondent. The case is remanded to the Assessing Authority with the direction to redetermine the rateable value of the said portion of the property in accordance with law, keeping in view the observations in this behalf.
No order as to costs.