NATARAJA GOWDER Vs. MUNICIPAL COUNCIL PALGHAT

JUDGEMENT

(1.) S. 100 of the Kerala Municipalities Act, 1960 provides for the method of assessment of property tax. Sub-s.(2), leaving out the proviso which may not be necessary for the purpose of this case, reads as follows:

(2.) It is evident from the language of sub-s.(2) of S.100 that it is not the rent that is that actually received by the landlord for the building let out by him that should necessarily be taken as rent for determining the gross annual rent. That is because the section refers to rent which may be reasonably expected to be received for the building let from month to month or from year to year. There may because where buildings are let out at rents much lower than the reasonable rents and equally well there will be cases where the buildings are let out at rents higher than those at which they may reasonably be let. Higher rent may be obtained in circumstances such as where the tenant may be prepared to take the building as a distress measure or because of some particular importance to him of the building. Similarly a building may be let out at a lower rent because of considerations of close intimacy such as a person letting out his building to a close relative, a brother or a son. It may be that buildings may be constructed by Companies and are let out to their employees at nominal rents. In all these case due to circumstances what is being received as rent may not be lithe reasonable rent for which the building could be let out. But where the parties genuinely enter into a rental arrangement and agree upon the rent to be paid it is normal to expect the parties to have entered into a bargain in which the rent fixed is reasonable. It may be that due to lapse of time the rental value of buildings in that area may have considerably risen up and therefore if the buildings are let out afresh to new tenant the rents that may be realised may be several times the rents for which the buildings were let out to the tenant years earlier. But it cannot be said for that reason that the reasonable rents for those buildings should be the rents that could be obtained from that buildings if rented out then for the first time. That is because the law of the land quite of ten secures safeguards to the tenant against any claim for enhancement of rent subject to certain exceptions. In such cases it is the rental value of the building to the landlord that is material and not the rental value of the building in the abstract. The rent to be obtained by the landlord from the property which is sought to be assessed must be the standard in making the assessment. Therefore any assessment without taking into account this factor may lead to erroneous results. In all cases where the genuineness of the rental arrangement is not in controversy and there are no circumstances to indicate that the rent received by the tenant is either inflated or deflated duel to peculiar circumstances what the parties have agreed to pay and are paying and receiving as rent would normally reflect the reasonable rent for the property. Of course if the parties have approached any court or tribunal to fix the standard or fair rent in accordance with any statute which provides for such fixation it goes without saying that reasonable rent cannot exceed such fair rent or standard rent so fixed.

(3.) Therefore when, at the time of revision of assessment, any municipality finds that a building has been let out on rent to a tenant and there are no circumstances to assume that the letting out was not in the usual course it cannot discard the data relating to the rent received by the landlord and proceed to determine reasonable rent in the abstract, by which term I mean the rent which would be obtainable for the premises at the relevant time if let out afresh or the rent that is being then obtained by the subtenant of the properties. To illustrate, it may be that in an important area in a town or city a building had been let out and the rental fixed earlier works out to only a rupee per square foot. The arrangement might be, say 20 or 30 years old and the tenancy has been continuing. May be that at the time of the revision of assessment the normal rental for similar premises would be much more, say Rs. 4 per square foot. The landlord can, if at all, by invoking the provisions of any law obtain only a marginal increase in the rent but certainly not Rs. 4 per square foot. Simply because buildings in the neighbourhood are let out at the rate of Rs. 4 per square foot and that might be the possible rent for the building if let out afresh at the relevant time the assessing authority under the Kerala Municipalities Act, 1960 cannot adopt Rs. 4 per square foot as reasonable rent for the building in question. That will be the rent which would reasonably be fetched for the building concerned if it is vacant so as to be ready for fresh occupation but the landlord burdened with a tenant paying a lower rent for a number of years cannot get the same rent and therefore it is not the reasonable rent for that building.