PETITIONER:
NEW DELHI MUNICIPAL COMMITTEE
Vs.
RESPONDENT:
M.N. SOl AND ANOTHER
DATE OF JUDGMENT24/09/1976
BENCH:
BEG, M. HAMEEDULLAH
SHINGAL, P.N.
CITATION:
1977 AIR 302 1977 SCR (1) 731
1976 SCC (4) 535
ACT
New Delhi House Rent Control Order 1939--Cl. 5--Standard
rent of house fixed in 1944--Rateable value enhanced on the
basis of rent received in 1966 Whether rating should be
correlated to actual income.
HEADNOTE
Under cl. 5 of the New Delhi House Rent Control Order,
1939 standard rent of the respondent’s house in New Delhi
was fixed in 1941 at Rs. 170/- per mensem on annual tenancy
and no fixation of fair rent or standard rent had taken
place thereafter. In 1966 an assessment order was passed
and then modified in appeal, by the Additional District
Magistrate, Delhi. enhancing the rateable value of the
premises on the basis of the rent then received which was
Rs. 1500 p.m. The writ petition filed by the respondent
under Art. 226 of the Constitution questioning the validity
of the order of assessment was allowed by the High Court,
quashing the impugned order of assessment.
On the question whether rating, for purposes of house
tax, is to be correlated to the actual income from house
property or is to be regulated by an artificially determined
basis fixed in the past without reference to the actual rent
derived from the house.
Dismissing the appeal,
HELD: It is the reasonable rent at which the house is
let that governs valuation for purposes of rating and such
reasonable rent is the fair rent or standard rent fixed
under the Rent Control legislation. [737A; E]
(1) The fixation of rates for the purposes of assessment
of house tax is governed by the provisions of s. 3(1) of the
Punjab Municipal Act, 1911. The section provides that
although annual value, for purposes of rating land, may be
linked to the assessment of land revenue, if the State
Government so directs, yet, in the cases of houses. or
buildings under s. 3(1)(b) of the Punjab Act it is the
reasonable expectation to let such buildings, subject to
certain reasonable deductions, which governs valuation,
whatever may have been the origin of rating. [737 A--B]
(2)(a) For purposes of rating, it is the rent which had
been held to be fair rent in the past. even though it does
not bear a real relationship to the prevailing conditions of
the market that determines ultimately the standard rent
which still affects the assessment of rates. Therefore, if
a rent which is higher than that which can be legally de-
manded by the landlord was actually paid by a tenant, de-
spite. the fact that such violation of the restriction on
rent chargeable by law is visited by penal consequences, the
Municipal authorities cannot take advantage of this defiance
of the law by the landlord. Rating cannot operate as a mode
of sharing the benefits of illegal rack-renting indulged in
by rapacious landlords. [738 H; 739 A--B]
Corporation of Calcutta v. Smt. Padma Debi & Ors. [1962]
3 S.C.R. 49 followed.
(b) The analogy of cases where income tax had to be paid
on income illegally made referred to by the appellant has no
application to this case because the basis of taxation in
such cases was the actual income and not a determination of
what a prudent man could reasonably do to get the. income.
It is not prudent for a landlord to extract higher rent than
what law enjoins and then punishes violation with penal
consequences. [739 C-D]
15--1234SCI/76
732
It is not the expectation of a landlord who takes the
risk of prosecution and punishment, but the expectation of
the landlord who is prudent enough to abide by the law that
serves as the standard of reasonableness for purposes. of
rating. [740 G]
(c) The appellant’s contention that the absence of a
restriction in the Punjab Act similar to the one found in
the proviso to s. 116 of the Delhi Municipal Corporation
Act, 1957, that is to say, that the rateable value of a
building shall not exceed the annual amount of the standard
rent so fixed implies that there is no such restriction upon
the powers of assessment under the Punjab Act, is without
force. The provision in the Delhi Act, far from helping the
appellant, suggests that it is in conformity with notions of
reasonable rental value today for the purposes of assess-
ment. The mere. fact that s. 3(1 )(b) of the Punjab Act
left the determination of reasonable expectations of rent to
the assessing authorities does not mean that they can today
ignore the subsequent law fixing the restrictions on rent
and the penal consequences with which their infringement is
visited. The provisions of the Delhi Act were introduced
after the concept of restrictions on rent and letting of
accommodation had become well established in this country.
It shows what reasonable expectation in the new context
could or should mean. Therefore the existence of such
provisions supports the case of the respondent. [740 B---D]
ARGUMENTS
For the Appellant:
(a) The decision of the Supreme Court in Padma Devi’s
case [1962] 3 S.C.R. 49 while stating that the rental value
cannot be fixed higher than the standard rent under the Rent
Control Act rested on different facts. In that case no rent
higher than the standard rent was in fact received by the
owner. It was also observed that "a bargain between a will-
ing lessor and willing lessee uninfluenced by any extraneous
circumstances (inflating or deflating the rent) may afford a
guiding test of reasonableness.
(b) In none of the decisions relied on in the judgment
under appeal there was agreement to pay rent at a rate
higher than the standard rent nor was any such higher rent
paid. In the present case the rent actually received by the
owner has been Rs. 1500/- per month, and not the standard
rent of Rs. 150/- per month.
(c) The ultimate test in all cases has to be what rent might
reasonably attributed as between a willing lessor and will-
ing lessee. It would be incongruous and most unreasonable
to contend that even though the standard rent is on the face
of it extremely low and in fact and in truth the owner is
being willingly paid by the tenant considerably higher rent
(here Rs. 150/- per month was the standard rent and Rs.
1500/- per month was the rent actually received by the
owner) the annual value for letting should not exceed the
amount of standard rent.
(d) The operation of the principle of illegality and the
operation of penal legislation would be confined to cases
where the owner is not receiving such higher rent and he was
adversely affected by fixation of any annual letting value
at a rent higher than the standard rent. The decisions
relied on in the judgment under appeal proceed on such
factual situation. They do not lay down any rule having the
effect of conferring unmerited and gratuitous benefit on the
owner to the prejudice of Municipal Administration.
(e) Illegality of a. transaction. between an owner and a
lessee is not a bar in the context of rating and taxing
statutes. The ultimate test in matters of rating must rest
on the principle of reasonableness and fair rent. The rent
actually stipulated and paid would be the most. cogent
factor in determining annual rating value unless there are
extraneous circumstances inflating or deflating the rate of
rent.
For the respondent:
The argument advanced by the appellant comes down to a
narrow point of construction of Section 3 (1 )(b) of the
Punjab Municipal Act, 1911 (Act No. III
733
of 1911) and in particular the interpretation of the words
"may reasonably be expected to let from year to year".
The same expression is used in number of Municipal Acts of
various States and has been judicially considered in number
of decisions of this Court. In the case of Smt. Padma Devi
[1962] 3 S.C.R. 49, this Court considered Section 127 (a) of
the Calcutta Municipal Act, 1923, which used the same ex-
pression as in Section 3(1)(b) of the Act in question.
The word "reasonably" has been considered in the said deci-
sion.
Under the Rent Control Act, the receipt of higher rent
other than the standard rent fixed under the Act is made
penal for the landlord. (See Sections 4, 5 and 48 of the
Act). A combined reading of the said provisions leaves no
room for doubt that a contract for rent at a rate higher
than the standard rent is not only enforceable but also that
the landlord would be committing an offence if he collected
a rent at a rate higher than the standard rent. This Court
has described the hypothetical rent "as a rent which a
landlord may reasonably be expected to get in the open
market. But the open market cannot include a "black market"
a term euphemistically used to commercial transactions
entered into between parties in defiance of law. In that
situation, a statutory limitation of rent circumscribes the
scope of the bargain in the market. In no circumstances the
hypothetical rent can exceed that limit.
The contentions of the appellant that the first respondent
has admitted that he was receiving the monthly rent of Rs.
1500/- and that should be the basis determining the rateable
value of the building and the decision of this Court in
the case of Smt. Padma Devi is distinguishable and should be
confined to the facts in that case. are untenable. The said
decision of this Court is conclusive on the issue in ques-
tion.
In the next case of this Court Corporation of Calcutta
v.L.I.C. [1971] 1 S.C.R. 248, Section 168 (1) of Calcutta
Municipal Corporation Act, 1951, which used the same expres-
sion came up for consideration of this Court, and this Court
applied the principles laid down in Smt. Padma Devi’s Case.
In Guntur Municipal Council Case [1971] 2 S.C.R. 423, this
Court went further and held that no distinction can be made
between buildings, the fair rent of which has been actually
fixed by the Rent Controller and those in respect of which
no such rent has been fixed when the Controller has not
fixed the fair rent the Municipal Authorities will have to
arive at the fair rent according to the principles laid
down in the Rent Act for the determination of fair rent.
In view of these decisions of this Court, the appellant
has no power to assess the annual value of the said property
at a higher rate than the standard rent fixed by the Con-
troller less 10% allowed for repairs. The fact that the
first respondent is receiving Rs. 1500/- per month is not
relevant for assessing the rateable value of the building.
JUDGMENT
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 541 of 1976.
(Appeal by Special Leave from the Judgment and Order
dated 30-5-2975 of the Delhi High Court in Civil Writ No.
374-D of 1966).
S. T. Desai, Bikramjit Nayar, B.P. Maheshwari and Suresh
Sethi, for the Appellant.
M. Natesan, N.H. Hingorani F.C. Bedi and M.K. Garg, for
Respondent No. 1.
The Judgment of the Court was delivered by
BEG, J.--This appeal by special leave is directed
against the unanimous decision of a Full’ Bench of the Delhi
High Court. The case before us arose from a Writ Petition
flied by the respondent, M.N.
734
Soi, praying that certain assessment orders, together with
the order under Section 84 of the Punjab Municipal Act 1II
of 1911, passed on 11th February, 1966, by an Additional
District Magistrate of Delhi relating to the house of the
petitioner at 15, Prithviraj Road, New Delhi, modifying
assessments on appeal, be quashed. The respondent landlord
submitted that assessment for purposes of rating, in accord-
ance with the provisions of Section 3(1)(b) Of the Punjab
Municipal Act 1II of 1911 (hereinafter referred to as ’the
Act’), and, in particular, the interpretation of the words
"may reasonably be expected to be let from year to year",
impose upon the assessing authorities the obligation not to
assess at a higher rental value than the "standard rent".
It is, not disputed that standard rent of the house was
fixed on 25th September, 1941, in the following terms:
"After due consideration of all the facts and
circumstances a fair rent of Rs. 170/- one Hundred
and Seventy P.M., (unfurnished) on annual tenancy,
exclusive of House Tax and Irrigation water
charges, is hereby fixed for House No. 15, Prithvi
Raj Road, New Delhi, under Clause 5 of the Rent
Control Order 1939".
It appears from the statement of facts by the
Full Bench, which has not been questioned before
us, that the fixation of rent in 194-1, under the
New Delhi House Rent Control Order, 1939, continues
to be valid notwithstanding the repeal of the
Control Order by Section 15 of the Delhi and
Ajmer-Merwara Rent Control Act, 1947, which, in its
turn, was repealed by Section 46 of the Delhi and
Ajmer Rent Control Act, 1952. The repealing provi-
sions maintained intact the validity of all that
was legally done under the repealed Order.
The Delhi Rent Control Act, 1958 (59 of 1958),
contains a very elaborate procedure for the fixa-
tion of "standard rent" under Section 6 of this
Act. In so far as such premises as "have been let
at any time before the 2nd day of June, 1944", are
concerned, the standard rent is determined as
follows:
"6(1) (a) if the basic rent of such premises
per annum does not exceed six hundred rupees, the
basic rent; or
(b) if the basic rent of such premises per
annum exceeds six hundred rupees, the basic rent
together with ten per cent of such basic rent;"
The first two clauses of the second schedule to the
1958 Act define the basic rent for the purposes of
the ease before us:
"1. In this Schedule, ’basic rent’ in rela-
tion to any premises let out before the 2nd June,
1944, means the original rent of such premises
referred to in paragraph 2 increased by such per-
centage of the original rent as is specified in
paragraph 3 of paragraph 4 or paragraph 5, as the
case may be.
2. ’Original rent’ in relation to premises
referred to in paragraph 1, means--
(a) Where the rent of such premises has been fixed
under
735
the New Delhi House Rent Control Order, 1939, or
the Delhi Rent Control Ordinance, 1944, the rent so
fixed; or
(b) in any other case,--
(i) the rent at which the premises were let on
the 1st November, 1939, or
(ii) if the premises were not let on that date,
the rent at which they were first let out at any
time after that date but before the 2nd June,
1944".
Thus, the "fair rent" fixed under the 1939 Order
determines, ultimately the "standard rent" which
still affects the assessment of rates in the manner
indicated below.
It is clear that, although, legislative provi-
sions, for the fixation of ’standard rent in New
Delhi, contained in. Section 9 of the Delhi Rent
’Control Act 59 of 1958, are comparatively recent
and fairly elaborate, yet, the fixation of rates
for purposes of assessment of house tax is still
governed by the provisions of Section 3(1)(b) of
the Punjab Municipal Act of 1911, enacted at a
time when there was no machinery for the control of
rents. The whole of the Section 3(1 ) may be set
out here in order to get an idea of the nature of
valuation contemplated ’by the Act of 1911 for the
purposes of rating. Section 3 (1) reads:
"3 ( 1 ) ’Annual value’ means--
(a) in the case of land, the gross annual
rent at which it may reasonably be expected to let
from year to year;
Provided that, in the case of land assessed to
land-revenue or of which the land-revenue has been
wholly or in part released, compounded for, re-
deemed or assigned, the annual value, shall if the
State Government so direct, be deemed to be double
the aggregate of the following amounts, namely :-
(i) the amount of the land-revenue for the time
being assessed on the land, whether such assessment
is leviable or not; or when the land-revenue has
been wholly or in part compounded for or redeemed,
the amount which, but for such composition or
redemption, would have been leviable and
(ii) when the improvement of the land due to
canal irrigation has been excluded from account in
assessing the land-revenue, the amount of owner’s
rate or water advantage rate, or other rate imposed
in respect of such improvement:
(b) 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) such deduction and exceeding 20 per cent of
the gross annual rent as the committee in each
particular
736
case may consider a reasonable allowance on account
of the furniture let therewith;
(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) where land is let with a building, such
deduction, not exceeding 20 per cent, of the gross
annual rent, as the committee in each particular
case may consider reasonable on account of the
actual expenditure, if any, annually incurred by
the owner on the upkeep of the land in a state to
command such gross annual’ rent:
Explanation I.---For the purposes of this
clause it is immaterial whether the house or build-
ing, and the furniture and the land let for use or
enjoyment therewith, are let by the same contract
or by different contracts, and if by different’
contracts, whether such contracts are’ made simul-
taneously or at different times.
Explanation II.---The term ’gross annual
rent’ shall not include any, tax payable by the
owner in respect of which the owner and tenant have
agreed that it shall be paid by the tenant.
(c) In the case of any house or building, the
gross annual rent of which cannot be determined
under clause (b), 5 per cent, on the sum obtained
by adding the estimated present cost of erecting
the building, less such amount as the Committee may
deem reasonable to be deducted on account of depre-
ciation (if any) to the estimated market value of
the site and any land attached to the house or
building:
Provided that--
(i) in the calculation of the annual value of
any premises no account shall be taken of any
machinery thereon;
(ii) when a building is occupied by
the .owner under such exceptional circumstances as
to render a valuation at 5 per cent. On the cost
of erecting the building, less depreciation, exces-
sive, a lower percentage may be taken."
The question raised before us is whether rat-
ing, for purposes house tax, is to be correlated to
the actual income from house property, or, it is to
be regulated by an artificially determined basis,
fixed in the’ past, without reference to the actual
rent that may be derived from the house or building
today ?
On a bare reading of the provisions of Section 3(1)(a),
set out above, no doubt is left that, although, annual
value, for purposes of
737
rating land, may be linked to the assessment of land reve-
nue, if the State Government so directs, yet, in the cases
of houses or buildings, it is the reasonable expectation to
let such buildings, subject to certain reasonable deduc-
tions, which governs valuation whatever may have been the
origin of rating. The concept of rating and its origin have
been commented upon by this Court several times (see: Patel
Gordhandas Hargovindas v. Municipal Commissioner, Ahmada-
bad,.(1) and, Municipal Corporation of Greater Bombay v.
M/s. Poly-chem Ltd.) (2)
In the case of the Municipal Corporation of Greater
Bombay (supra), after considering various cases on the
rating and commenting upon the case of Patel Gordhandas
(supra), this Court observed (at p. 697) .
"This case links the nature of the property
tax called a rate levied for local Government
purposes with the mode adopted for its levy. Each
mode had necessarily to be directed to finding out
the annual rental value of land as that was what
was taxed and not either the capital or the poten-
tial value of land".
It is true that, in the case before us, the
actual rent obtained by the landlord now is Rs.
1500/- p.m., which is about nine times the fair
rent fixed in 1941. But, the fixation of 1941 has
continued unaltered. No fresh fixation of a fair
or standard rent, in accordance with the applicable
provisions of law, has taken place. The argument,
therefore, which prevailed before the Full Bench
and is pressed before us also for acceptance, on
the strength of the view expressed by this Court in
the Corporation of Calcutta v. Smt. Padran Debi &
Ors., (3) followed by the Full Bench, was that
reasonable rent, contemplated by Section 3(1)(b) of
the Punjab Municipal Act, 1911, can, in no case, be
above the fair rent or standard rent fixed by the
provisions relating to fixation of rent in rent
control legislation an infringement of which is
penalised. The crucial words used in the enactment
before the Court in Smt. Padma Debi’s case (supra)
were (at p. 53): "gross annual rent at which the
land or building might at the time of assessment
reasonably be expected to let from year to year".
Subba Rao, J. speaking for a bench of four Judges
of this Court said there (at p. 53):
"The dictionary meaning of the words ’to
let’ is ’grant use of for rent or hire’. It im-
plies that the rent which the landlord might rea-
lise if the house was let is the basis for fixing
the annual value of the building. The criterion.
therefore, is the rent realisable by the landlord
and not the value of the holding in the hands of
the tenant".
After quoting from a passage the judgment of
the Judicial Committee of the Privy Council in
Bengal Nagpur Railway Co. Ltd. v. Corporation of
Calcutta,(4) showing that a hypothetical tenancy of
an improbable character was not contemplated, this
Court pronounced as follows on the decisive concept
of "reasonableness":
(1) [1964] 2 S.C.R. 608. (2) [1974] 3 S.C.R.
687.
(3) [1962] 3 S.C.R 49. (4) [1946] L.R. 74
I.A.I.
738
"The word ’reasonably’ in the section
throws further light on this interpretation. The
word ’reasonably’ is not capable of precise defini-
tion. ’Reasonable’ signifies ’in accordance with
reason’. In the ultimate analysis it is a question
of fact. Whether a particular act is reasonable or
not depends on the circumstances in a given situa-
tion. A bargain between a willing lessor and a
willing lessee uninfluenced by any extraneous
circumstances may afford a guiding test of reasona-
bleness. An inflated or deflated rate of
rent based upon fraud, emergency, relationship, and
such other considerations may take it out of the
bounds of reasonableness. Equally it would be
incongruous to consider fixation of rent beyond the
limits fixed by penal legislation as reasonable.
Under the Rent Control Act, the receipt of any rent
higher than the standard rent fixed under the Act
is made penal for the landlord. Section 3 of the
said Act says that any amount in excess’ of the
standard rent of any premises shall be irrecovera-
ble notwithstanding any agreement to the contrary.
Section 33(a) thereof provides inter alia that
"whoever knowingly receives, whether directly or
indirectly, any sum on account of the rent of any
premises in excess of the standard rent will be
liable to certain penalties. ’Standard rent’ has
been defined in 2(1)(b) to mean that ’where the
rent has been fixed under s. 9, the rent so fixed,
or at which it would have been fixed if application
were made under the said section’. A combined
reading of the said provisions leaves no room for
doubt that a contract for a rent at a ’rate higher
than the standard rent is not only not enforceable
but also that the landlord would be cmmitting an
offence if he collected a rent above the rate of
the standard rent. One may legitimately say under
those circumstances that a landlord cannot reasona-
bly be expected to let a building for a rent higher
than the standard rent. A law of the land with its
penal consequences cannot be ignored in ascertain-
ing the reasonable expectations of a landlord in
the matter of rent. In thus view, the law of the
land must necessarily be taken as one of the cir-
cumstances obtaining in the open market placing an
upper limit on the rate of rent for which a build-
ing can reasonably be expected to let".
It was held in Smt. Padma Debi’s case (supra) that it
was not the actual rent received by the landlord but the
"hypothetical rent which can reasonably be expected if
the building is to be let", which has to be the legal
yard stick of a "reasonable expectation" in an "open mar
ket". It was explained: ".. an open market cannot include
a ’black market’, a term euphemistically used to commer-
cial transactions entered into between parties in defiance
of law".
Thus, whatever may be our views on the reasonableness of
tying down assessment, for the purposes of rating, to the
concept of a rent which has been held to be fair rent in the
past but does not bear a real relationship to the prevailing
conditions of the market for accommodation if it was uncon-
trolled, we find it impossible to get over the ratio
739
decidendi of this Court in Smt. Padma Debi’s case (supra)
which we are bound to follow. This was that, if a rent
which is higher than that which can be legally demanded by
the landlord and actually paid by a tenant, despite the fact
that such violation of the restriction on rent chargeable by
law is visited by penal consequences, the Municipal authori-
ties cannot take advantage of this defiance of the law by
the landlord. Rating cannot operate as a mode of sharing
the benefits of illegal rack-renting indulged in by rapa-
cious landlords for whose activities the law prescribes
condign punishment.
Cases were referred to before us by Mr. S.T. Desai where
income tax had to be paid on income illegally made even by
indulging in criminal activities. In those cases, however,
the basis of taxation was the actual income and not a deter-
mination of what a prudent man could reasonably do to get
the income. It is certainly no part of prudence for a
landlord to extract higher rent than what law prescrib-
ing restrictions of rent, by Rent Control legislation,
enjoins and then visits their infringement with penal conse-
quences. Hence, in the case before us, the prudence of the
landlord has to be assumed and judged by normal standard to
determine his "reasonable expectation". This, we think was
the ratio decidendi of Smt. Padma Debi’s case (supra) which
was decided as long ago as 1962. If the law has remained
unchanged despite that pronouncement by this Court, of which
the law making authorities must be deemed to be cognizant,
the presumption would be that the intention, from allowing
the State of the law so declared to continue, is to let
rating be governed by the fixation of rent by Rent Control
authorities and not by the test of actual income derived by.
the landlord. In other words, the concept of an "open
market" applicable to such cases is not one where the land-
lord is absolutely free to let to anybody at any rent he can
obtain and where the tenant has the corresponding freedom to
offer anything he likes for any accommodation he may want to
hire. As we know, the right to offer many things one pos-
sesses for either sale or hire as well as the freedom to
purchase or to hire them is hedged round today with condi-
tions imposed by law. The concept of this restricted "open
market", if one may juxtapose such antithetical concepts, is
well established today. The area of the "open market" is
circumscribed by law. It is within this restricted area that
the reasonable man’s expectations must be deemed to operate
even if such a concept seems to import an element of unreal-
ity into the field of rating. Legal norms often savour of
some artificiality. It may be observed here that the provi-
so to Section 116 of the Delhi Municipal Corporation Act 66
of 1957, providing for determination of rateable value of
lands and buildings assessable to tax, lays down:
"Provided further that in respect of any land
or building the standard rent of which has been
fixed under the Delhi and Ajmer Rent Control Act,
1952, the rateable value thereof shall not exceed
the annual amount of the standard rent so fixed".
Mr. S.T. Desai, basing his argument on this provision,
contended that, as there is no such provision in the Punjab
Municipal Act, 1911,
740
imply such a restriction upon powers of assessment, due to
rent control legislation, would be incorrect. We think,
that this provision, far from helping the case of the
appellant Municipal Committee, suggests that it is in con-
formity with notions of reasonable rental value today for
the purposes of assessment. The mere fact that Section 3(1)
(b) of the Punjab Municipal Act of 1911 left the determina-
tion of reasonable expectations of rent to the assessing
authorities does not mean that they can today ignore the
subsequent law fixing restrictions on rents and the penal
consequences with which their infringement is visited. The
provisions of the Delhi Municipal Corporation Act 1957 were
introduced after the concept of restrictions on rent and
letting of accommodation had become well established in this
country. It shows what reasonable expectation in the new
context could or should mean. Therefore, in our opinion, the
existence of such provisions supports the case of the re-
spondent which was accepted by the Full Bench.In any case,
so long as the ratio decidendi of Smt. Padran Debi’s case
(supra) holds the ground, this Court cannot, by judicial
interpretation,introduce a new concept of reasonable expec-
tation. If the resulting position is not just or equitable,
its remedy lies in the amendment of the law itself by legis-
lation. We cannot remedy it. We may here indicate the penal
provisions in the Delhi Rent Control Act of 1958, which make
the ratio decidendi of Smt. Padma Debi’s case (supra) ap-
plicable to the case before us. Section 5(1) of this Act
lays down:
"5(1 ) Subject to the provisions of this Act,
no person shall claim or receive any rent in excess
of the standard rent notwithstanding any agreement
to the contrary."
And, Section 48(1)(a) enacts:
"48 (1 ) If any person contravenes any of the
provisions of Section 5, he shall. be punishable--
(a) in the case of a contravention of the
provisions of sub-section (1 ) of Section 5, with
simple imprisonment for a term which may extend to
three months, or with fine which may extend to a
sum which exceeds the unlawful charge claimed or
received under that sub-section by one thousand
rupees, or with both."
Hence, the case before us is completely covered by the
concept of reasonableness of expectation of rent which must
take the penal law of the State into account. It is not the
expectation of a landlord who takes the risk of prosecution
and punishment which the violation of the law involves, but
the expectation of the landlord who is prudent enough to
abide by the law that serves as the standard of reasonable-
ness for purposes of rating.
For the foregoing reasons, we affirm the decision of the
Full Bench of the Delhi High Court and dismiss this appeal.
But, in the circumstances of the case, we make no order as
to costs.
P.B.R. Appeal
dismissed.
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