ivil Appeal No 2111 of 1969
Appeal by Special Leave from the Judgment and Order dated 26 9 1968 of the Madhya Pradesh High COurt in Civil Revision No 71166
VS Desai P C Bhartari and D N Misra for the Appel lants
BN Lokur and Rameshwar Nath for the Respondents
1018 The Judgment of the Court was delivered by SHINGHAL J
This appeal by special leave is directed against the judgment of the Madhya Pradesh High Court dated September 26 1968 setting aside the appellate order or the Second Additional District Judge Indore dated Octo ber 29 1966 and remitting the matter to the Municipal Commissioner for a fresh determination of the annual value of the building
The building in question is known as Viram Lodge on Ravindra Nath Tagore Marg Indore
It belongs to the respondent and has been used by them as a hotel
The annual gross rental value of the building was determined at Rs 6600in 1956
It was revised by the Assessment Officer on June 3 1965 and was raised to Rs 4340520
The respondents filed objections to the valuation but the Municipal Commissioner fixed the annual value at Rs 4340520
He held that in view of the non obstante clause in section 138b of the Madhya Pradesh Municipal Corporation Act 1956 hereinafter referred to as the Act there was no justification for the argument that the rental value of the premises could not be fixed at a rate higher than the standard rent under section 7 of the Madhya Pradesh Accommodation Control Act 1961
An appeal was taken to the Second Additional District Judge but without suc cess
The respondents then filed an application for revi sion which was allowed by the impugned judgment of the High Court dated September 26 1968
This is how the present appeal has arisen at the instance of the Municipal Corporation and its officers
Section 138 of the Act prescribes the mode for determin ing the annual value of any land or building for purposes of assessing it to property tax
Clause a of the section deals with the annual value of land and it is not the case of the parties that it has any bearing on the controversy
Clause b prescribes the mode of determining the annual value of a building and reads as follows b the annual value of any building shall notwithstanding anything contained in any other law for the time being in force be deemed to be the gross annual rent at which such building together with its appurtenances and any furniture that may be let for use or enjoyment therewith might reasonably at the time of assessment be expected to be let from year to year less an allowance of ten 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
 There are two explanations to the clause
It is nobody s case that they have any bearing on the short point in con troversy before us
Clause c of the section prescribes that if the gross annual rent of a building cannot be deter mined under clause b the annual value of the building shall be determined according to that clause
If is 1019 not in controversy before us that the Viram Lodge was never let on rent and is being run as a hotel by its owners the present respondents so that the question of fixing its standard rent under section 7 of the Madhya Pradesh Accommodation Control Act 1961 has not arisen
It has argued that even so the reasonable rent contemplated by section 138b of the Act cannot exceed the standard rent to be fixed under the aforesaid section 7
It has thus been urged that it was incumbent for the Municipal Commissioner to determine the annual value of the building on the same basis on which its standard rent was required to be fixed under section 7
Reliance in this connection has been placed on the deci sions of this Court in The Car oration of Calcutta vs Smt
Padma Debi and others1 Corporation of Calcutta vs Life Insurance Corporation of India2 Guntur Municipal Council vs Guntur Town Rate Payers Assiciation3 New Delhi Munici pal Committee vs MN Soi and another4 As has been stated clause b of section 138 of the Act provides that the annual value of any
building shall notwithstanding anything contained in any other law for the time being in force be deemed to be the gross annual rent for which the building might reasonably at the time of the assessment be expected to be let from year to year
 While therefore the requirement of the law is that the reasonable letting value should determine the annual value of the building it has also been specifically provided that this would be so notwithstanding anything contained in any other law for the time being in force
It appears to us that it would be a proper interpretation of the provisions of clause b of section 138 of the Act to hold that in a case where the standard rent of a building has been fixed under section 7 of the Madhya Pradesh Accommodation Control Act and there is nothing to show that there has been fraud or collusion that would be its reasonable letting value hit where this is not so and the building has never been let out and is being used in a manner where the question of fixing its standard rent does not arise it would be permis sible to fix its reasonable rent without regard to the provisions of the Madhya Pradesh Accommodation Control Act 1961
This view will in our opinion give proper effect to the non obstante clause in clause b with due regard to its Other provision that the letting value should be rea sonable
We have gone through the decision in Padma Debi s case supra
There the premises were on rent and section 127a of Calcutta Municipal Corporation Act 1923 did not con tain a non obstante clause
That the section provided inter alia was that the annual value shall be deemed to be the gross annual rent at which the land or building might at the time of assessment reasonably be expected to let from year to year This Court examined the significance of the word reasonable and held that it would be incongruous to  1  2 1971 1 CR 248
3  4  15 1338SC176 1020 consider fixation of rent beyond the limits fixed by penal legislation as reasonable
That view was taken with refer ence to the provisions of the Rent Control Act which pena lised the taking of a higher rent and also  made it irrecoverable
While therefore we are in agreement with the view taken in Padma Debi s case supra that it would not be reasonable to consider fixation of rent beyond the limits fixed by the Rent Control Act as reasonable it would not be a proper interpretation of section 138b of the Act to ignore the significance of its non obstante clause altogether
That is why we have taken the view that it would be a fair and reasonable interpretation of section 138b to hold that as no standard rent has been fixed so far in respect of the Viram Lodge the Municipal Commis sioner was justified in adopting another suitable criterion for determining the annual value of the building
There is in fact nothing in the Act to
make it obligatory for the Commissioner to follow the provisions of the Madhya Pradesh Accommodation Control Act in spite of the non obstante clause and to limit the annual value to any standard rent that the building might fetch under that Act
We have also gone through Corporation of Calcutta vs Life InsuranceCorporation of India supra
That was also a case where the premises had been let out on rent
The standard rent had also been fixed and that was why Padma Debi s case supra was held to be applicable
So also Guntur Municipal Council vs Guntur Town Rate Payers  Association supra was a case where the premiseswere on rent and there also Padma Debi s case was held to be applicable even though the standard rent had not been fixed because it was held that there was nothing to prevent the authorities concerned from ascertaining the fair rent by keeping in view the principles which had been laid down for its determination under the Andhra Pradesh Buildings Lease Rent and Eviction Control Act 1960
Section 822 of the Madras District Municipalities Act which governed that case did not contain a non obstante clause
Much the same was the position in MN Soi s case which related to a house in New Delhi of which rate had to be assessed under the provisions of the Punjab Municipal Act 1911
The High Court did not properly appreciate the differ ence between the wordings of section 127 of the Calcutta Municipal Corporation Act 1923 and section 138c of the Act and committed an error in thinking that this was virtu ally similar to Padma Debi s case
We find that the High Court has taken the view that a full hearing was not given to the respondents at the time of fixing the annual value of the Viram Lodge and that the valuation was based on no principle
Here again the High Court was clearly in error because we find from the judgment of the Second Additional District Judge dated October 29 1966 that the counsel for the respondents 1021 was given ample opportunity by the Municipal Commissioner to represent his case before him
He has also stated that the Assessment Officer paid due regard to all the relevant circumstances which had a bearing on the determination of the reasonable letting value of the building
Counsel for the respondents has in fact not found it worth his while to argue either that such a hearing was not given or that all the relevant factors were not taken into consideration in determining the annual letting value of the premises
In the result the appeal is allowed and the impugned judgment of the High Court dated September 26 1968 is Set aside
The appellants will however pay the costs of the respondents as stipulated in the order of this Court grant ing the special leave
PHP Appeal al lowed


Summary:
The respondents are the owner of a building known as Viram Lodge
They run a hotel in the said building
The annual gross rental value of the
building was determined at Rs 6600 in 1956
It was revised to Rs 43405 by the Assessment Officer in 1965
Section 138b of the Madhya Pradesh Municipal Corporation Act 1956 provides that notwithstanding anything contained in any other law for the time being in force the annual value of any building shall be deemed to be the gross annual rent at which such building might be reasonably at the time of assessment be expected to let from year to year at the time of the less an allowance of 10 per cent for repairs etc
The respondent challenged the valuation on the ground that the rental value of the premises could not be fixed at a rate higher than the stand ard rent under section 7 of the Madhya Pradesh Accommoda tion Control Act 1961
The Municipal Commissioner negatived the respondents  contention
An appeal filed by the respondents to the Additional District Judge also failed
The High Court however allowed the Revision filed by the respondents
Allowing the appeal by Special Leave held 1
In the
present case the building in ques tion was never let on rent and is being used by the owners as a hotel
1019 A 2
On a proper construction of section 138b where the standard rent of a building has been fixed under section 7 of the Accommodation Control Act and there is nothing to show that there has been fraud or collusion that would be its reasonable letting value but where the building has never been let out the question of fixation standard rent does not arise
In that case it would be permissible to fix its reasonable rent without regard to the provi sions of Madhya Pradesh Accommodation Control Act
This view gives proper effect to the nonobstante clause in section 138b
1019 D F The Corporation of Calcutta vs Smt
Padma Debi and others   Corporation of Calcutta vs Life Insurance Corporation of India  Guntur Municipal Council vs Guntur Town Rate Payers  Association  and New Delhi Municipal Committee vs MN Soi and another   distinguished