Judgment:
N.K. Agrawal, J.
1. This is a petition under Articles 226/227'of the Constitution for quashing the order dated 27.6.1983 passed by the Municipal Committee Ferozpur City and the appellate order dated 15.9.1983 passed by the Additional Deputy Commissioner, Ferozepur, and for the, refund of Rs. 593/recovered from the petitioner as house tax.
2. Petitioner No.l is a partner of the firm M/s. Rameshwar Dass Madan Lal, Main Bazar, Ferozepur City. The partnership-firm has been arrayed in the present petition as petitioner No. 2. The petitioners own a shop (No. CS-1/97) in the Main Bazar of the City. Annual rental value of the shop was fixed for the year 1973-74 by the Municipal Committee, Ferozepur City at Rs. 90/- per month and Rs. 1080/- per annum. The Municipal Committee sent a notice to the petitioners in the month of February, 1982, proposing the annual rental value of the shop to be fixed at Rs. 3780/- for the year 1982-83 (taking the monthly rent at Rs. 350/-). The petitioners filed objections in response to that notice. The objections were considered by the House Tax Sub Committee of the Municipal Committee and, vide order 26.3.1982, rent was determined at Rs. 200/- per month and annual rental value was determined accordingly. The petitioners filed an appeal before the Deputy Commissioner against the order passed by the Municipal Committee, pleading therein that rental value may be fixed on the basis of the fair rent in accordance with the provisions of the EasWEunjab Urban Rent Restriction Act.
3. In appeal, the case was remanded to the Municipal Committee for determining the house tax afresh on the ground that the Executive Officer was not present in the Sub Committee deciding the case of the petitioners. The House Tax Sub Committee, however, again determined the annual rental value at Rs. 200/- per month, vide order dated 27.6.1983. Another appeal was filed by the petitioners, which, however, came to be dismissed, vide order dated 15.9.1983.
4. The petitioners'ss case precisely rests on the plea that the annual letting value of the shop in question could not be assessed at an amount which should be more than the fair rent under the East Punjab Urban Rent Restriction Act. It has been pointed out that the shop in' question was an old structure and in existence since 1937. It was in self-occupation of the petitioners. It is further explained that no additions, alterations or improvements were effected in the shop. The petitioners have, therefore, put forward the plea that there was no justification to increase the annual letting value of the shop in question in the absence of any material on the record showing any addition or alteration in the ship and also because the annual rental value cannot be fixed on the basis of the present market value.
'Annual value' has been defined in clause (1) of Section 3 of the Punjab Municipal Act, 1911. Sub-clause (b) of the clause (1) is relevant for the purposes of the question arising in the present petition and the said Sub-clause (b) read, prior to its amendment in the year 1994, as under:'
(1) 'annual value' means -
(a) *****
(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 not exceeding 20 per cent of the gross annual rent as the committee in each particular 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 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 building, 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 simultaneously or at different times.
Explanation II. - The terms 'gross annual rent' shall not include any tax payable by the owner iri respect of which the owner and the tenant have agreed that it shall be paid by the tenant.'
5. It would thus appear that, in the case of any house or building, gross annual rent is to be determined on the amount at which it may reasonably be expected to let from year to year subject to certain deductions. It has been settled by a catena of decisions that it is the fair rent which is the rent reasonably expected at a place where a rent control law is in force and restricts the amount of rent to fair rent.
6. A similar matter came to be examined by this Court in Punjab Concast Steels Ltd., Ludhiana v. The Municipal Corporation, Ludhiana, (1985-1)97 P.L.R. 757, and it was held that the principle of fair rent has to be followed for arriving at the annual letting value if the property was located in an area subject to rent control law.
7. In Banarsi Dass Mahajan v. State of Punjab and Anr., (1990-1)97 P.L.R.1 (F.B.) the question about the applicability of the fair rent was again upheld by a Full Bench of this Court.
8. In Letters Patent Appeal No. 190 of 1983 (Jagjit Cotton Textile Mills Ltd., Phagwara, through Mr. S.G. Viyas, Chief Accountant v. The State of Punjab and Ors.), (1991-1)99 P.L.R. 117 decided by a Division Bench of this Court on 13.9.1990, the question was examined in detail and it was held that the annual rental value has to be fixed in accordance with the principles laid down in the rent control law for the purposes of fair rent.
9. In Corporation of Calcutta v. Padma Devi,4 AIR 1962 Supreme Court 151, and in Devan Daulat Rai Kapoor etc. v. New Delhi Municipal Committee, and Anr., A.I.R. 1980 Supreme Court 541, the question about the applicability of fair rent for the purposes of determining the annual rental value has been finally settled in view of the rent control law being in force in the area where the property is situated.
10. In Dr. Balbir Singh and Ors. v. M.C.D.,6 A.I.R. 1985 Supreme Court 339, the view, that it is the fair rent which shall be adopted for the purposes of determining the annual rental value of a property which is subject to the rent control law, has been reiterated.
11. Keeping in view the provisions of Sub-clause (b) of clause (1) of Section 3 of the Punjab Municipal Act, 1911, as applicable to the assessment year 1982-83 and in the light of the decisions of this Court as well as those of the Supreme Court, referred to above, orders of the Municipal Committee, Ferozepur City, and of the Additional Deputy Commissioner Ferozepur, are quashed and the Municipal Committee, Ferozepur City (respondent No.l), is directed to redetermine the annual rental value of the property in question on the basis of the fair rent as was determinable under the East Punjab Urban Rent Restriction Act. The house-tax which shall be determined afresh in pursuance of the aforesaid directions, shall be refunded by the Municipal Committee to the petitioners. No order as to costs.