New Delhi Municipal Committee Vs. M.N.
Sol & ANR  INSC 240 (24 September 1976)
BEG, M. HAMEEDULLAH BEG, M. HAMEEDULLAH
CITATION: 1977 AIR 302 1977 SCR (1) 731 1976
SCC (4) 535
CITATOR INFO :
RF 1977 SC 308 (4,9)
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.
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
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 demanded by the landlord was 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 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.  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 assessment. 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  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 willing
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 willing
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
(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
(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  3 S.C.R. 49,
this Court considered Section 127 (a) of the Calcutta Municipal Act, 1923,
which used the same expression as in Section 3(1)(b) of the Act in question.
The word "reasonably" has been
considered in the said decision.
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 question.
In the next case of this Court Corporation of
Calcutta v.L.I.C.  1 S.C.R. 248, Section 168 (1) of Calcutta Municipal
Corporation Act, 1951, which used the same expression came up for consideration
of this Court, and this Court applied the principles laid down in Smt. Padma
In Guntur Municipal Council Case  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 Controller 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.
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 accordance 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 provisions 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 fixation 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
relation 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 percentage
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 provisions,
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, redeemed 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
(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 subclause
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 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 depreciation (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
(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, excessive, a
lower percentage may be taken." The question raised before us is whether
rating, 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 revenue,
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 deductions, 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, Ahmadabad,.(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 potential 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 implies that the rent which the
landlord might realise 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)  2 S.C.R. 608. (2)  3 S.C.R.
(3)  3 S.C.R 49. (4)  L.R. 74
738 "The word 'reasonably' in the
section throws further light on this interpretation. The word 'reasonably' is
not capable of precise definition. '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
situation. A bargain between a willing lessor and a willing lessee uninfluenced
by any extraneous circumstances may afford a guiding test of reasonableness. 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 irrecoverable 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 reasonably 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 ascertaining 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 circumstances obtaining in the
open market placing an upper limit on the rate of rent for which a building 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 commercial
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 uncontrolled, 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 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
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 determination 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 prescribing restrictions of
rent, by Rent Control legislation, enjoins and then visits their infringement
with penal consequences. 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 landlord
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 possesses for either sale or hire as well as the freedom to purchase or to
hire them is hedged round today with conditions 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 unreality into the field of rating. Legal norms often
savour of some artificiality. It may be observed here that the proviso 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
"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 conformity 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 determination 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 respondent 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
expectation. If the resulting position is not just or equitable, its remedy
lies in the amendment of the law itself by legislation. 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) applicable 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)
"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
reasonableness 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.